Intrinsic value of Atkore International Group Inc. - ATKR

Previous Close

$25.77

  Intrinsic Value

$34.64

stock screener

  Rating & Target

buy

+34%

Previous close

$25.77

 
Intrinsic value

$34.64

 
Up/down potential

+34%

 
Rating

buy

We calculate the intrinsic value of ATKR 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, %
  9.00
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
Revenue, $m
  2,000
  2,172
  2,351
  2,537
  2,731
  2,932
  3,141
  3,358
  3,583
  3,818
  4,062
  4,316
  4,581
  4,857
  5,144
  5,444
  5,756
  6,082
  6,423
  6,779
  7,151
  7,539
  7,946
  8,372
  8,817
  9,283
  9,771
  10,282
  10,818
  11,379
Variable operating expenses, $m
  1,788
  1,938
  2,094
  2,256
  2,424
  2,599
  2,781
  2,970
  3,167
  3,371
  3,538
  3,759
  3,989
  4,229
  4,479
  4,740
  5,012
  5,297
  5,593
  5,903
  6,227
  6,566
  6,920
  7,290
  7,678
  8,084
  8,509
  8,954
  9,421
  9,909
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
  1,788
  1,938
  2,094
  2,256
  2,424
  2,599
  2,781
  2,970
  3,167
  3,371
  3,538
  3,759
  3,989
  4,229
  4,479
  4,740
  5,012
  5,297
  5,593
  5,903
  6,227
  6,566
  6,920
  7,290
  7,678
  8,084
  8,509
  8,954
  9,421
  9,909
Operating income, $m
  212
  234
  258
  282
  307
  333
  360
  388
  417
  447
  525
  558
  592
  627
  664
  703
  744
  786
  830
  876
  924
  974
  1,026
  1,081
  1,139
  1,199
  1,262
  1,328
  1,397
  1,470
EBITDA, $m
  306
  332
  360
  388
  418
  448
  480
  514
  548
  584
  621
  660
  701
  743
  787
  833
  880
  930
  982
  1,037
  1,094
  1,153
  1,215
  1,281
  1,349
  1,420
  1,495
  1,573
  1,655
  1,741
Interest expense (income), $m
  26
  50
  55
  61
  68
  74
  81
  88
  96
  104
  112
  120
  129
  138
  147
  157
  167
  178
  189
  201
  213
  226
  239
  253
  267
  283
  299
  315
  333
  351
  370
Earnings before tax, $m
  162
  179
  196
  214
  232
  251
  271
  292
  313
  335
  405
  429
  454
  480
  507
  536
  566
  596
  629
  663
  698
  735
  774
  814
  856
  901
  947
  996
  1,047
  1,100
Tax expense, $m
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  109
  116
  123
  130
  137
  145
  153
  161
  170
  179
  188
  198
  209
  220
  231
  243
  256
  269
  283
  297
Net income, $m
  119
  131
  143
  156
  170
  183
  198
  213
  229
  245
  295
  313
  331
  351
  370
  391
  413
  435
  459
  484
  510
  536
  565
  594
  625
  657
  691
  727
  764
  803

