Intrinsic value of Uni-Select Inc. - UNS

Previous Close

$24.96

  Intrinsic Value

$1.82

stock screener

  Rating & Target

str. sell

-93%

Previous close

$24.96

 
Intrinsic value

$1.82

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of UNS 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 2016), $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 1.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -11.63
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  1,618
  1,704
  1,794
  1,888
  1,986
  2,089
  2,197
  2,311
  2,430
  2,554
  2,685
  2,822
  2,966
  3,117
  3,275
  3,441
  3,615
  3,798
  3,990
  4,191
  4,402
  4,624
  4,856
  5,101
  5,357
  5,626
  5,909
  6,205
  6,517
  6,844
  7,187
Variable operating expenses, $m
 
  1,785
  1,878
  1,975
  2,076
  2,182
  2,293
  2,410
  2,532
  2,660
  2,795
  2,903
  3,051
  3,206
  3,369
  3,539
  3,719
  3,907
  4,104
  4,311
  4,528
  4,756
  4,996
  5,247
  5,511
  5,788
  6,078
  6,383
  6,704
  7,040
  7,393
Fixed operating expenses, $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 operating expenses, $m
  1,495
  1,785
  1,878
  1,975
  2,076
  2,182
  2,293
  2,410
  2,532
  2,660
  2,795
  2,903
  3,051
  3,206
  3,369
  3,539
  3,719
  3,907
  4,104
  4,311
  4,528
  4,756
  4,996
  5,247
  5,511
  5,788
  6,078
  6,383
  6,704
  7,040
  7,393
Operating income, $m
  123
  -82
  -84
  -87
  -90
  -93
  -96
  -99
  -103
  -106
  -110
  -81
  -85
  -89
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -133
  -139
  -146
  -154
  -161
  -169
  -178
  -187
  -196
  -206
EBITDA, $m
  145
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -133
  -139
  -146
  -154
  -161
  -169
Interest expense (income), $m
  5
  6
  8
  9
  10
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  74
  78
  83
Earnings before tax, $m
  117
  -88
  -92
  -96
  -100
  -105
  -109
  -114
  -119
  -124
  -130
  -103
  -109
  -116
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -180
  -190
  -200
  -211
  -223
  -235
  -247
  -260
  -274
  -289
Tax expense, $m
  38
  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
Net income, $m
  79
  -88
  -92
  -96
  -100
  -105
  -109
  -114
  -119
  -124
  -130
  -103
  -109
  -116
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -180
  -190
  -200
  -211
  -223
  -235
  -247
  -260
  -274
  -289

