KRMN
Karman Holdings Inc.
$32.59
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 2194.9% above fair value
You pay
$32.59
Bear
$1.16
Fair
$1.42
Bull
$1.68
Bear
$1.16
-96.4%
$0.06 × 18x
Fair
$1.42
-95.6%
$0.06 × 22x
Bull
$1.68
-94.9%
$0.06 × 26x
Adjust Assumptions
22.0x
0.06$
Key Value Driver
Through-cycle normalized EPS ($0.06)
Implied Market Multiple
504.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$88.25
Divergence from AlphaVal
98%
Summary
Using 4-year normalized EPS of $0.06 at a 22x cycle multiple, the base-case value is $1.42 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.
Recent profits ($0.13/share) are 101% above the mid-cycle average ($0.06). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Wall Street's average price target is $88.25 (from 9 analysts). Our estimate is 98% 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