Intrinsic value of Compass Minerals International - CMP

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$65.55

  Intrinsic Value

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  Value-price divergence*

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$65.55

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

We calculate the intrinsic value of CMP 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 2.2

 

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, %
  3.55
  53.30
  48.47
  44.12
  40.21
  36.69
  33.52
  30.67
  28.10
  25.79
  23.71
  21.84
  20.16
  18.64
  17.28
  16.05
  14.94
  13.95
  13.06
  12.25
  11.52
  10.87
  10.28
  9.76
  9.28
  8.85
  8.47
  8.12
  7.81
  7.53
  7.27
Revenue, $m
  1,138
  1,745
  2,590
  3,733
  5,234
  7,154
  9,553
  12,482
  15,990
  20,114
  24,884
  30,318
  36,430
  43,221
  50,688
  58,823
  67,614
  77,046
  87,105
  97,775
  109,043
  120,898
  133,333
  146,341
  159,923
  174,080
  188,820
  204,154
  220,095
  236,664
  253,881
Variable operating expenses, $m
 
  1,392
  2,067
  2,979
  4,177
  5,709
  7,623
  9,961
  12,760
  16,051
  19,857
  24,194
  29,071
  34,490
  40,449
  46,941
  53,956
  61,483
  69,510
  78,024
  87,016
  96,477
  106,399
  116,780
  127,618
  138,916
  150,679
  162,915
  175,636
  188,858
  202,597
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
  963
  1,392
  2,067
  2,979
  4,177
  5,709
  7,623
  9,961
  12,760
  16,051
  19,857
  24,194
  29,071
  34,490
  40,449
  46,941
  53,956
  61,483
  69,510
  78,024
  87,016
  96,477
  106,399
  116,780
  127,618
  138,916
  150,679
  162,915
  175,636
  188,858
  202,597
Operating income, $m
  175
  352
  523
  754
  1,057
  1,445
  1,930
  2,521
  3,230
  4,063
  5,026
  6,124
  7,359
  8,731
  10,239
  11,882
  13,658
  15,563
  17,595
  19,751
  22,027
  24,421
  26,933
  29,561
  32,304
  35,164
  38,142
  41,239
  44,459
  47,806
  51,284
EBITDA, $m
  265
  427
  635
  915
  1,282
  1,753
  2,340
  3,058
  3,918
  4,928
  6,096
  7,428
  8,925
  10,589
  12,419
  14,412
  16,565
  18,876
  21,341
  23,955
  26,716
  29,620
  32,666
  35,854
  39,181
  42,650
  46,261
  50,018
  53,923
  57,983
  62,201
Interest expense (income), $m
  27
  44
  75
  118
  177
  254
  353
  476
  626
  806
  1,018
  1,262
  1,541
  1,855
  2,204
  2,587
  3,004
  3,456
  3,940
  4,456
  5,004
  5,582
  6,190
  6,828
  7,496
  8,193
  8,920
  9,676
  10,463
  11,281
  12,132
Earnings before tax, $m
  197
  309
  448
  636
  880
  1,191
  1,577
  2,046
  2,604
  3,257
  4,009
  4,862
  5,817
  6,876
  8,035
  9,295
  10,654
  12,108
  13,656
  15,295
  17,023
  18,840
  20,743
  22,732
  24,808
  26,971
  29,222
  31,563
  33,996
  36,525
  39,152
Tax expense, $m
  34
  83
  121
  172
  238
  322
  426
  552
  703
  879
  1,082
  1,313
  1,571
  1,856
  2,170
  2,510
  2,876
  3,269
  3,687
  4,130
  4,596
  5,087
  5,601
  6,138
  6,698
  7,282
  7,890
  8,522
  9,179
  9,862
  10,571
Net income, $m
  163
  225
  327
  464
  643
  870
  1,151
  1,493
  1,901
  2,378
  2,926
  3,549
  4,247
  5,019
  5,866
  6,786
  7,777
  8,839
  9,969
  11,165
  12,427
  13,753
  15,142
  16,595
  18,110
  19,689
  21,332
  23,041
  24,817
  26,663
  28,581

