TPC
Tutor Perini Corporation
$72.76
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 43.0% above fair value
You pay
$72.76
Bear
$41.57
Fair
$50.89
Bull
$60.21
Bear
$41.57
-42.9%
$2.61 × 14x + net cash
Fair
$50.89
-30.1%
$2.61 × 18x + net cash
Bull
$60.21
-17.2%
$2.61 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.61)
Implied Market Multiple
27.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $26.50 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $50.89 per share.
Warnings
Price-to-book value of 4.0x 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 $26.50 (from 13 analysts). Our estimate is 115% above 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