EXP
Eagle Materials Inc.
$205.93
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 1.8% above fair value
You pay
$205.93
Bear
$148.35
Fair
$202.30
Bull
$256.25
Bear
$148.35
-28.0%
$13.12 × 14x + net cash
Fair
$202.30
-1.8%
$13.12 × 18x + net cash
Bull
$256.25
+24.4%
$13.12 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($13.12)
Implied Market Multiple
15.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $218.80 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $202.30 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 7.2x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
This company has heavy ongoing investment costs. Valuation shortcuts that ignore those costs can make the stock look cheaper than it really is.
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