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TrueCar, Inc.
$2.54
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 71.6% below fair value
You pay
$2.54
Bear
$7.15
Fair
$8.94
Bull
$10.73
Bear
$7.15
+181.5%
$0.72 × 12x P/E
Fair
$8.94
+251.9%
$0.72 × 15x P/E
Bull
$10.73
+322.2%
$0.72 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
3.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $3.35 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $8.94 per share.
Warnings
Wall Street's average price target is $3.35 (from 23 analysts). Our estimate is 222% above the consensus -- consider that gap carefully.
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