Intrinsic value of Astec Industries - ASTE

Previous Close

$50.88

  Intrinsic Value

$19.00

stock screener

  Rating & Target

str. sell

-63%

Previous close

$50.88

 
Intrinsic value

$19.00

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of ASTE 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 1.2

 

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
  1,208
  1,236
  1,268
  1,304
  1,343
  1,387
  1,434
  1,485
  1,540
  1,599
  1,662
  1,730
  1,802
  1,878
  1,959
  2,045
  2,136
  2,232
  2,333
  2,440
  2,554
  2,673
  2,799
  2,931
  3,071
  3,218
  3,372
  3,535
  3,706
  3,886
Variable operating expenses, $m
  1,117
  1,142
  1,171
  1,204
  1,240
  1,280
  1,324
  1,371
  1,422
  1,476
  1,530
  1,592
  1,658
  1,728
  1,802
  1,881
  1,965
  2,054
  2,147
  2,246
  2,350
  2,459
  2,575
  2,697
  2,825
  2,961
  3,103
  3,253
  3,410
  3,576
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
  1,117
  1,142
  1,171
  1,204
  1,240
  1,280
  1,324
  1,371
  1,422
  1,476
  1,530
  1,592
  1,658
  1,728
  1,802
  1,881
  1,965
  2,054
  2,147
  2,246
  2,350
  2,459
  2,575
  2,697
  2,825
  2,961
  3,103
  3,253
  3,410
  3,576
Operating income, $m
  92
  94
  97
  100
  103
  106
  110
  114
  118
  123
  133
  138
  144
  150
  156
  163
  171
  178
  186
  195
  204
  213
  224
  234
  245
  257
  269
  282
  296
  310
EBITDA, $m
  120
  122
  126
  129
  133
  137
  142
  147
  152
  158
  165
  171
  178
  186
  194
  202
  211
  221
  231
  242
  253
  265
  277
  290
  304
  319
  334
  350
  367
  385
Interest expense (income), $m
  1
  0
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  29
  31
  33
  36
  39
  42
  45
  48
Earnings before tax, $m
  91
  93
  95
  98
  100
  103
  106
  109
  112
  116
  124
  129
  133
  138
  143
  148
  154
  160
  166
  173
  180
  187
  195
  203
  212
  221
  230
  241
  251
  262
Tax expense, $m
  25
  25
  26
  26
  27
  28
  29
  29
  30
  31
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
Net income, $m
  67
  68
  70
  71
  73
  75
  77
  79
  82
  85
  91
  94
  97
  101
  104
  108
  112
  117
  121
  126
  131
  137
  142
  148
  155
  161
  168
  176
  183
  191

