Intrinsic value of Cooper-Standard Holdings - CPS

Previous Close

$133.94

  Intrinsic Value

$175.37

stock screener

  Rating & Target

buy

+31%

Previous close

$133.94

 
Intrinsic value

$175.37

 
Up/down potential

+31%

 
Rating

buy

We calculate the intrinsic value of CPS 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, %
  3.89
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  3,473
  3,770
  3,931
  4,102
  4,284
  4,475
  4,678
  4,892
  5,118
  5,356
  5,607
  5,872
  6,151
  6,444
  6,754
  7,079
  7,421
  7,781
  8,160
  8,558
  8,977
  9,417
  9,880
  10,366
  10,877
  11,414
  11,978
  12,570
  13,193
  13,847
  14,534
Variable operating expenses, $m
 
  3,411
  3,556
  3,709
  3,872
  4,044
  4,226
  4,419
  4,622
  4,836
  5,061
  5,275
  5,526
  5,789
  6,067
  6,359
  6,667
  6,990
  7,330
  7,688
  8,064
  8,460
  8,875
  9,312
  9,771
  10,253
  10,760
  11,292
  11,852
  12,439
  13,057
Fixed operating expenses, $m
 
  89
  91
  93
  95
  97
  99
  101
  104
  106
  108
  111
  113
  115
  118
  121
  123
  126
  129
  132
  134
  137
  140
  144
  147
  150
  153
  157
  160
  164
  167
Total operating expenses, $m
  3,234
  3,500
  3,647
  3,802
  3,967
  4,141
  4,325
  4,520
  4,726
  4,942
  5,169
  5,386
  5,639
  5,904
  6,185
  6,480
  6,790
  7,116
  7,459
  7,820
  8,198
  8,597
  9,015
  9,456
  9,918
  10,403
  10,913
  11,449
  12,012
  12,603
  13,224
Operating income, $m
  239
  270
  285
  300
  316
  334
  352
  372
  393
  415
  438
  486
  512
  540
  569
  599
  631
  665
  701
  738
  778
  820
  864
  910
  959
  1,010
  1,064
  1,121
  1,181
  1,244
  1,310
EBITDA, $m
  362
  413
  432
  453
  475
  498
  523
  550
  577
  607
  638
  671
  705
  742
  781
  821
  864
  909
  957
  1,007
  1,060
  1,116
  1,174
  1,236
  1,301
  1,369
  1,441
  1,516
  1,595
  1,679
  1,767
Interest expense (income), $m
  0
  42
  46
  51
  56
  61
  67
  72
  79
  85
  92
  99
  107
  115
  123
  132
  142
  152
  162
  173
  185
  197
  209
  223
  237
  251
  267
  283
  300
  318
  337
Earnings before tax, $m
  195
  229
  239
  249
  261
  273
  286
  299
  314
  329
  346
  387
  405
  425
  445
  467
  489
  513
  539
  565
  594
  623
  655
  688
  722
  759
  797
  838
  881
  926
  973
Tax expense, $m
  55
  62
  64
  67
  70
  74
  77
  81
  85
  89
  93
  105
  109
  115
  120
  126
  132
  139
  145
  153
  160
  168
  177
  186
  195
  205
  215
  226
  238
  250
  263
Net income, $m
  139
  167
  174
  182
  190
  199
  209
  219
  229
  241
  252
  283
  296
  310
  325
  341
  357
  375
  393
  413
  433
  455
  478
  502
  527
  554
  582
  612
  643
  676
  710

