TSEM
Tower Semiconductor Ltd.
$184.43
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 494.2% above fair value
You pay
$184.43
Bear
$23.28
Fair
$31.04
Bull
$38.80
Bear
$23.28
-87.4%
$1.94 × 12x
Fair
$31.04
-83.2%
$1.94 × 16x
Bull
$38.80
-79.0%
$1.94 × 20x
Adjust Assumptions
16.0x
1.94$
Key Value Driver
Through-cycle normalized EPS ($1.94)
Implied Market Multiple
95.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$302.00
Divergence from AlphaVal
90%
Summary
Using 7-year normalized EPS of $1.94 at a 16x cycle multiple, the base-case value is $31.04 per share. P/TBV cross-check: 7.2x.
Warnings
Price-to-book value of 7.2x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
This company has heavy ongoing investment costs. Valuation shortcuts that ignore those costs can make the stock look cheaper than it really is.
Wall Street's average price target is $302.00 (from 14 analysts). Our estimate is 90% 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