WGO
Winnebago Industries, Inc.
$30.38
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 30.6% above fair value
You pay
$30.38
Bear
$12.03
Fair
$23.27
Bull
$34.50
Bear
$12.03
-60.4%
$6.23 × 4x + net cash
Fair
$23.27
-23.4%
$6.23 × 6x + net cash
Bull
$34.50
+13.5%
$6.23 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($6.23)
Implied Market Multiple
4.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $35.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $23.27 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 $35.00 (from 22 analysts). Our estimate is 45% 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