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  30
  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
  1,320
  1,359
  1,430
  1,505
  1,584
  1,666
  1,752
  1,843
  1,938
  2,037
  2,141
  2,250
  2,365
  2,485
  2,612
  2,744
  2,883
  3,029
  3,181
  3,342
  3,510
  3,687
  3,873
  4,068
  4,272
  4,487
  4,712
  4,948
  5,197
  5,457
  5,731
Adjusted assets (=assets-cash), $m
  1,290
  1,359
  1,430
  1,505
  1,584
  1,666
  1,752
  1,843
  1,938
  2,037
  2,141
  2,250
  2,365
  2,485
  2,612
  2,744
  2,883
  3,029
  3,181
  3,342
  3,510
  3,687
  3,873
  4,068
  4,272
  4,487
  4,712
  4,948
  5,197
  5,457
  5,731
Revenue / Adjusted assets
  1.254
  1.254
  1.255
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
  1.254
Average production assets, $m
  162
  170
  179
  189
  199
  209
  220
  231
  243
  255
  269
  282
  297
  312
  327
  344
  361
  380
  399
  419
  440
  462
  486
  510
  536
  563
  591
  621
  652
  684
  719
Working capital, $m
  259
  247
  260
  274
  288
  303
  319
  335
  352
  370
  389
  409
  430
  452
  475
  499
  524
  551
  578
  608
  638
  670
  704
  740
  777
  816
  857
  900
  945
  992
  1,042
Total debt, $m
  189
  220
  258
  297
  338
  382
  427
  474
  524
  576
  631
  688
  749
  812
  878
  948
  1,020
  1,097
  1,177
  1,262
  1,350
  1,443
  1,540
  1,642
  1,750
  1,862
  1,981
  2,105
  2,235
  2,372
  2,516
Total liabilities, $m
  682
  713
  751
  790
  831
  875
  920
  967
  1,017
  1,069
  1,124
  1,181
  1,242
  1,305
  1,371
  1,441
  1,513
  1,590
  1,670
  1,755
  1,843
  1,936
  2,033
  2,135
  2,243
  2,355
  2,474
  2,598
  2,728
  2,865
  3,009
Total equity, $m
  638
  645
  679
  715
  752
  791
  832
  875
  920
  968
  1,017
  1,069
  1,123
  1,181
  1,240
  1,303
  1,369
  1,439
  1,511
  1,587
  1,667
  1,751
  1,840
  1,932
  2,029
  2,131
  2,238
  2,351
  2,468
  2,592
  2,722
Total liabilities and equity, $m
  1,320
  1,358
  1,430
  1,505
  1,583
  1,666
  1,752
  1,842
  1,937
  2,037
  2,141
  2,250
  2,365
  2,486
  2,611
  2,744
  2,882
  3,029
  3,181
  3,342
  3,510
  3,687
  3,873
  4,067
  4,272
  4,486
  4,712
  4,949
  5,196
  5,457
  5,731
Debt-to-equity ratio
  0.296
  0.340
  0.380
  0.420
  0.450
  0.480
  0.510
  0.540
  0.570
  0.600
  0.620
  0.640
  0.670
  0.690
  0.710
  0.730
  0.750
  0.760
  0.780
  0.790
  0.810
  0.820
  0.840
  0.850
  0.860
  0.870
  0.880
  0.900
  0.910
  0.920
  0.920
Adjusted equity ratio
  0.471
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  79
  -88
  -92
  -96
  -100
  -105
  -109
  -114
  -119
  -124
  -130
  -103
  -109
  -116
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -180
  -190
  -200
  -211
  -223
  -235
  -247
  -260
  -274
  -289
Depreciation, amort., depletion, $m
  22
  42
  42
  43
  43
  44
  44
  45
  45
  46
  47
  14
  15
  16
  17
  18
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
Funds from operations, $m
  208
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -74
  -79
  -83
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -132
  -140
  -148
  -156
  -165
  -174
  -184
  -194
  -204
  -216
  -227
  -239
  -252
Change in working capital, $m
  23
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
Cash from operations, $m
  185
  -59
  -63
  -67
  -71
  -76
  -81
  -86
  -91
  -97
  -102
  -108
  -115
  -122
  -129
  -136
  -144
  -152
  -160
  -169
  -179
  -188
  -199
  -210
  -221
  -233
  -245
  -259
  -272
  -287
  -302
Maintenance CAPEX, $m
  0
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
New CAPEX, $m
  -20
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
Cash from investing activities, $m
  -286
  -17
  -18
  -18
  -20
  -20
  -22
  -22
  -24
  -24
  -26
  -28
  -28
  -30
  -32
  -34
  -35
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
Free cash flow, $m
  -101
  -76
  -81
  -86
  -91
  -97
  -102
  -108
  -115
  -121
  -128
  -136
  -144
  -152
  -160
  -169
  -179
  -188
  -199
  -210
  -221
  -233
  -246
  -259
  -273
  -287
  -302
  -318
  -335
  -353
  -371
Issuance/(repayment) of debt, $m
  50
  36
  38
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  69
  73
  77
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124
  130
  137
  144
Issuance/(repurchase) of shares, $m
  -28
  121
  126
  132
  138
  144
  150
  157
  164
  172
  180
  155
  164
  173
  182
  192
  203
  214
  225
  238
  250
  264
  278
  293
  308
  324
  342
  360
  378
  398
  419
Cash from financing (excl. dividends), $m  
  21
  157
  164
  171
  179
  187
  195
  204
  214
  224
  235
  212
  224
  236
  248
  261
  276
  291
  305
  322
  338
  357
  375
  395
  415
  437
  460
  484
  508
  535
  563
Total cash flow (excl. dividends), $m
  -79
  81
  83
  85
  88
  90
  93
  96
  99
  102
  106
  76
  80
  84
  88
  93
  97
  102
  107
  112
  118
  124
  130
  136
  143
  150
  158
  165
  174
  182
  191
Retained Cash Flow (-), $m
  -48
  -121
  -126
  -132
  -138
  -144
  -150
  -157
  -164
  -172
  -180
  -155
  -164
  -173
  -182
  -192
  -203
  -214
  -225
  -238
  -250
  -264
  -278
  -293
  -308
  -324
  -342
  -360
  -378
  -398
  -419
Prev. year cash balance distribution, $m
 
