Intrinsic value of Schnitzer Steel Industries - SCHN

Previous Close

$25.60

  Intrinsic Value

$3.12

stock screener

  Rating & Target

str. sell

-88%

  Value-price divergence*

-61%

Previous close

$25.60

 
Intrinsic value

$3.12

 
Up/down potential

-88%

 
Rating

str. sell

 
Value-price divergence*

-61%

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

We calculate the intrinsic value of SCHN 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 0.7

 

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, %
  -29.35
  32.20
  29.48
  27.03
  24.83
  22.85
  21.06
  19.46
  18.01
  16.71
  15.54
  14.48
  13.54
  12.68
  11.91
  11.22
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
Revenue, $m
  1,353
  1,789
  2,316
  2,942
  3,672
  4,511
  5,462
  6,524
  7,699
  8,986
  10,382
  11,886
  13,494
  15,206
  17,017
  18,927
  20,933
  23,035
  25,232
  27,524
  29,911
  32,396
  34,980
  37,666
  40,457
  43,358
  46,372
  49,506
  52,764
  56,153
  59,680
Variable operating expenses, $m
 
  1,966
  2,540
  3,222
  4,018
  4,933
  5,968
  7,126
  8,406
  9,808
  11,329
  12,951
  14,704
  16,569
  18,543
  20,624
  22,810
  25,100
  27,494
  29,991
  32,593
  35,300
  38,116
  41,043
  44,084
  47,245
  50,530
  53,944
  57,495
  61,188
  65,031
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
  1,360
  1,966
  2,540
  3,222
  4,018
  4,933
  5,968
  7,126
  8,406
  9,808
  11,329
  12,951
  14,704
  16,569
  18,543
  20,624
  22,810
  25,100
  27,494
  29,991
  32,593
  35,300
  38,116
  41,043
  44,084
  47,245
  50,530
  53,944
  57,495
  61,188
  65,031
Operating income, $m
  -8
  -177
  -224
  -280
  -346
  -421
  -506
  -602
  -707
  -822
  -948
  -1,066
  -1,210
  -1,363
  -1,526
  -1,697
  -1,877
  -2,065
  -2,262
  -2,468
  -2,682
  -2,905
  -3,136
  -3,377
  -3,627
  -3,887
  -4,158
  -4,439
  -4,731
  -5,035
  -5,351
EBITDA, $m
  47
  -109
  -141
  -179
  -224
  -275
  -333
  -398
  -469
  -548
  -633
  -725
  -823
  -927
  -1,037
  -1,154
  -1,276
  -1,404
  -1,538
  -1,678
  -1,824
  -1,975
  -2,133
  -2,296
  -2,466
  -2,643
  -2,827
  -3,018
  -3,217
  -3,423
  -3,638
Interest expense (income), $m
  6
  6
  11
  16
  22
  30
  38
  47
  58
  70
  83
  96
  111
  128
  145
  163
  182
  202
  223
  245
  267
  291
  316
  342
  368
  396
  425
  455
  486
  519
  553
Earnings before tax, $m
  -16
  -184
  -235
  -297
  -368
  -451
  -544
  -649
  -765
  -892
  -1,030
  -1,162
  -1,321
  -1,491
  -1,670
  -1,860
  -2,058
  -2,267
  -2,485
  -2,712
  -2,949
  -3,196
  -3,452
  -3,719
  -3,996
  -4,284
  -4,583
  -4,894
  -5,217
  -5,553
  -5,904
Tax expense, $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
Net income, $m
  -19
  -184
  -235
  -297
  -368
  -451
  -544
  -649
  -765
  -892
  -1,030
  -1,162
  -1,321
  -1,491
  -1,670
  -1,860
  -2,058
  -2,267
  -2,485
  -2,712
  -2,949
  -3,196
  -3,452
  -3,719
  -3,996
  -4,284
  -4,583
  -4,894
  -5,217
  -5,553
  -5,904

