MTZ
MasTec, Inc.
$382.11
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 123.4% above fair value
You pay
$382.11
Bear
$125.41
Fair
$171.01
Bull
$216.61
Bear
$125.41
-67.2%
$4.38 × 14x + net cash
Fair
$171.01
-55.2%
$4.38 × 18x + net cash
Bull
$216.61
-43.3%
$4.38 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.38)
Implied Market Multiple
87.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $416.73 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $171.01 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 85.3x 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 $416.73 (from 36 analysts). Our estimate is 84% 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