Intrinsic value of Continental Building Products - CBPX

Previous Close

$27.00

  Intrinsic Value

$10.29

stock screener

  Rating & Target

str. sell

-62%

Previous close

$27.00

 
Intrinsic value

$10.29

 
Up/down potential

-62%

 
Rating

str. sell

We calculate the intrinsic value of CBPX 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  9.24
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  461
  470
  481
  493
  507
  523
  540
  558
  578
  599
  622
  647
  673
  701
  731
  762
  796
  831
  868
  908
  950
  994
  1,040
  1,089
  1,141
  1,195
  1,252
  1,312
  1,376
  1,442
  1,512
Variable operating expenses, $m
 
  421
  430
  441
  453
  467
  481
  497
  515
  533
  553
  563
  586
  610
  636
  663
  692
  723
  755
  790
  826
  864
  905
  947
  992
  1,039
  1,089
  1,142
  1,197
  1,255
  1,316
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
  374
  421
  430
  441
  453
  467
  481
  497
  515
  533
  553
  563
  586
  610
  636
  663
  692
  723
  755
  790
  826
  864
  905
  947
  992
  1,039
  1,089
  1,142
  1,197
  1,255
  1,316
Operating income, $m
  87
  49
  51
  52
  54
  56
  58
  61
  63
  66
  69
  84
  88
  91
  95
  99
  103
  108
  113
  118
  123
  129
  135
  142
  148
  155
  163
  171
  179
  188
  197
EBITDA, $m
  134
  98
  100
  103
  106
  109
  113
  116
  121
  125
  130
  135
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  249
  261
  274
  287
  301
  315
Interest expense (income), $m
  0
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
Earnings before tax, $m
  67
  40
  41
  42
  44
  46
  47
  49
  52
  54
  56
  71
  74
  77
  80
  83
  87
  91
  95
  99
  103
  108
  113
  118
  124
  129
  136
  142
  149
  156
  163
Tax expense, $m
  23
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  19
  20
  21
  22
  22
  23
  24
  26
  27
  28
  29
  30
  32
  33
  35
  37
  38
  40
  42
  44
Net income, $m
  44
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  104
  109
  114
  119

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  52
  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
  635
  594
  608
  624
  641
  661
  682
  705
  730
  758
  787
  818
  851
  886
  924
  964
  1,006
  1,051
  1,098
  1,148
  1,201
  1,256
  1,315
  1,377
  1,442
  1,511
  1,583
  1,659
  1,739
  1,823
  1,912
Adjusted assets (=assets-cash), $m
  583
  594
  608
  624
  641
  661
  682
  705
  730
  758
  787
  818
  851
  886
  924
  964
  1,006
  1,051
  1,098
  1,148
  1,201
  1,256
  1,315
  1,377
  1,442
  1,511
  1,583
  1,659
  1,739
  1,823
  1,912
Revenue / Adjusted assets
  0.791
  0.791
  0.791
  0.790
  0.791
  0.791
  0.792
  0.791
  0.792
  0.790
  0.790
  0.791
  0.791
  0.791
  0.791
  0.790
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
  0.791
Average production assets, $m
  406
  414
  423
  434
  446
  460
  475
  491
  508
  527
  548
  569
  592
  617
  643
  671
  700
  731
  764
  799
  836
  874
  915
  958
  1,004
  1,051
  1,102
  1,155
  1,210
  1,269
  1,331
Working capital, $m
  76
  26
  27
  28
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  81
  85
Total debt, $m
  266
  271
  278
  287
  297
  307
  319
  332
  346
  361
  377
  395
  413
  433
  454
  476
  499
  524
  550
  578
  608
  638
  671
  705
  742
  780
  820
  862
  907
  954
  1,003
Total liabilities, $m
  326
  331
  338
  347
  357
  367
  379
  392
  406
  421
  437
  455
  473
  493
  514
  536
  559
  584
  610
  638
  668
  698
  731
  765
  802
  840
  880
  922
  967
  1,014
  1,063
Total equity, $m
  309
  264
  270
  277
  285
  293
  303
  313
  324
  336
  349
  363
  378
  393
  410
  428
  447
  466
  487
  510
  533
  558
  584
  611
  640
  671
  703
  737
  772
  809
  849
Total liabilities and equity, $m
  635
  595
  608
  624
  642
  660
  682
  705
  730
  757
  786
  818
  851
  886
  924
  964
  1,006
  1,050
  1,097
  1,148
  1,201
  1,256
  1,315
  1,376
  1,442
  1,511
  1,583
  1,659
  1,739
  1,823
  1,912
Debt-to-equity ratio
  0.861
  1.020
  1.030
  1.040
  1.040
  1.050
  1.050
  1.060
  1.070
  1.070
  1.080
  1.090
  1.090
  1.100
  1.110
  1.110
  1.120
  1.120
  1.130
  1.130
  1.140
  1.140
  1.150
  1.150
  1.160
  1.160
  1.170
  1.170
  1.170
  1.180
  1.180
Adjusted equity ratio
  0.441
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  44
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  104
  109
  114
  119
Depreciation, amort., depletion, $m
  47
  49
  50
  51
  52
  53
  54
  56
  57
  59
  61
  51
  53
  55
  57
  60
  63
  65
  68
  71
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  119
Funds from operations, $m
  124
  78
  80
  82
  84
  86
  89
  92
  95
  98
  102
  103
  107
  111
  116
  121
  126
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  217
  227
  238
Change in working capital, $m
  8
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
Cash from operations, $m
  116
  78
  79
  81
  83
  85
  88
  91
  94
  97
  101
  101
  105
  110
  114
  119
  124
  129
  135
  141
  148
  154
  162
  169
  177
  185
  194
  203
  213
  223
  234
Maintenance CAPEX, $m
  0
  -36
  -37
  -38
  -39
  -40
  -41
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -63
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -98
  -103
  -108
  -113
New CAPEX, $m
  -12
  -8
  -10
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
Cash from investing activities, $m
  -12
  -44
  -47
  -49
  -51
  -54
  -56
  -58
  -62
  -64
  -67
  -71
  -74
  -78
  -81
  -85
  -89
  -94
  -98
  -103
  -108
  -114
  -119
  -125
  -131
  -138
  -144
  -151
  -159
  -167
  -175
Free cash flow, $m
  104
  33
  33
  32
  32
  32
  32
  32
  33
  33
  33
  31
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
Issuance/(repayment) of debt, $m
  -23
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  45
  47
  49
Issuance/(repurchase) of shares, $m
  -40
  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  
  -68
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  45
  47
  49
Total cash flow (excl. dividends), $m
  37
  40
  40
  41
  42
  43
  44
  45
  47
  48
  50
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  103
  108
Retained Cash Flow (-), $m
  -8
  -5
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
Prev. year cash balance distribution, $m
 
