Q
Qnity Electronics, Inc.
$156.93
Cyclical & Capital-Intensive
70%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 265.3% above fair value
You pay
$156.93
Bear
$29.74
Fair
$42.96
Bull
$56.18
Bear
$29.74
-81.0%
$3.30 × 12x + net cash
Fair
$42.96
-72.6%
$3.30 × 16x + net cash
Bull
$56.18
-64.2%
$3.30 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.30)
Implied Market Multiple
47.5x
Summary
Using 4-year normalized EPS of $3.30 at a 16x cycle multiple, the base-case value is $42.96 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