PKE
Park Aerospace Corp.
$34.60
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 177.8% above fair value
You pay
$34.60
Bear
$10.82
Fair
$12.46
Bull
$14.10
Bear
$10.82
-68.7%
$0.41 × 18x + net cash
Fair
$12.46
-64.0%
$0.41 × 22x + net cash
Bull
$14.10
-59.3%
$0.41 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.41)
Implied Market Multiple
84.4x
Summary
Using 7-year normalized EPS of $0.41 at a 22x cycle multiple, the base-case value is $12.46 per share. P/TBV cross-check: 7.1x.
Warnings
Price-to-book value of 7.1x 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