GEF
Greif, Inc.
$82.75
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 12.4% above fair value
You pay
$82.75
Bear
$54.25
Fair
$73.62
Bull
$93.00
Bear
$54.25
-34.4%
$7.75 × 7x
Fair
$73.62
-11.0%
$7.75 × 10x
Bull
$93.00
+12.4%
$7.75 × 12x
Adjust Assumptions
9.5x
7.75$
Key Value Driver
Through-cycle normalized EPS ($7.75)
Implied Market Multiple
10.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$90.67
Divergence from AlphaVal
19%
Summary
Using 7-year normalized EPS of $7.75 at a 10x cycle multiple, the base-case value is $73.62 per share. P/TBV cross-check: 10.1x.
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 ($15.00/share) are 94% above the mid-cycle average ($7.75). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 10.1x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
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