Intrinsic value of Adient plc - ADNT

Previous Close

$22.09

  Intrinsic Value

$72.85

stock screener

  Rating & Target

str. buy

+230%

Previous close

$22.09

 
Intrinsic value

$72.85

 
Up/down potential

+230%

 
Rating

str. buy

We calculate the intrinsic value of ADNT 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 0001), $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 2.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  17,788
  18,197
  18,665
  19,190
  19,771
  20,410
  21,105
  21,857
  22,668
  23,538
  24,468
  25,461
  26,519
  27,643
  28,835
  30,099
  31,436
  32,851
  34,345
  35,923
  37,589
  39,345
  41,196
  43,146
  45,200
  47,363
  49,639
  52,034
  54,554
  57,205
Variable operating expenses, $m
  17,053
  17,439
  17,881
  18,376
  18,925
  19,528
  20,184
  20,894
  21,659
  22,480
  23,094
  24,032
  25,030
  26,090
  27,216
  28,409
  29,671
  31,006
  32,417
  33,906
  35,478
  37,135
  38,882
  40,723
  42,662
  44,703
  46,852
  49,112
  51,491
  53,993
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
  17,053
  17,439
  17,881
  18,376
  18,925
  19,528
  20,184
  20,894
  21,659
  22,480
  23,094
  24,032
  25,030
  26,090
  27,216
  28,409
  29,671
  31,006
  32,417
  33,906
  35,478
  37,135
  38,882
  40,723
  42,662
  44,703
  46,852
  49,112
  51,491
  53,993
Operating income, $m
  735
  758
  784
  813
  846
  882
  921
  963
  1,009
  1,057
  1,374
  1,430
  1,489
  1,552
  1,619
  1,690
  1,765
  1,845
  1,928
  2,017
  2,111
  2,209
  2,313
  2,423
  2,538
  2,659
  2,787
  2,922
  3,063
  3,212
EBITDA, $m
  1,322
  1,353
  1,388
  1,427
  1,470
  1,517
  1,569
  1,625
  1,685
  1,750
  1,819
  1,893
  1,972
  2,055
  2,144
  2,238
  2,337
  2,442
  2,554
  2,671
  2,795
  2,925
  3,063
  3,208
  3,361
  3,521
  3,691
  3,869
  4,056
  4,253
Interest expense (income), $m
  0
  185
  194
  205
  217
  231
  247
  264
  282
  302
  323
  346
  371
  397
  425
  455
  486
  520
  555
  593
  632
  674
  718
  764
  813
  865
  919
  977
  1,037
  1,100
  1,167
Earnings before tax, $m
  549
  563
  579
  596
  615
  635
  657
  681
  707
  734
  1,028
  1,059
  1,092
  1,127
  1,164
  1,204
  1,245
  1,289
  1,336
  1,385
  1,437
  1,491
  1,549
  1,609
  1,673
  1,740
  1,811
  1,885
  1,963
  2,045
Tax expense, $m
  148
  152
  156
  161
  166
  171
  177
  184
  191
  198
  277
  286
  295
  304
  314
  325
  336
  348
  361
  374
  388
  403
  418
  434
  452
  470
  489
  509
  530
  552
Net income, $m
  401
  411
  423
  435
  449
  464
  480
  497
  516
  536
  750
  773
  797
  823
  850
  879
  909
  941
  975
  1,011
  1,049
  1,089
  1,131
  1,175
  1,221
  1,270
  1,322
  1,376
  1,433
  1,493

