SKYT
SkyWater Technology, Inc.
$31.85
Cyclical & Capital-Intensive
70%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Fair Value
Trading 7.8% below fair value
You pay
$31.85
Bear
$24.74
Fair
$34.54
Bull
$44.33
Bear
$24.74
-22.3%
$2.44 × 12x + net cash
Fair
$34.54
+8.4%
$2.44 × 16x + net cash
Bull
$44.33
+39.2%
$2.44 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.44)
Implied Market Multiple
13.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $35.00 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $34.54 per share.
Warnings
Price-to-book value of 8.8x 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