On the other hand, short-cycle Industriall companies include Valeo (XPAR:FR) and Faurecia where risk derives from a potential economic slowdown. In these cases, protection must be sought through pricing and Valeo is a clear example of this. In the past, this company has traded at an EBITDA multiple of 8x, which now stands at 4.5x. In other words, if the price was efficient, the market would be discounting a fall in earnings of -44%. Thanks to our research team’s experience and in-depth knowledge of the company, we estimate that while normalised earnings are down on those in the previous year, they are well above the discounted decrease.
From Bestinfond (Trades, Portfolio)'s first-quarter 2019 shareholder letter.