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  480
  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
  2,492
  2,841
  2,963
  3,091
  3,228
  3,372
  3,525
  3,686
  3,857
  4,036
  4,226
  4,425
  4,635
  4,856
  5,089
  5,335
  5,592
  5,864
  6,149
  6,449
  6,765
  7,096
  7,445
  7,811
  8,196
  8,601
  9,026
  9,473
  9,942
  10,435
  10,953
Adjusted assets (=assets-cash), $m
  2,012
  2,841
  2,963
  3,091
  3,228
  3,372
  3,525
  3,686
  3,857
  4,036
  4,226
  4,425
  4,635
  4,856
  5,089
  5,335
  5,592
  5,864
  6,149
  6,449
  6,765
  7,096
  7,445
  7,811
  8,196
  8,601
  9,026
  9,473
  9,942
  10,435
  10,953
Revenue / Adjusted assets
  1.726
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
Average production assets, $m
  875
  1,184
  1,234
  1,288
  1,345
  1,405
  1,469
  1,536
  1,607
  1,682
  1,761
  1,844
  1,931
  2,024
  2,121
  2,223
  2,330
  2,443
  2,562
  2,687
  2,819
  2,957
  3,102
  3,255
  3,415
  3,584
  3,761
  3,947
  4,143
  4,348
  4,564
Working capital, $m
  537
  -369
  -385
  -402
  -420
  -439
  -458
  -479
  -502
  -525
  -550
  -575
  -603
  -632
  -662
  -694
  -727
  -763
  -800
  -839
  -880
  -923
  -968
  -1,016
  -1,066
  -1,119
  -1,174
  -1,232
  -1,293
  -1,357
  -1,424
Total debt, $m
  763
  840
  924
  1,014
  1,110
  1,210
  1,317
  1,429
  1,548
  1,673
  1,805
  1,944
  2,090
  2,245
  2,407
  2,578
  2,758
  2,947
  3,146
  3,355
  3,575
  3,806
  4,049
  4,304
  4,573
  4,855
  5,151
  5,462
  5,789
  6,133
  6,494
Total liabilities, $m
  1,794
  1,980
  2,065
  2,155
  2,250
  2,351
  2,457
  2,569
  2,688
  2,813
  2,945
  3,084
  3,231
  3,385
  3,547
  3,718
  3,898
  4,087
  4,286
  4,495
  4,715
  4,946
  5,189
  5,445
  5,713
  5,995
  6,291
  6,603
  6,930
  7,273
  7,634
Total equity, $m
  697
  861
  898
  937
  978
  1,022
  1,068
  1,117
  1,169
  1,223
  1,280
  1,341
  1,404
  1,472
  1,542
  1,616
  1,695
  1,777
  1,863
  1,954
  2,050
  2,150
  2,256
  2,367
  2,484
  2,606
  2,735
  2,870
  3,012
  3,162
  3,319
Total liabilities and equity, $m
  2,491
  2,841
  2,963
  3,092
  3,228
  3,373
  3,525
  3,686
  3,857
  4,036
  4,225
  4,425
  4,635
  4,857
  5,089
  5,334
  5,593
  5,864
  6,149
  6,449
  6,765
  7,096
  7,445
  7,812
  8,197
  8,601
  9,026
  9,473
  9,942
  10,435
  10,953
Debt-to-equity ratio
  1.095
  0.980
  1.030
  1.080
  1.130
  1.180
  1.230
  1.280
  1.320
  1.370
  1.410
  1.450
  1.490
  1.530
  1.560
  1.590
  1.630
  1.660
  1.690
  1.720
  1.740
  1.770
  1.790
  1.820
  1.840
  1.860
  1.880
  1.900
  1.920
  1.940
  1.960
Adjusted equity ratio
  0.108
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  139
  167
  174
  182
  190
  199
  209
  219
  229
  241
  252
  283
  296
  310
  325
  341
  357
  375
  393
  413
  433
  455
  478
  502
  527
  554
  582
  612
  643
  676
  710
Depreciation, amort., depletion, $m
  123
  142
  148
  153
  159
  165
  171
  178
  185
  192
  200
  184
  193
  202
  212
  222
  233
  244
  256
  269
  282
  296
  310
  325
  342
  358
  376
  395
  414
  435
  456
Funds from operations, $m
  428
  309
  322
  335
  349
  364
  380
  396
  414
  433
  453
  467
  489
  512
  537
  563
  590
  619
  650
  682
  715
  751
  788
  827
  869
  912
  958
  1,006
  1,057
  1,111
  1,167
Change in working capital, $m
  64
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
Cash from operations, $m
  364
  324
  337
  352
  367
  383
  399
  417
  436
  456
  477
  493
  516
  541
  567
  595
  624
  654
  687
  721
  756
  794
  833
  875
  919
  965
  1,014
  1,065
  1,118
  1,175
  1,234
Maintenance CAPEX, $m
  0
  -114
  -118
  -123
  -129
  -135
  -141
  -147
  -154
  -161
  -168
  -176
  -184
  -193
  -202
  -212
  -222
  -233
  -244
  -256
  -269
  -282
  -296
  -310
  -325
  -342
  -358
  -376
  -395
  -414
  -435
New CAPEX, $m
  -164
  -47
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -107
  -113
  -119
  -125
  -131
  -138
  -145
  -153
  -160
  -169
  -177
  -186
  -196
  -205
  -216
Cash from investing activities, $m
  -198
  -161
  -169
  -177
  -186
  -195
  -205
  -214
  -225
  -236
  -247
  -259
  -272
  -285
  -299
  -314
  -329
  -346
  -363
  -381
  -400
  -420
  -441
  -463
  -485
  -511
  -535
  -562
  -591
  -619
  -651
Free cash flow, $m
  166
  164
  168
  174
  181
  188
  195
  203
  212
  221
  230
  234
  244
  256
  268
  281
  294
  308
  323
  339
  356
  374
  392
  412
  433
  455
  478
  502
  528
  555
  584
Issuance/(repayment) of debt, $m
  -27
  82
  85
  90
  95
  101
  106
  112
  119
  125
  132
  139
  146
  154
  162
  171
  180
  189
  199
  209
  220
  231
  243
  255
  268
  282
  296
  311
  327
  344
  361
Issuance/(repurchase) of shares, $m
  -21
  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  
  -63
  82
  85
  90
  95
  101
  106
  112
  119
  125
  132
  139
  146
  154
  162
  171
  180
  189
  199
  209
  220
  231
  243
  255
  268
  282
  296
  311
  327
  344
  361
Total cash flow (excl. dividends), $m
  102
  245
  253
  264
  276
  289
  302
  316
  330
  346
  362
  373
  391
  410
  430
  452
  474
  497
  522
  548
  576
  605
  635
  668
  701
  737
  774
  814
  855
  899
  944
Retained Cash Flow (-), $m
  -94
  -34
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -91
  -96
  -100
  -106
  -111
  -117
  -123
  -129
  -135
  -142
  -149
  -157
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
 
