LMNR
Limoneira Company
$13.06
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 110.6% above fair value
You pay
$13.06
Bear
$3.82
Fair
$6.20
Bull
$8.58
Bear
$3.82
-70.8%
$0.50 × 7x + net cash
Fair
$6.20
-52.5%
$0.50 × 10x + net cash
Bull
$8.58
-34.3%
$0.50 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.50)
Implied Market Multiple
26.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $18.00 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $6.20 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.
Wall Street's average price target is $18.00 (from 13 analysts). Our estimate is 82% 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