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
  1,443
  1,567
  1,696
  1,831
  1,970
  2,115
  2,266
  2,423
  2,585
  2,755
  2,931
  3,114
  3,305
  3,504
  3,711
  3,928
  4,153
  4,388
  4,634
  4,891
  5,159
  5,440
  5,733
  6,040
  6,361
  6,698
  7,050
  7,419
  7,805
  8,210
Adjusted assets (=assets-cash), $m
  1,443
  1,567
  1,696
  1,831
  1,970
  2,115
  2,266
  2,423
  2,585
  2,755
  2,931
  3,114
  3,305
  3,504
  3,711
  3,928
  4,153
  4,388
  4,634
  4,891
  5,159
  5,440
  5,733
  6,040
  6,361
  6,698
  7,050
  7,419
  7,805
  8,210
Revenue / Adjusted assets
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
  1.386
Average production assets, $m
  490
  532
  576
  622
  669
  718
  769
  823
  878
  935
  995
  1,058
  1,122
  1,190
  1,260
  1,334
  1,410
  1,490
  1,574
  1,661
  1,752
  1,847
  1,947
  2,051
  2,160
  2,274
  2,394
  2,519
  2,650
  2,788
Working capital, $m
  298
  324
  350
  378
  407
  437
  468
  500
  534
  569
  605
  643
  683
  724
  766
  811
  858
  906
  957
  1,010
  1,065
  1,123
  1,184
  1,247
  1,314
  1,383
  1,456
  1,532
  1,612
  1,696
Total debt, $m
  1,001
  1,113
  1,229
  1,350
  1,475
  1,606
  1,742
  1,883
  2,029
  2,182
  2,340
  2,505
  2,677
  2,856
  3,042
  3,237
  3,440
  3,652
  3,873
  4,104
  4,346
  4,598
  4,862
  5,138
  5,428
  5,730
  6,047
  6,379
  6,727
  7,091
Total liabilities, $m
  1,299
  1,410
  1,527
  1,648
  1,773
  1,904
  2,039
  2,180
  2,327
  2,479
  2,638
  2,803
  2,975
  3,154
  3,340
  3,535
  3,738
  3,950
  4,171
  4,402
  4,643
  4,896
  5,160
  5,436
  5,725
  6,028
  6,345
  6,677
  7,025
  7,389
Total equity, $m
  144
  157
  170
  183
  197
  212
  227
  242
  259
  275
  293
  311
  331
  350
  371
  393
  415
  439
  463
  489
  516
  544
  573
  604
  636
  670
  705
  742
  781
  821
Total liabilities and equity, $m
  1,443
  1,567
  1,697
  1,831
  1,970
  2,116
  2,266
  2,422
  2,586
  2,754
  2,931
  3,114
  3,306
  3,504
  3,711
  3,928
  4,153
  4,389
  4,634
  4,891
  5,159
  5,440
  5,733
  6,040
  6,361
  6,698
  7,050
  7,419
  7,806
  8,210
Debt-to-equity ratio
  6.940
  7.100
  7.240
  7.370
  7.490
  7.590
  7.690
  7.770
  7.850
  7.920
  7.980
  8.040
  8.100
  8.150
  8.200
  8.240
  8.280
  8.320
  8.360
  8.390
  8.420
  8.450
  8.480
  8.510
  8.530
  8.560
  8.580
  8.600
  8.620
  8.640
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  119
  131
  143
  156
  170
  183
  198
  213
  229
  245
  295
  313
  331
  351
  370
  391
  413
  435
  459
  484
  510
  536
  565
  594
  625
  657
  691
  727
  764
  803
Depreciation, amort., depletion, $m
  94
  98
  102
  107
  111
  116
  121
  126
  131
  137
  97
  103
  109
  116
  122
  129
  137
  145
  153
  161
  170
  179
  189
  199
  210
  221
  232
  245
  257
  271
Funds from operations, $m
  212
  229
  245
  263
  281
  299
  319
  339
  360
  382
  392
  416
  440
  466
  493
  521
  550
  580
  612
  645
  680
  716
  754
  793
  835
  878
  924
  971
  1,021
  1,074
Change in working capital, $m
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  55
  58
  61
  63
  66
  69
  73
  76
  80
  84
Cash from operations, $m
  188
  203
  219
  235
  252
  269
  288
  307
  326
  347
  356
  378
  401
  425
  450
  476
  503
  532
  561
  592
  624
  658
  693
  730
  768
  809
  851
  895
  942
  990
Maintenance CAPEX, $m
  -44
  -48
  -52
  -56
  -60
  -65
  -70
  -75
  -80
  -85
  -91
  -97
  -103
  -109
  -116
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -179
  -189
  -199
  -210
  -221
  -232
  -245
  -257
New CAPEX, $m
  -41
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -68
  -70
  -73
  -77
  -80
  -83
  -87
  -91
  -95
  -100
  -104
  -109
  -114
  -120
  -125
  -131
  -138
Cash from investing activities, $m
  -85
  -90
  -96
  -102
  -107
  -114
  -121
  -128
  -135
  -143
  -151
  -159
  -168
  -177
  -186
  -195
  -206
  -217
  -228
  -240
  -252
  -265
  -279
  -293
  -308
  -324
  -341
  -357
  -376
  -395
Free cash flow, $m
  103
  113
  123
  133
  144
  155
  167
  179
  191
  204
  205
  219
  233
  248
  264
  280
  297
  315
  333
  352
  372
  393
  414
  437
  460
  485
  511
  538
  566
  595
Issuance/(repayment) of debt, $m
  97
  112
  116
  121
  126
  131
  136
  141
  147
  152
  159
  165
  172
  179
  187
  195
  203
  212
  221
  231
  241
  252
  264
  276
  289
  303
  317
  332
  348
  364
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  
  97
  112
  116
  121
  126
  131
  136
  141
  147
  152
  159
  165
  172
  179
  187
  195
  203
  212
  221
  231
  241
  252
  264
  276
  289
  303
  317
  332
  348
  364
Total cash flow (excl. dividends), $m
  200
  225
  239
  254
  270
  286
  302
  320
  338
  357
  364
  384
  405
  427
  451
  475
  500
  526
  554
  583
  613
  645
  678
  713
  749
  788
  828
  870
  914
  960
Retained Cash Flow (-), $m
  -22
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
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
  178
  213
  227
  241
  256
  271
  287
  304
  322
  340
  346
  366
  386
  408
  430
  453
  478
  503
  530
  557
  587
  617
  649
  682
  717
  754
  792
  833
  875
  919
Discount rate, %
  10.30
  10.82
  11.36
  11.92
  12.52
  13.15
  13.80
  14.49
  15.22
  15.98
  16.78
  17.62
  18.50
  19.42
  20.39
  21.41
  22.48
  23.61
  24.79
  26.03
  27.33
  28.70
  30.13
  31.64
  33.22
  34.88
  36.62
  38.45
  40.38
  42.40
PV of cash for distribution, $m
  161
  173
  164
  154
  142
  129
  116
  103
  90
  77
  63
  52
  43
  34
  27
  20
  15
  11
  8
  5
  4
  2
  2
  1
  1
  0
  0
  0
  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