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  77
  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
  2,467
  3,665
  5,441
  7,842
  10,996
  15,030
  20,068
  26,223
  33,592
  42,256
  52,276
  63,694
  76,533
  90,800
  106,488
  123,578
  142,046
  161,862
  182,993
  205,409
  229,082
  253,988
  280,110
  307,439
  335,972
  365,715
  396,681
  428,895
  462,385
  497,193
  533,364
Adjusted assets (=assets-cash), $m
  2,390
  3,665
  5,441
  7,842
  10,996
  15,030
  20,068
  26,223
  33,592
  42,256
  52,276
  63,694
  76,533
  90,800
  106,488
  123,578
  142,046
  161,862
  182,993
  205,409
  229,082
  253,988
  280,110
  307,439
  335,972
  365,715
  396,681
  428,895
  462,385
  497,193
  533,364
Revenue / Adjusted assets
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
Average production assets, $m
  1,068
  750
  1,114
  1,605
  2,251
  3,076
  4,108
  5,367
  6,876
  8,649
  10,700
  13,037
  15,665
  18,585
  21,796
  25,294
  29,074
  33,130
  37,455
  42,043
  46,888
  51,986
  57,333
  62,927
  68,767
  74,854
  81,193
  87,786
  94,641
  101,765
  109,169
Working capital, $m
  343
  625
  927
  1,336
  1,874
  2,561
  3,420
  4,469
  5,724
  7,201
  8,908
  10,854
  13,042
  15,473
  18,146
  21,059
  24,206
  27,583
  31,184
  35,003
  39,037
  43,282
  47,733
  52,390
  57,252
  62,321
  67,598
  73,087
  78,794
  84,726
  90,889
Total debt, $m
  1,325
  2,140
  3,380
  5,056
  7,257
  10,073
  13,590
  17,886
  23,029
  29,077
  36,071
  44,041
  53,002
  62,960
  73,910
  85,840
  98,730
  112,562
  127,311
  142,958
  159,481
  176,866
  195,099
  214,175
  234,090
  254,851
  276,466
  298,950
  322,327
  346,623
  371,870
Total liabilities, $m
  1,749
  2,558
  3,798
  5,474
  7,675
  10,491
  14,008
  18,304
  23,447
  29,495
  36,489
  44,459
  53,420
  63,378
  74,328
  86,258
  99,148
  112,980
  127,729
  143,376
  159,899
  177,284
  195,517
  214,593
  234,508
  255,269
  276,884
  299,368
  322,745
  347,041
  372,288
Total equity, $m
  717
  1,107
  1,643
  2,368
  3,321
  4,539
  6,061
  7,919
  10,145
  12,761
  15,787
  19,236
  23,113
  27,422
  32,159
  37,321
  42,898
  48,882
  55,264
  62,034
  69,183
  76,704
  84,593
  92,847
  101,464
  110,446
  119,798
  129,526
  139,640
  150,152
  161,076
Total liabilities and equity, $m
  2,466
  3,665
  5,441
  7,842
  10,996
  15,030
  20,069
  26,223
  33,592
  42,256
  52,276
  63,695
  76,533
  90,800
  106,487
  123,579
  142,046
  161,862
  182,993
  205,410
  229,082
  253,988
  280,110
  307,440
  335,972
  365,715
  396,682
  428,894
  462,385
  497,193
  533,364
Debt-to-equity ratio
  1.848
  1.930
  2.060
  2.130
  2.190
  2.220
  2.240
  2.260
  2.270
  2.280
  2.280
  2.290
  2.290
  2.300
  2.300
  2.300
  2.300
  2.300
  2.300
  2.300
  2.310
  2.310
  2.310
  2.310
  2.310
  2.310
  2.310
  2.310
  2.310
  2.310
  2.310
Adjusted equity ratio
  0.268
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  163
  225
  327
  464
  643
  870
  1,151
  1,493
  1,901
  2,378
  2,926
  3,549
  4,247
  5,019
  5,866
  6,786
  7,777
  8,839
  9,969
  11,165
  12,427
  13,753
  15,142
  16,595
  18,110
  19,689
  21,332
  23,041
  24,817
  26,663
  28,581
Depreciation, amort., depletion, $m
  90
  75
  111
  161
  225
  308
  411
  537
  688
  865
  1,070
  1,304
  1,566
  1,858
  2,180
  2,529
  2,907
  3,313
  3,746
  4,204
  4,689
