LCII
LCI Industries
$111.67
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 148.9% above fair value
You pay
$111.67
Bear
$17.94
Fair
$44.86
Bull
$71.76
Bear
$17.94
-83.9%
$7.57 × 4x + net cash
Fair
$44.86
-59.8%
$7.57 × 6x + net cash
Bull
$71.76
-35.7%
$7.57 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.57)
Implied Market Multiple
14.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $148.60 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $44.86 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 8.1x 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 $148.60 (from 14 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