NVEC
NVE Corporation
$91.25
Cyclical & Capital-Intensive
70%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 67.6% above fair value
You pay
$91.25
Bear
$41.81
Fair
$54.44
Bull
$67.07
Bear
$41.81
-54.2%
$3.16 × 12x + net cash
Fair
$54.44
-40.3%
$3.16 × 16x + net cash
Bull
$67.07
-26.5%
$3.16 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.16)
Implied Market Multiple
28.9x
Summary
Using 7-year normalized EPS of $3.16 at a 16x cycle multiple, the base-case value is $54.44 per share. P/TBV cross-check: 7.6x.
Warnings
Price-to-book value of 7.6x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
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