  5,199
  5,733
  6,293
  6,877
  7,485
  8,119
  8,779
  9,464
  10,177
  10,917
Funds from operations, $m
  135
  300
  439
  625
  868
  1,177
  1,562
  2,030
  2,588
  3,243
  3,996
  4,853
  5,813
  6,878
  8,045
  9,315
  10,685
  12,152
  13,714
  15,369
  17,116
  18,952
  20,876
  22,887
  24,987
  27,174
  29,451
  31,819
  34,281
  36,840
  39,498
Change in working capital, $m
  -32
  217
  303
  409
  537
  687
  859
  1,049
  1,256
  1,476
  1,707
  1,946
  2,188
  2,431
  2,673
  2,912
  3,147
  3,377
  3,601
  3,820
  4,034
  4,244
  4,451
  4,657
  4,862
  5,068
  5,277
  5,489
  5,707
  5,931
  6,164
Cash from operations, $m
  167
  256
  136
  215
  330
  490
  703
  981
  1,333
  1,766
  2,289
  2,907
  3,625
  4,446
  5,372
  6,403
  7,537
  8,775
  10,113
  11,550
  13,082
  14,707
  16,424
  18,230
  20,124
  22,106
  24,174
  26,330
  28,574
  30,908
  33,334
Maintenance CAPEX, $m
  0
  -49
  -75
  -111
  -161
  -225
  -308
  -411
  -537
  -688
  -865
  -1,070
  -1,304
  -1,566
  -1,858
  -2,180
  -2,529
  -2,907
  -3,313
  -3,746
  -4,204
  -4,689
  -5,199
  -5,733
  -6,293
  -6,877
  -7,485
  -8,119
  -8,779
  -9,464
  -10,177
New CAPEX, $m
  -182
  -261
  -364
  -491
  -645
  -826
  -1,031
  -1,260
  -1,508
  -1,773
  -2,051
  -2,337
  -2,628
  -2,920
  -3,211
  -3,498
  -3,780
  -4,056
  -4,325
  -4,588
  -4,845
  -5,098
  -5,347
  -5,594
  -5,840
  -6,088
  -6,338
  -6,593
  -6,855
  -7,124
  -7,403
Cash from investing activities, $m
  -468
  -310
  -439
  -602
  -806
  -1,051
  -1,339
  -1,671
  -2,045
  -2,461
  -2,916
  -3,407
  -3,932
  -4,486
  -5,069
  -5,678
  -6,309
  -6,963
  -7,638
  -8,334
  -9,049
  -9,787
  -10,546
  -11,327
  -12,133
  -12,965
  -13,823
  -14,712
  -15,634
  -16,588
  -17,580
Free cash flow, $m
  -301
  -54
  -303
  -387
  -476
  -561
  -635
  -689
  -712
  -695
  -627
  -500
  -306
  -40
  303
  725
  1,228
  1,812
  2,475
  3,216
  4,032
  4,921
  5,879
  6,903
  7,992
  9,142
  10,351
  11,617
  12,941
  14,320
  15,754
Issuance/(repayment) of debt, $m
  417
  889
  1,240
  1,676
  2,201
  2,816
  3,517
  4,296
  5,144
  6,047
  6,994
  7,970
  8,962
  9,958
  10,950
  11,929
  12,891
  13,831
  14,750
  15,646
  16,523
  17,384
  18,234
  19,076
  19,916
  20,760
  21,615
  22,485
  23,377
  24,296
  25,247
Issuance/(repurchase) of shares, $m
  1
  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  
  409
  889
  1,240
  1,676
  2,201
  2,816
  3,517
  4,296
  5,144
  6,047
  6,994
  7,970
  8,962
  9,958
  10,950
  11,929
  12,891
  13,831
  14,750
  15,646
  16,523
  17,384
  18,234
  19,076
  19,916
  20,760
  21,615
  22,485
  23,377
  24,296
  25,247
Total cash flow (excl. dividends), $m
  113
  835
  937
  1,289
  1,725
  2,255
  2,881
  3,607
  4,431
  5,353
  6,367
  7,470
  8,655
  9,918
  11,253
  12,654
  14,119
  15,643
  17,225
  18,862
  20,556
  22,305
  24,112
  25,979
  27,908
  29,902
  31,965
  34,102
  36,317
  38,615
  41,001
Retained Cash Flow (-), $m
  -77
  -384
  -536
  -725
  -952
  -1,218
  -1,522
  -1,859
  -2,225
  -2,617
  -3,026
  -3,448
  -3,877
  -4,309
  -4,738
  -5,161
  -5,577
  -5,984
  -6,382
  -6,770
  -7,149
  -7,522
  -7,889
  -8,253
  -8,617
  -8,982
  -9,352
  -9,728
  -10,114
  -10,512
  -10,924
Prev. year cash balance distribution, $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 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
 
