RXO
RXO, Inc.
$20.66
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 1557.0% above fair value
You pay
$20.66
Bear
$0.91
Fair
$1.25
Bull
$1.59
Bear
$0.91
-95.6%
$0.23 × 4x
Fair
$1.25
-94.0%
$0.23 × 6x
Bull
$1.59
-92.3%
$0.23 × 7x
Adjust Assumptions
5.5x
0.23$
Key Value Driver
Through-cycle normalized EPS ($0.23)
Implied Market Multiple
91.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (21 analysts)
$25.91
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 $25.91 (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