Intrinsic value of Core Molding Technologies - CMT

Previous Close

$22.64

  Intrinsic Value

$63.23

stock screener

  Rating & Target

str. buy

+179%

  Value-price divergence*

+198%

Previous close

$22.64

 
Intrinsic value

$63.23

 
Up/down potential

+179%

 
Rating

str. buy

 
Value-price divergence*

+198%

*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
  20.50
  18.95
  17.56
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.01
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.58
  7.33
  7.09
  6.88
  6.70
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
Revenue, $m
  175
  211
  251
  295
  343
  395
  451
  511
  574
  641
  711
  785
  863
  944
  1,028
  1,116
  1,208
  1,303
  1,401
  1,504
  1,611
  1,722
  1,837
  1,957
  2,082
  2,211
  2,346
  2,487
  2,634
  2,787
  2,947
Variable operating expenses, $m
 
  158
  188
  221
  257
  296
  337
  382
  429
  479
  532
  587
  645
  706
  769
  835
  903
  974
  1,048
  1,125
  1,205
  1,288
  1,374
  1,463
  1,557
  1,654
  1,755
  1,860
  1,970
  2,084
  2,204
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
  192
  223
  257
  293
  333
  375
  421
  469
  520
  574
  630
  689
  751
  816
  883
  952
  1,024
  1,099
  1,178
  1,259
  1,343
  1,431
  1,521
  1,617
  1,715
  1,818
  1,924
  2,036
  2,152
  2,273
Operating income, $m
  12
  19
  28
  39
  50
  62
  75
  89
  104
  120
  137
  155
  173
  192
  213
  234
  255
  278
  302
  326
  352
  379
  406
  435
  465
  496
  529
  563
  598
  635
  674
EBITDA, $m
  18
  26
  37
  49
  61
  75
  90
  107
  124
  142
  161
  181
  202
  224
  247
  271
  296
  322
  349
  377
  406
  436
  468
  500
  535
  570
  607
  646
  686
  728
  772
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  15
  16
  17
Earnings before tax, $m
  11
  19
  28
  38
  49
  61
  74
  87
  102
  117
  134
  151
  169
  188
  207
  228
  249
  271
  294
  318
  343
  369
  396
  424
  453
  484
  515
  548
  583
  619
  656
Tax expense, $m
  4
  5
  8
  10
  13
  16
  20
  24
  27
  32
  36
  41
  46
  51
  56
  61
  67
  73
  79
  86
  93
  100
  107
  114
  122
  131
  139
  148
  157
  167
  177
Net income, $m
  7
  14
  20
  28
  36
  44
  54
  64
  74
  86
  98
  110
  123
  137
  151
  166
  182
  198
  215
  232
  250
  269
  289
  309
  331
  353
  376
  400
  425
  452
  479

