WNC
Wabash National Corporation
$13.44
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 67.8% below fair value
You pay
$13.44
Bear
$33.76
Fair
$41.70
Bull
$49.64
Bear
$33.76
+151.2%
$2.33 × 20x + net cash
Fair
$41.70
+210.2%
$2.33 × 24x + net cash
Bull
$49.64
+269.3%
$2.33 × 28x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.33)
Implied Market Multiple
5.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $20.00 from 18 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $41.70 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 4.9x 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 $20.00 (from 18 analysts). Our estimate is 145% 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