KLIC
Kulicke and Soffa Industries, Inc.
$104.40
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 141.8% above fair value
You pay
$104.40
Bear
$35.05
Fair
$43.18
Bull
$51.30
Bear
$35.05
-66.4%
$1.72 × 12x + net cash
Fair
$43.18
-58.6%
$1.72 × 16x + net cash
Bull
$51.30
-50.9%
$1.72 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.72)
Implied Market Multiple
60.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $70.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $43.18 per share.
Warnings
Price-to-book value of 7.3x 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 $70.00 (from 11 analysts). Our estimate is 48% 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