NX
Quanex Building Products Corporation
$19.77
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 35.4% below fair value
You pay
$19.77
Bear
$23.80
Fair
$30.60
Bull
$37.40
Bear
$23.80
+20.4%
$1.70 × 14x
Fair
$30.60
+54.8%
$1.70 × 18x
Bull
$37.40
+89.2%
$1.70 × 22x
Adjust Assumptions
18.0x
1.7$
Key Value Driver
Through-cycle normalized EPS ($1.70)
Implied Market Multiple
11.6x
Summary
Using 7-year normalized EPS of $1.70 at a 18x cycle multiple, the base-case value is $30.60 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.
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