FBIN
Fortune Brands Innovations, Inc.
$40.18
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 41.7% below fair value
You pay
$40.18
Bear
$53.62
Fair
$68.94
Bull
$84.26
Bear
$53.62
+33.4%
$3.83 × 14x
Fair
$68.94
+71.6%
$3.83 × 18x
Bull
$84.26
+109.7%
$3.83 × 22x
Adjust Assumptions
18.0x
3.83$
Key Value Driver
Through-cycle normalized EPS ($3.83)
Implied Market Multiple
10.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (27 analysts)
$54.27
Divergence from AlphaVal
27%
Summary
Using 7-year normalized EPS of $3.83 at a 18x cycle multiple, the base-case value is $68.94 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.
Wall Street's average price target is $54.27 (from 27 analysts). Our estimate is 27% above 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