WNC
Wabash National Corporation
$14.04
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 74.0% below fair value
You pay
$14.04
Bear
$45.00
Fair
$54.00
Bull
$63.00
Bear
$45.00
+220.5%
$2.25 × 20x
Fair
$54.00
+284.6%
$2.25 × 24x
Bull
$63.00
+348.7%
$2.25 × 28x
Adjust Assumptions
24.0x
2.25$
Key Value Driver
Through-cycle normalized EPS ($2.25)
Implied Market Multiple
6.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$20.00
Divergence from AlphaVal
170%
Summary
Using 7-year normalized EPS of $2.25 at a 24x cycle multiple, the base-case value is $54.00 per share. P/TBV cross-check: 5.1x.
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 125% above the mid-cycle average ($2.25). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 5.1x 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 170% 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