Intrinsic value of Core Molding Technologies - CMT

Previous Close

$20.55

  Intrinsic Value

$12.82

stock screener

  Rating & Target

sell

-38%

  Value-price divergence*

-25%

Previous close

$20.55

 
Intrinsic value

$12.82

 
Up/down potential

-38%

 
Rating

sell

 
Value-price divergence*

-25%

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

We calculate the intrinsic value of CMT 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 0.2

 

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, %
  -12.06
  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
  175
  179
  183
  187
  193
  198
  205
  212
  219
  227
  236
  246
  256
  266
  277
  289
  302
  315
  330
  345
  360
  377
  395
  413
  433
  454
  475
  498
  522
  547
  574
Variable operating expenses, $m
 
  134
  137
  140
  144
  149
  153
  159
  164
  170
  177
  184
  191
  199
  207
  216
  226
  236
  247
  258
  270
  282
  295
  309
  324
  339
  355
  373
  391
  409
  429
Fixed operating expenses, $m
 
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  47
  48
  49
  50
  51
  53
  54
  55
  57
  58
  60
  61
  63
  64
  66
  68
  69
Total operating expenses, $m
  163
  168
  172
  176
  180
  186
  191
  198
  204
  211
  219
  227
  235
  244
  254
  264
  275
  286
  298
  311
  324
  337
  352
  367
  384
  400
  418
  437
  457
  477
  498
Operating income, $m
  12
  11
  11
  11
  12
  12
  13
  14
  15
  16
  17
  19
  20
  22
  23
  25
  27
  29
  32
  34
  37
  40
  43
  46
  49
  53
  57
  61
  66
  71
  76
EBITDA, $m
  18
  17
  17
  18
  19
  19
  20
  21
  22
  24
  25
  27
  29
  30
  33
  35
  37
  40
  43
  46
  49
  52
  56
  60
  64
  68
  73
  78
  83
  89
  95
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
Earnings before tax, $m
  11
  11
  11
  11
  12
  12
  13
  14
  14
  15
  17
  18
  19
  21
  22
  24
  26
  28
  30
  33
  35
  38
  41
  44
  48
  51
  55
  59
  63
  68
  73
Tax expense, $m
  4
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
Net income, $m
  7
  8
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  18
  19
  21
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  46
  50
  53

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  28
  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
  133
  107
  110
  112
  116
  119
  123
  127
  132
  136
  142
  147
  153
  160
  166
  174
  181
  189
  198
  207
  216
  226
  237
  248
  260
  272
  285
  299
  313
  328
  344
Adjusted assets (=assets-cash), $m
  105
  107
  110
  112
  116
  119
  123
  127
  132
  136
  142
  147
  153
  160
  166
  174
  181
  189
  198
  207
  216
  226
  237
  248
  260
  272
  285
  299
  313
  328
  344
Revenue / Adjusted assets
  1.667
  1.673
  1.664
  1.670
  1.664
  1.664
  1.667
  1.669
  1.659
  1.669
  1.662
  1.673
  1.673
  1.663
  1.669
  1.661
  1.669
  1.667
  1.667
  1.667
  1.667
  1.668
  1.667
  1.665
  1.665
  1.669
  1.667
  1.666
  1.668
  1.668
  1.669
Average production assets, $m
  74
  75
  77
  79
  81
  83
  86
  89
  92
  96
  99
  103
  107
  112
  117
  122
  127
  132
  138
  145
  151
  158
  166
  174
  182
  191
  200
  209
  219
  230
  241
Working capital, $m
  39
  14
  15
  15
  15
  16
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
Total debt, $m
  10
  8
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  22
  24
  26
  29
  31
  33
  36
  39
  42
  45
  48
  52
  56
  59
  64
  68
  72
  77
  82
Total liabilities, $m
  37
  34
  34
  35
  36
  37
  39
  40
  41
  43
  44
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  78
  82
  85
  90
  94
  98
  103
  108
Total equity, $m
  97
  73
  75
  77
  79
  82
  84
  87
  90
  94
  97
  101
  105
  110
  114
  119
  124
  130
  136
  142
  148
  155
  162
  170
  178
  187
  196
  205
  215
  225
  236
Total liabilities and equity, $m
  134
  107
  109
  112
  115
  119
  123
  127
  131
  137
  141
  147
  153
  160
  166
  174
  181
  189
  198
  207
  216
  226
  236
  248
  260
  272
  286
  299
  313
  328
  344
Debt-to-equity ratio
  0.103
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.270
  0.280
  0.290
  0.300
  0.300
  0.310
  0.320
  0.320
  0.330
  0.340
  0.340
  0.350
Adjusted equity ratio
  0.657
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  8
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  18
  19
  21
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  46
  50
  53
Depreciation, amort., depletion, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
Funds from operations, $m
  37
  14
  14
  15
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
Change in working capital, $m
  11
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  26
  14
  14
  14
  15
  15
  16
  17
  17
  18
  19
  21
  22
  23
  25
  26
  28
  30
  32
  34
  37
  39
  42
  45
  48
  51
  54
  58
  62
  66
  70
Maintenance CAPEX, $m
  0
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
New CAPEX, $m
  -3
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
Cash from investing activities, $m
  -3
  -7
  -8
  -8
  -8
  -8
  -10
  -10
  -10
  -10
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
Free cash flow, $m
  23
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  38
  41
Issuance/(repayment) of debt, $m
  -4
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
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  
  -4
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
Total cash flow (excl. dividends), $m
  19
  7
  7
  7
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  25
  27
  29
  32
  34
  37
  40
  43
  46
Retained Cash Flow (-), $m
  -8
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
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
 