Atkore International Group Inc. is a manufacturer of electrical raceway products. The Company's products are primarily offered for non-residential construction and renovation markets, and mechanical products and solutions (MP&S) for the construction and industrial markets. The Company operates in two segments: Electrical Raceway and MP&S. Through the electrical raceway segment, it manufactures products that deploy, isolate and protect a structure's electrical circuitry from the original power source to the final outlet. The Company's electrical raceway segment products include electrical conduit, armored cable, cable trays, mounting systems and fittings. Through the MP&S segment, it provides products and services that frame, support and secure component parts in a range of structures, equipment and systems in electrical, industrial and construction applications. The Company's MP&S segment products include metal framing products and in-line galvanized mechanical tube.

FINANCIAL RATIOS  of  Atkore International Group Inc. (ATKR)

Valuation Ratios
P/E Ratio 19.2
Price to Sales 1.1
Price to Book 4.5
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 16.8
Growth Rates
Sales Growth Rate -1.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 47.1%
Cap. Spend. - 3 Yr. Gr. Rate 0.8%
Financial Strength
Quick Ratio 12
Current Ratio 0
LT Debt to Equity 158.4%
Total Debt to Equity 159.6%
Interest Coverage 6
Management Effectiveness
Return On Assets 8.6%
Ret/ On Assets - 3 Yr. Avg. 6.2%
Return On Total Capital 9.3%
Ret/ On T. Cap. - 3 Yr. Avg. 5.2%
Return On Equity 27.5%
Return On Equity - 3 Yr. Avg. 17.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 24.1%
Gross Margin - 3 Yr. Avg. 21.4%
EBITDA Margin 13.8%
EBITDA Margin - 3 Yr. Avg. 10.6%
Operating Margin 10.2%
Oper. Margin - 3 Yr. Avg. 6.9%
Pre-Tax Margin 8.4%
Pre-Tax Margin - 3 Yr. Avg. 4.5%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 32.5%
Eff/ Tax Rate - 3 Yr. Avg. 34.1%
Payout Ratio 0%

ATKR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATKR stock intrinsic value calculation we used $1835 million for the last fiscal year's total revenue generated by Atkore International Group Inc.. The default revenue input number comes from 0001 income statement of Atkore International Group 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 ATKR stock valuation model: a) initial revenue growth rate of 9% 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 10.3%, whose default value for ATKR is calculated based on our internal credit rating of Atkore International Group 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 Atkore International Group 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 ATKR stock the variable cost ratio is equal to 89.6%.

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 ATKR 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 5.5% for Atkore International Group Inc..

Corporate tax rate of 27% is the nominal tax rate for Atkore International Group 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 ATKR 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 ATKR are equal to 24.5%.

Life of production assets of 10.3 years is the average useful life of capital assets used in Atkore International Group 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 ATKR is equal to 14.9%. 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 - $122.059 million for Atkore International Group 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 46.112 million for Atkore International Group 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 Atkore International Group Inc. at the current share price and the inputted number of shares is $1.2 billion.

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