  25
  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
 
  -15
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -133
  -140
  -148
  -156
  -165
  -174
  -184
  -194
  -205
  -216
  -228
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
 
  -14
  -39
  -40
  -41
  -41
  -41
  -41
  -41
  -40
  -39
  -37
  -36
  -34
  -32
  -29
  -27
  -24
  -22
  -19
  -17
  -14
  -12
  -10
  -8
  -7
  -5
  -4
  -3
  -2
  -2
Current shareholders' claim on cash, %
  100
  89.4
  80.0
  71.6
  64.2
  57.5
  51.6
  46.4
  41.7
  37.4
  33.7
  30.8
  28.2
  25.8
  23.6
  21.6
  19.8
  18.1
  16.5
  15.1
  13.8
  12.6
  11.5
  10.5
  9.6
  8.7
  7.9
  7.2
  6.6
  6.0
  5.5

Uni-Select Inc. is a Canada-based distributor of automotive products, and paint and related products for motor vehicles. The Company operates through three segments: Paint and Related Products (US), Automotive Products (Canada), and Corporate Office and Others. The Paint and Related Products (US) segment is engaged in the distribution of automotive refinish and industrial paint and related products representing its subsidiary, FinishMaster, Inc. Automotive Products (Canada) is engaged in the distribution of automotive aftermarket parts, including refinish and industrial paint and related products, through Canadian networks. In Canada, the Company supports automotive repair and collision repair shops, through corporate stores, which operate under the BUMPER TO BUMPER, AUTO PARTS PLUS and FINISHMASTER store banner programs. In the United States, the Company operates a national network of automotive refinish corporate stores under the FINISHMASTER banner.

FINANCIAL RATIOS  of  Uni-Select Inc. (UNS)

Valuation Ratios
P/E Ratio 13.3
Price to Sales 0.7
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 5.7
Price to Free Cash Flow 6.4
Growth Rates
Sales Growth Rate -11.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -6.5%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 28.8%
Total Debt to Equity 29.6%
Interest Coverage 24
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. 4.8%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 30.6%
Gross Margin - 3 Yr. Avg. 30.1%
EBITDA Margin 8.9%
EBITDA Margin - 3 Yr. Avg. 3.6%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin 7.2%
Pre-Tax Margin - 3 Yr. Avg. 1.8%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 1.6%
Effective Tax Rate 32.5%
Eff/ Tax Rate - 3 Yr. Avg. 32.6%
Payout Ratio 17.7%

UNS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UNS stock intrinsic value calculation we used $1618 million for the last fiscal year's total revenue generated by Uni-Select Inc.. The default revenue input number comes from 2016 income statement of Uni-Select 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 UNS stock valuation model: a) initial revenue growth rate of 5.3% 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 UNS is calculated based on our internal credit rating of Uni-Select 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 Uni-Select 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 UNS stock the variable cost ratio is equal to 104.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for UNS 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 3.5% for Uni-Select Inc..

Corporate tax rate of 27% is the nominal tax rate for Uni-Select 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 UNS 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 UNS are equal to 10%.

Life of production assets of 19.6 years is the average useful life of capital assets used in Uni-Select 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 UNS is equal to 14.5%. 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 - $638 million for Uni-Select 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 42.4 million for Uni-Select 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 Uni-Select Inc. at the current share price and the inputted number of shares is $1.1 billion.

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Financial statements of UNS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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