CVCO
Cavco Industries, Inc.
$580.76
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 39.7% above fair value
You pay
$580.76
Bear
$330.22
Fair
$415.58
Bull
$500.94
Bear
$330.22
-43.1%
$21.34 × 14x + net cash
Fair
$415.58
-28.4%
$21.34 × 18x + net cash
Bull
$500.94
-13.7%
$21.34 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($21.34)
Implied Market Multiple
27.2x
Summary
Using 7-year normalized EPS of $21.34 at a 18x cycle multiple, the base-case value is $415.58 per share. P/TBV cross-check: 5.2x.
Warnings
Price-to-book value of 5.2x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
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