Intrinsic value of Multi Packaging Solutions International - MPSX

Previous Close

$17.99

  Intrinsic Value

$6.73

stock screener

  Rating & Target

str. sell

-63%

  Value-price divergence*

-111%

Previous close

$17.99

 
Intrinsic value

$6.73

 
Up/down potential

-63%

 
Rating

str. sell

 
Value-price divergence*

-111%

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

We calculate the intrinsic value of MPSX 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 1.4

 

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, %
  2.66
  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
  1,661
  1,694
  1,733
  1,778
  1,828
  1,883
  1,944
  2,010
  2,082
  2,159
  2,242
  2,331
  2,425
  2,526
  2,633
  2,746
  2,867
  2,994
  3,129
  3,271
  3,422
  3,580
  3,747
  3,924
  4,109
  4,305
  4,511
  4,728
  4,956
  5,196
  5,449
Variable operating expenses, $m
 
  1,300
  1,329
  1,362
  1,399
  1,440
  1,485
  1,534
  1,587
  1,644
  1,706
  1,725
  1,795
  1,869
  1,948
  2,032
  2,121
  2,216
  2,315
  2,421
  2,532
  2,649
  2,773
  2,904
  3,041
  3,186
  3,338
  3,499
  3,668
  3,845
  4,032
Fixed operating expenses, $m
 
  322
  330
  338
  347
  355
  364
  373
  383
  392
  402
  412
  422
  433
  444
  455
  466
  478
  490
  502
  515
  527
  541
  554
  568
  582
  597
  612
  627
  643
  659
Total operating expenses, $m
  1,581
  1,622
  1,659
  1,700
  1,746
  1,795
  1,849
  1,907
  1,970
  2,036
  2,108
  2,137
  2,217
  2,302
  2,392
  2,487
  2,587
  2,694
  2,805
  2,923
  3,047
  3,176
  3,314
  3,458
  3,609
  3,768
  3,935
  4,111
  4,295
  4,488
  4,691
Operating income, $m
  80
  72
  74
  78
  82
  88
  95
  103
  112
  123
  134
  194
  208
  224
  241
  259
  279
  301
  324
  349
  375
  403
  434
  466
  501
  537
  576
  618
  662
  708
  758
EBITDA, $m
  209
  199
  203
  208
  215
  224
  233
  245
  257
  272
  287
  304
  323
  344
  366
  389
  415
  443
  472
  504
  537
  573
  611
  652
  695
  741
  790
  842
  897
  955
  1,016
Interest expense (income), $m
  60
  51
  53
  54
  56
  59
  61
  64
  66
  70
  73
  76
  80
  84
  89
  93
  98
  104
  109
  115
  121
  128
  134
  142
  149
  157
  166
  175
  184
  194
  204
Earnings before tax, $m
  9
  21
  21
  23
  26
  29
  34
  39
  46
  53
  62
  117
  128
  139
  152
  166
  181
  197
  215
  234
  254
  276
  299
  324
  351
  380
  410
  443
  478
  515
  554
Tax expense, $m
  8
  6
  6
  6
  7
  8
  9
  11
  12
  14
  17
  32
  35
  38
  41
  45
  49
  53
  58
  63
  69
  74
  81
  88
  95
  103
  111
  120
  129
  139
  149
Net income, $m
  2
  15
  16
  17
  19
  21
  25
  29
  33
  39
  45
  86
  93
  102
  111
  121
  132
  144
  157
  171
  185
  201
  219
  237
  256
  277
  300
  323
  349
  376
  404

