UCTT
Ultra Clean Holdings, Inc.
$92.75
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 172.0% above fair value
You pay
$92.75
Bear
$23.62
Fair
$34.10
Bull
$44.60
Bear
$23.62
-74.5%
$1.28 × 12x + net cash
Fair
$34.10
-63.2%
$1.28 × 16x + net cash
Bull
$44.60
-51.9%
$1.28 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.28)
Implied Market Multiple
72.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $103.75 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $34.10 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.
Price-to-book value of 9.4x 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 $103.75 (from 12 analysts). Our estimate is 84% 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