Intrinsic value of Albany International Corporation - AIN

Previous Close

$81.10

  Intrinsic Value

$71.80

stock screener

  Rating & Target

hold

-11%

Previous close

$81.10

 
Intrinsic value

$71.80

 
Up/down potential

-11%

 
Rating

hold

We calculate the intrinsic value of AIN 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 2.6

 

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, %
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
Revenue, $m
  1,053
  1,126
  1,203
  1,282
  1,365
  1,451
  1,540
  1,633
  1,730
  1,832
  1,937
  2,047
  2,163
  2,283
  2,408
  2,540
  2,677
  2,821
  2,971
  3,129
  3,293
  3,466
  3,647
  3,836
  4,035
  4,243
  4,461
  4,690
  4,930
  5,181
Variable operating expenses, $m
  532
  568
  605
  643
  684
  725
  769
  814
  861
  910
  940
  993
  1,049
  1,108
  1,169
  1,232
  1,299
  1,369
  1,442
  1,518
  1,598
  1,682
  1,769
  1,861
  1,958
  2,059
  2,165
  2,276
  2,392
  2,514
Fixed operating expenses, $m
  363
  371
  379
  387
  396
  405
  413
  423
  432
  441
  451
  461
  471
  481
  492
  503
  514
  525
  537
  549
  561
  573
  586
  598
  612
  625
  639
  653
  667
  682
Total operating expenses, $m
  895
  939
  984
  1,030
  1,080
  1,130
  1,182
  1,237
  1,293
  1,351
  1,391
  1,454
  1,520
  1,589
  1,661
  1,735
  1,813
  1,894
  1,979
  2,067
  2,159
  2,255
  2,355
  2,459
  2,570
  2,684
  2,804
  2,929
  3,059
  3,196
Operating income, $m
  158
  188
  219
  251
  285
  321
  358
  397
  438
  480
  546
  593
  642
  694
  748
  805
  864
  927
  993
  1,062
  1,135
  1,211
  1,292
  1,376
  1,465
  1,559
  1,658
  1,761
  1,870
  1,985
EBITDA, $m
  250
  285
  321
  359
  398
  440
  483
  528
  575
  625
  676
  731
  788
  847
  910
  975
  1,044
  1,116
  1,192
  1,272
  1,356
  1,444
  1,537
  1,634
  1,737
  1,844
  1,957
  2,077
  2,202
  2,334
Interest expense (income), $m
  0
  28
  32
  35
  38
  42
  45
  49
  53
  57
  62
  66
  71
  76
  81
  86
  92
  98
  104
  110
  117
  124
  131
  139
  147
  156
  165
  174
  184
  194
  205
Earnings before tax, $m
  129
  156
  184
  213
  244
  275
  309
  344
  380
  418
  480
  522
  566
  613
  661
  713
  766
  823
  882
  945
  1,011
  1,080
  1,153
  1,229
  1,310
  1,394
  1,484
  1,578
  1,677
  1,781
Tax expense, $m
  35
  42
  50
  58
  66
  74
  83
  93
  103
  113
  130
  141
  153
  165
  179
  192
  207
  222
  238
  255
  273
  292
  311
  332
  354
  377
  401
  426
  453
  481
Net income, $m
  94
  114
  134
  156
  178
  201
  225
  251
  278
  305
  350
  381
  413
  447
  483
  520
  559
  601
  644
  690
  738
  788
  841
  897
  956
  1,018
  1,083
  1,152
  1,224
  1,300