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  27
  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
  891
  1,142
  1,479
  1,879
  2,345
  2,881
  3,488
  4,166
  4,917
  5,738
  6,630
  7,590
  8,617
  9,710
  10,867
  12,086
  13,367
  14,710
  16,112
  17,576
  19,100
  20,687
  22,337
  24,052
  25,835
  27,687
  29,612
  31,613
  33,693
  35,858
  38,110
Adjusted assets (=assets-cash), $m
  864
  1,142
  1,479
  1,879
  2,345
  2,881
  3,488
  4,166
  4,917
  5,738
  6,630
  7,590
  8,617
  9,710
  10,867
  12,086
  13,367
  14,710
  16,112
  17,576
  19,100
  20,687
  22,337
  24,052
  25,835
  27,687
  29,612
  31,613
  33,693
  35,858
  38,110
Revenue / Adjusted assets
  1.566
  1.567
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
  1.566
Average production assets, $m
  416
  549
  711
  903
  1,127
  1,385
  1,677
  2,003
  2,364
  2,759
  3,187
  3,649
  4,143
  4,668
  5,224
  5,811
  6,427
  7,072
  7,746
  8,450
  9,183
  9,946
  10,739
  11,563
  12,420
  13,311
  14,236
  15,198
  16,199
  17,239
  18,322
Working capital, $m
  166
  195
  252
  321
  400
  492
  595
  711
  839
  979
  1,132
  1,296
  1,471
  1,657
  1,855
  2,063
  2,282
  2,511
  2,750
  3,000
  3,260
  3,531
  3,813
  4,106
  4,410
  4,726
  5,055
  5,396
  5,751
  6,121
  6,505
Total debt, $m
  193
  309
  460
  638
  846
  1,085
  1,355
  1,658
  1,993
  2,359
  2,757
  3,185
  3,643
  4,131
  4,647
  5,190
  5,762
  6,360
  6,986
  7,639
  8,319
  9,026
  9,762
  10,527
  11,322
  12,148
  13,007
  13,899
  14,827
  15,793
  16,797
Total liabilities, $m
  394
  509
  660
  838
  1,046
  1,285
  1,555
  1,858
  2,193
  2,559
  2,957
  3,385
  3,843
  4,331
  4,847
  5,390
  5,962
  6,560
  7,186
  7,839
  8,519
  9,226
  9,962
  10,727
  11,522
  12,348
  13,207
  14,099
  15,027
  15,993
  16,997
Total equity, $m
  498
  633
  819
  1,041
  1,299
  1,596
  1,932
  2,308
  2,724
  3,179
  3,673
  4,205
  4,774
  5,379
  6,020
  6,696
  7,406
  8,149
  8,926
  9,737
  10,582
  11,461
  12,375
  13,325
  14,312
  15,339
  16,405
  17,513
  18,666
  19,865
  21,113
Total liabilities and equity, $m
  892
  1,142
  1,479
  1,879
  2,345
  2,881
  3,487
  4,166
  4,917
  5,738
  6,630
  7,590
  8,617
  9,710
  10,867
  12,086
  13,368
  14,709
  16,112
  17,576
  19,101
  20,687
  22,337
  24,052
  25,834
  27,687
  29,612
  31,612
  33,693
  35,858
  38,110
Debt-to-equity ratio
  0.388
  0.490
  0.560
  0.610
  0.650
  0.680
  0.700
  0.720
  0.730
  0.740
  0.750
  0.760
  0.760
  0.770
  0.770
  0.780
  0.780
  0.780
  0.780
  0.780
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.800
Adjusted equity ratio
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -19
  -184
  -235
  -297
  -368
  -451
  -544
  -649
  -765
  -892
  -1,030
  -1,162
  -1,321
  -1,491
  -1,670
  -1,860
  -2,058
  -2,267
  -2,485
  -2,712
  -2,949
  -3,196
  -3,452
  -3,719
  -3,996
  -4,284
  -4,583
  -4,894
  -5,217
  -5,553
  -5,904
Depreciation, amort., depletion, $m
  55
  68
  83
  101
  122
  146
  173
  204
  238
  275
  315
  341
  387
  436
  488
  543
  601
  661
  724
  790
  858
  929
  1,004
  1,081
  1,161
  1,244
  1,330
