Intrinsic value of Shiloh Industries - SHLO

Previous Close

$10.16

  Intrinsic Value

$2.36

stock screener

  Rating & Target

str. sell

-77%

  Value-price divergence*

-69%

Previous close

$10.16

 
Intrinsic value

$2.36

 
Up/down potential

-77%

 
Rating

str. sell

 
Value-price divergence*

-69%

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

We calculate the intrinsic value of SHLO 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, %
  -0.65
  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
  1,066
  1,087
  1,112
  1,141
  1,173
  1,209
  1,248
  1,290
  1,336
  1,386
  1,439
  1,496
  1,556
  1,621
  1,690
  1,763
  1,840
  1,922
  2,008
  2,099
  2,196
  2,298
  2,405
  2,518
  2,637
  2,763
  2,895
  3,034
  3,181
  3,335
  3,497
Variable operating expenses, $m
 
  776
  794
  814
  837
  863
  890
  921
  953
  989
  1,026
  1,064
  1,107
  1,153
  1,202
  1,254
  1,309
  1,367
  1,429
  1,494
  1,562
  1,635
  1,711
  1,792
  1,876
  1,966
  2,060
  2,159
  2,263
  2,373
  2,488
Fixed operating expenses, $m
 
  300
  308
  316
  323
  332
  340
  348
  357
  366
  375
  384
  394
  404
  414
  424
  435
  446
  457
  468
  480
  492
  504
  517
  530
  543
  557
  571
  585
  600
  615
Total operating expenses, $m
  1,047
  1,076
  1,102
  1,130
  1,160
  1,195
  1,230
  1,269
  1,310
  1,355
  1,401
  1,448
  1,501
  1,557
  1,616
  1,678
  1,744
  1,813
  1,886
  1,962
  2,042
  2,127
  2,215
  2,309
  2,406
  2,509
  2,617
  2,730
  2,848
  2,973
  3,103
Operating income, $m
  18
  11
  10
  11
  12
  15
  17
  21
  26
  31
  37
  47
  55
  64
  74
  84
  96
  109
  122
  137
  153
  171
  190
  210
  231
  254
  279
  305
  333
  363
  394
EBITDA, $m
  56
  49
  49
  51
  53
  56
  61
  66
  72
  79
  87
  96
  106
  116
  128
  142
  156
  171
  188
  206
  225
  246
  268
  291
  317
  344
  373
  403
  436
  471
  508
Interest expense (income), $m
  16
  15
  15
  16
  17
  17
  18
  19
  21
  22
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  63
  66
  70
  74
Earnings before tax, $m
  -1
  -4
  -5
  -5
  -4
  -3
  -1
  2
  5
  9
  14
  23
  29
  36
  44
  53
  63
  74
  85
  98
  112
  127
  143
  160
  178
  198
  219
  242
  266
  292
  320
Tax expense, $m
  -5
  0
  0
  0
  0
  0
  0
  0
  1
  3
  4
  6
  8
  10
  12
  14
  17
  20
  23
  26
  30
  34
  38
  43
  48
  53
  59
  65
  72
  79
  86
Net income, $m
  4
  -4
  -5
  -5
  -4
  -3
  -1
  1
  4
  7
  10
  17
  21
  26
  32
  39
  46
  54
  62
  72
  82
  92
  104
  117
  130
  145
  160
  177
  194
  213
  234

