VSEC
VSE Corporation
$149.54
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 210.4% above fair value
You pay
$149.54
Bear
$39.42
Fair
$48.18
Bull
$56.94
Bear
$39.42
-73.6%
$2.19 × 18x
Fair
$48.18
-67.8%
$2.19 × 22x
Bull
$56.94
-61.9%
$2.19 × 26x
Adjust Assumptions
22.0x
2.19$
Key Value Driver
Through-cycle normalized EPS ($2.19)
Implied Market Multiple
68.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$261.25
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: 8.4x.
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 8.4x 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 $261.25 (from 13 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