  1,420
  1,514
  1,611
  1,712
Funds from operations, $m
  119
  -116
  -152
  -195
  -246
  -305
  -371
  -445
  -527
  -618
  -716
  -821
  -934
  -1,055
  -1,182
  -1,317
  -1,458
  -1,606
  -1,761
  -1,923
  -2,091
  -2,266
  -2,448
  -2,638
  -2,835
  -3,040
  -3,252
  -3,473
  -3,703
  -3,942
  -4,191
Change in working capital, $m
  20
  47
  57
  68
  80
  91
  104
  116
  128
  140
  152
  164
  175
  187
  197
  208
  219
  229
  239
  250
  260
  271
  282
  293
  304
  316
  329
  342
  355
  369
  384
Cash from operations, $m
  99
  -163
  -209
  -264
  -326
  -396
  -475
  -561
  -655
  -758
  -868
  -985
  -1,110
  -1,241
  -1,380
  -1,525
  -1,677
  -1,835
  -2,000
  -2,172
  -2,351
  -2,537
  -2,730
  -2,931
  -3,139
  -3,356
  -3,581
  -3,815
  -4,058
  -4,312
  -4,576
Maintenance CAPEX, $m
  0
  -39
  -51
  -66
  -84
  -105
  -129
  -157
  -187
  -221
  -258
  -298
  -341
  -387
  -436
  -488
  -543
  -601
  -661
  -724
  -790
  -858
  -929
  -1,004
  -1,081
  -1,161
  -1,244
  -1,330
  -1,420
  -1,514
  -1,611
New CAPEX, $m
  -35
  -133
  -162
  -192
  -224
  -258
  -292
  -326
  -361
  -395
  -429
  -462
  -494
  -525
  -556
  -586
  -616
  -645
  -674
  -704
  -733
  -763
  -793
  -825
  -857
  -890
  -925
  -962
  -1,000
  -1,041
  -1,083
Cash from investing activities, $m
  -30
  -172
  -213
  -258
  -308
  -363
  -421
  -483
  -548
  -616
  -687
  -760
  -835
  -912
  -992
  -1,074
  -1,159
  -1,246
  -1,335
  -1,428
  -1,523
  -1,621
  -1,722
  -1,829
  -1,938
  -2,051
  -2,169
  -2,292
  -2,420
  -2,555
  -2,694
Free cash flow, $m
  69
  -335
  -423
  -522
  -635
  -759
  -896
  -1,044
  -1,203
  -1,374
  -1,554
  -1,745
  -1,944
  -2,154
  -2,372
  -2,599
  -2,836
  -3,081
  -3,336
  -3,600
  -3,874
  -4,158
  -4,453
  -4,759
  -5,077
  -5,407
  -5,750
  -6,107
  -6,479
  -6,866
  -7,270
Issuance/(repayment) of debt, $m
  -36
  124
  150
  178
  208
  239
  271
  303
  335
  366
  398
  428
  458
  487
  516
  544
  571
  599
  626
  653
  680
  708
  736
  765
  795
  826
  859
  892
  928
  965
  1,005
Issuance/(repurchase) of shares, $m
  -3
  337
  422
  518
  627
  748
  880
  1,025
  1,181
  1,347
  1,524
  1,694
  1,890
  2,096
  2,311
  2,535
  2,768
  3,010
  3,262
  3,523
  3,794
  4,075
  4,366
  4,669
  4,983
  5,310
  5,649
  6,002
  6,370
  6,753
  7,151
Cash from financing (excl. dividends), $m  
  -45
  461
  572
  696
  835
  987
  1,151
  1,328
  1,516
  1,713
  1,922
  2,122
  2,348
  2,583
  2,827
  3,079
  3,339
  3,609
  3,888
  4,176
  4,474
  4,783
  5,102
  5,434
  5,778
  6,136
  6,508
  6,894
  7,298
  7,718
  8,156
Total cash flow (excl. dividends), $m
  24
  127
  149
  174
  200
  228
  255
  284
  312
  340
  368
  378
  404
  430
  455
  480
  504
  528
  552
  576
  600
  624
  649
  675
  701
  729
  757
  787
  819
  852
  886
Retained Cash Flow (-), $m
  37
  -337
  -422
  -518
  -627
  -748
  -880
  -1,025
  -1,181
  -1,347
  -1,524
  -1,694
  -1,890
  -2,096
  -2,311
  -2,535
  -2,768
  -3,010
  -3,262
  -3,523
  -3,794
  -4,075
  -4,366
  -4,669
  -4,983
  -5,310
  -5,649
  -6,002
  -6,370
  -6,753
  -7,151
Prev. year cash balance distribution, $m
 