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
Cash available for distribution, $m
 
  212
  216
  225
  235
  245
  255
  267
  279
  291
  305
  312
  327
  343
  360
  377
  396
  415
  436
  458
  480
  504
  530
  557
  585
  614
  646
  678
  713
  749
  788
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
 
  203
  198
  196
  193
  190
  185
  180
  174
  167
  160
  148
  140
  130
  121
  111
  101
  90
  80
  70
  61
  52
  44
  36
  30
  24
  19
  15
  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

Cooper-Standard Holdings Inc. is a holding company. The Company designs, manufactures and sells sealing, fuel and brake delivery, fluid transfer and anti-vibration systems for use in passenger vehicles and light trucks manufactured by global original equipment manufacturers (OEMs). The Company operates through four segments: North America, Europe, Asia Pacific and South America. The Company's products are used in passenger vehicles and light trucks. As of December 31, 2016, the Company's operations were conducted through 123 leased and joint venture facilities in 20 countries (North America: Canada, Mexico and the United States; Asia Pacific: China, India, Japan, South Korea and Thailand; Europe: Czech Republic, France, Germany, Italy, the Netherlands, Poland, Romania, Serbia, Spain, Sweden and the United Kingdom, and South America: Brazil), of which 90 are manufacturing facilities and 33 have design, engineering, administrative or logistics designations.

FINANCIAL RATIOS  of  Cooper-Standard Holdings (CPS)

Valuation Ratios
P/E Ratio 17
Price to Sales 0.7
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 6.5
Price to Free Cash Flow 11.8
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.2%
Cap. Spend. - 3 Yr. Gr. Rate -2.2%
Financial Strength
Quick Ratio 15
Current Ratio 0.1
LT Debt to Equity 104.7%
Total Debt to Equity 109.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 21.4%
Return On Equity - 3 Yr. Avg. 16.1%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 19.1%
Gross Margin - 3 Yr. Avg. 17.5%
EBITDA Margin 9.2%
EBITDA Margin - 3 Yr. Avg. 7.8%
Operating Margin 6.9%
Oper. Margin - 3 Yr. Avg. 5.4%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 4%
Net Profit Margin - 3 Yr. Avg. 2.9%
Effective Tax Rate 28.2%
Eff/ Tax Rate - 3 Yr. Avg. 34.6%
Payout Ratio 0%

CPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPS stock intrinsic value calculation we used $3618 million for the last fiscal year's total revenue generated by Cooper-Standard Holdings. The default revenue input number comes from 2016 income statement of Cooper-Standard Holdings. 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 CPS stock valuation model: a) initial revenue growth rate of 4.2% 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 CPS is calculated based on our internal credit rating of Cooper-Standard Holdings, 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 Cooper-Standard Holdings.
    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 CPS stock the variable cost ratio is equal to 90.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $87 million in the base year in the intrinsic value calculation for CPS 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 5.5% for Cooper-Standard Holdings.

Corporate tax rate of 27% is the nominal tax rate for Cooper-Standard Holdings. 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 CPS stock is equal to 0.7%.

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 CPS are equal to 31.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Cooper-Standard Holdings 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 CPS is equal to -9.8%. 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 - $827 million for Cooper-Standard Holdings - 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 18 million for Cooper-Standard Holdings 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 Cooper-Standard Holdings at the current share price and the inputted number of shares is $2.4 billion.

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COMPANY NEWS

▶ Why Cooper-Standard Holdings Inc (NYSE:CPS) Could Be A Buy   [Jun-22-18 07:58AM  Simply Wall St.]
▶ Cooper-Standard: 1Q Earnings Snapshot   [May-01-18 06:59PM  Associated Press]
▶ Cooper-Standard Holdings Inc. to Host Earnings Call   [Feb-16-18 07:00AM  ACCESSWIRE]
▶ Cooper Standard Reports Record 2017 Results   [Feb-15-18 04:45PM  PR Newswire]
▶ Cooper-Standard misses 3Q profit forecasts   [Oct-31-17 05:03PM  Associated Press]
▶ Cooper Standard Unveils Global Technology Center   [Oct-25-17 08:30AM  PR Newswire]
▶ Cooper-Standard beats Street 2Q forecasts   [02:36AM  Associated Press]
▶ Cooper-Standard tops Street 1Q forecasts   [May-02-17 07:41PM  Associated Press]
Financial statements of CPS
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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