Intrinsic value of Ampco-Pittsburgh Corporation - AP

Previous Close

$3.91

  Intrinsic Value

$21.61

stock screener

  Rating & Target

str. buy

+453%

Previous close

$3.91

 
Intrinsic value

$21.61

 
Up/down potential

+453%

 
Rating

str. buy

We calculate the intrinsic value of AP 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 0.0

 

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, %
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
Revenue, $m
  467
  502
  540
  579
  619
  661
  704
  750
  797
  846
  897
  950
  1,006
  1,064
  1,125
  1,188
  1,254
  1,323
  1,395
  1,470
  1,549
  1,632
  1,718
  1,808
  1,903
  2,002
  2,106
  2,215
  2,330
  2,449
Variable operating expenses, $m
  258
  278
  298
  320
  342
  365
  389
  414
  440
  467
  494
  523
  554
  586
  619
  654
  690
  728
  768
  809
  853
  898
  946
  995
  1,048
  1,102
  1,159
  1,219
  1,282
  1,348
Fixed operating expenses, $m
  211
  215
  220
  225
  230
  235
  240
  245
  251
  256
  262
  267
  273
  279
  286
  292
  298
  305
  311
  318
  325
  332
  340
  347
  355
  363
  371
  379
  387
  396
Total operating expenses, $m
  469
  493
  518
  545
  572
  600
  629
  659
  691
  723
  756
  790
  827
  865
  905
  946
  988
  1,033
  1,079
  1,127
  1,178
  1,230
  1,286
  1,342
  1,403
  1,465
  1,530
  1,598
  1,669
  1,744
Operating income, $m
  -2
  10
  22
  34
  47
  61
  76
  91
  107
  123
  142
  160
  179
  199
  220
  242
  265
  290
  316
  343
  371
  401
  432
  466
  501
  537
  576
  617
  660
  705
EBITDA, $m
  23
  36
  50
  65
  80
  96
  112
  130
  148
  167
  187
  208
  230
  253
  277
  302
  329
  357
  386
  417
  449
  483
  519
  557
  597
  639
  683
  729
  778
  829
Interest expense (income), $m
  1
  4
  6
  8
  10
  12
  15
  17
  19
  22
  25
  27
  30
  33
  36
  40
  43
  47
  50
  54
  58
  63
  67
  72
  77
  82
  87
  93
  99
  105
  111
Earnings before tax, $m
  -6
  4
  14
  24
  35
  47
  59
  71
  85
  99
  114
  130
  146
  163
  180
  199
  219
  239
  261
  284
  308
  334
  361
  389
  419
  450
  484
  519
  555
  594
Tax expense, $m
  0
  1
  4
  7
  10
  13
  16
  19
  23
  27
  31
  35
  39
  44
  49
  54
  59
  65
  71
  77
  83
  90
  97
  105
  113
  122
  131
  140
  150
  160
Net income, $m
  -6
  3
  10
  18
  26
  34
  43
  52
  62
  72
  83
  95
  106
  119
  132
  145
  160
  175
  191
  207
  225
  244
  263
  284
  306
  329
  353
  379
  405
  434

