MTZ
MasTec, Inc.
$190.91
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 223.8% above fair value
You pay
$190.91
Bear
$45.86
Fair
$58.97
Bull
$72.07
Bear
$45.86
-76.0%
$3.28 × 14x
Fair
$58.97
-69.1%
$3.28 × 18x
Bull
$72.07
-62.2%
$3.28 × 22x
Adjust Assumptions
18.0x
3.28$
Key Value Driver
Through-cycle normalized EPS ($3.28)
Implied Market Multiple
58.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (36 analysts)
$394.29
Divergence from AlphaVal
85%
Summary
Using 7-year normalized EPS of $3.28 at a 18x cycle multiple, the base-case value is $58.97 per share. P/TBV cross-check: 43.3x.
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.
Recent profits ($5.07/share) are 55% above the mid-cycle average ($3.28). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 43.3x 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 $394.29 (from 36 analysts). Our estimate is 85% 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