LCI Industries, formerly known as Drew Industries, supplies a broad array of components for the leading manufacturers of recreational vehicles and manufactured homes, and to a lesser extent supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; modular housing; and factory-built mobile office units. The company was founded in 1962 and is based in Elkhart, Indiana.
LCII Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Lci Industries. To summarize, we found that Lci Industries ranked in the 62th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 86.83% on a DCF basis. The most interesting components of our discounted cash flow analysis for Lci Industries ended up being:
Interest coverage, a measure of earnings relative to interest payments, is 15.01 -- which is good for besting 86.47% of its peer stocks (US stocks in the Consumer Cyclical sector with positive cash flow).
Lci Industries's weighted average cost of capital (WACC) is 8%; for context, that number is higher than only 18.62% of tickers in our DCF set.
LCII's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than only 18.62% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
FLXS, AMCR, NLS, MDP, and RSTRF can be thought of as valuation peers to LCII, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
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Source: Reuters COVID-19 practically brought business activity to a halt in March and April. It hurt the RV industry in particular, as temporary shutdowns of manufacturing plants caused revenue to fall hard. LCI Industries (LCII) was negatively impacted by knock-on effects of COVID-19. The company reported revenue of $525.77 million,...
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