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
  611
  658
  707
  757
  810
  865
  922
  981
  1,043
  1,107
  1,174
  1,244
  1,317
  1,393
  1,472
  1,555
  1,641
  1,731
  1,826
  1,924
  2,028
  2,136
  2,249
  2,367
  2,491
  2,621
  2,757
  2,900
  3,049
  3,206
Adjusted assets (=assets-cash), $m
  611
  658
  707
  757
  810
  865
  922
  981
  1,043
  1,107
  1,174
  1,244
  1,317
  1,393
  1,472
  1,555
  1,641
  1,731
  1,826
  1,924
  2,028
  2,136
  2,249
  2,367
  2,491
  2,621
  2,757
  2,900
  3,049
  3,206
Revenue / Adjusted assets
  0.764
  0.763
  0.764
  0.765
  0.764
  0.764
  0.764
  0.765
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
Average production assets, $m
  238
  256
  275
  295
  316
  337
  359
  382
  406
  431
  458
  485
  513
  543
  574
  606
  639
  675
  711
  750
  790
  832
  876
  922
  971
  1,021
  1,074
  1,130
  1,188
  1,249
Working capital, $m
  102
  110
  118
  126
  135
  144
  154
  163
  174
  184
  196
  207
  219
  232
  245
  259
  273
  288
  304
  320
  338
  356
  375
  394
  415
  437
  459
  483
  508
  534
Total debt, $m
  99
  132
  168
  204
  242
  281
  322
  365
  409
  456
  504
  554
  606
  661
  718
  777
  839
  904
  972
  1,043
  1,117
  1,195
  1,276
  1,361
  1,451
  1,544
  1,642
  1,744
  1,852
  1,965
Total liabilities, $m
  439
  473
  508
  545
  582
  622
  663
  706
  750
  796
  844
  895
  947
  1,001
  1,058
  1,118
  1,180
  1,245
  1,313
  1,384
  1,458
  1,535
  1,617
  1,702
  1,791
  1,884
  1,982
  2,085
  2,192
  2,305
Total equity, $m
  172
  185
  199
  213
  228
  243
  259
  276
  293
  311
  330
  350
  370
  391
  414
  437
  461
  486
  513
  541
  570
  600
  632
  665
  700
  736
  775
  815
  857
  901
Total liabilities and equity, $m
  611
  658
  707
  758
  810
  865
  922
  982
  1,043
  1,107
  1,174
  1,245
  1,317
  1,392
  1,472
  1,555
  1,641
  1,731
  1,826
  1,925
  2,028
  2,135
  2,249
  2,367
  2,491
  2,620
  2,757
  2,900
  3,049
  3,206
Debt-to-equity ratio
  0.570
  0.720
  0.840
  0.960
  1.060
  1.160
  1.240
  1.320
  1.400
  1.460
  1.530
  1.580
  1.640
  1.690
  1.740
  1.780
  1.820
  1.860
  1.890
  1.930
  1.960
  1.990
  2.020
  2.050
  2.070
  2.100
  2.120
  2.140
  2.160
  2.180
Adjusted equity ratio
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  3
  10
  18
  26
  34
  43
  52
  62
  72
  83
  95
  106
  119
  132
  145
  160
  175
  191
  207
  225
  244
  263
  284
  306
  329
  353
  379
  405
  434
Depreciation, amort., depletion, $m
  25
  26
  28
  30
  32
  34
  37
  39
  41
  44
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  87
  91
  96
  101
  106
  112
  118
  124
Funds from operations, $m
  19
  29
  38
  48
  58
  69
  80
  91
  103
  116
  129
  143
  157
  172
  188
  205
  223
  242
  261
  282
  303
  326
  350
  375
  402
  430
  459
  490
  523
  558
Change in working capital, $m
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Cash from operations, $m
  11
  21
  30
  40
  49
  59
  70
  81
  93
  105
  118
  131
  145
  160
  175
  192
  209
  227
  245
  265
  286
  308
  331
  356
  381
  408
  437
  467
  498
  531
Maintenance CAPEX, $m
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -36
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -112
  -118
New CAPEX, $m
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
Cash from investing activities, $m
  -40
  -42
  -44
  -47
  -50
  -52
  -55
  -59
  -62
  -65
  -69
  -72
  -76
  -81
  -85
  -89
  -94
  -98
  -104
  -108
  -114
  -120
  -126
  -133
  -139
  -147
  -154
  -162
  -170
  -179
Free cash flow, $m
  -28
  -21
  -14
  -7
  -1
  7
  14
  23
  31
  40
  49
  58
  69
  79
  91
  103
  115
  128
  142
  156
  172
  188
  205
  223
  242
  262
  283
  305
  328
  353
Issuance/(repayment) of debt, $m
  32
  34
  35
  37
  38
  39
  41
  43
  44
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  103
  108
  113
Issuance/(repurchase) of shares, $m
  19
  11
  4
  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  
  51
  45
  39
  37
  38
  39
  41
  43
  44
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  103
  108
  113
Total cash flow (excl. dividends), $m
  23
  24
  25
  29
  37
  46
  56
  65
  75
  86
  97
  109
  121
  134
  148
  162
  177
  193
  210
  227
  246
  266
  286
  308
  331
  355
  380
  407
  436
  465
Retained Cash Flow (-), $m
  -19
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
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
  4
  11
  11
  15
  23
  31
  39
  49
  58
  68
  78
  89
  101
  113
  125
  139
  153
  168
  183
  200
  217
  235
  254
  275
  296
  318
  342
  367
  394
  421
Discount rate, %
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
  4
  9
  9
  11
  15
  19
  21
  23
  24
  25
  24
  23
  22
  20
  18
  16
  14
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  85.7
  78.8
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6
  76.6

