CVCO
Cavco Industries, Inc.
$509.17
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 22.6% above fair value
You pay
$509.17
Bear
$330.01
Fair
$415.37
Bull
$500.73
Bear
$330.01
-35.2%
$21.34 × 14x + net cash
Fair
$415.37
-18.4%
$21.34 × 18x + net cash
Bull
$500.73
-1.7%
$21.34 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($21.34)
Implied Market Multiple
23.9x
Summary
Using 7-year normalized EPS of $21.34 at a 18x cycle multiple, the base-case value is $415.37 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