Intrinsic value of Atkore International Group - ATKR

Previous Close

$21.34

  Intrinsic Value

$12.18

stock screener

  Rating & Target

sell

-43%

Previous close

$21.34

 
Intrinsic value

$12.18

 
Up/down potential

-43%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Atkore International Group (ATKR) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.25
  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
  1,504
  1,534
  1,569
  1,610
  1,655
  1,705
  1,760
  1,820
  1,885
  1,955
  2,030
  2,110
  2,196
  2,287
  2,384
  2,487
  2,596
  2,711
  2,833
  2,962
  3,098
  3,242
  3,393
  3,553
  3,721
  3,898
  4,085
  4,281
  4,488
  4,705
  4,934
Variable operating expenses, $m
 
  1,405
  1,437
  1,473
  1,514
  1,560
  1,610
  1,664
  1,723
  1,786
  1,854
  1,912
  1,990
  2,072
  2,160
  2,253
  2,352
  2,457
  2,567
  2,684
  2,807
  2,938
  3,075
  3,219
  3,372
  3,532
  3,701
  3,879
  4,066
  4,263
  4,471
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
  1,351
  1,405
  1,437
  1,473
  1,514
  1,560
  1,610
  1,664
  1,723
  1,786
  1,854
  1,912
  1,990
  2,072
  2,160
  2,253
  2,352
  2,457
  2,567
  2,684
  2,807
  2,938
  3,075
  3,219
  3,372
  3,532
  3,701
  3,879
  4,066
  4,263
  4,471
Operating income, $m
  153
  129
  132
  136
  141
  145
  150
  156
  162
  169
  176
  198
  206
  215
  224
  233
  244
  254
  266
  278
  291
  304
  318
  333
  349
  366
  383
  402
  421
  442
  463
EBITDA, $m
  208
  188
  193
  198
  203
  209
  216
  224
  231
  240
  249
  259
  270
  281
  293
  305
  319
  333
  348
  364
  380
  398
  417
  436
  457
  479
  502
  526
  551
  578
  606
Interest expense (income), $m
  26
  25
  25
  26
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  44
  46
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  83
  87
  92
  97
  102
Earnings before tax, $m
  126
  105
  107
  110
  113
  117
  121
  125
  130
  135
  140
  161
  167
  173
  180
  187
  195
  203
  212
  221
  231
  241
  252
  263
  275
  287
  301
  314
  329
  344
  361
Tax expense, $m
  41
  28
  29
  30
  31
  32
  33
  34
  35
  36
  38
  43
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
Net income, $m
  85
  76
  78
  80
  83
  85
  88
  91
  95
  98
  102
  117
  122
  126
  131
  137
  142
  148
  155
  161
  168
  176
  184
  192
  201
  210
  219
  230
  240
  251
  263

