WNC
Wabash National Corporation
$7.77
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 80.0% below fair value
You pay
$7.77
Bear
$31.43
Fair
$38.82
Bull
$46.22
Bear
$31.43
+304.5%
$2.33 × 20x + net cash
Fair
$38.82
+399.6%
$2.33 × 24x + net cash
Bull
$46.22
+494.8%
$2.33 × 28x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.33)
Implied Market Multiple
3.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $8.50 from 18 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $38.82 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.
Recent profits ($5.07/share) are 118% above the mid-cycle average ($2.33). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 2.8x 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 $8.50 (from 18 analysts). Our estimate is 476% above 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