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
  1,510
  1,616
  1,725
  1,839
  1,958
  2,081
  2,209
  2,343
  2,483
  2,628
  2,779
  2,938
  3,103
  3,275
  3,455
  3,644
  3,841
  4,047
  4,263
  4,489
  4,725
  4,973
  5,232
  5,504
  5,789
  6,087
  6,400
  6,728
  7,073
  7,434
Adjusted assets (=assets-cash), $m
  1,510
  1,616
  1,725
  1,839
  1,958
  2,081
  2,209
  2,343
  2,483
  2,628
  2,779
  2,938
  3,103
  3,275
  3,455
  3,644
  3,841
  4,047
  4,263
  4,489
  4,725
  4,973
  5,232
  5,504
  5,789
  6,087
  6,400
  6,728
  7,073
  7,434
Revenue / Adjusted assets
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
  0.697
Average production assets, $m
  608
  651
  695
  741
  789
  838
  890
  944
  1,000
  1,059
  1,120
  1,183
  1,250
  1,319
  1,392
  1,468
  1,547
  1,630
  1,717
  1,808
  1,904
  2,003
  2,108
  2,217
  2,332
  2,452
  2,578
  2,711
  2,849
  2,995
Working capital, $m
  222
  238
  254
  270
  288
  306
  325
  345
  365
  386
  409
  432
  456
  482
  508
  536
  565
  595
  627
  660
  695
  731
  769
  809
  851
  895
  941
  990
  1,040
  1,093
Total debt, $m
  583
  644
  707
  773
  841
  912
  986
  1,063
  1,143
  1,227
  1,314
  1,405
  1,501
  1,600
  1,704
  1,812
  1,926
  2,045
  2,169
  2,299
  2,435
  2,578
  2,727
  2,884
  3,048
  3,220
  3,400
  3,589
  3,787
  3,995
Total liabilities, $m
  870
  931
  994
  1,059
  1,128
  1,199
  1,273
  1,350
  1,430
  1,514
  1,601
  1,692
  1,787
  1,887
  1,990
  2,099
  2,212
  2,331
  2,455
  2,585
  2,722
  2,864
  3,014
  3,170
  3,334
  3,506
  3,687
  3,876
  4,074
  4,282
Total equity, $m
  640
  685
  732
  780
  830
  882
  937
  994
  1,053
  1,114
  1,178
  1,246
  1,316
  1,389
  1,465
  1,545
  1,629
  1,716
  1,807
  1,903
  2,003
  2,108
  2,218
  2,334
  2,454
  2,581
  2,714
  2,853
  2,999
  3,152
Total liabilities and equity, $m
  1,510
  1,616
  1,726
  1,839
  1,958
  2,081
  2,210
  2,344
  2,483
  2,628
  2,779
  2,938
  3,103
  3,276
  3,455
  3,644
  3,841
  4,047
  4,262
  4,488
  4,725
  4,972
  5,232
  5,504
  5,788
  6,087
  6,401
  6,729
  7,073
  7,434
Debt-to-equity ratio
  0.910
  0.940
  0.970
  0.990
  1.010
  1.030
  1.050
  1.070
  1.090
  1.100
  1.120
  1.130
  1.140
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.210
  1.220
  1.220
  1.230
  1.240
  1.240
  1.250
  1.250
  1.260
  1.260
  1.270
Adjusted equity ratio
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  94
  114
  134
  156
  178
  201
  225
  251
  278
  305
  350
  381
  413
  447
  483
  520
  559
  601
  644
  690
  738
  788
  841
  897
  956
  1,018
  1,083
  1,152
  1,224
  1,300
Depreciation, amort., depletion, $m
  92
  97
  102
  108
  113
  119
  125
  131
  138
  145
  130
  138
  145
  153
  162
  171
  180
  190
  200
  210
  221
  233
  245
  258
  271
  285
  300
  315
  331
  348
Funds from operations, $m
  187
  211
  236
  263
  291
  320
  350
  382
  415
  450
  481
  519
  559
  601
  645
  691
  739
  790
  844
  900
  959
  1,021
  1,086
  1,155
  1,227
  1,303
  1,383
  1,467
  1,555
  1,648
Change in working capital, $m
  15
  16
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
Cash from operations, $m
  172
  196
  220
  246
  273
  302
  331
  362
  395
  429
  458
  495
  534
  575
  618
  663
  710
  760
  812
  867
  924
  985
  1,048
  1,115
  1,185
  1,259
  1,337
  1,419
  1,505
  1,595
Maintenance CAPEX, $m
  -66
  -71
  -76
  -81
  -86
  -92
  -97
  -104
  -110
  -116
  -123
  -130
  -138
  -145
  -153
  -162
  -171
  -180
  -190
  -200
  -210
  -221
  -233
  -245
  -258
  -271
  -285
  -300
  -315
  -331
New CAPEX, $m
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -69
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -139
  -145
Cash from investing activities, $m
  -107
  -113
  -120
  -127
  -134
  -142
  -149
  -158
  -166
  -175
  -184
  -194
  -205
  -214
  -226
  -238
  -250
  -263
  -277
  -291
  -305
  -321
  -338
  -355
  -373
  -391
  -411
  -432
  -454
  -476
Free cash flow, $m
  64
  82
  101
  120
  140
  160
  182
  205
  229
  254
  274
  302
  330
  360
  392
  425
  460
  497
  536
  576
  619
  664
  711
  760
  813
  868
  926
  987
  1,051
  1,118
Issuance/(repayment) of debt, $m
  58
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  113
  119
  124
  130
  136
  143
  149
  157
  164
  172
  180
  189
  198
  208
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  
  58
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  113
  119
  124
  130
  136
  143
  149
  157
  164
  172
  180
  189
  198
  208
Total cash flow (excl. dividends), $m
  123
  143
  164
  185
  208
  231
  256
  282
  309
  337
  361
  393
  425
  460
  496
  534
  574
  616
  660
  706
  755
  806
  860
  917
  977
  1,040
  1,106
  1,176
  1,249
  1,326
Retained Cash Flow (-), $m
  -44
  -45
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -139
  -146
  -153
Prev. year cash balance distribution, $m
  8
  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
  88
  98
  117
  137
  158
  179
  202
  225
  250
  276
  297
  326
  355
  387
  420
  454
  490
  528
  568
  610
  655
  701
  750
  802
  856
  913
  973
  1,037
  1,103
  1,173
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  84
  89
  100
  109
  117
  124
  128
  131
  132
  131
  126
  122
  116
  110
  102
  93
  84
  75
  66
  57
  48
  40
  32
  26
  20
  16
  12
  9
  6
  4
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

