WERN
Werner Enterprises, Inc.
$36.68
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 109.6% above fair value
You pay
$36.68
Bear
$6.99
Fair
$17.50
Bull
$27.98
Bear
$6.99
-80.9%
$2.53 × 4x + net cash
Fair
$17.50
-52.3%
$2.53 × 6x + net cash
Bull
$27.98
-23.7%
$2.53 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.53)
Implied Market Multiple
14.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $43.56 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $17.50 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.
Wall Street's average price target is $43.56 (from 36 analysts). Our estimate is 85% 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