LCII
LCI Industries
$91.02
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 118.6% above fair value
You pay
$91.02
Bear
$30.28
Fair
$41.64
Bull
$52.99
Bear
$30.28
-66.7%
$7.57 × 4x
Fair
$41.64
-54.3%
$7.57 × 6x
Bull
$52.99
-41.8%
$7.57 × 7x
Adjust Assumptions
5.5x
7.57$
Key Value Driver
Through-cycle normalized EPS ($7.57)
Implied Market Multiple
12.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$123.83
Divergence from AlphaVal
66%
Summary
Using 7-year normalized EPS of $7.57 at a 6x cycle multiple, the base-case value is $41.64 per share. P/TBV cross-check: 6.6x.
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.
Price-to-book value of 6.6x 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 $123.83 (from 15 analysts). Our estimate is 66% 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