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
  126
  150
  177
  206
  237
  270
  306
  344
  384
  427
  471
  518
  566
  617
  670
  724
  781
  841
  902
  966
  1,033
  1,102
  1,174
  1,249
  1,327
  1,408
  1,492
  1,580
  1,672
  1,768
Adjusted assets (=assets-cash), $m
  105
  126
  150
  177
  206
  237
  270
  306
  344
  384
  427
  471
  518
  566
  617
  670
  724
  781
  841
  902
  966
  1,033
  1,102
  1,174
  1,249
  1,327
  1,408
  1,492
  1,580
  1,672
  1,768
Revenue / Adjusted assets
  1.667
  1.675
  1.673
  1.667
  1.665
  1.667
  1.670
  1.670
  1.669
  1.669
  1.665
  1.667
  1.666
  1.668
  1.666
  1.666
  1.669
  1.668
  1.666
  1.667
  1.668
  1.667
  1.667
  1.667
  1.667
  1.666
  1.666
  1.667
  1.667
  1.667
  1.667
Average production assets, $m
  74
  89
  105
  124
  144
  166
  189
  214
  241
  269
  299
  330
  362
  396
  432
  469
  507
  547
  589
  632
  677
  723
  772
  822
  874
  929
  986
  1,045
  1,106
  1,171
  1,238
Working capital, $m
  39
  17
  20
  24
  27
  32
  36
  41
  46
  51
  57
  63
  69
  76
  82
  89
  97
  104
  112
  120
  129
  138
  147
  157
  167
  177
  188
  199
  211
  223
  236
Total debt, $m
  10
  14
  21
  30
  39
  48
  59
  70
  82
  95
  108
  122
  137
  152
  168
  184
  201
  219
  238
  257
  277
  298
  320
  343
  366
  391
  416
  443
  470
  499
  529
Total liabilities, $m
  37
  40
  47
  56
  65
  74
  85
  96
  108
  121
  134
  148
  163
  178
  194
  210
  227
  245
  264
  283
  303
  324
  346
  369
  392
  417
  442
  469
  496
  525
  555
Total equity, $m
  97
  87
  103
  121
  141
  163
  186
  210
  236
  264
  293
  323
  355
  388
  423
  459
  497
  536
  577
  619
  663
  708
  756
  805
  857
  910
  966
  1,024
  1,084
  1,147
  1,213
Total liabilities and equity, $m
  134
  127
  150
  177
  206
  237
  271
  306
  344
  385
  427
  471
  518
  566
  617
  669
  724
  781
  841
  902
  966
  1,032
  1,102
  1,174
  1,249
  1,327
  1,408
  1,493
  1,580
  1,672
  1,768
Debt-to-equity ratio
  0.103
  0.160
  0.210
  0.240
  0.270
  0.300
  0.320
  0.330
  0.350
  0.360
  0.370
  0.380
  0.380
  0.390
  0.400
  0.400
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.440
  0.440
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
  14
  20
  28
  36
  44
  54
  64
  74
  86
  98
  110
  123
  137
  151
  166
  182
  198
  215
  232
  250
  269
  289
  309
  331
  353
  376
  400
  425
  452
  479
Depreciation, amort., depletion, $m
  6
  7
  9
  10
  12
  13
  15
  17
  19
  22
  24
  26
  29
  31
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  69
  74
  78
  83
  88
  93
  98
Funds from operations, $m
  37
  21
  29
  38
  47
  58
  69
  81
  94
  107
  121
  136
  152
  168
  186
  203
  222
  241
  261
  282
  304
  327
  350
  375
  400
  427
  454
  483
  513
  545
  577
Change in working capital, $m
  11
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
Cash from operations, $m
  26
  18
  26
  34
  43
  54
  64
  76
  89
  102
  116
  130
  146
  162
  179
  196
  215
  234
  254
  274
  296
  318
  341
  365
  390
  416
  444
  472
  502
  532
  565
Maintenance CAPEX, $m
  0
  -6
  -7
  -8
  -10
  -11
  -13
  -15
  -17
  -19
  -21
  -24
  -26
  -29
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
New CAPEX, $m
  -3
  -15
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -64
  -67
Cash from investing activities, $m
  -3
  -21
  -24
  -26
  -30
  -33
  -36
  -40
  -44
  -47
  -51
  -55
  -59
  -63
  -66
  -71
  -75
  -80
  -84
  -90
  -95
  -101
  -105
  -111
  -117
  -124
  -131
  -137
  -145
  -152
  -160
Free cash flow, $m
  23
  -3
  2
  7
  13
  20
  28
  36
  45
  55
  65
  76
  87
  99
  112
  125
  139
  154
  169
  184
  201
  218
  235
  254
  273
  292
  313
  335
  357
  380
  405
Issuance/(repayment) of debt, $m
  -4
  7
  8
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  27
  28
  29
  30
Issuance/(repurchase) of shares, $m
  0
  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
Cash from financing (excl. dividends), $m  
  -4
  8
  8
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  27
  28
  29
  30
Total cash flow (excl. dividends), $m
  19
  5
  9
  16
  22
  30
  38
  47
  57
  67
  78
  90
  102
  115
  128
  142
  156
  171
  187
  204
  221
  238
  257
  276
  296
  317
  339
  361
  385
  409
  435
Retained Cash Flow (-), $m
  -8
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -56
  -58
  -60
  -63
  -66
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
  -7
  -3
  3
  9
  15
  23
  31
  40
  49
  59
  70
  81
  93
  106
  119
  132
  147
  161
  177
  193
  209
  227
  245
  263
  283
  303
  324
  346
  369
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
 
  15
  -6
  -2
  2
  7
  11
  15
  19
  23
  26
  28
  30
  31
  31
  31
  30
  29
  27
  25
  22
  20
  17
  15
  12
  10
  8
  7
  5
  4
  3
Current shareholders' claim on cash, %
  100
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3
  99.3

Core Molding Technologies, Inc. is a manufacturer of sheet molding compound (SMC) and molder of fiberglass reinforced plastics. The Company along with its subsidiaries operates in the plastics market in a family of products known as reinforced plastics. It operates through manufacturing of SMC and molder of fiberglass reinforced plastics segment. It produces and sells SMC and molded products for varied markets, such as medium and heavy-duty trucks, automobiles, marine, construction and other commercial markets. 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, spray-up, hand-lay-up, and resin transfer molding. It offers reaction injection molding, utilizing dicyclopentadiene technology. It operates over five production facilities in Columbus, Ohio; Batavia, Ohio; Gaffney, South Carolina; Winona, Minnesota, and Matamoros, Mexico.

FINANCIAL RATIOS  of  Core Molding Technologies (CMT)

Valuation Ratios
P/E Ratio 24.7
Price to Sales 1
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 6.7
Price to Free Cash Flow 7.5
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 20.5% 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 7.859 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]
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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