  451
  401
  563
  773
  1,037
  1,360
  1,748
  2,206
  2,736
  3,341
  4,022
  4,778
  5,609
  6,515
  7,493
  8,541
  9,659
  10,843
  12,093
  13,406
  14,784
  16,223
  17,726
  19,291
  20,920
  22,613
  24,374
  26,203
  28,103
  30,078
Discount rate, %
 
  11.00
  11.55
  12.13
  12.73
  13.37
  14.04
  14.74
  15.48
  16.25
  17.06
  17.92
  18.81
  19.75
  20.74
  21.78
  22.87
  24.01
  25.21
  26.47
  27.80
  29.19
  30.65
  32.18
  33.79
  35.48
  37.25
  39.11
  41.07
  43.12
  45.28
PV of cash for distribution, $m
 
  407
  322
  400
  479
  553
  618
  668
  698
  706
  691
  656
  604
  538
  465
  390
  317
  249
  189
  140
  99
  68
  45
  29
  18
  11
  6
  3
  2
  1
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Compass Minerals International, Inc. produces and markets salt, sulfate of potash specialty fertilizer (SOP), plant micronutrients, and magnesium chloride primarily in North America and the United Kingdom. Its Salt segment mines, produces, processes, distributes, and markets sodium chloride and magnesium chloride for use in highway and consumer deicing, dust control, water conditioning, consumer and industrial food preparation, and agricultural and industrial applications; and purchases potassium chloride and calcium chloride to sell as finished products or to blend with sodium chloride to produce specialty products. This segment offers rock salt, mechanically evaporated and solar evaporated salt, and brine and flake magnesium chloride products to producers of intermediate chemical products used in the production of vinyls and other chemicals, and pulp and paper, as well as water treatment and other industrial uses. The company’s Plant Nutrition segment provides SOP, which is used as an ingredient in specialty fertilizer blends for chloride-sensitive crops and turfs under the Protassium+ brand name; and develops and distributes micronutrient products under the Wolf Trax brand. This segment serves growers and fertilizer distributors worldwide. The company also produces and markets consumer deicing and water conditioning products, ingredients used in consumer and commercial food preparation, and other mineral-based products for consumer, agricultural, and industrial applications; and offers records management services to businesses located in the United Kingdom. It operates rock salt mines in Goderich, Ontario, Canada; Cote Blanche, Louisiana, the United States; and Winsford, Cheshire, the United Kingdom. The company was formerly known as Salt Holdings Corporation and changed its name to Compass Minerals International, Inc. in December 2003. Compass Minerals International, Inc. was founded in 1993 and is headquartered in Overland Park, Kansas.

FINANCIAL RATIOS  of  Compass Minerals International (CMP)

Valuation Ratios
P/E Ratio 13.6
Price to Sales 1.9
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 13.3
Price to Free Cash Flow -147.7
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.5%
Cap. Spend. - 3 Yr. Gr. Rate 8.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 166.7%
Total Debt to Equity 184.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 9.1%
Ret/ On Assets - 3 Yr. Avg. 11.6%
Return On Total Capital 9.6%
Ret/ On T. Cap. - 3 Yr. Avg. 13.5%
Return On Equity 24%
Return On Equity - 3 Yr. Avg. 28.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 26.4%
Gross Margin - 3 Yr. Avg. 29.7%
EBITDA Margin 27.6%
EBITDA Margin - 3 Yr. Avg. 28.7%
Operating Margin 15.4%
Oper. Margin - 3 Yr. Avg. 19.9%
Pre-Tax Margin 17.3%
Pre-Tax Margin - 3 Yr. Avg. 19.9%
Net Profit Margin 14.3%
Net Profit Margin - 3 Yr. Avg. 15.3%
Effective Tax Rate 17.3%
Eff/ Tax Rate - 3 Yr. Avg. 22.9%
Payout Ratio 57.7%

