SSD
Simpson Manufacturing Co., Inc.
$200.14
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 31.1% above fair value
You pay
$200.14
Bear
$118.13
Fair
$152.69
Bull
$187.24
Bear
$118.13
-41.0%
$7.76 × 14x + net cash
Fair
$152.69
-23.7%
$7.76 × 18x + net cash
Bull
$187.24
-6.4%
$7.76 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.76)
Implied Market Multiple
25.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $214.75 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $152.69 per share.
Warnings
Price-to-book value of 7.6x 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 $214.75 (from 8 analysts). Our estimate is 36% 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