CTVA
Corteva, Inc.
$79.56
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 104.0% above fair value
You pay
$79.56
Bear
$30.41
Fair
$39.00
Bull
$47.59
Bear
$30.41
-61.8%
$1.58 × 7x + net cash
Fair
$39.00
-51.0%
$1.58 × 10x + net cash
Bull
$47.59
-40.2%
$1.58 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.58)
Implied Market Multiple
50.4x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $88.17 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $39.00 per share.
Warnings
Price-to-book value of 9.9x 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 $88.17 (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