Intrinsic value of ATS Automation Tooling Systems Inc. - ATA

Previous Close

$18.97

  Intrinsic Value

$31.13

stock screener

  Rating & Target

str. buy

+64%

Previous close

$18.97

 
Intrinsic value

$31.13

 
Up/down potential

+64%

 
Rating

str. buy

We calculate the intrinsic value of ATA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.60
  12.74
  11.97
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
Revenue, $m
  1,148
  1,295
  1,450
  1,613
  1,785
  1,965
  2,153
  2,349
  2,553
  2,766
  2,987
  3,217
  3,456
  3,705
  3,963
  4,231
  4,510
  4,800
  5,102
  5,417
  5,744
  6,085
  6,441
  6,812
  7,200
  7,604
  8,026
  8,468
  8,929
  9,412
Variable operating expenses, $m
  945
  1,060
  1,182
  1,310
  1,445
  1,587
  1,735
  1,889
  2,050
  2,217
  2,348
  2,529
  2,717
  2,912
  3,115
  3,326
  3,546
  3,774
  4,011
  4,258
  4,516
  4,784
  5,064
  5,356
  5,660
  5,978
  6,310
  6,657
  7,020
  7,399
Fixed operating expenses, $m
  107
  110
  112
  115
  117
  120
  122
  125
  128
  131
  133
  136
  139
  142
  146
  149
  152
  155
  159
  162
  166
  169
  173
  177
  181
  185
  189
  193
  197
  202
Total operating expenses, $m
  1,052
  1,170
  1,294
  1,425
  1,562
  1,707
  1,857
  2,014
  2,178
  2,348
  2,481
  2,665
  2,856
  3,054
  3,261
  3,475
  3,698
  3,929
  4,170
  4,420
  4,682
  4,953
  5,237
  5,533
  5,841
  6,163
  6,499
  6,850
  7,217
  7,601
Operating income, $m
  96
  125
  156
  188
  222
  258
  296
  335
  376
  419
  505
  552
  600
  650
  702
  756
  812
  871
  932
  996
  1,062
  1,132
  1,204
  1,280
  1,359
  1,441
  1,527
  1,618
  1,712
  1,811
EBITDA, $m
  152
  183
  215
  250
  286
  324
  364
  406
  449
  494
  541
  590
  641
  694
  749
  807
  867
  929
  994
  1,061
  1,131
  1,205
  1,281
  1,361
  1,445
  1,532
  1,624
  1,719
  1,819
  1,924
Interest expense (income), $m
  23
  23
  29
  36
  44
  51
  60
  68
  77
  86
  96
  106
  117
  128
  139
  151
  163
  176
  189
  203
  217
  232
  248
  264
  281
  299
  317
  336
  356
  377
  399
Earnings before tax, $m
  73
  96
  119
  144
  171
  199
  228
  258
  289
  322
  399
  435
  472
  511
  551
  593
  636
  682
  729
  779
  830
  884
  940
  999
  1,060
  1,124
  1,191
  1,261
  1,335
  1,412
Tax expense, $m
  20
  26
  32
  39
  46
  54
  61
  70
  78
  87
  108
  117
  127
  138
  149
  160
  172
  184
  197
  210
  224
  239
  254
  270
  286
  303
  322
  341
  360
  381
Net income, $m
  53
  70
  87
  105
  125
  145
  166
  188
  211
  235
  291
  317
  345
  373
  402
  433
  465
  498
  532
  568
  606
  645
  686
  729
  774
  821
  869
  921
  974
  1,030