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  45
  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
  1,708
  1,696
  1,735
  1,780
  1,830
  1,885
  1,946
  2,012
  2,084
  2,161
  2,244
  2,333
  2,428
  2,528
  2,635
  2,749
  2,870
  2,997
  3,132
  3,275
  3,425
  3,584
  3,751
  3,928
  4,114
  4,309
  4,516
  4,733
  4,961
  5,201
  5,454
Adjusted assets (=assets-cash), $m
  1,663
  1,696
  1,735
  1,780
  1,830
  1,885
  1,946
  2,012
  2,084
  2,161
  2,244
  2,333
  2,428
  2,528
  2,635
  2,749
  2,870
  2,997
  3,132
  3,275
  3,425
  3,584
  3,751
  3,928
  4,114
  4,309
  4,516
  4,733
  4,961
  5,201
  5,454
Revenue / Adjusted assets
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
Average production assets, $m
  787
  803
  822
  843
  866
  893
  921
  953
  987
  1,023
  1,063
  1,105
  1,150
  1,197
  1,248
  1,302
  1,359
  1,419
  1,483
  1,551
  1,622
  1,697
  1,776
  1,860
  1,948
  2,041
  2,138
  2,241
  2,349
  2,463
  2,583
Working capital, $m
  216
  181
  185
  190
  196
  201
  208
  215
  223
  231
  240
  249
  259
  270
  282
  294
  307
  320
  335
  350
  366
  383
  401
  420
  440
  461
  483
  506
  530
  556
  583
Total debt, $m
  908
  927
  956
  990
  1,028
  1,070
  1,116
  1,166
  1,221
  1,279
  1,342
  1,409
  1,481
  1,557
  1,639
  1,725
  1,816
  1,913
  2,015
  2,123
  2,237
  2,357
  2,484
  2,618
  2,759
  2,908
  3,064
  3,228
  3,401
  3,584
  3,775
Total liabilities, $m
  1,267
  1,286
  1,315
  1,349
  1,387
  1,429
  1,475
  1,525
  1,580
  1,638
  1,701
  1,768
  1,840
  1,916
  1,998
  2,084
  2,175
  2,272
  2,374
  2,482
  2,596
  2,716
  2,843
  2,977
  3,118
  3,267
  3,423
  3,587
  3,760
  3,943
  4,134
Total equity, $m
  441
  410
  420
  431
  443
  456
  471
  487
  504
  523
  543
  565
  587
  612
  638
  665
  694
  725
  758
  792
  829
  867
  908
  950
  995
  1,043
  1,093
  1,145
  1,201
  1,259
  1,320
Total liabilities and equity, $m
  1,708
  1,696
  1,735
  1,780
  1,830
  1,885
  1,946
  2,012
  2,084
  2,161
  2,244
  2,333
  2,427
  2,528
  2,636
  2,749
  2,869
  2,997
  3,132
  3,274
  3,425
  3,583
  3,751
  3,927
  4,113
  4,310
  4,516
  4,732
  4,961
  5,202
  5,454
Debt-to-equity ratio
  2.059
  2.260
  2.280
  2.300
  2.320
  2.350
  2.370
  2.390
  2.420
  2.450
  2.470
  2.500
  2.520
  2.550
  2.570
  2.590
  2.620
  2.640
  2.660
  2.680
  2.700
  2.720
  2.740
  2.750
  2.770
  2.790
  2.800
  2.820
  2.830
  2.850
  2.860
Adjusted equity ratio
  0.238
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  15
  16
  17
  19
  21
  25
  29
  33
  39
  45
  86
  93
  102
  111
  121
  132
  144
  157
  171
  185
  201
  219
  237
  256
  277
  300
  323
  349
  376
  404
Depreciation, amort., depletion, $m
  129
  127
  129
  131
  133
  136
  139
  142
  145
  149
  153
  110
  115
  120
  125
  130
  136
  142
  148
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
Funds from operations, $m
  94
  142
  144
  148
  152
  157
  163
  170
  179
  188
  198
  196
  208
  222
  236
  251
  268
  286
  305
  326
  348
  371
  396
  423
  451
  481
  513
  547
  584
  622
  662
Change in working capital, $m
  -39
  4
  4
  5
  5
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
Cash from operations, $m
  133
  138
  140
  143
  147
  151
  157
  163
  171
  179
  189
  187
  198
  211
  224
  239
  255
  272
  291
  310
  332
  354
  378
  404
  431
  460
  491
  524
  559
  596
  635
Maintenance CAPEX, $m
  0
  -79
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -99
  -102
  -106
  -110
  -115
  -120
  -125
  -130
  -136
  -142
  -148
  -155
  -162
  -170
  -178
  -186
  -195
  -204
  -214
  -224
  -235
  -246
New CAPEX, $m
  -59
  -17
  -18
  -21
  -24
  -26
  -29
  -31
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
Cash from investing activities, $m
  -66
  -96
  -98
  -103
  -108
  -113
  -118
  -123
  -129
  -136
  -141
  -148
  -155
  -163
  -171
  -179
  -187
  -196
  -206
  -215
  -226
  -237
  -249
  -262
  -274
  -288
  -302
  -317
  -332
  -349
  -366
Free cash flow, $m
  67
  43
  41
  40
  39
  38
  39
  40
  42
  44
  47
  38
  43
  48
  54
  60
  68
  76
  85
  95
  105
  117
  129
  143
  157
  173
  190
  208
  227
  248
  269
Issuance/(repayment) of debt, $m
  -259
  26
  30
  34
  38
  42
  46
  50
  54
  59
  63
  67
  72
  76
  81
  86
  91
  97
  102
  108
  114
  120
  127
  134
  141
  148
  156
  165
  173
  182
  192
Issuance/(repurchase) of shares, $m
  186
  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  
  -79
  26
  30
  34
  38
  42
  46
  50
  54
  59
  63
  67
  72
  76
  81
  86
  91
  97
  102
  108
  114
  120
  127
  134
  141
  148
  156
  165
  173
  182
  192
Total cash flow (excl. dividends), $m
  -11
  69
  71
  73
  77
  80
  85
  90
  96
  103
  110
  106
  115
  124
  135
  147
  159
  173
  187
  203
  219
  237
  256
  277
  298
  321
  346
  372
  400
  430
  461
Retained Cash Flow (-), $m
  -159
  -7
  -9
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -41
  -43
  -45
  -47
  -50
  -53
  -55
  -58
  -61
Prev. year cash balance distribution, $m
 
