Intrinsic value of Altra Industrial Motion Corp. - AIMC

Previous Close

$25.85

  Intrinsic Value

$34.43

stock screener

  Rating & Target

buy

+33%

Previous close

$25.85

 
Intrinsic value

$34.43

 
Up/down potential

+33%

 
Rating

buy

We calculate the intrinsic value of AIMC 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 1.7

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,880
  2,905
  4,344
  6,303
  8,892
  12,225
  16,409
  21,546
  27,725
  35,019
  43,485
  53,165
  64,081
  76,244
  89,650
  104,284
  120,126
  137,151
  155,331
  174,638
  195,047
  216,538
  239,093
  262,703
  287,363
  313,077
  339,857
  367,719
  396,689
  426,800
Variable operating expenses, $m
  1,681
  2,578
  3,837
  5,551
  7,817
  10,733
  14,395
  18,890
  24,296
  30,678
  38,050
  46,520
  56,073
  66,715
  78,445
  91,251
  105,113
  120,010
  135,918
  152,812
  170,671
  189,475
  209,211
  229,870
  251,449
  273,949
  297,382
  321,762
  347,112
  373,459
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
  1,681
  2,578
  3,837
  5,551
  7,817
  10,733
  14,395
  18,890
  24,296
  30,678
  38,050
  46,520
  56,073
  66,715
  78,445
  91,251
  105,113
  120,010
  135,918
  152,812
  170,671
  189,475
  209,211
  229,870
  251,449
  273,949
  297,382
  321,762
  347,112
  373,459
Operating income, $m
  199
  327
  506
  751
  1,075
  1,491
  2,014
  2,656
  3,429
  4,340
  5,435
  6,644
  8,009
  9,529
  11,204
  13,033
  15,013
  17,141
  19,413
  21,826
  24,377
  27,063
  29,882
  32,832
  35,914
  39,128
  42,475
  45,957
  49,578
  53,341
EBITDA, $m
  298
  460
  689
  999
  1,410
  1,938
  2,601
  3,415
  4,395
  5,551
  6,893
  8,427
  10,158
  12,086
  14,211
  16,530
  19,041
  21,740
  24,622
  27,682
  30,917
  34,324
  37,899
  41,642
  45,550
  49,627
  53,871
  58,288
  62,880
  67,653
Interest expense (income), $m
  7
  92
  173
  290
  455
  679
  975
  1,356
  1,835
  2,422
  3,129
  3,963
  4,931
  6,039
  7,287
  8,678
  10,212
  11,885
  13,697
  15,645
  17,724
  19,932
  22,267
  24,725
  27,304
  30,005
  32,825
  35,766
  38,829
  42,016
  45,330
Earnings before tax, $m
  106
  154
  216
  297
  396
  517
  658
  822
  1,006
  1,211
  1,472
  1,713
  1,970
  2,242
  2,526
  2,822
  3,128
  3,444
  3,768
  4,102
  4,444
  4,796
  5,157
  5,528
  5,909
  6,303
  6,708
  7,128
  7,562
  8,011
Tax expense, $m
  29
  42
  58
  80
  107
  139
  178
  222
  272
  327
  397
  462
  532
  605
  682
  762
  845
  930
  1,017
  1,108
  1,200
  1,295
  1,392
  1,493
  1,596
  1,702
  1,811
  1,924
  2,042
  2,163
Net income, $m
  78
  112
  158
  217
  289
  377
  481
  600
  735
  884
  1,074
  1,250
  1,438
  1,636
  1,844
  2,060
  2,283
  2,514
  2,751
  2,994
  3,244
  3,501
  3,765
  4,035
  4,314
  4,601
  4,897
  5,203
  5,520
  5,848

