Why do all the other cement companies trade at such high multiples? Is it in anticipation of the Bipartisan Infrastructure Deal? If so, why didn't that impact the DCF enough to make the upside on MCEM significantly larger?
That’s not really the point of the question. What I’m asking is, if a DCF suggests MCEM is only 10% undervalued, why do these other companies trade at 4x the multiple? Are they all just super overvalued?
I did not assume new cash flows from the infrastructure bill into the DCF because it's not feasible to know how much of that could benefit which cement company. Those cash flows are only based on MCEMs historical growth rates. If I had a better ball park figure I would have included that in my DCF.
The other companies I compared MCEM too had higher multiples because they're larger cap companies with more shares available to trade. Also MCEM only has one location which could also impact its ability to absorb some of those new revenues. This does limit MCEMs total cement output capacity.
Got it. I guess the other companies, with their lower margins, also have more operational leverage so if the infrastructure bill has a big impact, those PE ratios will come down more quickly.
Why do all the other cement companies trade at such high multiples? Is it in anticipation of the Bipartisan Infrastructure Deal? If so, why didn't that impact the DCF enough to make the upside on MCEM significantly larger?
MCEM has a very small market cap and trades under the counter, which is part of the story.
That’s not really the point of the question. What I’m asking is, if a DCF suggests MCEM is only 10% undervalued, why do these other companies trade at 4x the multiple? Are they all just super overvalued?
That being said yes I believe a lot of these stocks are overvalued.
I did not assume new cash flows from the infrastructure bill into the DCF because it's not feasible to know how much of that could benefit which cement company. Those cash flows are only based on MCEMs historical growth rates. If I had a better ball park figure I would have included that in my DCF.
The other companies I compared MCEM too had higher multiples because they're larger cap companies with more shares available to trade. Also MCEM only has one location which could also impact its ability to absorb some of those new revenues. This does limit MCEMs total cement output capacity.
Got it. I guess the other companies, with their lower margins, also have more operational leverage so if the infrastructure bill has a big impact, those PE ratios will come down more quickly.