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,236
  1,394
  1,561
  1,736
  1,921
  2,115
  2,317
  2,528
  2,748
  2,977
  3,216
  3,463
  3,720
  3,988
  4,266
  4,554
  4,855
  5,167
  5,492
  5,831
  6,183
  6,550
  6,933
  7,333
  7,750
  8,185
  8,640
  9,115
  9,612
  10,131
Adjusted assets (=assets-cash), $m
  1,236
  1,394
  1,561
  1,736
  1,921
  2,115
  2,317
  2,528
  2,748
  2,977
  3,216
  3,463
  3,720
  3,988
  4,266
  4,554
  4,855
  5,167
  5,492
  5,831
  6,183
  6,550
  6,933
  7,333
  7,750
  8,185
  8,640
  9,115
  9,612
  10,131
Revenue / Adjusted assets
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
  0.929
Average production assets, $m
  269
  303
  339
  377
  418
  460
  504
  550
  597
  647
  699
  753
  809
  867
  927
  990
  1,055
  1,123
  1,194
  1,267
  1,344
  1,424
  1,507
  1,594
  1,685
  1,779
  1,878
  1,981
  2,089
  2,202
Working capital, $m
  91
  102
  115
  127
  141
  155
  170
  186
  202
  219
  236
  254
  273
  293
  313
  334
  356
  379
  403
  428
  454
  481
  509
  538
  569
  601
  634
  669
  705
  744
Total debt, $m
  420
  519
  625
  736
  852
  974
  1,102
  1,235
  1,374
  1,519
  1,669
  1,825
  1,988
  2,156
  2,332
  2,514
  2,703
  2,900
  3,106
  3,319
  3,541
  3,773
  4,015
  4,267
  4,530
  4,805
  5,092
  5,392
  5,705
  6,033
Total liabilities, $m
  780
  879
  985
  1,096
  1,212
  1,334
  1,462
  1,595
  1,734
  1,879
  2,029
  2,185
  2,348
  2,516
  2,692
  2,874
  3,063
  3,260
  3,466
  3,679
  3,901
  4,133
  4,375
  4,627
  4,890
  5,165
  5,452
  5,752
  6,065
  6,393
Total equity, $m
  456
  514
  576
  641
  709
  780
  855
  933
  1,014
  1,099
  1,187
  1,278
  1,373
  1,471
  1,574
  1,681
  1,791
  1,907
  2,027
  2,151
  2,282
  2,417
  2,558
  2,706
  2,860
  3,020
  3,188
  3,363
  3,547
  3,738
Total liabilities and equity, $m
  1,236
  1,393
  1,561
  1,737
  1,921
  2,114
  2,317
  2,528
  2,748
  2,978
  3,216
  3,463
  3,721
  3,987
  4,266
  4,555
  4,854
  5,167
  5,493
  5,830
  6,183
  6,550
  6,933
  7,333
  7,750
  8,185
  8,640
  9,115
  9,612
  10,131
Debt-to-equity ratio
  0.920
  1.010
  1.080
  1.150
  1.200
  1.250
  1.290
  1.320
  1.360
  1.380
  1.410
  1.430
  1.450
  1.470
  1.480
  1.500
  1.510
  1.520
  1.530
  1.540
  1.550
  1.560
  1.570
  1.580
  1.580
  1.590
  1.600
  1.600
  1.610
  1.610
Adjusted equity ratio
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  53
  70
  87
  105
  125
  145
  166
  188
  211
  235
  291
  317
  345
  373
  402
  433
  465
  498
  532
  568
  606
  645
  686
  729
  774
  821
  869
  921
  974
  1,030
Depreciation, amort., depletion, $m
  56
  58
  60
  62
  64
  66
  68
  70
  73
  75
  36
  39
  41
  44
  48
  51
  54
  58
  61
  65
  69
  73
  77
  82
  86
  91
  96
  102
  107
  113
Funds from operations, $m
  109
  128
  147
  167
  188
  211
  234
  259
  284
  311
  327
  356
  386
  417
  450
  484
  519
  555
  594
  633
  675
  718
  764
  811
  860
  912
  966
  1,022
  1,081
  1,143
Change in working capital, $m
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
Cash from operations, $m
  99
  116
  135
  154
  175
  197
  219
  243
  268
  294
  310
  338
  367
  398
  429
  462
  497
  532
  570
  609
  649
  691
  735
  781
  830
  880
  932
  987
  1,045
  1,105
Maintenance CAPEX, $m
  -12
  -14
  -16
  -17
  -19
  -21
  -24
  -26
  -28
  -31
  -33
  -36
  -39
  -41
  -44
  -48
  -51
  -54
  -58
  -61
  -65
  -69
  -73
  -77
  -82
  -86
  -91
  -96
  -102
  -107
New CAPEX, $m
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -83
  -87
  -91
  -95
  -99
  -103
  -108
  -113
Cash from investing activities, $m
  -44
  -48
  -52
  -55
  -59
  -63
  -68
  -72
  -76
  -81
  -85
  -90
  -95
  -99
  -104
  -111
  -116
  -122
  -129
  -135
  -142
  -149
  -156
  -164
  -173
  -181
  -190
  -199
  -210
  -220
Free cash flow, $m
  54
  68
  83
  99
  115
  133
  152
  171
  192
  214
  225
  248
  273
  298
  324
  352
  381
  410
  441
  474
  507
  543
  579
  617
  657
  699
  742
  788
  835
  885
Issuance/(repayment) of debt, $m
  93
  99
  105
  111
  117
  122
  128
  133
  139
  144
  150
  156
  162
  169
  175
  182
  189
  197
  205
  214
  222
  232
  242
  252
  263
  275
  287
  300
  313
  328
Issuance/(repurchase) of shares, $m
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  95
  99
  105
  111
  117
  122
  128
  133
  139
  144
  150
  156
  162
  169
  175
  182
  189
  197
  205
  214
  222
  232
  242
  252
  263
  275
  287
  300
  313
  328
Total cash flow (excl. dividends), $m
  149
  167
  188
  209
  232
  255
  280
  305
  331
  358
  375
  404
  435
  467
  500
  534
  570
  608
  647
  687
  730
  774
  821
  869
  920
  974
  1,029
  1,088
  1,149
  1,213
Retained Cash Flow (-), $m
  -55
  -58
  -62
  -65
  -68
  -71
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -115
  -120
  -125
  -130
  -136
  -141
  -147
  -154
  -161
  -168
  -175
  -183
  -192
Prev. year cash balance distribution, $m
  285
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  379
  109
  126
  145
  164
  184
  205
  227
  250
  274
  287
  313
  340
  368
  397
  428
  459
  492
  527
  562
  600
  639
  679
  722
  766
  813
  861
  912
  966
  1,021
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  363
  100
  110
  119
  127
  133
  138
  142
  143
  143
  136
  134
  129
  124
  117
  109
  100
  91
  81
  71
  62
  53
  45
  37
  30
  24
  18
  14
  11
  8
Current shareholders' claim on cash, %
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8