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
  6,937
  10,718
  16,029
  23,257
  32,812
  45,110
  60,550
  79,506
  102,305
  129,220
  160,462
  196,180
  236,462
  281,344
  330,810
  384,812
  443,271
  506,093
  573,177
  644,421
  719,732
  799,033
  882,262
  969,382
  1,060,379
  1,155,267
  1,254,084
  1,356,896
  1,463,798
  1,574,909
Adjusted assets (=assets-cash), $m
  6,937
  10,718
  16,029
  23,257
  32,812
  45,110
  60,550
  79,506
  102,305
  129,220
  160,462
  196,180
  236,462
  281,344
  330,810
  384,812
  443,271
  506,093
  573,177
  644,421
  719,732
  799,033
  882,262
  969,382
  1,060,379
  1,155,267
  1,254,084
  1,356,896
  1,463,798
  1,574,909
Revenue / Adjusted assets
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
  0.271
Average production assets, $m
  1,891
  2,922
  4,370
  6,340
  8,946
  12,298
  16,508
  21,675
  27,891
  35,229
  43,746
  53,484
  64,466
  76,702
  90,187
  104,910
  120,847
  137,974
  156,263
  175,686
  196,218
  217,837
  240,528
  264,279
  289,087
  314,956
  341,896
  369,925
  399,069
  429,361
Working capital, $m
  344
  532
  795
  1,153
  1,627
  2,237
  3,003
  3,943
  5,074
  6,408
  7,958
  9,729
  11,727
  13,953
  16,406
  19,084
  21,983
  25,099
  28,426
  31,959
  35,694
  39,626
  43,754
  48,075
  52,587
  57,293
  62,194
  67,293
  72,594
  78,104
Total debt, $m
  3,201
  5,371
  8,420
  12,569
  18,053
  25,112
  33,975
  44,856
  57,942
  73,391
  91,324
  111,826
  134,948
  160,710
  189,104
  220,101
  253,656
  289,716
  328,223
  369,117
  412,345
  457,864
  505,637
  555,644
  607,877
  662,342
  719,063
  778,078
  839,439
  903,217
Total liabilities, $m
  3,982
  6,152
  9,201
  13,350
  18,834
  25,893
  34,756
  45,637
  58,723
  74,172
  92,105
  112,607
  135,729
  161,491
  189,885
  220,882
  254,437
  290,497
  329,003
  369,898
  413,126
  458,645
  506,418
  556,425
  608,658
  663,123
  719,844
  778,859
  840,220
  903,998
Total equity, $m
  2,955
  4,566
  6,828
  9,908
  13,978
  19,217
  25,794
  33,870
  43,582
  55,048
  68,357
  83,573
  100,733
  119,852
  140,925
  163,930
  188,833
  215,596
  244,173
  274,523
  306,606
  340,388
  375,844
  412,957
  451,722
  492,144
  534,240
  578,038
  623,578
  670,911
Total liabilities and equity, $m
  6,937
  10,718
  16,029
  23,258
  32,812
  45,110
  60,550
  79,507
  102,305
  129,220
  160,462
  196,180
  236,462
  281,343
  330,810
  384,812
  443,270
  506,093
  573,176
  644,421
  719,732
  799,033
  882,262
  969,382
  1,060,380
  1,155,267
  1,254,084
  1,356,897
  1,463,798
  1,574,909
Debt-to-equity ratio
  1.080
  1.180
  1.230
  1.270
  1.290
  1.310
  1.320
  1.320
  1.330
  1.330
  1.340
  1.340
  1.340
  1.340
  1.340
  1.340
  1.340
  1.340
  1.340
  1.340
  1.340
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
Adjusted equity ratio
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  78
  112
  158
  217
  289
  377
  481
  600
  735
  884
  1,074
  1,250
  1,438
  1,636
  1,844
  2,060
  2,283
  2,514
  2,751
  2,994
  3,244
  3,501
  3,765
  4,035
  4,314
  4,601
  4,897
  5,203
  5,520
  5,848
Depreciation, amort., depletion, $m
  99
  134
  182
  248
  335
  446
  587
  759
  966
  1,211
  1,458
  1,783
  2,149
  2,557
  3,006
  3,497
  4,028
  4,599
  5,209
  5,856
  6,541
  7,261
  8,018
  8,809
  9,636
  10,499
  11,397
  12,331
  13,302
  14,312
Funds from operations, $m
  177
  246
  340
  464
  624
  823
  1,067
  1,359
  1,701
  2,095
  2,532
  3,033
  3,587
  4,193
  4,850
  5,557
  6,312
  7,113
  7,960
  8,851
  9,785
  10,762
  11,782
  12,845
  13,950
  15,099
  16,294
  17,534
  18,822
  20,160
Change in working capital, $m
  129
  188
  263
  358
  474
  610
  766
  940
  1,131
  1,335
  1,549
  1,771
  1,998
  2,226
  2,453
  2,678
  2,899
  3,116
  3,327
  3,533