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
  907
  928
  952
  979
  1,008
  1,041
  1,076
  1,115
  1,156
  1,200
  1,248
  1,299
  1,353
  1,410
  1,471
  1,535
  1,603
  1,675
  1,752
  1,832
  1,917
  2,007
  2,101
  2,201
  2,305
  2,416
  2,532
  2,654
  2,782
  2,918
Adjusted assets (=assets-cash), $m
  907
  928
  952
  979
  1,008
  1,041
  1,076
  1,115
  1,156
  1,200
  1,248
  1,299
  1,353
  1,410
  1,471
  1,535
  1,603
  1,675
  1,752
  1,832
  1,917
  2,007
  2,101
  2,201
  2,305
  2,416
  2,532
  2,654
  2,782
  2,918
Revenue / Adjusted assets
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.333
  1.332
  1.332
  1.333
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.333
  1.333
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
  1.332
Average production assets, $m
  218
  223
  228
  235
  242
  250
  258
  267
  277
  288
  299
  311
  324
  338
  353
  368
  384
  402
  420
  439
  460
  481
  504
  528
  553
  579
  607
  636
  667
  700
Working capital, $m
  370
  378
  388
  399
  411
  424
  439
  454
  471
  489
  509
  529
  551
  575
  599
  626
  654
  683
  714
  747
  781
  818
  856
  897
  940
  985
  1,032
  1,082
  1,134
  1,189
Total debt, $m
  8
  13
  18
  24
  31
  39
  47
  55
  65
  75
  86
  98
  110
  123
  137
  152
  167
  184
  201
  220
  239
  260
  281
  304
  328
  353
  380
  408
  437
  468
Total liabilities, $m
  208
  213
  218
  224
  231
  238
  246
  255
  265
  275
  286
  297
  310
  323
  337
  352
  367
  384
  401
  420
  439
  460
  481
  504
  528
  553
  580
  608
  637
  668
Total equity, $m
  699
  716
  734
  755
  777
  803
  830
  859
  891
  926
  962
  1,001
  1,043
  1,087
  1,134
  1,184
  1,236
  1,292
  1,351
  1,413
  1,478
  1,547
  1,620
  1,697
  1,777
  1,862
  1,952
  2,046
  2,145
  2,249
Total liabilities and equity, $m
  907
  929
  952
  979
  1,008
  1,041
  1,076
  1,114
  1,156
  1,201
  1,248
  1,298
  1,353
  1,410
  1,471
  1,536
  1,603
  1,676
  1,752
  1,833
  1,917
  2,007
  2,101
  2,201
  2,305
  2,415
  2,532
  2,654
  2,782
  2,917
Debt-to-equity ratio
  0.010
  0.020
  0.020
  0.030
  0.040
  0.050
  0.060
  0.060
  0.070
  0.080
  0.090
  0.100
  0.110
  0.110
  0.120
  0.130
  0.140
  0.140
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.210
Adjusted equity ratio
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771
  0.771

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  67
  68
  70
  71
  73
  75
  77
  79
  82
  85
  91
  94
  97
  101
  104
  108
  112
  117
  121
  126
  131
  137
  142
  148
  155
  161
  168
  176
  183
  191
Depreciation, amort., depletion, $m
  28
  28
  29
  30
  30
  31
  32
  33
  34
  35
  32
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  74
Funds from operations, $m
  94
  96
  98
  101
  103
  106
  109
  112
  116
  120
  123
  127
  132
  137
  142
  147
  153
  159
  166
  173
  180
  188
  196
  204
  213
  223
  233
  243
  254
  266
Change in working capital, $m
  7
  9
  10
  11
  12
  13
  14
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  38
  41
  43
  45
  47
  50
  52
  55
Cash from operations, $m
  87
  88
  89
  90
  91
  93
  95
  97
  99
  102
  103
  106
  110
  113
  117
  121
  125
  130
  135
  140
  146
  151
  157
  164
  171
  178
  185
  193
  202
  211
Maintenance CAPEX, $m
  -23
  -23
  -24
  -24
  -25
  -26
  -27
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
New CAPEX, $m
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
Cash from investing activities, $m
  -27
  -28
  -30
  -30
  -32
  -34
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -81
  -85
  -90
  -94
  -99
  -103
Free cash flow, $m
  61
  60
  59
  59
  59
  59
  60
  60
  61
  62
  61
  62
  64
  65
  67
  68
  70
  72
  74
  76
  78
  81
  84
  86
  89
  93
  96
  100
  103
  107
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  29
  31
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  
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  29
  31
Total cash flow (excl. dividends), $m
  65
  64
  65
  65
  66
  67
  68
  69
  70
  72
  72
  74
  76
  78
  80
  83
  86
  88
  91
  94
  98
  101
  105
  109
  113
  118
  123
  128
  133
  138
Retained Cash Flow (-), $m
  -14
  -16
  -18
  -21
  -23
  -25
  -27
  -30
  -32
  -34
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -90
  -94
  -99
  -104
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
  51
  48
  46
  45
  43
  42
  40
  39
  38
  38
  36
  35
  34
  34
  34
  33
  33
  33
  33
  32
  32
  32
  32
  33
  33
  33
  33
  33
  34
  34
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
  49
  44
  40
  37
  33
  30
  27
  25
  22
  20
  17
  15
  13
  11
  10
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
  0
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

