SKY
Champion Homes, Inc.
$81.23
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 3.0% above fair value
You pay
$81.23
Bear
$63.59
Fair
$78.87
Bull
$94.16
Bear
$63.59
-21.7%
$3.65 × 14x + net cash
Fair
$78.87
-2.9%
$3.65 × 18x + net cash
Bull
$94.16
+15.9%
$3.65 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.65)
Implied Market Multiple
22.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $93.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $78.87 per share.
Warnings
Price-to-book value of 3.9x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
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