UVV
Universal Corporation
$54.52
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 18.8% below fair value
You pay
$54.52
Bear
$55.31
Fair
$67.16
Bull
$79.01
Bear
$55.31
+1.4%
$3.95 × 14x P/E
Fair
$67.16
+23.2%
$3.95 × 17x P/E
Bull
$79.01
+44.9%
$3.95 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
13.8x
Summary
Applying a 17x P/E to adjusted EPS of $3.95, the base-case value is $67.16 per share. DDM cross-check: $47.49.
Warnings
The company pays out 87% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $47.49 (below our primary estimate by 29%). Large gaps may signal the dividend doesn't reflect full earning power.
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