PLAB
Photronics, Inc.
$28.56
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 35.4% below fair value
You pay
$28.56
Bear
$35.71
Fair
$44.18
Bull
$52.65
Bear
$35.71
+25.0%
$2.03 × 12x + net cash
Fair
$44.18
+54.7%
$2.03 × 16x + net cash
Bull
$52.65
+84.4%
$2.03 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.03)
Implied Market Multiple
14.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $51.50 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $44.18 per share.
Warnings
This company has heavy ongoing investment costs. Valuation shortcuts that ignore those costs can make the stock look cheaper than it really is.
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