  19
  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
 
  -192
  -273
  -344
  -426
  -520
  -625
  -741
  -869
  -1,007
  -1,156
  -1,316
  -1,486
  -1,666
  -1,856
  -2,055
  -2,264
  -2,482
  -2,710
  -2,947
  -3,194
  -3,450
  -3,717
  -3,994
  -4,282
  -4,581
  -4,892
  -5,215
  -5,551
  -5,901
  -6,265
Discount rate, %
 
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
 
  -183
  -247
  -295
  -344
  -392
  -438
  -479
  -515
  -544
  -564
  -575
  -577
  -569
  -552
  -527
  -494
  -456
  -414
  -369
  -324
  -278
  -235
  -195
  -158
  -125
  -97
  -74
  -55
  -40
  -28
Current shareholders' claim on cash, %
  100
  65.9
  44.3
  30.2
  21.0
  14.7
  10.5
  7.6
  5.5
  4.0
  3.0
  2.2
  1.7
  1.3
  1.0
  0.7
  0.6
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0

Schnitzer Steel Industries, Inc. recycles ferrous and nonferrous scrap metals; and manufactures finished steel products worldwide. It operates through two segments, Auto and Metals Recycling (AMR) and Steel Manufacturing Business (SMB). The AMR segment buys, collects, processes, recycles, sells, and brokers scrap metals, as well as processes mixed and large pieces of scrap metal into smaller pieces by crushing, torching, shearing, shredding, and sorting. This segment offers ferrous scrap metal, a feedstock used in the production of finished steel products; and nonferrous products, including aluminum, copper, stainless steel, nickel, brass, titanium, lead, high temperature alloys, and joint products. It sells ferrous and nonferrous recycled metal products to steel mills, foundries, and smelters. This segment also procures salvaged vehicles and sells serviceable used auto parts from these vehicles through its 52 self-service auto parts stores in the United States and Western Canada, as well as sells auto bodies and parts containing ferrous and nonferrous materials, such as engines, transmissions, and alternators to wholesalers. The SMB segment produces various finished steel products using recycled metal and other raw materials. It offers semi-finished goods, which include billets; and finished goods consisting of rebar, coiled rebar, wire rods, merchant bars, and other specialty products. This segment serves steel service centers, construction industry subcontractors, steel fabricators, wire drawers, and farm and wood products suppliers. Schnitzer Steel Industries, Inc. was founded in 1906 and is headquartered in Portland, Oregon.

FINANCIAL RATIOS  of  Schnitzer Steel Industries (SCHN)