Albany International Corp. is focused on textiles and materials processing business. The Company operates through two segments: Machine Clothing and Albany Engineered Composites. The Company's Machine Clothing segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, nonwovens, fiber cement and various other industrial applications. The Machine Clothing segment also supplies customized, consumable fabrics used in the manufacturing process in the pulp, corrugator, nonwovens, fiber cement, building products, and tannery and textile industries. Its Albany Engineered Composites segment includes Albany Safran Composites, LLC (ASC), in which its customer SAFRAN Group owns interest and provides engineered composite structures based on its technology to customers in the aerospace and defense industries.

FINANCIAL RATIOS  of  Albany International Corporation (AIN)

Valuation Ratios
P/E Ratio 49.1
Price to Sales 3.3
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 32.6
Price to Free Cash Flow 372
Growth Rates
Sales Growth Rate 9.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 43.1%
Cap. Spend. - 3 Yr. Gr. Rate 2.7%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 85.2%
Total Debt to Equity 95.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 9.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 38.6%
Gross Margin - 3 Yr. Avg. 39%
EBITDA Margin 18.6%
EBITDA Margin - 3 Yr. Avg. 17.4%
Operating Margin 11.8%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin 10%
Pre-Tax Margin - 3 Yr. Avg. 8.8%
Net Profit Margin 6.8%
Net Profit Margin - 3 Yr. Avg. 6.8%
Effective Tax Rate 32.1%
Eff/ Tax Rate - 3 Yr. Avg. 19.5%
Payout Ratio 41.5%

AIN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AIN stock intrinsic value calculation we used $982 million for the last fiscal year's total revenue generated by Albany International Corporation. The default revenue input number comes from 0001 income statement of Albany International Corporation. 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 AIN stock valuation model: a) initial revenue growth rate of 7.2% 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 5%, whose default value for AIN is calculated based on our internal credit rating of Albany International Corporation, 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 Albany International Corporation.
    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 AIN stock the variable cost ratio is equal to 50.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $355 million in the base year in the intrinsic value calculation for AIN 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 Albany International Corporation.

Corporate tax rate of 27% is the nominal tax rate for Albany International Corporation. 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 AIN 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 AIN are equal to 57.8%.

Life of production assets of 8.6 years is the average useful life of capital assets used in Albany International Corporation 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 AIN is equal to 21.1%. 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 - $605.249 million for Albany International Corporation - 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 32.223 million for Albany International Corporation 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 Albany International Corporation at the current share price and the inputted number of shares is $2.6 billion.

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