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9
  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
  626
  629
  644
  660
  679
  699
  722
  747
  773
  802
  833
  866
  901
  938
  978
  1,020
  1,065
  1,112
  1,162
  1,215
  1,271
  1,330
  1,392
  1,457
  1,526
  1,599
  1,675
  1,756
  1,841
  1,930
  2,024
Adjusted assets (=assets-cash), $m
  617
  629
  644
  660
  679
  699
  722
  747
  773
  802
  833
  866
  901
  938
  978
  1,020
  1,065
  1,112
  1,162
  1,215
  1,271
  1,330
  1,392
  1,457
  1,526
  1,599
  1,675
  1,756
  1,841
  1,930
  2,024
Revenue / Adjusted assets
  1.728
  1.728
  1.727
  1.729
  1.728
  1.730
  1.729
  1.727
  1.728
  1.728
  1.727
  1.727
  1.727
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
  1.728
Average production assets, $m
  291
  297
  304
  311
  320
  330
  341
  352
  365
  378
  393
  408
  425
  443
  461
  481
  502
  525
  548
  573
  599
  627
  657
  687
  720
  754
  790
  828
  868
  910
  955
Working capital, $m
  90
  85
  87
  89
  91
  94
  97
  101
  104
  108
  112
  117
  121
  126
  132
  137
  144
  150
  157
  164
  171
  179
  188
  196
  206
  216
  226
  237
  248
  260
  273
Total debt, $m
  259
  267
  278
  292
  306
  323
  341
  360
  381
  404
  429
  455
  483
  513
  544
  578
  614
  651
  691
  733
  778
  824
  874
  926
  981
  1,039
  1,100
  1,164
  1,231
  1,302
  1,377
Total liabilities, $m
  494
  501
  512
  526
  540
  557
  575
  594
  615
  638
  663
  689
  717
  747
  778
  812
  848
  885
  925
  967
  1,012
  1,058
  1,108
  1,160
  1,215
  1,273
  1,334
  1,398
  1,465
  1,536
  1,611
Total equity, $m
  133
  128
  131
  135
  138
  143
  147
  152
  158
  164
  170
  177
  184
  191
  199
  208
  217
  227
  237
  248
  259
  271
  284
  297
  311
  326
  342
  358
  376
  394
  413
Total liabilities and equity, $m
  627
  629
  643
  661
  678
  700
  722
  746
  773
  802
  833
  866
  901
  938
  977
  1,020
  1,065
  1,112
  1,162
  1,215
  1,271
  1,329
  1,392
  1,457
  1,526
  1,599
  1,676
  1,756
  1,841
  1,930
  2,024
Debt-to-equity ratio
  1.947
  2.080
  2.120
  2.160
  2.210
  2.260
  2.310
  2.370
  2.420
  2.470
  2.520
  2.580
  2.630
  2.680
  2.730
  2.780
  2.820
  2.870
  2.910
  2.960
  3.000
  3.040
  3.080
  3.110
  3.150
  3.180
  3.220
  3.250
  3.280
  3.310
  3.340
Adjusted equity ratio
  0.201
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  -4
  -5
  -5
  -4
  -3
  -1
  1
  4
  7
  10
  17
  21
  26
  32
  39
  46
  54
  62
  72
  82
  92
  104
  117
  130
  145
  160
  177
  194
  213
  234
Depreciation, amort., depletion, $m
  38
  38
  39
  40
  41
  42
  43
  45
  46
  48
  49
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
  103
  108
  114
Funds from operations, $m
  94
  34
  34
  35
  37
  39
  42
  46
  50
  55
  60
  65
  72
  79
  87
  96
  106
  116
  128
  140
  153
  167
  182
  198
  216
  234
  254
  275
  298
  322
  347
Change in working capital, $m
  25
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
Cash from operations, $m
  69
  32
  32
  33
  34
  36
  39
  43
  46
  51
  56
  61
  67
  74
  82
  90
  100
  110
  121
  133
  145
  159
  174
  190
  207
  225
  244
  264
  286
  310
  335
Maintenance CAPEX, $m
  0
  -35
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -103
  -108
New CAPEX, $m
  -28
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
Cash from investing activities, $m
  -28
  -41
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -115
  -120
  -126
  -132
  -139
  -145
  -152
Free cash flow, $m
  41
  -8
  -10
  -11
  -12
  -12
  -11
  -10
  -8
  -6
  -4
  -2
  2
  6
  10
  16
  21
  28
  35
  42
  51
  60
  70
  81
  92
  105
  118
  132
  148
  164
  182
Issuance/(repayment) of debt, $m
  -42
  10
  12
  13
  15
  16
  18
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  75
Issuance/(repurchase) of shares, $m
  0
  6
  8
  8
  8
  7
  6
  4
  2
  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  
  -44
  16
  20
  21
  23
  23
  24
  24
  23
  23
  24
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  75
Total cash flow (excl. dividends), $m
  -4
  8
  9
  10
  11
  12
  13
  14
  15
  17
  21
  25
  30
  36
  42
  49
  57
  65
  75
  85
  95
  107
  119
  133
  147
  162
  179
  197
  215
  235
  257
Retained Cash Flow (-), $m
  1
  -6
  -8
  -8
  -8
  -7
  -6
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
Prev. year cash balance distribution, $m
 
