PHM
PulteGroup, Inc.
$123.17
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 32.3% below fair value
You pay
$123.17
Bear
$141.14
Fair
$182.01
Bull
$222.88
Bear
$141.14
+14.6%
$11.12 × 14x + net cash
Fair
$182.01
+47.8%
$11.12 × 18x + net cash
Bull
$222.88
+81.0%
$11.12 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($11.12)
Implied Market Multiple
11.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $144.50 from 44 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $182.01 per share.
Warnings
Wall Street's average price target is $144.50 (from 44 analysts). Our estimate is 37% 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