CMP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMP stock intrinsic value calculation we used $1138 million for the last fiscal year's total revenue generated by Compass Minerals International. The default revenue input number comes from 2016 income statement of Compass Minerals International. 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 CMP stock valuation model: a) initial revenue growth rate of 53.3% 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 11%, whose default value for CMP is calculated based on our internal credit rating of Compass Minerals International, 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 Compass Minerals International.
    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 CMP stock the variable cost ratio is equal to 79.8%.

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 CMP 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 Compass Minerals International.

Corporate tax rate of 27% is the nominal tax rate for Compass Minerals International. 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 CMP 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 CMP are equal to 43%.

Life of production assets of 10 years is the average useful life of capital assets used in Compass Minerals International 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 CMP is equal to 35.8%. 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 - $723 million for Compass Minerals International - 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 33.84 million for Compass Minerals International 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 Compass Minerals International at the current share price and the inputted number of shares is $2.2 billion.


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COMPANY NEWS

▶ 3 Stocks on the Motley Fool Money Radar This Week   [Jun-22-17 02:23PM  Motley Fool]
▶ Weitz Funds Comments on Compass Minerals   [May-18-17 01:15PM  GuruFocus.com]
▶ Compass Minerals Declares Dividend   [May-04-17 07:30AM  Business Wire]
▶ Compass Minerals Survives a Mild Winter   [May-03-17 07:19PM  Motley Fool]
▶ Compass beats 1Q profit forecasts   [04:36PM  Associated Press]
▶ 9 Small-Cap Stocks With Wide Moats   [Apr-12-17 06:00AM  Morningstar]
▶ Compass Minerals Reports First-Quarter Snow-Event Data   [Apr-10-17 09:00AM  Business Wire]
▶ Snow Scarcity Dings Compass Minerals   [Apr-05-17 10:40AM  Morningstar]
▶ Stocks Reach Their 3-Year Lows   [Apr-02-17 11:01AM  GuruFocus.com]
▶ Basic Materials: The Most Expensive Sector We Cover   [Mar-30-17 07:00AM  Morningstar]
▶ Could It Be Time to Buy US Domestic Moats?   [Mar-27-17 04:05PM  Market Realist]
▶ Which KC-area stocks had the best, worst February? Take a look   [04:00PM  American City Business Journals]
▶ Compass Minerals to Host Investor Meetings   [04:15PM  Business Wire]
▶ Compass Minerals Posts a Double Win   [Feb-08-17 07:05PM  at Motley Fool]
▶ Eight Dividend Stocks Rewarding Shareholders With A Raise   [Feb-07-17 12:55PM  at Insider Monkey]
▶ Utilities Awake From Their Long Slumber   [Feb-01-17 11:15AM  at Investopedia]
▶ Compass Minerals Declares Fourth-Quarter Dividend   [Nov-09-16 04:28PM  Business Wire]
▶ CFO steps down from Compass Minerals   [Nov-03-16 09:35AM  at bizjournals.com]
▶ [$$] TreeHouse Shuffles Executives, Shutters Plant   [08:59AM  at The Wall Street Journal]
▶ Compass Minerals Misses Q3 Earnings (CMP)   [12:10PM  at Investopedia]
▶ Compass Minerals Earnings Preview (CMP)   [10:48AM  at Investopedia]
▶ The 2 Best Potash Stocks to Buy Now   [Oct-17-16 05:49PM  at Motley Fool]
▶ Compass Minerals CEO: Brazil acquisition adds diversity, stability   [Oct-10-16 04:05PM  at bizjournals.com]
Stock chart of CMP Financial statements of CMP Annual reports of CMP
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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