  38
  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
 
  99
  61
  63
  64
  67
  70
  74
  79
  84
  90
  84
  92
  100
  109
  119
  130
  142
  154
  168
  183
  199
  216
  234
  253
  274
  296
  320
  345
  371
  400
Discount rate, %
 
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
 
  91
  51
  47
  43
  39
  36
  33
  30
  27
  24
  18
  16
  14
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Multi Packaging Solutions International Limited prints, manufactures, and sells paperboard, paper, and plastic packaging products in North America, Europe, and Asia. It offers folding cartons, inserts, outserts, booklets, folders, cover sheets, and slipcases. The company also provides labels, including single-panel, multi-panel, multi-ply, and extended content labels, as well as cut and stack labels; and rigid packaging products comprising rigid boxes and tubes, as well as other consumer packaging products that include transaction cards, point-of-purchase displays, brochures, product literature, marketing materials and grower tags, and plant stakes for the horticultural market. In addition, it offers a range of value-added services, such as digital workflow, creative, pre-press, vendor managed inventory, late stage customization, co-located facilities, and brand protection/e-pedigree services, as well as environmental, new product development, and customized supply chain solutions. The company serves personal care, spirits, cosmetics, confectionary, healthcare, and multi-media markets. Multi Packaging Solutions International Limited was founded in 2005 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Multi Packaging Solutions International (MPSX)

Valuation Ratios
P/E Ratio 696.7
Price to Sales 0.8
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 18.8
Growth Rates
Sales Growth Rate 2.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.7%
Cap. Spend. - 3 Yr. Gr. Rate 20.7%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 204.3%
Total Debt to Equity 205.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. 0.7%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. -2.8%
Return On Equity 0.6%
Return On Equity - 3 Yr. Avg. -29.9%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 21.3%
Gross Margin - 3 Yr. Avg. 20%
EBITDA Margin 11.9%
EBITDA Margin - 3 Yr. Avg. 8.9%
Operating Margin 4.8%
Oper. Margin - 3 Yr. Avg. 0.6%
Pre-Tax Margin 0.5%
Pre-Tax Margin - 3 Yr. Avg. -3.8%
Net Profit Margin 0.1%
Net Profit Margin - 3 Yr. Avg. -2.7%
Effective Tax Rate 88.9%
Eff/ Tax Rate - 3 Yr. Avg. 26.9%
Payout Ratio 0%

MPSX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MPSX stock intrinsic value calculation we used $1661 million for the last fiscal year's total revenue generated by Multi Packaging Solutions International. The default revenue input number comes from 2016 income statement of Multi Packaging Solutions 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 MPSX 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 9.2%, whose default value for MPSX is calculated based on our internal credit rating of Multi Packaging Solutions 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 Multi Packaging Solutions 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 MPSX stock the variable cost ratio is equal to 76.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $314 million in the base year in the intrinsic value calculation for MPSX 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 5.7% for Multi Packaging Solutions International.

Corporate tax rate of 27% is the nominal tax rate for Multi Packaging Solutions 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 MPSX 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 MPSX are equal to 47.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Multi Packaging Solutions 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 MPSX is equal to 10.7%. 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 - $441 million for Multi Packaging Solutions 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 77.441 million for Multi Packaging Solutions 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 Multi Packaging Solutions International at the current share price and the inputted number of shares is $1.4 billion.

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Financial statements of MPSX
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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