SSD
Simpson Manufacturing Co., Inc.
$172.44
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 23.5% above fair value
You pay
$172.44
Bear
$108.64
Fair
$139.68
Bull
$170.72
Bear
$108.64
-37.0%
$7.76 × 14x
Fair
$139.68
-19.0%
$7.76 × 18x
Bull
$170.72
-1.0%
$7.76 × 22x
Adjust Assumptions
18.0x
7.76$
Key Value Driver
Through-cycle normalized EPS ($7.76)
Implied Market Multiple
22.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$216.25
Divergence from AlphaVal
35%
Summary
Using 7-year normalized EPS of $7.76 at a 18x cycle multiple, the base-case value is $139.68 per share. P/TBV cross-check: 6.5x.
Warnings
Price-to-book value of 6.5x 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 $216.25 (from 8 analysts). Our estimate is 35% 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