EME
EMCOR Group, Inc.
$848.91
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 121.8% above fair value
You pay
$848.91
Bear
$299.81
Fair
$382.79
Bull
$465.76
Bear
$299.81
-64.7%
$13.31 × 14x + net cash
Fair
$382.79
-54.9%
$13.31 × 18x + net cash
Bull
$465.76
-45.1%
$13.31 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($13.31)
Implied Market Multiple
63.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $931.50 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $382.79 per share.
Warnings
Recent profits ($28.19/share) are 112% above the mid-cycle average ($13.31). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 32.8x 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 $931.50 (from 12 analysts). Our estimate is 74% 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