STRL
Sterling Infrastructure, Inc.
$638.56
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 225.4% above fair value
You pay
$638.56
Bear
$153.34
Fair
$196.24
Bull
$239.14
Bear
$153.34
-76.0%
$4.44 × 14x + net cash
Fair
$196.24
-69.3%
$4.44 × 18x + net cash
Bull
$239.14
-62.6%
$4.44 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.44)
Implied Market Multiple
143.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $656.20 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $196.24 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 $656.20 (from 9 analysts). Our estimate is 88% 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