EME
EMCOR Group, Inc.
$699.17
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 191.8% above fair value
You pay
$699.17
Bear
$186.34
Fair
$239.58
Bull
$292.82
Bear
$186.34
-73.3%
$13.31 × 14x
Fair
$239.58
-65.7%
$13.31 × 18x
Bull
$292.82
-58.1%
$13.31 × 22x
Adjust Assumptions
18.0x
13.31$
Key Value Driver
Through-cycle normalized EPS ($13.31)
Implied Market Multiple
52.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$1012.00
Divergence from AlphaVal
76%
Summary
Using 7-year normalized EPS of $13.31 at a 18x cycle multiple, the base-case value is $239.58 per share. P/TBV cross-check: 26.8x.
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 26.8x 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 $1012.00 (from 14 analysts). Our estimate is 76% 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