Intrinsic value of Winpak Ltd. - WPK

Previous Close

$53.97

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$53.97

 
Intrinsic value

$38.77

 
Up/down potential

-28%

 
Rating

sell

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of WPK 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 3.5

 

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, %
  3.16
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
Revenue, $m
  1,111
  1,163
  1,218
  1,276
  1,337
  1,401
  1,469
  1,540
  1,615
  1,694
  1,776
  1,863
  1,955
  2,051
  2,152
  2,258
  2,369
  2,486
  2,610
  2,739
  2,875
  3,017
  3,167
  3,325
  3,490
  3,664
  3,846
  4,038
  4,239
  4,450
  4,672
Variable operating expenses, $m
 
  685
  717
  751
  787
  825
  865
  906
  950
  997
  1,045
  1,095
  1,148
  1,205
  1,264
  1,326
  1,392
  1,461
  1,533
  1,609
  1,689
  1,773
  1,861
  1,953
  2,050
  2,152
  2,259
  2,372
  2,490
  2,614
  2,745
Fixed operating expenses, $m
 
  256
  263
  269
  276
  283
  290
  297
  305
  312
  320
  328
  336
  345
  353
  362
  371
  380
  390
  400
  410
  420
  430
  441
  452
  463
  475
  487
  499
  512
  524
Total operating expenses, $m
  898
  941
  980
  1,020
  1,063
  1,108
  1,155
  1,203
  1,255
  1,309
  1,365
  1,423
  1,484
  1,550
  1,617
  1,688
  1,763
  1,841
  1,923
  2,009
  2,099
  2,193
  2,291
  2,394
  2,502
  2,615
  2,734
  2,859
  2,989
  3,126
  3,269
Operating income, $m
  213
  222
  238
  256
  274
  294
  314
  336
  360
  385
  411
  441
  470
  501
  534
  569
  606
  645
  687
  730
  776
  825
  876
  930
  988
  1,048
  1,112
  1,179
  1,250
  1,324
  1,403
EBITDA, $m
  261
  272
  291
  311
  332
  354
  377
  402
  429
  457
  487
  518
  552
  587
  624
  664
  705
  749
  796
  845
  896
  951
  1,008
  1,069
  1,133
  1,201
  1,272
  1,347
  1,427
  1,510
  1,598
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
Earnings before tax, $m
  213
  222
  238
  255
  273
  292
  312
  334
  357
  381
  407
  436
  465
  495
  528
  562
  598
  636
  677
  719
  765
  812
  863
  916
  972
  1,031
  1,093
  1,159
  1,229
  1,302
  1,379
Tax expense, $m
  67
  60
  64
  69
  74
  79
  84
  90
  96
  103
  110
  118
  125
  134
  142
  152
  161
  172
  183
  194
  206
  219
  233
  247
  262
  278
  295
  313
  332
  351
  372
Net income, $m
  141
  162
  174
  186
  199
  213
  228
  244
  260
  278
  297
  318
  339
  362
  385
  410
  437
  465
  494
  525
  558
  593
  630
  668
  709
  753
  798
  846
  897
  950
  1,007

