WGO
Winnebago Industries, Inc.
$29.78
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 19.3% above fair value
You pay
$29.78
Bear
$12.91
Fair
$24.97
Bull
$37.02
Bear
$12.91
-56.6%
$6.23 × 4x + net cash
Fair
$24.97
-16.2%
$6.23 × 6x + net cash
Bull
$37.02
+24.3%
$6.23 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($6.23)
Implied Market Multiple
4.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $41.80 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $24.97 per share.
Warnings
Price-to-book value of 3.0x 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 $41.80 (from 22 analysts). Our estimate is 54% 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