HIMX
Himax Technologies, Inc.
$13.27
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 4.4% above fair value
You pay
$13.27
Bear
$9.86
Fair
$12.71
Bull
$15.56
Bear
$9.86
-25.7%
$0.80 × 12x + net cash
Fair
$12.71
-4.2%
$0.80 × 16x + net cash
Bull
$15.56
+17.2%
$0.80 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.80)
Implied Market Multiple
16.6x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $8.00 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $12.71 per share.
Warnings
Price-to-book value of 2.7x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $8.00 (from 20 analysts). Our estimate is 78% 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