SMP
Standard Motor Products, Inc.
$36.67
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 25.8% below fair value
You pay
$36.67
Bear
$43.24
Fair
$49.41
Bull
$55.59
Bear
$43.24
+17.9%
$2.85 × 15x P/E
Fair
$49.41
+34.8%
$2.85 × 17x P/E
Bull
$55.59
+51.6%
$2.85 × 20x P/E
Adjust Assumptions
17.3x
2.85$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
12.9x
Summary
Applying a 17x P/E to adjusted EPS of $2.85, the base-case value is $49.41 per share. DDM cross-check: $35.32.
Warnings
The company's reported profits differ from official accounting profits by 55%. Check what costs are being left out of the adjusted number.
Dividend-based valuation: $35.32 (below our primary estimate by 29%). Large gaps may signal the dividend doesn't reflect full earning power.
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