ROCK
Gibraltar Industries, Inc.
$37.18
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 36.0% below fair value
You pay
$37.18
Bear
$45.29
Fair
$58.12
Bull
$70.95
Bear
$45.29
+21.8%
$3.25 × 14x + net cash
Fair
$58.12
+56.3%
$3.25 × 18x + net cash
Bull
$70.95
+90.8%
$3.25 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.25)
Implied Market Multiple
11.4x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $55.00 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $58.12 per share.
Warnings
Price-to-book value of 2.8x 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