VSEC
VSE Corporation
$194.98
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 304.7% above fair value
You pay
$194.98
Bear
$39.42
Fair
$48.18
Bull
$56.94
Bear
$39.42
-79.8%
$2.19 × 18x
Fair
$48.18
-75.3%
$2.19 × 22x
Bull
$56.94
-70.8%
$2.19 × 26x
Adjust Assumptions
22.0x
2.19$
Key Value Driver
Through-cycle normalized EPS ($2.19)
Implied Market Multiple
89.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$265.00
Divergence from AlphaVal
82%
Summary
Using 7-year normalized EPS of $2.19 at a 22x cycle multiple, the base-case value is $48.18 per share. P/TBV cross-check: 10.9x.
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 10.9x 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 $265.00 (from 12 analysts). Our estimate is 82% 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