Ampco-Pittsburgh Corporation is engaged in manufacturing and selling specialty metal products and customized equipment utilized by industry throughout the world. The Company operates through two segments: the Forged and Cast Engineered Products segment, and the Air and Liquid Processing segment. The Forged and Cast Engineered Products segment consists of Union Electric Steel Corporation (Union Electric Steel or UES) and Union Electric Steel UK Limited (UES-UK). The Air and Liquid Processing segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation (Air and Liquid), a subsidiary of the Company. Union Electric Steel produces ingot and forged products that service a range of industries across the globe. UES-UK produces cast rolls for hot and cold strip mills, medium/heavy section mills and plate mills in a range of iron and steel qualities.

FINANCIAL RATIOS  of  Ampco-Pittsburgh Corporation (AP)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -8
Price to Free Cash Flow -2.8
Growth Rates
Sales Growth Rate 39.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.2%
Cap. Spend. - 3 Yr. Gr. Rate -1.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 16.9%
Total Debt to Equity 35.1%
Interest Coverage -57
Management Effectiveness
Return On Assets -14.7%
Ret/ On Assets - 3 Yr. Avg. -4.9%
Return On Total Capital -37.7%
Ret/ On T. Cap. - 3 Yr. Avg. -12.6%
Return On Equity -44.6%
Return On Equity - 3 Yr. Avg. -14.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 16.6%
Gross Margin - 3 Yr. Avg. 18%
EBITDA Margin -11.1%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin -16.3%
Oper. Margin - 3 Yr. Avg. -4.7%
Pre-Tax Margin -17.5%
Pre-Tax Margin - 3 Yr. Avg. -5.2%
Net Profit Margin -24.1%
Net Profit Margin - 3 Yr. Avg. -8%
Effective Tax Rate -37.9%
Eff/ Tax Rate - 3 Yr. Avg. 40.7%
Payout Ratio -6.3%

AP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AP stock intrinsic value calculation we used $432 million for the last fiscal year's total revenue generated by Ampco-Pittsburgh Corporation. The default revenue input number comes from 0001 income statement of Ampco-Pittsburgh 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 AP stock valuation model: a) initial revenue growth rate of 8% 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 6.9%, whose default value for AP is calculated based on our internal credit rating of Ampco-Pittsburgh 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 Ampco-Pittsburgh 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 AP stock the variable cost ratio is equal to 55.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $206 million in the base year in the intrinsic value calculation for AP 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 6% for Ampco-Pittsburgh Corporation.

Corporate tax rate of 27% is the nominal tax rate for Ampco-Pittsburgh 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 AP 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 AP are equal to 51%.

Life of production assets of 10.1 years is the average useful life of capital assets used in Ampco-Pittsburgh 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 AP is equal to 21.8%. 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 - $158.941 million for Ampco-Pittsburgh 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 12.495 million for Ampco-Pittsburgh 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 Ampco-Pittsburgh Corporation at the current share price and the inputted number of shares is $0.0 billion.

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