SBH
Sally Beauty Holdings, Inc.
$12.61
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 53.2% below fair value
You pay
$12.61
Bear
$23.59
Fair
$26.95
Bull
$30.32
Bear
$23.59
+87.1%
$1.93 × 14x P/E
Fair
$26.95
+113.8%
$1.93 × 16x P/E
Bull
$30.32
+140.5%
$1.93 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
6.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $17.75 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $26.95 per share.
Warnings
Wall Street's average price target is $17.75 (from 30 analysts). Our estimate is 74% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples