IBP
Installed Building Products, Inc.
$199.12
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 28.5% above fair value
You pay
$199.12
Bear
$120.54
Fair
$154.98
Bull
$189.42
Bear
$120.54
-39.5%
$8.61 × 14x
Fair
$154.98
-22.2%
$8.61 × 18x
Bull
$189.42
-4.9%
$8.61 × 22x
Adjust Assumptions
18.0x
8.61$
Key Value Driver
Through-cycle normalized EPS ($8.61)
Implied Market Multiple
23.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (27 analysts)
$216.50
Divergence from AlphaVal
28%
Summary
Using 7-year normalized EPS of $8.61 at a 18x cycle multiple, the base-case value is $154.98 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 $216.50 (from 27 analysts). Our estimate is 28% 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