FTAI
FTAI Aviation Ltd.
$197.37
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 76.1% above fair value
You pay
$197.37
Bear
$88.50
Fair
$112.11
Bull
$135.71
Bear
$88.50
-55.2%
$1.56 × 18x + net cash
Fair
$112.11
-43.2%
$1.56 × 22x + net cash
Bull
$135.71
-31.2%
$1.56 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.56)
Implied Market Multiple
126.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $359.50 from 18 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $112.11 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.
Recent profits ($4.60/share) are 195% above the mid-cycle average ($1.56). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 92.0x 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.
Wall Street's average price target is $359.50 (from 18 analysts). Our estimate is 92% 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