USLM
United States Lime & Minerals, Inc.
$106.05
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 125.7% above fair value
You pay
$106.05
Bear
$36.54
Fair
$46.98
Bull
$57.42
Bear
$36.54
-65.5%
$2.61 × 14x
Fair
$46.98
-55.7%
$2.61 × 18x
Bull
$57.42
-45.9%
$2.61 × 22x
Adjust Assumptions
18.0x
2.61$
Key Value Driver
Through-cycle normalized EPS ($2.61)
Implied Market Multiple
40.6x
Summary
Using 7-year normalized EPS of $2.61 at a 18x cycle multiple, the base-case value is $46.98 per share. P/TBV cross-check: 4.8x.
Warnings
Recent profits ($4.67/share) are 79% above the mid-cycle average ($2.61). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 4.8x 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.
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