LMB
Limbach Holdings, Inc.
$71.36
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 65.4% above fair value
You pay
$71.36
Bear
$32.28
Fair
$43.15
Bull
$54.02
Bear
$32.28
-54.8%
$1.76 × 14x + net cash
Fair
$43.15
-39.5%
$1.76 × 18x + net cash
Bull
$54.02
-24.3%
$1.76 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.76)
Implied Market Multiple
40.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $104.00 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $43.15 per share.
Warnings
Recent profits ($4.02/share) are 128% above the mid-cycle average ($1.76). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 11.2x 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 $104.00 (from 7 analysts). Our estimate is 73% 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