CVCO
Cavco Industries, Inc.
$521.96
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 35.9% above fair value
You pay
$521.96
Bear
$298.76
Fair
$384.12
Bull
$469.48
Bear
$298.76
-42.8%
$21.34 × 14x
Fair
$384.12
-26.4%
$21.34 × 18x
Bull
$469.48
-10.1%
$21.34 × 22x
Adjust Assumptions
18.0x
21.34$
Key Value Driver
Through-cycle normalized EPS ($21.34)
Implied Market Multiple
24.5x
Summary
Using 7-year normalized EPS of $21.34 at a 18x cycle multiple, the base-case value is $384.12 per share. P/TBV cross-check: 4.6x.
Warnings
Price-to-book value of 4.6x 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