  31
  5
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  14
  15
  16
  18
  20
  21
  23
  25
  27
  30
  32
  35
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
 
  29
  5
  4
  4
  4
  4
  4
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  1
  1
  1
  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
  100.0
  100.0
  100.0
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Core Molding Technologies, Inc., together with its subsidiaries, manufactures sheet molding compound (SMC) and molds fiberglass reinforced plastics. It specializes in large-format moldings and offers a range of fiberglass processes, including compression molding of SMC, glass mat thermoplastics, bulk molding compounds, and direct long-fiber thermoplastics; and spray-up, hand lay-up, and resin transfer molding. It also provides reaction injection molding, utilizing dicyclopentadiene technology. The company serves various markets, including medium and heavy-duty truck, marine, automotive, agriculture, construction, and other commercial products in the United States, Mexico, and Canada. The company was formerly known as Core Materials Corporation and changed its name to Core Molding Technologies, Inc. in August 2002. Core Molding Technologies, Inc. was founded in 1988 and is headquartered in Columbus, Ohio.

FINANCIAL RATIOS  of  Core Molding Technologies (CMT)

Valuation Ratios
P/E Ratio 22.4
Price to Sales 0.9
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 6
Price to Free Cash Flow 6.8
Growth Rates
Sales Growth Rate -12.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -85%
Cap. Spend. - 3 Yr. Gr. Rate -19.7%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 7.2%
Total Debt to Equity 10.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.1%
Ret/ On Assets - 3 Yr. Avg. 7.9%
Return On Total Capital 6.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.9%
Return On Equity 7.5%
Return On Equity - 3 Yr. Avg. 12%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 16%
Gross Margin - 3 Yr. Avg. 17.1%
EBITDA Margin 9.7%
EBITDA Margin - 3 Yr. Avg. 11.1%
Operating Margin 6.9%
Oper. Margin - 3 Yr. Avg. 8%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 8%
Net Profit Margin 4%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 36.4%
Eff/ Tax Rate - 3 Yr. Avg. 34.3%
Payout Ratio 0%

CMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMT stock intrinsic value calculation we used $175 million for the last fiscal year's total revenue generated by Core Molding Technologies. The default revenue input number comes from 2016 income statement of Core Molding Technologies. 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 CMT 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 4.3%, whose default value for CMT is calculated based on our internal credit rating of Core Molding Technologies, 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 Core Molding Technologies.
    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 CMT stock the variable cost ratio is equal to 74.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $33 million in the base year in the intrinsic value calculation for CMT 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 Core Molding Technologies.

Corporate tax rate of 27% is the nominal tax rate for Core Molding Technologies. 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 CMT 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 CMT are equal to 42%.

Life of production assets of 12.6 years is the average useful life of capital assets used in Core Molding Technologies 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 CMT is equal to 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 - $97 million for Core Molding Technologies - 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 7.786 million for Core Molding Technologies 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 Core Molding Technologies at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Core Molding Technologies posts 2Q profit   [Aug-04-17 02:36AM  Associated Press]
▶ Core Molding rejoins index of nations 3,000 largest stocks   [Jun-26-17 04:00PM  American City Business Journals]
▶ Core Molding Technologies posts 1Q profit   [May-05-17 08:52AM  Associated Press]
▶ Core Molding Technologies posts 4Q profit   [08:58AM  Associated Press]
▶ Should You Buy Core Molding Technologies, Inc. (CMT)?   [Nov-26  03:40AM  at Insider Monkey]
▶ 10-Q for Core Molding Technologies, Inc.   [Aug-13  08:10PM  at Company Spotlight]
▶ Core Molding Technologies Appoints New Board Member   [Aug-06  08:00AM  PR Newswire]
▶ 10-Q for Core Molding Technologies, Inc.   [May-10  08:11PM  at Company Spotlight]
▶ 10-K for Core Molding Technologies, Inc.   [May-05  08:12PM  at Company Spotlight]
▶ 10-Q for Core Molding Technologies, Inc.   [Nov-13  07:08PM  Company Spotlight]
Stock chart of CMT Financial statements of CMT
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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