Valuation Ratios
P/E Ratio -36.1
Price to Sales 0.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 6.9
Price to Free Cash Flow 10.7
Growth Rates
Sales Growth Rate -29.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.4%
Cap. Spend. - 3 Yr. Gr. Rate -17.2%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 37.1%
Total Debt to Equity 38.8%
Interest Coverage -2
Management Effectiveness
Return On Assets -1.4%
Ret/ On Assets - 3 Yr. Avg. -5.6%
Return On Total Capital -2.6%
Ret/ On T. Cap. - 3 Yr. Avg. -7.8%
Return On Equity -3.7%
Return On Equity - 3 Yr. Avg. -11%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 13.1%
Gross Margin - 3 Yr. Avg. 10.3%
EBITDA Margin 3.3%
EBITDA Margin - 3 Yr. Avg. 0.3%
Operating Margin -0.5%
Oper. Margin - 3 Yr. Avg. -3.3%
Pre-Tax Margin -1.2%
Pre-Tax Margin - 3 Yr. Avg. -3.7%
Net Profit Margin -1.4%
Net Profit Margin - 3 Yr. Avg. -3.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 8.7%
Payout Ratio -105.3%

SCHN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SCHN stock intrinsic value calculation we used $1353 million for the last fiscal year's total revenue generated by Schnitzer Steel Industries. The default revenue input number comes from 2016 income statement of Schnitzer Steel Industries. 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 SCHN stock valuation model: a) initial revenue growth rate of 32.2% 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 4.8%, whose default value for SCHN is calculated based on our internal credit rating of Schnitzer Steel Industries, 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 Schnitzer Steel Industries.
    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 SCHN stock the variable cost ratio is equal to 110.2%.

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 SCHN 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 Schnitzer Steel Industries.

Corporate tax rate of 27% is the nominal tax rate for Schnitzer Steel Industries. 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 SCHN 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 SCHN are equal to 30.7%.

Life of production assets of 10.7 years is the average useful life of capital assets used in Schnitzer Steel Industries 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 SCHN is equal to 10.9%. 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 - $498 million for Schnitzer Steel Industries - 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 26.502 million for Schnitzer Steel Industries 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 Schnitzer Steel Industries at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
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IDSA Industrial Ser 1.75 0.38  str.sell

COMPANY NEWS

▶ Schnitzer Announces Fiscal 2016 Sustainability Report   [Aug-14-17 10:00AM  Business Wire]
▶ Schnitzer Board Declares Quarterly Dividend   [Jul-28-17 06:00PM  Business Wire]
▶ Breakout Watch: Steel Stock Closing In On Double Bottom Buy Point   [Jul-03-17 01:07PM  Investor's Business Daily]
▶ 5 Best Performing Stocks of June   [10:32AM  Zacks]
▶ Company News for June 27, 2017   [Jun-27-17 10:52AM  Zacks]
▶ Schnitzer Steel posts 3Q profit   [Jun-26-17 09:56PM  Associated Press]
▶ Story Stocks from Briefing.com   [10:09AM  Briefing.com]
▶ Schnitzer Board Declares Quarterly Dividend   [Apr-28-17 05:45PM  Business Wire]
▶ Schnitzer Steel posts 2Q profit   [08:43AM  Associated Press]
▶ Schnitzer Board Declares Quarterly Dividend   [Jan-26-17 07:00PM  Business Wire]
▶ Is Schnitzer Steel Industries, Inc. (SCHN) A Good Stock To Buy?   [Dec-08-16 01:29PM  at Insider Monkey]
▶ Assessing Schnitzer Steel's Post-Earnings Valuation (SCHN)   [Oct-31-16 09:26AM  at Investopedia]
▶ Schnitzer Board Declares Quarterly Dividend   [Oct-27-16 05:45PM  Business Wire]
▶ Schnitzer Steel Q4 Boosted by Lower Costs (SCHN)   [Oct-26-16 11:41AM  at Investopedia]
▶ [$$] AK Steel, Schnitzer Steel Earnings Rise Amid Lower Costs   [09:51AM  at The Wall Street Journal]
▶ Schnitzer Steel Nets 52-Week High Ahead of Earnings (SCHN)   [Oct-24-16 05:16PM  at Investopedia]
▶ Schnitzer Steel Guides Q4 EPS Above Consensus (SCHN)   [Oct-04-16 10:37AM  at Investopedia]
▶ Assessing Schnitzer Steel Valuation (SCHN)   [Sep-23-16 10:22AM  at Investopedia]
Stock chart of SCHN Financial statements of SCHN
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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