WLDN
Willdan Group, Inc.
$93.55
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 135.4% above fair value
You pay
$93.55
Bear
$30.81
Fair
$39.74
Bull
$48.67
Bear
$30.81
-67.1%
$1.14 × 14x + net cash
Fair
$39.74
-57.5%
$1.14 × 18x + net cash
Bull
$48.67
-48.0%
$1.14 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.14)
Implied Market Multiple
82.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $117.50 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $39.74 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 15.7x 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 $117.50 (from 7 analysts). Our estimate is 83% 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