CVLG
Covenant Logistics Group, Inc.
$46.75
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 199.2% above fair value
You pay
$46.75
Bear
$6.24
Fair
$15.62
Bull
$24.97
Bear
$6.24
-86.6%
$1.81 × 4x + net cash
Fair
$15.62
-66.6%
$1.81 × 6x + net cash
Bull
$24.97
-46.6%
$1.81 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.81)
Implied Market Multiple
25.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $60.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $15.62 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 5.4x 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 $60.00 (from 9 analysts). Our estimate is 92% 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