IBP
Installed Building Products, Inc.
$214.22
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 33.7% above fair value
You pay
$214.22
Bear
$117.54
Fair
$160.28
Bull
$203.02
Bear
$117.54
-45.1%
$8.61 × 14x + net cash
Fair
$160.28
-25.2%
$8.61 × 18x + net cash
Bull
$203.02
-5.2%
$8.61 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($8.61)
Implied Market Multiple
24.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $253.67 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $160.28 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 $253.67 (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