  3,735
  3,933
  4,128
  4,321
  4,513
  4,706
  4,901
  5,099
  5,302
  5,510
Cash from operations, $m
  48
  59
  77
  106
  150
  214
  301
  419
  570
  760
  983
  1,262
  1,589
  1,967
  2,397
  2,879
  3,412
  3,997
  4,633
  5,317
  6,050
  6,830
  7,655
  8,524
  9,437
  10,394
  11,393
  12,435
  13,521
  14,650
Maintenance CAPEX, $m
  -39
  -63
  -97
  -146
  -211
  -298
  -410
  -550
  -723
  -930
  -1,174
  -1,458
  -1,783
  -2,149
  -2,557
  -3,006
  -3,497
  -4,028
  -4,599
  -5,209
  -5,856
  -6,541
  -7,261
  -8,018
  -8,809
  -9,636
  -10,499
  -11,397
  -12,331
  -13,302
New CAPEX, $m
  -710
  -1,031
  -1,448
  -1,971
  -2,605
  -3,353
  -4,210
  -5,168
  -6,216
  -7,338
  -8,517
  -9,738
  -10,982
  -12,236
  -13,486
  -14,722
  -15,937
  -17,127
  -18,289
  -19,423
  -20,532
  -21,619
  -22,690
  -23,751
  -24,808
  -25,869
  -26,940
  -28,029
  -29,144
  -30,292
Cash from investing activities, $m
  -749
  -1,094
  -1,545
  -2,117
  -2,816
  -3,651
  -4,620
  -5,718
  -6,939
  -8,268
  -9,691
  -11,196
  -12,765
  -14,385
  -16,043
  -17,728
  -19,434
  -21,155
  -22,888
  -24,632
  -26,388
  -28,160
  -29,951
  -31,769
  -33,617
  -35,505
  -37,439
  -39,426
  -41,475
  -43,594
Free cash flow, $m
  -701
  -1,035
  -1,469
  -2,010
  -2,666
  -3,437
  -4,318
  -5,299
  -6,368
  -7,507
  -8,709
  -9,934
  -11,176
  -12,417
  -13,646
  -14,850
  -16,022
  -17,158
  -18,255
  -19,314
  -20,338
  -21,330
  -22,297
  -23,245
  -24,180
  -25,111
  -26,046
  -26,991
  -27,954
  -28,944
Issuance/(repayment) of debt, $m
  1,493
  2,170
  3,048
  4,149
  5,485
  7,059
  8,863
  10,881
  13,087
  15,449
  17,933
  20,502
  23,122
  25,762
  28,394
  30,997
  33,556
  36,060
  38,506
  40,894
  43,229
  45,518
  47,774
  50,007
  52,233
  54,465
  56,721
  59,015
  61,362
  63,778
Issuance/(repurchase) of shares, $m
  1,029
  1,498
  2,104
  2,863
  3,781
  4,861
  6,097
  7,475
  8,978
  10,581
  12,235
  13,965
  15,722
  17,483
  19,229
  20,945
  22,620
  24,249
  25,827
  27,355
  28,838
  30,281
  31,691
  33,078
  34,451
  35,821
  37,199
  38,595
  40,020
  41,485
Cash from financing (excl. dividends), $m  
  2,522
  3,668
  5,152
  7,012
  9,266
  11,920
  14,960
  18,356
  22,065
  26,030
  30,168
  34,467
  38,844
  43,245
  47,623
  51,942
  56,176
  60,309
  64,333
  68,249
  72,067
  75,799
  79,465
  83,085
  86,684
  90,286
  93,920
  97,610
  101,382
  105,263
Total cash flow (excl. dividends), $m
  1,821
  2,633
  3,684
  5,001
  6,600
  8,483
  10,642
  13,057
  15,696
  18,523
  21,459
  24,534
  27,669
  30,827
  33,977
  37,092
  40,154
  43,151
  46,078
  48,935
  51,729
  54,469
  57,168
  59,840
  62,503
  65,175
  67,874
  70,619
  73,428
  76,318
Retained Cash Flow (-), $m
  -1,107
  -1,611
  -2,262
  -3,079
  -4,071
  -5,239
  -6,578
  -8,075
  -9,712
  -11,466
  -13,309
  -15,216
  -17,160
  -19,119
  -21,073
  -23,005
  -24,904
  -26,762
  -28,578
  -30,350
  -32,083
  -33,782
  -35,456
  -37,113
  -38,765
  -40,422
  -42,096
  -43,798
  -45,540
  -47,333
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
  714
  1,023
  1,422
  1,922
  2,529
  3,244
  4,064
  4,981
  5,984
  7,058
  8,150
  9,318
  10,509
  11,708
  12,904
  14,087
  15,250
  16,388
  17,500
  18,585
  19,646
  20,687
  21,712
  22,727
  23,738
  24,753
  25,778
  26,821
  27,887
  28,985
Discount rate, %
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
  660
  867
  1,097
  1,337
  1,573
  1,786
  1,959
  2,080
  2,138
  2,131
  2,052
  1,929
  1,762
  1,564
  1,351
  1,135
  928
  738
  571
  430
  315
  224
  155
  104
  67
  42
  26
  15
  9
  5
Current shareholders' claim on cash, %
  61.9
  39.6
  26.2
  17.9
  12.6
  9.1
  6.7
  5.1
  3.9
  3.1
  2.5
  2.0
  1.7
  1.4
  1.2
  1.0
  0.9
  0.8
  0.7
  0.6
  0.6
  0.5
  0.5
  0.4
  0.4
  0.3
  0.3
  0.3
  0.3
  0.3

