Arconic not excessively cheap if you include retirement deficit

Arconic's 2017E EBITDA guidance is for $12.1b revenues and 15% EBITDA margins. So $1.82b EBITDA.   They are forecasting net debt at the end of 2017 will be $5.9b. Given the current market cap of $8.4b, including the $2.2b of non-controlling interest / preferreds, $1b of Alcoa stake, the EV comes close to $15.5b (end of 2017E).

(Note: Arconic's debt shown on their balance sheet of $10.3b includes their unfunded pension and OPEB liabilities. Their gross debt before the redemption of the 5.55% notes was $8.1b (as per their investor day presentation on 12/14/16). So their net debt is closer to $6.3b). 

Arconic has an unfunded pension and OPEB liabilities around $3.3b ($2.2b NPV based on the latest 10Q). 

So key conclusions:

So, this is cheap if you exclude the retirement obligations, since it is trading at only 8.5X EBITDA. You could argue it deserves a higher multiple (10X?) given the stable margins and low CAPEX spend (particularly relative to Alcoa).

But if you include the retirement obligations, then EV jumps to $17.7b, and the EV/EBITDA multiple goes to 10X.

Perhaps you could argue it deserves a higher multiple, but that requires a more thorough analysis of peers.

Analysts have figured out the pension expense / OPEB impact on EBITDA estimates. The company gave guidance for $1.82b EBITDA (15% margins) and $60MM of expense associated with pensions / OPEB (included in $300MM corporate spread). Hence, consensus EBITDA is at $1.755b ($1.82b - $0.06b).
So if you exclude the Alcoa stake, this is trading at slightly more than 10X EBITDA and 18.5X consensus earnings. It's not a bad business given the steady margin profile, low CAPEX spend and exposure to autos and aerospace. But it isn't excessively cheap based on consensus. Of course, the question is: do you disagree with consensus?