SKY
Champion Homes, Inc.
$71.00
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Fair Value
Trading 7.6% below fair value
You pay
$71.00
Bear
$61.73
Fair
$76.84
Bull
$91.95
Bear
$61.73
-13.1%
$3.42 × 14x + net cash
Fair
$76.84
+8.2%
$3.42 × 18x + net cash
Bull
$91.95
+29.5%
$3.42 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.42)
Implied Market Multiple
20.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $106.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $76.84 per share.
Warnings
Price-to-book value of 3.5x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $106.00 (from 8 analysts). Our estimate is 34% 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