RXO
RXO, Inc.
$28.67
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 2199.4% above fair value
You pay
$28.67
Bear
$0.91
Fair
$1.25
Bull
$1.59
Bear
$0.91
-96.8%
$0.23 × 4x
Fair
$1.25
-95.7%
$0.23 × 6x
Bull
$1.59
-94.5%
$0.23 × 7x
Adjust Assumptions
5.5x
0.23$
Key Value Driver
Through-cycle normalized EPS ($0.23)
Implied Market Multiple
126.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (21 analysts)
$26.11
Divergence from AlphaVal
95%
Summary
Using 7-year normalized EPS of $0.23 at a 6x cycle multiple, the base-case value is $1.25 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.
Wall Street's average price target is $26.11 (from 21 analysts). Our estimate is 95% below 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