GMS
GMS Inc.
$109.96
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Fair Value
Trading 1.9% below fair value
You pay
$109.96
Bear
$87.22
Fair
$112.14
Bull
$137.06
Bear
$87.22
-20.7%
$6.23 × 14x
Fair
$112.14
+2.0%
$6.23 × 18x
Bull
$137.06
+24.6%
$6.23 × 22x
Adjust Assumptions
18.0x
6.23$
Key Value Driver
Through-cycle normalized EPS ($6.23)
Implied Market Multiple
17.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$101.42
Divergence from AlphaVal
11%
Summary
Using 7-year normalized EPS of $6.23 at a 18x cycle multiple, the base-case value is $112.14 per share. P/TBV cross-check: 1970.5x.
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 1970.5x 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