  7
  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
 
  9
  1
  2
  3
  5
  7
  9
  9
  11
  14
  18
  23
  28
  34
  41
  48
  56
  64
  74
  84
  95
  107
  119
  133
  148
  163
  180
  198
  217
  238
Discount rate, %
 
  9.40
  9.87
  10.36
  10.88
  11.43
  12.00
  12.60
  13.23
  13.89
  14.58
  15.31
  16.08
  16.88
  17.73
  18.61
  19.54
  20.52
  21.54
  22.62
  23.75
  24.94
  26.19
  27.50
  28.87
  30.32
  31.83
  33.42
  35.09
  36.85
  38.69
PV of cash for distribution, $m
 
  8
  1
  1
  2
  3
  4
  4
  3
  3
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  97.2
  93.9
  90.7
  87.6
  85.1
  83.3
  82.1
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6

Shiloh Industries, Inc. is a supplier of lightweighting, noise and vibration solutions to the automotive, commercial vehicle and industrial markets. The Company operates through Automotive and Commercial Vehicles segment. The Company offers portfolio of lightweighting solutions in aluminum, magnesium, steel and high strength steel alloys. The Company delivers these solutions through design, engineering and manufacturing of first operation blanks, engineered welded blanks, complex stampings, modular assemblies, and engineered aluminum and magnesium die casting and machined components. The Company offers its solutions through its BlankLight, CastLight and StampLight brands. The Company delivers solutions in body, chassis and powertrain systems to original equipment manufacturers (OEMs). The Company also provides intermediate steel processing services, such as oiling, leveling, cutting-to-length, slitting, edge trimming of hot and cold-rolled steel coils and inventory control services.

FINANCIAL RATIOS  of  Shiloh Industries (SHLO)

Valuation Ratios
P/E Ratio 44.7
Price to Sales 0.2
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 2.6
Price to Free Cash Flow 4.4
Growth Rates
Sales Growth Rate -0.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.7%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 193.2%
Total Debt to Equity 194.7%
Interest Coverage 1
Management Effectiveness
Return On Assets -9.3%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 3%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 9%
Gross Margin - 3 Yr. Avg. 8.7%
EBITDA Margin 5%
EBITDA Margin - 3 Yr. Avg. 5.6%
Operating Margin 1.8%
Oper. Margin - 3 Yr. Avg. 2.4%
Pre-Tax Margin -0.1%
Pre-Tax Margin - 3 Yr. Avg. 1.3%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 500%
Eff/ Tax Rate - 3 Yr. Avg. 187.4%
Payout Ratio 0%

SHLO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHLO stock intrinsic value calculation we used $1066 million for the last fiscal year's total revenue generated by Shiloh Industries. The default revenue input number comes from 2016 income statement of Shiloh 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 SHLO 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 9.4%, whose default value for SHLO is calculated based on our internal credit rating of Shiloh 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 Shiloh 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 SHLO stock the variable cost ratio is equal to 71.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $293 million in the base year in the intrinsic value calculation for SHLO 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 Shiloh Industries.

Corporate tax rate of 27% is the nominal tax rate for Shiloh 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 SHLO 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 SHLO are equal to 27.3%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Shiloh 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 SHLO is equal to 7.8%. 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 - $133 million for Shiloh 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 22.794 million for Shiloh 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 Shiloh Industries at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Shiloh reports 3Q loss   [Aug-29-17 10:15PM  Associated Press]
▶ Shiloh Industries, Inc. Announces Common Stock Offering   [Jul-10-17 04:01PM  GlobeNewswire]
▶ Shiloh Industries Added to Russell 3000Ā® Index   [Jun-26-17 07:00AM  GlobeNewswire]
▶ Shiloh posts 2Q profit   [Jun-01-17 07:31AM  Associated Press]
▶ Three Small Caps to Buy on the Pullback   [10:28AM  Investopedia]
▶ Shiloh reports 1Q loss   [07:04AM  Associated Press]
▶ Correction: Earns-Shiloh Industries story   [Feb-02-17 04:03PM  Associated Press]
▶ Tesla Stock: Analyzing 5 Key Suppliers (TSLA)   [Apr-30-16 03:20PM  at Investopedia]
▶ Is It Time to Revisit Shiloh Industries? (SHLO)   [Feb-19-16 04:48AM  at Investopedia]
Financial statements of SHLO
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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