MYRG
MYR Group Inc.
$423.04
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 147.5% above fair value
You pay
$423.04
Bear
$134.20
Fair
$170.95
Bull
$207.70
Bear
$134.20
-68.3%
$4.95 × 14x + net cash
Fair
$170.95
-59.6%
$4.95 × 18x + net cash
Bull
$207.70
-50.9%
$4.95 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.95)
Implied Market Multiple
85.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $407.50 from 21 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $170.95 per share.
Warnings
Recent profits ($7.53/share) are 52% above the mid-cycle average ($4.95). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 13.9x 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 $407.50 (from 21 analysts). Our estimate is 77% 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