LCII
LCI Industries
$107.67
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 116.7% above fair value
You pay
$107.67
Bear
$19.87
Fair
$49.70
Bull
$79.49
Bear
$19.87
-81.5%
$7.57 × 4x + net cash
Fair
$49.70
-53.8%
$7.57 × 6x + net cash
Bull
$79.49
-26.2%
$7.57 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.57)
Implied Market Multiple
14.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $142.00 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $49.70 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.
Price-to-book value of 7.8x 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 $142.00 (from 15 analysts). Our estimate is 87% 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