IPI
Intrepid Potash, Inc.
$34.22
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 21.2% above fair value
You pay
$34.22
Bear
$22.29
Fair
$28.23
Bull
$34.16
Bear
$22.29
-34.9%
$2.44 × 7x + net cash
Fair
$28.23
-17.5%
$2.44 × 10x + net cash
Bull
$34.16
-0.2%
$2.44 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.44)
Implied Market Multiple
14.0x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $26.00 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $28.23 per share.
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