SLAB
Silicon Laboratories Inc.
$219.75
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 133.3% above fair value
You pay
$219.75
Bear
$77.85
Fair
$94.17
Bull
$110.50
Bear
$77.85
-64.6%
$1.90 × 12x + net cash
Fair
$94.17
-57.1%
$1.90 × 16x + net cash
Bull
$110.50
-49.7%
$1.90 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.90)
Implied Market Multiple
115.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $211.60 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $94.17 per share.
Warnings
Price-to-book value of 10.4x 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 $211.60 (from 37 analysts). Our estimate is 79% 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