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  1,181
  938
  982
  1,029
  1,078
  1,130
  1,185
  1,242
  1,302
  1,366
  1,433
  1,503
  1,576
  1,654
  1,735
  1,821
  1,911
  2,005
  2,104
  2,209
  2,318
  2,433
  2,554
  2,681
  2,815
  2,955
  3,102
  3,256
  3,418
  3,589
  3,768
Adjusted assets (=assets-cash), $m
  896
  938
  982
  1,029
  1,078
  1,130
  1,185
  1,242
  1,302
  1,366
  1,433
  1,503
  1,576
  1,654
  1,735
  1,821
  1,911
  2,005
  2,104
  2,209
  2,318
  2,433
  2,554
  2,681
  2,815
  2,955
  3,102
  3,256
  3,418
  3,589
  3,768
Revenue / Adjusted assets
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.239
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
  1.240
Average production assets, $m
  529
  554
  580
  607
  637
  667
  699
  733
  769
  806
  846
  887
  930
  976
  1,024
  1,075
  1,128
  1,184
  1,242
  1,304
  1,368
  1,436
  1,508
  1,583
  1,661
  1,744
  1,831
  1,922
  2,018
  2,118
  2,224
Working capital, $m
  493
  218
  228
  239
  250
  262
  275
  288
  302
  317
  332
  348
  366
  383
  402
  422
  443
  465
  488
  512
  538
  564
  592
  622
  653
  685
  719
  755
  793
  832
  874
Total debt, $m
  0
  10
  22
  33
  46
  59
  73
  87
  103
  119
  136
  154
  172
  192
  213
  234
  257
  281
  307
  333
  361
  390
  421
  453
  487
  522
  560
  599
  640
  684
  729
Total liabilities, $m
  228
  238
  250
  261
  274
  287
  301
  315
  331
  347
  364
  382
  400
  420
  441
  462
  485
  509
  535
  561
  589
  618
  649
  681
  715
  750
  788
  827
  868
  912
  957
Total equity, $m
  953
  700
  733
  768
  804
  843
  884
  927
  972
  1,019
  1,069
  1,121
  1,176
  1,234
  1,295
  1,358
  1,425
  1,496
  1,570
  1,648
  1,729
  1,815
  1,905
  2,000
  2,100
  2,204
  2,314
  2,429
  2,550
  2,677
  2,811
Total liabilities and equity, $m
  1,181
  938
  983
  1,029
  1,078
  1,130
  1,185
  1,242
  1,303
  1,366
  1,433
  1,503
  1,576
  1,654
  1,736
  1,820
  1,910
  2,005
  2,105
  2,209
  2,318
  2,433
  2,554
  2,681
  2,815
  2,954
  3,102
  3,256
  3,418
  3,589
  3,768
Debt-to-equity ratio
  0.000
  0.010
  0.030
  0.040
  0.060
  0.070
  0.080
  0.090
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.160
  0.170
  0.180
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
Adjusted equity ratio
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  141
  162
  174
  186
  199
  213
  228
  244
  260
  278
  297
  318
  339
  362
  385
  410
  437
  465
  494
  525
  558
  593
  630
  668
  709
  753
  798
  846
  897
  950
  1,007
Depreciation, amort., depletion, $m
  48
  50
  53
  55
  58
  60
  63
  66
  69
  72
  76
  78
  82
  86
  90
  94
  99
  104
  109
  114
  120
  126
  132
  139
  146
  153
  161
  169
  177
  186
  195
Funds from operations, $m
  88
  212
  226
  241
  257
  273
  291
  310
  330
  351
  373
  396
  421
  447
  475
  504
  536
  568
  603
  640
  678
  719
  762
  807
  855
  906
  959
  1,015
  1,074
  1,136
  1,202
Change in working capital, $m
  -82
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  38
  40
  41
Cash from operations, $m
  170
  229
  216
  230
  245
  261
  278
  296
  316
  336
  357
  380
  404
  429
  456
  485
  515
  546
  580
  615
  653
  692
  734
  778
  824
  873
  925
  979
  1,036
  1,097
  1,160
Maintenance CAPEX, $m
  0
  -46
  -49
  -51
  -53
  -56
  -59
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -132
  -139
  -146
  -153
  -161
  -169
  -177
  -186
New CAPEX, $m
  -98
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -106
Cash from investing activities, $m
  -98
  -71
  -75
  -79
  -82
  -87
  -91
  -95
  -100
  -104
  -110
  -115
  -122
  -128
  -134
  -141
  -147
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -218
  -229
  -240
  -252
  -265
  -278
  -292
Free cash flow, $m
  72
  157
  141
  152
  163
  175
  188
  201
  216
  231
  247
  264
  282
  302
  322
  344
  367
  392
  418
  445
  474
  504
  537
  571
  607
  645
  685
  727
  772
  819
  869
Issuance/(repayment) of debt, $m
  0
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -2
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
Total cash flow (excl. dividends), $m
  70
  168
  152
  164
  175
  188
  202
  216
  231
  247
  264
  282
  301
  322
  343
  366
  390
  416
  443
  471
  502
  534
  567
  603
  640
  680
  722
  766
  813
  862
  914
Retained Cash Flow (-), $m
  -136
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -133
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
 
