HTLD
Heartland Express, Inc.
$10.75
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 280.2% above fair value
You pay
$10.75
Bear
$2.06
Fair
$2.83
Bull
$3.60
Bear
$2.06
-80.9%
$0.51 × 4x
Fair
$2.83
-73.7%
$0.51 × 6x
Bull
$3.60
-66.5%
$0.51 × 7x
Adjust Assumptions
5.5x
0.51$
Key Value Driver
Through-cycle normalized EPS ($0.51)
Implied Market Multiple
20.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$13.25
Divergence from AlphaVal
79%
Summary
Using 7-year normalized EPS of $0.51 at a 6x cycle multiple, the base-case value is $2.83 per share. P/TBV cross-check: 2.3x.
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 2.3x 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 $13.25 (from 22 analysts). Our estimate is 79% 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