CTVA
Corteva, Inc.
$87.30
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 119.1% above fair value
You pay
$87.30
Bear
$31.07
Fair
$39.85
Bull
$48.63
Bear
$31.07
-64.4%
$1.58 × 7x + net cash
Fair
$39.85
-54.4%
$1.58 × 10x + net cash
Bull
$48.63
-44.3%
$1.58 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.58)
Implied Market Multiple
55.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $91.00 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $39.85 per share.
Warnings
Price-to-book value of 10.9x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $91.00 (from 37 analysts). Our estimate is 80% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing