Intrinsic value of Apogee Enterprises, Inc. - APOG

Previous Close

$40.39

  Intrinsic Value

$55.06

stock screener

  Rating & Target

buy

+36%

Previous close

$40.39

 
Intrinsic value

$55.06

 
Up/down potential

+36%

 
Rating

buy

We calculate the intrinsic value of APOG 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 1.1

 

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
  1,353
  1,384
  1,419
  1,459
  1,503
  1,552
  1,605
  1,662
  1,724
  1,790
  1,860
  1,936
  2,016
  2,102
  2,193
  2,289
  2,390
  2,498
  2,611
  2,731
  2,858
  2,992
  3,132
  3,281
  3,437
  3,601
  3,774
  3,956
  4,148
  4,350
Variable operating expenses, $m
  1,204
  1,231
  1,262
  1,297
  1,335
  1,378
  1,423
  1,473
  1,527
  1,584
  1,615
  1,681
  1,750
  1,825
  1,903
  1,987
  2,075
  2,168
  2,267
  2,371
  2,481
  2,597
  2,719
  2,848
  2,983
  3,126
  3,276
  3,435
  3,601
  3,776
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
  1,204
  1,231
  1,262
  1,297
  1,335
  1,378
  1,423
  1,473
  1,527
  1,584
  1,615
  1,681
  1,750
  1,825
  1,903
  1,987
  2,075
  2,168
  2,267
  2,371
  2,481
  2,597
  2,719
  2,848
  2,983
  3,126
  3,276
  3,435
  3,601
  3,776
Operating income, $m
  148
  152
  157
  162
  168
  174
  181
  189
  197
  206
  245
  255
  266
  277
  289
  302
  315
  330
  345
  360
  377
  395
  413
  433
  453
  475
  498
  522
  547
  574
EBITDA, $m
  220
  225
  231
  238
  245
  253
  261
  271
  281
  292
  303
  315
  329
  342
  357
  373
  389
  407
  425
  445
  466
  487
  510
  534
  560
  587
  615
  645
  676
  709
Interest expense (income), $m
  1
  12
  12
  13
  14
  14
  15
  16
  17
  19
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  41
  44
  46
  49
  52
  56
  59
  63
  66
  70
Earnings before tax, $m
  136
  140
  144
  148
  153
  159
  165
  171
  178
  186
  224
  233
  242
  251
  261
  272
  284
  296
  308
  322
  336
  351
  367
  384
  401
  419
  439
  459
  481
  503
Tax expense, $m
  37
  38
  39
  40
  41
  43
  45
  46
  48
  50
  61
  63
  65
  68
  71
  73
  77
  80
  83
  87
  91
  95
  99
  104
  108
  113
  119
  124
  130
  136
Net income, $m
  100
  102
  105
  108
  112
  116
  120
  125
  130
  136
  164
  170
  176
  183
  191
  199
  207
  216
  225
  235
  245
  256
  268
  280
  293
  306
  320
  335
  351
  367

