ICHR
Ichor Holdings, Ltd.
$95.03
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 147.7% above fair value
You pay
$95.03
Bear
$28.07
Fair
$38.36
Bull
$48.65
Bear
$28.07
-70.5%
$2.30 × 12x + net cash
Fair
$38.36
-59.6%
$2.30 × 16x + net cash
Bull
$48.65
-48.8%
$2.30 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.30)
Implied Market Multiple
41.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $54.60 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $38.36 per share.
Warnings
Price-to-book value of 11.5x 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 $54.60 (from 14 analysts). Our estimate is 37% 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