Intrinsic value of TimkenSteel - TMST

Previous Close

$15.38

  Intrinsic Value

$3.34

stock screener

  Rating & Target

str. sell

-78%

  Value-price divergence*

-53%

Previous close

$15.38

 
Intrinsic value

$3.34

 
Up/down potential

-78%

 
Rating

str. sell

 
Value-price divergence*

-53%

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

We calculate the intrinsic value of TMST 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, %
  -21.34
  52.00
  47.30
  43.07
  39.26
  35.84
  32.75
  29.98
  27.48
  25.23
  23.21
  21.39
  19.75
  18.27
  16.95
  15.75
  14.68
  13.71
  12.84
  12.05
  11.35
  10.71
  10.14
  9.63
  9.17
  8.75
  8.37
  8.04
  7.73
  7.46
  7.21
Revenue, $m
  870
  1,322
  1,948
  2,787
  3,881
  5,272
  6,999
  9,097
  11,596
  14,522
  17,893
  21,720
  26,009
  30,762
  35,975
  41,642
  47,754
  54,301
  61,272
  68,658
  76,450
  84,641
  93,226
  102,202
  111,569
  121,330
  131,491
  142,058
  153,044
  164,460
  176,324
Variable operating expenses, $m
 
  975
  1,436
  2,054
  2,860
  3,885
  5,158
  6,704
  8,547
  10,703
  13,187
  16,007
  19,169
  22,672
  26,514
  30,690
  35,195
  40,020
  45,157
  50,601
  56,344
  62,380
  68,707
  75,323
  82,227
  89,421
  96,909
  104,697
  112,793
  121,207
  129,951
Fixed operating expenses, $m
 
  375
  385
  394
  404
  414
  424
  435
  446
  457
  469
  480
  492
  505
  517
  530
  543
  557
  571
  585
  600
  615
  630
  646
  662
  679
  696
  713
  731
  749
  768
Total operating expenses, $m
  998
  1,350
  1,821
  2,448
  3,264
  4,299
  5,582
  7,139
  8,993
  11,160
  13,656
  16,487
  19,661
  23,177
  27,031
  31,220
  35,738
  40,577
  45,728
  51,186
  56,944
  62,995
  69,337
  75,969
  82,889
  90,100
  97,605
  105,410
  113,524
  121,956
  130,719
Operating income, $m
  -129
  -27
  128
  339
  617
  972
  1,416
  1,957
  2,604
  3,362
  4,237
  5,232
  6,348
  7,586
  8,944
  10,422
  12,016
  13,724
  15,544
  17,472
  19,507
  21,646
  23,888
  26,233
  28,681
  31,231
  33,887
  36,648
  39,520
  42,504
  45,606
EBITDA, $m
  -54
  86
  295
  578
  950
  1,425
  2,017
  2,738
  3,599
  4,608
  5,773
  7,096
  8,580
  10,226
  12,031
  13,995
  16,114
  18,384
  20,801
  23,363
  26,067
  28,909
  31,888
  35,003
  38,254
  41,643
  45,170
  48,838
  52,652
  56,616
  60,736
Interest expense (income), $m
  0
  5
  13
  25
  41
  62
  89
  121
  161
  209
  265
  329
  402
  483
  574
  673
  781
  897
  1,022
  1,154
  1,295
  1,443
  1,599
  1,763
  1,934
  2,112
  2,298
  2,491
  2,692
  2,901
  3,119
Earnings before tax, $m
  -142
  -32
  114
  313
  575
  910
  1,328
  1,836
  2,443
  3,153
  3,973
  4,903
  5,947
  7,103
  8,371
  9,749
  11,235
  12,827
  14,522
  16,317
  18,212
  20,202
  22,289
  24,471
  26,747
  29,120
  31,589
  34,157
  36,828
  39,603
  42,487
Tax expense, $m
  -36
  0
  31
  85
  155
  246
  358
  496
  659
  851
  1,073
  1,324
  1,606
  1,918
  2,260
  2,632
  3,033
  3,463
  3,921
  4,406
  4,917
  5,455
  6,018
  6,607
  7,222
  7,862
  8,529
  9,223
  9,943
  10,693
  11,472
Net income, $m
  -106
  -32
  83
  229
  420
  665
  969
  1,340
  1,783
  2,302
  2,900
  3,579
  4,341
  5,185
  6,111
  7,117
  8,202
  9,364
  10,601
  11,912
  13,294
  14,748
  16,271
  17,864
  19,525
  21,257
  23,060
  24,935
  26,884
  28,910
  31,016

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  26
  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
  1,070
  1,588
  2,338
  3,346
  4,659
  6,329
  8,402
  10,920
  13,921
  17,434
  21,480
  26,074
  31,224
  36,929
  43,188
  49,991
  57,328
  65,187
  73,556
  82,422
  91,777
  101,610
  111,916
  122,691
  133,937
  145,655
  157,852
  170,538
  183,726
  197,432
  211,674
Adjusted assets (=assets-cash), $m
  1,044
  1,588
  2,338
  3,346
  4,659
  6,329
  8,402
  10,920
  13,921
  17,434
  21,480
  26,074
  31,224
  36,929
  43,188
  49,991
  57,328
  65,187
  73,556
  82,422
  91,777
  101,610
  111,916
  122,691
  133,937
  145,655
  157,852
  170,538
  183,726
  197,432
  211,674
Revenue / Adjusted assets
  0.833
  0.832
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
Average production assets, $m
  784
  1,191
  1,755
  2,511
  3,497
  4,750
  6,306
  8,196
  10,448
  13,085
  16,121
  19,569
  23,434
  27,717
  32,414
  37,520
  43,026
  48,925
  55,206
  61,861
  68,881
  76,261
  83,996
  92,084
  100,524
  109,319
  118,473
  127,995
  137,892
  148,179
  158,868
Working capital, $m
  159
  202
  298
  426
  594
  807
  1,071
  1,392
  1,774
  2,222
  2,738
  3,323
  3,979
  4,707
  5,504
  6,371
  7,306
  8,308
  9,375
  10,505
  11,697
  12,950
  14,264
  15,637
  17,070
  18,564
  20,118
  21,735
  23,416
  25,162
  26,978
Total debt, $m
  137
  383
  723
  1,180
  1,775
  2,531
  3,470
  4,611
  5,970
  7,562
  9,394
  11,476
  13,808
  16,393
  19,228
  22,310
  25,633
  29,194
  32,985
  37,001
  41,239
  45,693
  50,362
  55,243
  60,337
  65,646
  71,171
  76,918
  82,892
  89,100
  95,552
Total liabilities, $m
  473
  719
  1,059
  1,516
  2,111
  2,867
  3,806
  4,947
  6,306
  7,898
  9,730
  11,812
  14,144
  16,729
  19,564
  22,646
  25,969
  29,530
  33,321
  37,337
  41,575
  46,029
  50,698
  55,579
  60,673
  65,982
  71,507
  77,254
  83,228
  89,436
  95,888
Total equity, $m
  597
  868
  1,279
  1,830
  2,549
  3,462
  4,596
  5,973
  7,615
  9,536
  11,750
  14,263
  17,079
  20,200
  23,624
  27,345
  31,358
  35,657
  40,235
  45,085
  50,202
  55,580
  61,218
  67,112
  73,263
  79,673
  86,345
  93,284
  100,498
  107,995
  115,786
Total liabilities and equity, $m
  1,070
  1,587
  2,338
  3,346
  4,660
  6,329
  8,402
  10,920
  13,921
  17,434
  21,480
  26,075
  31,223
  36,929
  43,188
  49,991
  57,327
  65,187
  73,556
  82,422
  91,777
  101,609
  111,916
  122,691
  133,936
  145,655
  157,852
  170,538
  183,726
  197,431
  211,674
Debt-to-equity ratio
  0.229
  0.440
  0.570
  0.640
  0.700
  0.730
  0.760
  0.770
  0.780
  0.790
  0.800
  0.800
  0.810
  0.810
  0.810
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.830
  0.830
Adjusted equity ratio
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -106
  -32
  83
  229
  420
  665
  969
  1,340
  1,783
  2,302
  2,900
  3,579
  4,341
  5,185
  6,111
  7,117
  8,202
  9,364
  10,601
  11,912
  13,294
  14,748
  16,271
  17,864
  19,525
  21,257
  23,060
  24,935
  26,884
  28,910
  31,016
Depreciation, amort., depletion, $m
  75
  113
  167
  239
  333
  452
  601
  781
  995
  1,246
  1,535
  1,864
  2,232
  2,640
  3,087
  3,573
  4,098
  4,660
  5,258
  5,892
  6,560
  7,263
  8,000
  8,770
  9,574
  10,411
  11,283
  12,190
  13,133
  14,112
  15,130
Funds from operations, $m
  113
  81
  251
  468
  753
  1,117
  1,570
  2,121
  2,778
  3,548
  4,435
  5,443
  6,573
  7,825
  9,198
  10,690
  12,299
  14,023
  15,859
  17,803
  19,855
  22,011
  24,271
  26,633
  29,099
  31,669
  34,343
  37,125
  40,017
  43,022
  46,146
Change in working capital, $m
  39
  69
  96
  128
  167
  213
  264
  321
  382
  448
  516
  586
  656
  727
  798
  867
  935
  1,002
  1,067
  1,130
  1,192
  1,253
  1,313
  1,373
  1,433
  1,493
  1,555
  1,617
  1,681
  1,747
  1,815
Cash from operations, $m
  74
  12
  155
  340
  586
  904
  1,306
  1,800
  2,396
  3,100
  3,920
  4,858
  5,917
  7,097
  8,400
  9,823
  11,364
  13,022
  14,792
  16,673
  18,662
  20,758
  22,957
  25,260
  27,666
  30,175
  32,789
  35,508
  38,336
  41,276
  44,331
Maintenance CAPEX, $m
  0
  -75
  -113
  -167
  -239
  -333
  -452
  -601
  -781
  -995
  -1,246
  -1,535
  -1,864
  -2,232
  -2,640
  -3,087
  -3,573
  -4,098
  -4,660
  -5,258
  -5,892
  -6,560
  -7,263
  -8,000
  -8,770
  -9,574
  -10,411
  -11,283
  -12,190
  -13,133
  -14,112
New CAPEX, $m
  -43
  -407
  -564
  -756
  -986
  -1,253
  -1,556
  -1,890
  -2,252
  -2,636
  -3,037
  -3,448
  -3,865
  -4,282
  -4,697
  -5,106
  -5,507
  -5,899
  -6,281
  -6,655
  -7,021
  -7,380
  -7,735
  -8,088
  -8,440
  -8,795
  -9,154
  -9,521
  -9,898
  -10,286
  -10,689
Cash from investing activities, $m
  -43
  -482
  -677
  -923
  -1,225
  -1,586
  -2,008
  -2,491
  -3,033
  -3,631
  -4,283
  -4,983
  -5,729
  -6,514
  -7,337
  -8,193
  -9,080
  -9,997
  -10,941
  -11,913
  -12,913
  -13,940
  -14,998
  -16,088
  -17,210
  -18,369
  -19,565
  -20,804
  -22,088
  -23,419
  -24,801
Free cash flow, $m
  31
  -470
  -522
  -583
  -639
  -682
  -703
  -691
  -637
  -531
  -363
  -126
  188
  583
  1,063
  1,630
  2,284
  3,025
  3,851
  4,761
  5,750
  6,817
  7,959
  9,173
  10,456
  11,807
  13,223
  14,704
  16,248
  17,857
  19,529
Issuance/(repayment) of debt, $m
  -44
  246
  340
  456
  595
  756
  939
  1,141
  1,359
  1,591
  1,833
  2,081
  2,333
  2,585
  2,835
  3,082
  3,324
  3,560
  3,791
  4,017
  4,237
  4,454
  4,669
  4,881
  5,094
  5,308
  5,525
  5,747
  5,974
  6,209
  6,452
Issuance/(repurchase) of shares, $m
  0
  330
  327
  322
  298
  249
  165
  37
  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  
  -49
  576
  667
  778
  893
  1,005
  1,104
  1,178
  1,359
  1,591
  1,833
  2,081
  2,333
  2,585
  2,835
  3,082
  3,324
  3,560
  3,791
  4,017
  4,237
  4,454
  4,669
  4,881
  5,094
  5,308
  5,525
  5,747
  5,974
  6,209
  6,452
Total cash flow (excl. dividends), $m
  -17
  106
  145
  195
  254
  323
  401
  487
  722
  1,060
  1,470
  1,955
  2,521
  3,168
  3,898
  4,712
  5,608
  6,585
  7,643
  8,777
  9,988
  11,272
  12,628
  14,054
  15,550
  17,115
  18,748
  20,450
  22,222
  24,065
  25,981
Retained Cash Flow (-), $m
  85
  -330
  -411
  -551
  -719
  -913
  -1,134
  -1,378
  -1,641
  -1,921
  -2,213
  -2,513
  -2,817
  -3,121
  -3,423
  -3,721
  -4,013
  -4,299
  -4,578
  -4,850
  -5,117
  -5,379
  -5,637
  -5,894
  -6,151
  -6,410
  -6,672
  -6,939
  -7,214
  -7,497
  -7,791
Prev. year cash balance distribution, $m
 
  26
  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
 
  -198
  -265
  -356
  -464
  -590
  -733
  -890
  -919
  -861
  -744
  -558
  -296
  47
  475
  991
  1,595
  2,287
  3,065
  3,927
  4,871
  5,893
  6,990
  8,160
  9,399
  10,705
  12,076
  13,511
  15,009
  16,568
  18,190
Discount rate, %
 
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
 
  -188
  -239
  -302
  -369
  -437
  -502
  -561
  -528
  -448
  -347
  -232
  -109
  15
  131
  234
  318
  380
  419
  435
  431
  410
  376
  333
  286
  238
  192
  150
  114
  84
  60
Current shareholders' claim on cash, %
  100
  66.6
  50.2
  41.2
  36.1
  33.3
  31.9
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7
  31.7

TimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company's portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company's products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.

FINANCIAL RATIOS  of  TimkenSteel (TMST)

Valuation Ratios
P/E Ratio -6.4
Price to Sales 0.8
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 21.9
Growth Rates
Sales Growth Rate -21.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -44.9%
Cap. Spend. - 3 Yr. Gr. Rate -25.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 22.9%
Total Debt to Equity 22.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -9.6%
Ret/ On Assets - 3 Yr. Avg. -3.1%
Return On Total Capital -13.1%
Ret/ On T. Cap. - 3 Yr. Avg. -4.3%
Return On Equity -16.6%
Return On Equity - 3 Yr. Avg. -5.6%
Asset Turnover 0.8
Profitability Ratios
Gross Margin -3.1%
Gross Margin - 3 Yr. Avg. 4.4%
EBITDA Margin -7.7%
EBITDA Margin - 3 Yr. Avg. -0%
Operating Margin -14.7%
Oper. Margin - 3 Yr. Avg. -5.5%
Pre-Tax Margin -16.3%
Pre-Tax Margin - 3 Yr. Avg. -6.2%
Net Profit Margin -12.2%
Net Profit Margin - 3 Yr. Avg. -4.5%
Effective Tax Rate 25.4%
Eff/ Tax Rate - 3 Yr. Avg. 32.1%
Payout Ratio 0%

TMST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TMST stock intrinsic value calculation we used $870 million for the last fiscal year's total revenue generated by TimkenSteel. The default revenue input number comes from 2016 income statement of TimkenSteel. 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 TMST stock valuation model: a) initial revenue growth rate of 52% 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 5.1%, whose default value for TMST is calculated based on our internal credit rating of TimkenSteel, 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 TimkenSteel.
    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 TMST stock the variable cost ratio is equal to 73.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $366 million in the base year in the intrinsic value calculation for TMST 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 TimkenSteel.

Corporate tax rate of 27% is the nominal tax rate for TimkenSteel. 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 TMST 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 TMST are equal to 90.1%.

Life of production assets of 10.5 years is the average useful life of capital assets used in TimkenSteel 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 TMST is equal to 15.3%. 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 - $597 million for TimkenSteel - 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 44.704 million for TimkenSteel 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 TimkenSteel at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ TimkenSteel Announces Second-Quarter 2017 Results   [Jul-31-17 04:15PM  PR Newswire]
▶ ETFs with exposure to TimkenSteel Corp. : June 29, 2017   [Jun-29-17 03:20PM  Capital Cube]
▶ Why TimkenSteel Stock Fell Nearly 11% in May   [Jun-06-17 11:45AM  Motley Fool]
▶ ETFs with exposure to TimkenSteel Corp. : May 30, 2017   [May-30-17 12:47PM  Capital Cube]
▶ ETFs with exposure to TimkenSteel Corp. : May 15, 2017   [May-15-17 04:46PM  Capital Cube]
▶ ETFs with exposure to TimkenSteel Corp. : May 2, 2017   [May-02-17 04:44PM  Capital Cube]
▶ Timken Steel Has Been Building on Breakout   [Feb-22-17 01:16PM  TheStreet.com]
▶ Here is What Hedge Funds Think About Timkensteel Corp (TMST)   [Dec-13-16 05:46AM  at Insider Monkey]
▶ Why TimkenSteel Corporation Stock Fell By 33% in May   [Jun-08-16 05:28PM  at Motley Fool]
▶ Why Shares of TimkenSteel Corp. Plunged 17% Today   [May-25-16 12:37PM  at Motley Fool]
▶ TimkenSteel Prices Offering of Convertible Senior Notes   [May-24-16 08:30PM  PR Newswire]
Financial statements of TMST
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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