RXO
RXO, Inc.
$28.04
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 297.3% above fair value
You pay
$28.04
Bear
$2.80
Fair
$7.06
Bull
$11.26
Bear
$2.80
-90.0%
$0.56 × 4x + net cash
Fair
$7.06
-74.8%
$0.56 × 6x + net cash
Bull
$11.26
-59.8%
$0.56 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.56)
Implied Market Multiple
49.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $24.00 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $7.06 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 $24.00 (from 20 analysts). Our estimate is 94% 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