TRS
TriMas Corporation
$40.12
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 155.2% above fair value
You pay
$40.12
Bear
$9.68
Fair
$15.72
Bull
$21.78
Bear
$9.68
-75.9%
$1.56 × 7x + net cash
Fair
$15.72
-60.8%
$1.56 × 10x + net cash
Bull
$21.78
-45.7%
$1.56 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.56)
Implied Market Multiple
25.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $38.00 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $15.72 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.
Recent profits ($2.95/share) are 89% above the mid-cycle average ($1.56). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 4.4x 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 $38.00 (from 14 analysts). Our estimate is 73% 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