ATS Automation Tooling Systems Inc. (ATS) is an automation solutions provider. The Company is engaged in planning, designing, building, commissioning and servicing automated manufacturing and assembly systems, including automation products and test solutions. The Automation Systems segment designs and builds custom-engineered automated manufacturing and test systems, and provides pre-automation and post-automation services. ATS is engaged in offering custom automation, repeat automation, automation products and value-added services to address the needs of multinational customers in markets, such as life sciences, chemicals, consumer products, electronics, food, beverage, transportation, energy, and oil and gas. It engages with customers on both greenfield programs and brownfield programs. Its solutions include ATS SuperTrak conveyor system, ATS850 Clean Room Conveyor, ATS Cortex System, ATS OmniTrak and ATS SmartVision Software.

FINANCIAL RATIOS  of  ATS Automation Tooling Systems Inc. (ATA)

Valuation Ratios
P/E Ratio 50.7
Price to Sales 1.8
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 13.9
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate -2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 12.5%
Cap. Spend. - 3 Yr. Gr. Rate 10.4%
Financial Strength
Quick Ratio 144
Current Ratio 0.5
LT Debt to Equity 47.7%
Total Debt to Equity 48%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 5.2%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 24.8%
Gross Margin - 3 Yr. Avg. 25.3%
EBITDA Margin 10.2%
EBITDA Margin - 3 Yr. Avg. 10.6%
Operating Margin 7.1%
Oper. Margin - 3 Yr. Avg. 7.2%
Pre-Tax Margin 4.5%
Pre-Tax Margin - 3 Yr. Avg. 5.1%
Net Profit Margin 3.5%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 23.9%
Eff/ Tax Rate - 3 Yr. Avg. 24.3%
Payout Ratio 0%

ATA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATA stock intrinsic value calculation we used $1011 million for the last fiscal year's total revenue generated by ATS Automation Tooling Systems Inc.. The default revenue input number comes from 2017 income statement of ATS Automation Tooling Systems Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ATA stock valuation model: a) initial revenue growth rate of 13.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for ATA is calculated based on our internal credit rating of ATS Automation Tooling Systems Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of ATS Automation Tooling Systems Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ATA stock the variable cost ratio is equal to 82.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $105 million in the base year in the intrinsic value calculation for ATA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7% for ATS Automation Tooling Systems Inc..

Corporate tax rate of 27% is the nominal tax rate for ATS Automation Tooling Systems Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ATA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ATA are equal to 23.4%.

Life of production assets of 19.5 years is the average useful life of capital assets used in ATS Automation Tooling Systems Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ATA is equal to 7.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $686 million for ATS Automation Tooling Systems Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 93.891 million for ATS Automation Tooling Systems Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of ATS Automation Tooling Systems Inc. at the current share price and the inputted number of shares is $1.8 billion.

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