FOR
Forestar Group Inc.
$25.36
Stable Earnings Power
60%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 57.7% below fair value
You pay
$25.36
Bear
$47.92
Fair
$59.90
Bull
$71.88
Bear
$47.92
+89.0%
$3.29 × 15x P/E
Fair
$59.90
+136.2%
$3.29 × 18x P/E
Bull
$71.88
+183.5%
$3.29 × 22x P/E
Adjust Assumptions
18.2x
3.29$
Key Value Driver
Normalized P/E multiple (18x base case)
Implied Market Multiple
7.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$28.38
Divergence from AlphaVal
111%
Summary
Applying a 18x P/E to adjusted EPS of $3.29, the base-case value is $59.90 per share.
Warnings
Wall Street's average price target is $28.38 (from 12 analysts). Our estimate is 111% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples