WLDN
Willdan Group, Inc.
$72.62
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 89.9% above fair value
You pay
$72.62
Bear
$29.65
Fair
$38.24
Bull
$46.83
Bear
$29.65
-59.2%
$1.14 × 14x + net cash
Fair
$38.24
-47.3%
$1.14 × 18x + net cash
Bull
$46.83
-35.5%
$1.14 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.14)
Implied Market Multiple
63.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $110.00 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $38.24 per share.
Warnings
Recent profits ($3.49/share) are 206% above the mid-cycle average ($1.14). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 12.2x 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 $110.00 (from 7 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