SYNA
Synaptics Incorporated
$114.05
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 61.8% above fair value
You pay
$114.05
Bear
$48.80
Fair
$70.49
Bull
$92.19
Bear
$48.80
-57.2%
$3.16 × 12x + net cash
Fair
$70.49
-38.2%
$3.16 × 16x + net cash
Bull
$92.19
-19.2%
$3.16 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.16)
Implied Market Multiple
36.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $139.13 from 34 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $70.49 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 36.8x 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 $139.13 (from 34 analysts). Our estimate is 70% 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