IBP
Installed Building Products, Inc.
$222.09
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 38.8% above fair value
You pay
$222.09
Bear
$117.34
Fair
$160.01
Bull
$202.68
Bear
$117.34
-47.2%
$8.61 × 14x + net cash
Fair
$160.01
-28.0%
$8.61 × 18x + net cash
Bull
$202.68
-8.7%
$8.61 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($8.61)
Implied Market Multiple
25.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $252.60 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $160.01 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.
Wall Street's average price target is $252.60 (from 27 analysts). Our estimate is 49% 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