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
  1,043
  1,067
  1,094
  1,125
  1,159
  1,197
  1,237
  1,281
  1,329
  1,380
  1,434
  1,493
  1,555
  1,621
  1,690
  1,765
  1,843
  1,926
  2,013
  2,106
  2,204
  2,307
  2,415
  2,529
  2,650
  2,777
  2,910
  3,050
  3,198
  3,354
Adjusted assets (=assets-cash), $m
  1,043
  1,067
  1,094
  1,125
  1,159
  1,197
  1,237
  1,281
  1,329
  1,380
  1,434
  1,493
  1,555
  1,621
  1,690
  1,765
  1,843
  1,926
  2,013
  2,106
  2,204
  2,307
  2,415
  2,529
  2,650
  2,777
  2,910
  3,050
  3,198
  3,354
Revenue / Adjusted assets
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.296
  1.297
  1.298
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
  1.297
Average production assets, $m
  423
  433
  444
  457
  471
  486
  502
  520
  539
  560
  582
  606
  631
  658
  686
  716
  748
  782
  817
  855
  895
  936
  980
  1,027
  1,076
  1,127
  1,181
  1,238
  1,298
  1,361
Working capital, $m
  111
  113
  116
  120
  123
  127
  132
  136
  141
  147
  153
  159
  165
  172
  180
  188
  196
  205
  214
  224
  234
  245
  257
  269
  282
  295
  309
  324
  340
  357
Total debt, $m
  226
  238
  252
  267
  284
  303
  324
  346
  369
  395
  422
  451
  482
  515
  550
  587
  626
  668
  712
  758
  807
  858
  912
  970
  1,030
  1,093
  1,160
  1,230
  1,304
  1,382
Total liabilities, $m
  521
  533
  547
  562
  580
  598
  619
  641
  664
  690
  717
  746
  777
  810
  845
  882
  921
  963
  1,007
  1,053
  1,102
  1,153
  1,208
  1,265
  1,325
  1,388
  1,455
  1,525
  1,599
  1,677
Total equity, $m
  521
  533
  547
  562
  580
  598
  619
  641
  664
  690
  717
  746
  777
  810
  845
  882
  921
  963
  1,007
  1,053
  1,102
  1,153
  1,208
  1,265
  1,325
  1,388
  1,455
  1,525
  1,599
  1,677
Total liabilities and equity, $m
  1,042
  1,066
  1,094
  1,124
  1,160
  1,196
  1,238
  1,282
  1,328
  1,380
  1,434
  1,492
  1,554
  1,620
  1,690
  1,764
  1,842
  1,926
  2,014
  2,106
  2,204
  2,306
  2,416
  2,530
  2,650
  2,776
  2,910
  3,050
  3,198
  3,354
Debt-to-equity ratio
  0.430
  0.450
  0.460
  0.480
  0.490
  0.510
  0.520
  0.540
  0.560
  0.570
  0.590
  0.600
  0.620
  0.640
  0.650
  0.670
  0.680
  0.690
  0.710
  0.720
  0.730
  0.740
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.820
Adjusted equity ratio
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  100
  102
  105
  108
  112
  116
  120
  125
  130
  136
  164
  170
  176
  183
  191
  199
  207
  216
  225
  235
  245
  256
  268
  280
  293
  306
  320
  335
  351
  367
Depreciation, amort., depletion, $m
  72
  73
  74
  76
  77
  78
  80
  82
  84
  86
  58
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
Funds from operations, $m
  172
  175
  179
  184
  189
  195
  201
  207
  214
  221
  221
  230
  239
  249
  259
  270
  281
  293
  306
  320
  334
  349
  365
  382
  399
  418
  437
  458
  480
  502
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  17
Cash from operations, $m
  170
  173
  177
  181
  185
  191
  196
  202
  209
  216
  215
  224
  232
  242
  251
  262
  273
  284
  297
  310
  324
  338
  353
  369
  386
  404
  423
  443
  464
  486
Maintenance CAPEX, $m
  -41
  -42
  -43
  -44
  -45
  -47
  -48
  -50
  -52
  -53
  -55
  -58
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -129
New CAPEX, $m
  -9
  -10
  -11
  -12
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
Cash from investing activities, $m
  -50
  -52
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -77
  -82
  -85
  -89
  -93
  -98
  -103
  -108
  -113
  -119
  -125
  -131
  -137
  -143
  -151
  -158
  -166
  -174
  -183
  -192
Free cash flow, $m
  120
  121
  123
  124
  126
  129
  132
  135
  138
  142
  138
  142
  147
  152
  158
  164
  170
  177
  184
  191
  199
  208
  217
  226
  236
  246
  257
  269
  281
  294
Issuance/(repayment) of debt, $m
  10
  12
  14
  15
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
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  
  10
  12
  14
  15
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
Total cash flow (excl. dividends), $m
  130
  133
  136
  140
  143
  147
  152
  157
  162
  167
  165
  171
  178
  185
  193
  201
  209
  218
  228
  238
  248
  259
  271
  283
  296
  310
  324
  339
  355
  372
Retained Cash Flow (-), $m
  -10
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
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
  120
  121
  123
  124
  126
  129
  132
  135
  138
  142
  138
  142
  147
  152
  158
  164
  170
  177
  184
  191
  199
  208
  217
  226
  236
  246
  257
  269
  281
  294
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  115
  111
  107
  102
  98
  93
  89
  84
  79
  74
  65
  61
  56
  51
  46
  42
  37
  33
  28
  24
  21
  17
  14
  12
  9
  7
  6
  4
  3
  2
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

Apogee Enterprises, Inc. is engaged in the design and development of glass solutions for enclosing commercial buildings and framing art. The Company operates through four segments: Architectural Glass, Architectural Services, Architectural Framing Systems and Large-Scale Optical Technologies (LSO). The Architectural Glass segment fabricates coated glass used in customized window and wall systems. The Architectural Services segment designs, engineers, fabricates and installs the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings. The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems. The Large-Scale Optical Technologies segment manufactures glass and acrylic products for the custom picture framing and fine art markets.

FINANCIAL RATIOS  of  Apogee Enterprises, Inc. (APOG)

Valuation Ratios
P/E Ratio 13.5
Price to Sales 1
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 9.3
Price to Free Cash Flow 20.7
Growth Rates
Sales Growth Rate 13.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 61.9%
Cap. Spend. - 3 Yr. Gr. Rate 10.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 13.8%
Total Debt to Equity 13.8%
Interest Coverage 124
Management Effectiveness
Return On Assets 12%
Ret/ On Assets - 3 Yr. Avg. 10.4%
Return On Total Capital 17.9%
Ret/ On T. Cap. - 3 Yr. Avg. 15.5%
Return On Equity 19.6%
Return On Equity - 3 Yr. Avg. 16.6%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 26.2%
Gross Margin - 3 Yr. Avg. 24.5%
EBITDA Margin 14.3%
EBITDA Margin - 3 Yr. Avg. 12.6%
Operating Margin 11%
Oper. Margin - 3 Yr. Avg. 9.3%
Pre-Tax Margin 11%
Pre-Tax Margin - 3 Yr. Avg. 9.3%
Net Profit Margin 7.7%
Net Profit Margin - 3 Yr. Avg. 6.6%
Effective Tax Rate 30.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.2%
Payout Ratio 17.4%

APOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APOG stock intrinsic value calculation we used $1326 million for the last fiscal year's total revenue generated by Apogee Enterprises, Inc.. The default revenue input number comes from 0001 income statement of Apogee Enterprises, Inc.. 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 APOG 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 4.3%, whose default value for APOG is calculated based on our internal credit rating of Apogee Enterprises, Inc., 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 Apogee Enterprises, Inc..
    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 APOG stock the variable cost ratio is equal to 89.1%.

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 APOG 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 Apogee Enterprises, Inc..

Corporate tax rate of 27% is the nominal tax rate for Apogee Enterprises, Inc.. 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 APOG 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 APOG are equal to 31.3%.

Life of production assets of 10.1 years is the average useful life of capital assets used in Apogee Enterprises, Inc. 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 APOG is equal to 8.2%. 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 - $511.355 million for Apogee Enterprises, Inc. - 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 27.176 million for Apogee Enterprises, Inc. 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 Apogee Enterprises, Inc. at the current share price and the inputted number of shares is $1.1 billion.

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