CVLG
Covenant Logistics Group, Inc.
$37.41
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 352.4% above fair value
You pay
$37.41
Bear
$5.55
Fair
$8.27
Bull
$10.98
Bear
$5.55
-85.2%
$1.81 × 4x + net cash
Fair
$8.27
-77.9%
$1.81 × 6x + net cash
Bull
$10.98
-70.6%
$1.81 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.81)
Implied Market Multiple
20.7x
Summary
Using 7-year normalized EPS of $1.81 at a 6x cycle multiple, the base-case value is $8.27 per share. P/TBV cross-check: 4.3x.
Warnings
Price-to-book value of 4.3x 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