  50
  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
 
  85
  34
  34
  34
  34
  35
  35
  35
  36
  37
  34
  35
  36
  37
  38
  39
  41
  42
  44
  46
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
Discount rate, %
 
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
 
  80
  31
  29
  27
  25
  23
  22
  20
  18
  17
  14
  13
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  0
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
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Continental Building Products, Inc. is a manufacturer of gypsum wallboard and complementary finishing products. The Company operates through wallboard segment. Gypsum wallboard is a primary building material used in residential and commercial construction and in repair and remodel (R&R). It offers customers a range of gypsum wallboard products, including LiftLite, its lightweight product designed to lift and install; its Mold Defense line of products designed for protection against mold and mildew, and its Weather Defense line of moisture and mold-resistant exterior sheathing. The Company also operates a finishing products business that manufactures a line of joint compounds at its plant in Silver Grove (Kentucky) and its joint compound plant in Chambly (Quebec). The Company manufactures gypsum wallboard related products for commercial and residential buildings and houses. The Company's manufacturing facilities are concentrated in the eastern United States and eastern Canada.

FINANCIAL RATIOS  of  Continental Building Products (CBPX)

Valuation Ratios
P/E Ratio 24.4
Price to Sales 2.3
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 10.3
Growth Rates
Sales Growth Rate 9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate 19.1%
Financial Strength
Quick Ratio 26
Current Ratio 0
LT Debt to Equity 85.4%
Total Debt to Equity 86.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 7.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 14.4%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 27.1%
Gross Margin - 3 Yr. Avg. 25%
EBITDA Margin 24.7%
EBITDA Margin - 3 Yr. Avg. 22.2%
Operating Margin 18.9%
Oper. Margin - 3 Yr. Avg. 14.6%
Pre-Tax Margin 14.5%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 9.5%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 34.3%
Eff/ Tax Rate - 3 Yr. Avg. 35.8%
Payout Ratio 0%

CBPX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBPX stock intrinsic value calculation we used $461 million for the last fiscal year's total revenue generated by Continental Building Products. The default revenue input number comes from 2016 income statement of Continental Building Products. 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 CBPX stock valuation model: a) initial revenue growth rate of 2% 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 5.2%, whose default value for CBPX is calculated based on our internal credit rating of Continental Building Products, 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 Continental Building Products.
    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 CBPX stock the variable cost ratio is equal to 89.6%.

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 CBPX 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 Continental Building Products.

Corporate tax rate of 27% is the nominal tax rate for Continental Building Products. 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 CBPX 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 CBPX are equal to 88%.

Life of production assets of 11.2 years is the average useful life of capital assets used in Continental Building Products 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 CBPX is equal to 5.6%. 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 - $309 million for Continental Building Products - 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 38.011 million for Continental Building Products 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 Continental Building Products at the current share price and the inputted number of shares is $1.0 billion.

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COMPANY NEWS

▶ Continental tops Street 4Q forecasts   [Feb-22-18 05:33PM  Associated Press]
▶ Here are the D.C.-area stocks getting pummeled in the market rout   [Feb-06-18 03:21PM  American City Business Journals]
▶ See the D.C.-area stocks hit hardest in the last week   [10:22AM  American City Business Journals]
▶ Continental meets 3Q profit forecasts   [Nov-09-17 04:47PM  Associated Press]
▶ Continental Building Prd Shows Market Leadership With Jump To 82 RS Rating   [Nov-01-17 03:00AM  Investor's Business Daily]
▶ Continental Supports Hurricane Irma Relief Efforts   [Sep-12-17 04:15PM  Business Wire]
▶ Continental posts 2Q profit   [Aug-04-17 02:36AM  Associated Press]
▶ 3 Stocks With Activision Blizzard-Like Return Potential   [Jun-13-17 09:31AM  Motley Fool]
▶ Continental beats 1Q profit forecasts   [May-04-17 06:28PM  Associated Press]
▶ Continental tops Street 4Q forecasts   [05:31PM  Associated Press]
▶ Is Hi-Crush Partners LP (HCLP) A Good Stock To Buy?   [Dec-12-16 04:36PM  at Insider Monkey]
▶ Is CenterState Banks Inc (CSFL) A Good Stock To Buy?   [Dec-07-16 07:57AM  at Insider Monkey]
▶ 3 Best Gypsum Stocks to Buy   [Aug-30-16 02:04PM  at Motley Fool]
Financial statements of CBPX
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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