  421
  119
  129
  139
  149
  161
  173
  186
  200
  215
  230
  246
  264
  282
  302
  323
  345
  369
  394
  420
  448
  477
  508
  541
  576
  612
  651
  692
  735
  781
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
 
  404
  109
  112
  114
  116
  117
  117
  116
  115
  112
  109
  105
  100
  95
  89
  82
  75
  68
  61
  53
  46
  40
  33
  28
  22
  18
  14
  11
  8
  6
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Winpak Ltd. manufactures and sells packaging materials in the United States, Canada, and internationally. The company offers flexible packaging products, such as barrier shrink bags, modified atmosphere packaging products, rollstock and specialty films, zipper/stand-up pouches, and vacuum pouches. It also provides paper/poly/foil laminated rollstock products for various flexible food applications. In addition, the company manufactures pharmaceutical and healthcare packaging products, including blister foils, pouch stock products, film overwraps, child-resistant blister lidding products, and cold form laminates; and laminations for pouches and lidding applications for personal care products, such as cosmetics, skin cream, and shampoos. Further, if provides rigid plastic packaging products, such as rigid plastic cups and trays, and rigid plastic sheets, as well as custom plastic containers; and flexible lidding packaging products to the food, dairy, beverage, health care, and industrial markets. Additionally, it designs and manufactures pouch and cup packaging machines, as well as packaging systems and replacement parts. Winpak Ltd. has a strategic alliance with Wipak. The company was incorporated in 1975 and is headquartered in Winnipeg, Canada. Winpak Ltd. is a subsidiary of W-Packaging Oy.

FINANCIAL RATIOS  of  Winpak Ltd. (WPK)

Valuation Ratios
P/E Ratio 24.9
Price to Sales 3.2
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 20.6
Price to Free Cash Flow 48.7
Growth Rates
Sales Growth Rate 3.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 34.2%
Cap. Spend. - 3 Yr. Gr. Rate 7.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 12.7%
Ret/ On Assets - 3 Yr. Avg. 12.3%
Return On Total Capital 15.9%
Ret/ On T. Cap. - 3 Yr. Avg. 15.4%
Return On Equity 15.9%
Return On Equity - 3 Yr. Avg. 15.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 32.8%
Gross Margin - 3 Yr. Avg. 31.2%
EBITDA Margin 23.5%
EBITDA Margin - 3 Yr. Avg. 21.7%
Operating Margin 19.2%
Oper. Margin - 3 Yr. Avg. 17.4%
Pre-Tax Margin 19.2%
Pre-Tax Margin - 3 Yr. Avg. 17.4%
Net Profit Margin 12.7%
Net Profit Margin - 3 Yr. Avg. 11.7%
Effective Tax Rate 31.5%
Eff/ Tax Rate - 3 Yr. Avg. 31%
Payout Ratio 5.7%

WPK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WPK stock intrinsic value calculation we used $1111 million for the last fiscal year's total revenue generated by Winpak Ltd.. The default revenue input number comes from 2016 income statement of Winpak Ltd.. 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 WPK stock valuation model: a) initial revenue growth rate of 4.7% 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 WPK is calculated based on our internal credit rating of Winpak Ltd., 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 Winpak Ltd..
    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 WPK stock the variable cost ratio is equal to 58.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $250 million in the base year in the intrinsic value calculation for WPK 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 Winpak Ltd..

Corporate tax rate of 27% is the nominal tax rate for Winpak Ltd.. 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 WPK 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 WPK are equal to 47.6%.

Life of production assets of 11.4 years is the average useful life of capital assets used in Winpak Ltd. 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 WPK is equal to 18.7%. 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 - $953 million for Winpak Ltd. - 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 64.675 million for Winpak Ltd. 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 Winpak Ltd. at the current share price and the inputted number of shares is $3.5 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
ITP Intertape Poly 23.74 27.69  hold
ATA ATS Automation 12.73 17.77  buy
IFX Imaflex Inc. 0.690 0.10  str.sell
Stock chart of WPK Financial statements of WPK
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.