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  11,159
  11,416
  11,709
  12,039
  12,404
  12,804
  13,240
  13,712
  14,221
  14,766
  15,350
  15,973
  16,637
  17,342
  18,090
  18,882
  19,722
  20,609
  21,547
  22,537
  23,581
  24,683
  25,844
  27,068
  28,356
  29,713
  31,141
  32,644
  34,225
  35,888
Adjusted assets (=assets-cash), $m
  11,159
  11,416
  11,709
  12,039
  12,404
  12,804
  13,240
  13,712
  14,221
  14,766
  15,350
  15,973
  16,637
  17,342
  18,090
  18,882
  19,722
  20,609
  21,547
  22,537
  23,581
  24,683
  25,844
  27,068
  28,356
  29,713
  31,141
  32,644
  34,225
  35,888
Revenue / Adjusted assets
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
  1.594
Average production assets, $m
  3,593
  3,676
  3,770
  3,876
  3,994
  4,123
  4,263
  4,415
  4,579
  4,755
  4,943
  5,143
  5,357
  5,584
  5,825
  6,080
  6,350
  6,636
  6,938
  7,257
  7,593
  7,948
  8,322
  8,715
  9,130
  9,567
  10,027
  10,511
  11,020
  11,555
Working capital, $m
  -569
  -582
  -597
  -614
  -633
  -653
  -675
  -699
  -725
  -753
  -783
  -815
  -849
  -885
  -923
  -963
  -1,006
  -1,051
  -1,099
  -1,150
  -1,203
  -1,259
  -1,318
  -1,381
  -1,446
  -1,516
  -1,588
  -1,665
  -1,746
  -1,831
Total debt, $m
  3,595
  3,796
  4,025
  4,282
  4,567
  4,880
  5,221
  5,589
  5,986
  6,413
  6,869
  7,355
  7,873
  8,424
  9,008
  9,627
  10,283
  10,976
  11,708
  12,481
  13,297
  14,157
  15,064
  16,020
  17,026
  18,086
  19,201
  20,375
  21,609
  22,908
Total liabilities, $m
  8,715
  8,916
  9,145
  9,402
  9,687
  10,000
  10,341
  10,709
  11,106
  11,533
  11,989
  12,475
  12,993
  13,544
  14,128
  14,747
  15,403
  16,096
  16,828
  17,601
  18,417
  19,277
  20,184
  21,140
  22,146
  23,206
  24,321
  25,495
  26,729
  28,028
Total equity, $m
  2,444
  2,500
  2,564
  2,636
  2,716
  2,804
  2,900
  3,003
  3,114
  3,234
  3,362
  3,498
  3,643
  3,798
  3,962
  4,135
  4,319
  4,513
  4,719
  4,936
  5,164
  5,406
  5,660
  5,928
  6,210
  6,507
  6,820
  7,149
  7,495
  7,859
Total liabilities and equity, $m
  11,159
  11,416
  11,709
  12,038
  12,403
  12,804
  13,241
  13,712
  14,220
  14,767
  15,351
  15,973
  16,636
  17,342
  18,090
  18,882
  19,722
  20,609
  21,547
  22,537
  23,581
  24,683
  25,844
  27,068
  28,356
  29,713
  31,141
  32,644
  34,224
  35,887
Debt-to-equity ratio
  1.470
  1.520
  1.570
  1.620
  1.680
  1.740
  1.800
  1.860
  1.920
  1.980
  2.040
  2.100
  2.160
  2.220
  2.270
  2.330
  2.380
  2.430
  2.480
  2.530
  2.570
  2.620
  2.660
  2.700
  2.740
  2.780
  2.820
  2.850
  2.880
  2.910
Adjusted equity ratio
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  401
  411
  423
  435
  449
  464
  480
  497
  516
  536
  750
  773
  797
  823
  850
  879
  909
  941
  975
  1,011
  1,049
  1,089
  1,131
  1,175
  1,221
  1,270
  1,322
  1,376
  1,433
  1,493
Depreciation, amort., depletion, $m
  588
  595
  604
  613
  624
  636
  648
  662
  677
  693
  445
  463
  483
  503
  525
  548
  572
  598
  625
  654
  684
  716
  750
  785
  823
  862
  903
  947
  993
  1,041
Funds from operations, $m
  989
  1,007
  1,026
  1,048
  1,073
  1,099
  1,128
  1,159
  1,193
  1,228
  1,195
  1,236
  1,280
  1,326
  1,375
  1,426
  1,481
  1,539
  1,600
  1,665
  1,733
  1,805
  1,880
  1,960
  2,044
  2,132
  2,225
  2,323
  2,426
  2,534
Change in working capital, $m
  -11
  -13
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
Cash from operations, $m
  1,000
  1,020
  1,041
  1,065
  1,091
  1,120
  1,150
  1,183
  1,219
  1,256
  1,225
  1,268
  1,313
  1,362
  1,413
  1,467
  1,524
  1,584
  1,648
  1,715
  1,786
  1,861
  1,939
  2,022
  2,110
  2,201
  2,298
  2,400
  2,506
  2,619
Maintenance CAPEX, $m
  -317
  -324
  -331
  -340
  -349
  -360
  -371
  -384
  -398
  -413
  -428
  -445
  -463
  -483
  -503
  -525
  -548
  -572
  -598
  -625
  -654
  -684
  -716
  -750
  -785
  -823
  -862
  -903
  -947
  -993
New CAPEX, $m
  -76
  -83
  -94
  -106
  -118
  -129
  -140
  -152
  -164
  -176
  -188
  -201
  -214
  -227
  -241
  -255
  -270
  -286
  -302
  -319
  -336
  -355
  -374
  -394
  -415
  -437
  -460
  -484
  -509
  -535
Cash from investing activities, $m
  -393
  -407
  -425
  -446
  -467
  -489
  -511
  -536
  -562
  -589
  -616
  -646
  -677
  -710
  -744
  -780
  -818
  -858
  -900
  -944
  -990
  -1,039
  -1,090
  -1,144
  -1,200
  -1,260
  -1,322
  -1,387
  -1,456
  -1,528
Free cash flow, $m
  608
  613
  616
  620
  625
  631
  639
  647
  657
  668
  609
  622
  637
  652
  669
  687
  706
  726
  748
  771
  796
  822
  850
  879
  909
  942
  976
  1,012
  1,050
  1,091
Issuance/(repayment) of debt, $m
  165
  200
  229
  257
  285
  313
  341
  369
  397
  426
  456
  487
  518
  551
  584
  619
  655
  693
  732
  773
  816
  860
  907
  956
  1,006
  1,060
  1,115
  1,174
  1,235
  1,299
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  165
  200
  229
  257
  285
  313
  341
  369
  397
  426
  456
  487
  518
  551
  584
  619
  655
  693
  732
  773
  816
  860
  907
  956
  1,006
  1,060
  1,115
  1,174
  1,235
  1,299
Total cash flow (excl. dividends), $m
  773
  814
  845
  877
  910
  944
  979
  1,016
  1,054
  1,094
  1,065
  1,109
  1,155
  1,203
  1,253
  1,306
  1,361
  1,420
  1,481
  1,545
  1,612
  1,682
  1,756
  1,834
  1,916
  2,002
  2,091
  2,186
  2,285
  2,389
Retained Cash Flow (-), $m
  -52
  -56
  -64
  -72
  -80
  -88
  -95
  -103
  -111
  -120
  -128
  -136
  -145
  -154
  -164
  -174
  -184
  -194
  -205
  -217
  -229
  -241
  -254
  -268
  -282
  -297
  -313
  -329
  -346
  -364
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
  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
  721
  758
  781
  805
  830
  856
  884
  913
  943
  975
  937
  972
  1,009
  1,048
  1,089
  1,132
  1,178
  1,225
  1,275
  1,328
  1,383
  1,441
  1,502
  1,566
  1,634
  1,704
  1,779
  1,857
  1,939
  2,025
Discount rate, %
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
  673
  656
  623
  587
  549
  509
  468
  426
  384
  343
  281
  246
  212
  181
  151
  125
  102
  81
  64
  49
  37
  27
  20
  14
  9
  6
  4
  3
  2
  1
Current shareholders' claim on cash, %
  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

Adient plc, formerly Adient Limited, is an automotive seating supplier. The Company designs, manufactures and markets a range of seating systems and components for passenger cars, commercial vehicles, and light trucks, including vans, pick-up trucks, and sport/crossover utility vehicles. The Company operates through two segments: Seating and Interiors. The Seating segment produces automotive seat metal structures, and mechanisms, foam, trim, fabric and complete seat systems. The Interiors segment produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products. The Company also supplies various seating systems to the international motorsports industry through its RECARO brand of products. It operates approximately 230 manufacturing or assembly facilities, with operations in over 30 countries. Its technologies focus on offering automotive seating solutions in a range of areas, including frames, armrests and fabrics.

FINANCIAL RATIOS  of  Adient plc (ADNT)

Valuation Ratios
P/E Ratio 2.3
Price to Sales 0.1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow 12.2
Growth Rates
Sales Growth Rate -3.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 32%
Cap. Spend. - 3 Yr. Gr. Rate -1.6%
Financial Strength
Quick Ratio 19
Current Ratio 0.2
LT Debt to Equity 80.4%
Total Debt to Equity 81.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. -0.8%
Return On Total Capital 11.3%
Ret/ On T. Cap. - 3 Yr. Avg. -1.2%
Return On Equity 20.7%
Return On Equity - 3 Yr. Avg. -0.8%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 8.7%
Gross Margin - 3 Yr. Avg. 9.2%
EBITDA Margin 8.8%
EBITDA Margin - 3 Yr. Avg. 6.5%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. 2.6%
Pre-Tax Margin 6.5%
Pre-Tax Margin - 3 Yr. Avg. 4.5%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 9.3%
Eff/ Tax Rate - 3 Yr. Avg. 180.5%
Payout Ratio 5.9%

ADNT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ADNT stock intrinsic value calculation we used $17439 million for the last fiscal year's total revenue generated by Adient plc. The default revenue input number comes from 0001 income statement of Adient plc. 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 ADNT 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 7.1%, whose default value for ADNT is calculated based on our internal credit rating of Adient plc, 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 Adient plc.
    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 ADNT stock the variable cost ratio is equal to 95.9%.

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 ADNT 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 5.4% for Adient plc.

Corporate tax rate of 27% is the nominal tax rate for Adient plc. 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 ADNT 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 ADNT are equal to 20.2%.

Life of production assets of 11.1 years is the average useful life of capital assets used in Adient plc 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 ADNT is equal to -3.2%. 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 - $2392 million for Adient plc - 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 93.772 million for Adient plc 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 Adient plc at the current share price and the inputted number of shares is $2.1 billion.

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