Altra Industrial Motion Corp. is a designer, producer and marketer of a range of mechanical power transmission (MPT) components. The Company operates through three segments: Couplings, Clutches and Brakes; Electromagnetic Clutches and Brakes, and Gearing. It manufactures a range of couplings suitable for various industrial and specialty applications. The Electromagnetic Clutches and Brakes segment products include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections. The Gearing segment product lines include vertical and horizontal gear drives, speed reducers and increasers, high-speed compressor drives, enclosed custom gear drives, various enclosed gear drive and gear motor configurations, and open gearing products, such as spur, helical, worm and miter/bevel gears. Its products are used to control and transmit power and torque in virtually any industrial application involving movement.

FINANCIAL RATIOS  of  Altra Industrial Motion Corp. (AIMC)

Valuation Ratios
P/E Ratio 28.1
Price to Sales 1
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 9.1
Price to Free Cash Flow 12.1
Growth Rates
Sales Growth Rate -5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.4%
Cap. Spend. - 3 Yr. Gr. Rate -7.5%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 115.2%
Total Debt to Equity 130.7%
Interest Coverage 6
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 9.5%
Return On Equity - 3 Yr. Avg. 12.9%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 31.3%
Gross Margin - 3 Yr. Avg. 30.7%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 6.5%
Oper. Margin - 3 Yr. Avg. 8.1%
Pre-Tax Margin 4.8%
Pre-Tax Margin - 3 Yr. Avg. 6.4%
Net Profit Margin 3.5%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 26.5%
Eff/ Tax Rate - 3 Yr. Avg. 31.5%
Payout Ratio 48%

AIMC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AIMC stock intrinsic value calculation we used $1175 million for the last fiscal year's total revenue generated by Altra Industrial Motion Corp.. The default revenue input number comes from 0001 income statement of Altra Industrial Motion Corp.. 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 AIMC stock valuation model: a) initial revenue growth rate of 60% 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 8.2%, whose default value for AIMC is calculated based on our internal credit rating of Altra Industrial Motion Corp., 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 Altra Industrial Motion Corp..
    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 AIMC stock the variable cost ratio is equal to 90.6%.

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 AIMC 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 Altra Industrial Motion Corp..

Corporate tax rate of 27% is the nominal tax rate for Altra Industrial Motion Corp.. 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 AIMC 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 AIMC are equal to 100.6%.

Life of production assets of 34.7 years is the average useful life of capital assets used in Altra Industrial Motion Corp. 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 AIMC is equal to 18.3%. 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 - $1848.196 million for Altra Industrial Motion Corp. - 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 64.608 million for Altra Industrial Motion Corp. 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 Altra Industrial Motion Corp. at the current share price and the inputted number of shares is $1.7 billion.

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