PHM
PulteGroup, Inc.
$132.31
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 27.3% below fair value
You pay
$132.31
Bear
$141.05
Fair
$181.88
Bull
$222.72
Bear
$141.05
+6.6%
$11.12 × 14x + net cash
Fair
$181.88
+37.5%
$11.12 × 18x + net cash
Bull
$222.72
+68.3%
$11.12 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($11.12)
Implied Market Multiple
11.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $144.00 from 44 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $181.88 per share.
Warnings
Wall Street's average price target is $144.00 (from 44 analysts). Our estimate is 38% above 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