Astec Industries, Inc. designs, engineers, manufactures and markets equipment and components used primarily in road building and related construction activities. Its segments include Infrastructure Group, Aggregate and Mining Group and Energy Group. The Infrastructure Group segment is made up of five business units, including Astec, Inc., Roadtec, Inc., Carlson Paving Products, Inc., Astec Mobile Machinery GmbH and Astec Australia Pty Ltd. Its Aggregate and Mining Group consists of eight business units that are focused on designing and manufacturing heavy processing equipment, as well as servicing and supplying parts for the aggregate, metallic mining, recycling, ports and bulk handling markets. Its Energy Group includes five business units focused on supplying heavy equipment, such as heaters, drilling rigs, concrete plants, wood chippers and grinders, pump trailers, storage equipment and related parts to the oil and gas, construction and water well industries.

FINANCIAL RATIOS  of  Astec Industries (ASTE)

Valuation Ratios
P/E Ratio 21.3
Price to Sales 1
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 8.7
Price to Free Cash Flow 10.9
Growth Rates
Sales Growth Rate 16.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 28.6%
Cap. Spend. - 3 Yr. Gr. Rate -0.7%
Financial Strength
Quick Ratio 10
Current Ratio 0
LT Debt to Equity 0.5%
Total Debt to Equity 1.7%
Interest Coverage 88
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 8.6%
Ret/ On T. Cap. - 3 Yr. Avg. 6.6%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 6.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 23.1%
Gross Margin - 3 Yr. Avg. 22.5%
EBITDA Margin 9.9%
EBITDA Margin - 3 Yr. Avg. 8.6%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 6%
Pre-Tax Margin 7.6%
Pre-Tax Margin - 3 Yr. Avg. 6.1%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 36.8%
Eff/ Tax Rate - 3 Yr. Avg. 37.4%
Payout Ratio 16.4%

ASTE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASTE stock intrinsic value calculation we used $1184.739 million for the last fiscal year's total revenue generated by Astec Industries. The default revenue input number comes from 0001 income statement of Astec Industries. 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 ASTE 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 ASTE is calculated based on our internal credit rating of Astec Industries, 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 Astec Industries.
    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 ASTE stock the variable cost ratio is equal to 92.4%.

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 ASTE 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 11% for Astec Industries.

Corporate tax rate of 27% is the nominal tax rate for Astec Industries. 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 ASTE 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 ASTE are equal to 18%.

Life of production assets of 9.4 years is the average useful life of capital assets used in Astec Industries 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 ASTE is equal to 30.6%. 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 - $685.672 million for Astec Industries - 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 23.094 million for Astec Industries 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 Astec Industries at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating
CAT Caterpillar 146.22 601.98  str.buy
GENC Gencor Industr 12.45 16.28  buy
CMI Cummins 144.49 372.61  str.buy
TEX Terex 39.61 3.17  str.sell
MTW Manitowoc 23.40 1.65  str.sell
NOV National Oilwe 44.11 2.98  str.sell

COMPANY NEWS

▶ New Strong Sell Stocks for August 2nd   [Aug-02-18 07:23AM  Zacks]
▶ Astec Industries: 2Q Earnings Snapshot   [06:42AM  Associated Press]
▶ A Preview Of Astec Industries Q2 Earnings   [Jul-23-18 03:24PM  Benzinga]
▶ Some Familiar Names Among Short Sellers' Top Stocks   [May-15-18 02:07PM  Benzinga]
▶ Astec Industries: 1Q Earnings Snapshot   [07:18AM  Associated Press]
▶ Astec Industries misses 4Q profit forecasts   [08:19AM  Associated Press]
▶ Astec Industries reports 3Q loss   [08:17AM  Associated Press]
▶ New Strong Sell Stocks for October 5th   [Oct-05-17 08:18AM  Zacks]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.