TRC
Tejon Ranch Co.
$17.30
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 488.4% above fair value
You pay
$17.30
Bear
$2.35
Fair
$2.94
Bull
$3.53
Bear
$2.35
-86.4%
$0.20 × 12x P/E
Fair
$2.94
-83.0%
$0.20 × 15x P/E
Bull
$3.53
-79.6%
$0.20 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
88.3x
Summary
Applying a 15x P/E to adjusted EPS of $0.20, the base-case value is $2.94 per share.
Warnings
The company's reported profits differ from official accounting profits by 6900%. Check what costs are being left out of the adjusted number.
The company pays out 3571% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples