STRL
Sterling Infrastructure, Inc.
$732.94
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 307.4% above fair value
You pay
$732.94
Bear
$140.58
Fair
$179.90
Bull
$219.22
Bear
$140.58
-80.8%
$4.44 × 14x + net cash
Fair
$179.90
-75.5%
$4.44 × 18x + net cash
Bull
$219.22
-70.1%
$4.44 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.44)
Implied Market Multiple
165.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $574.50 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $179.90 per share.
Warnings
Recent profits ($9.38/share) are 111% above the mid-cycle average ($4.44). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Wall Street's average price target is $574.50 (from 9 analysts). Our estimate is 86% 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