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  46
  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
  1,215
  1,192
  1,219
  1,251
  1,286
  1,325
  1,368
  1,414
  1,465
  1,519
  1,577
  1,640
  1,706
  1,777
  1,852
  1,932
  2,017
  2,107
  2,201
  2,302
  2,407
  2,519
  2,637
  2,761
  2,891
  3,029
  3,174
  3,326
  3,487
  3,656
  3,833
Adjusted assets (=assets-cash), $m
  1,169
  1,192
  1,219
  1,251
  1,286
  1,325
  1,368
  1,414
  1,465
  1,519
  1,577
  1,640
  1,706
  1,777
  1,852
  1,932
  2,017
  2,107
  2,201
  2,302
  2,407
  2,519
  2,637
  2,761
  2,891
  3,029
  3,174
  3,326
  3,487
  3,656
  3,833
Revenue / Adjusted assets
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
  1.287
Average production assets, $m
  506
  515
  527
  541
  556
  573
  591
  612
  633
  657
  682
  709
  738
  768
  801
  836
  872
  911
  952
  995
  1,041
  1,089
  1,140
  1,194
  1,250
  1,310
  1,372
  1,438
  1,508
  1,581
  1,658
Working capital, $m
  294
  258
  264
  270
  278
  286
  296
  306
  317
  328
  341
  355
  369
  384
  401
  418
  436
  455
  476
  498
  520
  545
  570
  597
  625
  655
  686
  719
  754
  790
  829
Total debt, $m
  576
  589
  609
  631
  657
  685
  716
  750
  787
  826
  869
  914
  962
  1,014
  1,069
  1,127
  1,188
  1,253
  1,322
  1,395
  1,472
  1,553
  1,639
  1,729
  1,824
  1,924
  2,029
  2,140
  2,257
  2,380
  2,509
Total liabilities, $m
  854
  867
  887
  909
  935
  963
  994
  1,028
  1,065
  1,104
  1,147
  1,192
  1,240
  1,292
  1,347
  1,405
  1,466
  1,531
  1,600
  1,673
  1,750
  1,831
  1,917
  2,007
  2,102
  2,202
  2,307
  2,418
  2,535
  2,658
  2,787
Total equity, $m
  361
  325
  333
  341
  351
  362
  373
  386
  400
  415
  431
  448
  466
  485
  506
  528
  551
  575
  601
  628
  657
  688
  720
  754
  789
  827
  866
  908
  952
  998
  1,047
Total liabilities and equity, $m
  1,215
  1,192
  1,220
  1,250
  1,286
  1,325
  1,367
  1,414
  1,465
  1,519
  1,578
  1,640
  1,706
  1,777
  1,853
  1,933
  2,017
  2,106
  2,201
  2,301
  2,407
  2,519
  2,637
  2,761
  2,891
  3,029
  3,173
  3,326
  3,487
  3,656
  3,834
Debt-to-equity ratio
  1.596
  1.810
  1.830
  1.850
  1.870
  1.890
  1.920
  1.940
  1.970
  1.990
  2.020
  2.040
  2.070
  2.090
  2.110
  2.140
  2.160
  2.180
  2.200
  2.220
  2.240
  2.260
  2.280
  2.290
  2.310
  2.330
  2.340
  2.360
  2.370
  2.380
  2.400
Adjusted equity ratio
  0.269
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  85
  76
  78
  80
  83
  85
  88
  91
  95
  98
  102
  117
  122
  126
  131
  137
  142
  148
  155
  161
  168
  176
  184
  192
  201
  210
  219
  230
  240
  251
  263
Depreciation, amort., depletion, $m
  55
  59
  60
  61
  63
  64
  66
  68
  69
  71
  74
  61
  64
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  130
  136
  143
Funds from operations, $m
  92
  136
  138
  142
  145
  150
  154
  159
  164
  170
  176
  178
  185
  193
  201
  209
  218
  227
  237
  247
  258
  270
  282
  295
  308
  323
  338
  354
  370
  388
  406
Change in working capital, $m
  -30
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  38
Cash from operations, $m
  122
  131
  133
  135
  138
  141
  145
  149
  153
  158
  163
  165
  171
  177
  184
  192
  199
  208
  216
  226
  235
  246
  257
  268
  280
  293
  306
  321
  336
  351
  368
Maintenance CAPEX, $m
  0
  -44
  -44
  -45
  -47
  -48
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -108
  -113
  -118
  -124
  -130
  -136
New CAPEX, $m
  -25
  -10
  -12
  -14
  -15
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
Cash from investing activities, $m
  -206
  -54
  -56
  -59
  -62
  -65
  -67
  -71
  -75
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -114
  -120
  -125
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -184
  -193
  -203
  -213
Free cash flow, $m
  -84
  77
  76
  76
  76
  76
  77
  78
  79
  80
  81
  79
  81
  83
  85
  88
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  131
  136
  142
  148
  155
Issuance/(repayment) of debt, $m
  -62
  17
  20
  23
  26
  28
  31
  34
  37
  39
  42
  45
  48
  52
  55
  58
  62
  65
  69
  73
  77
  81
  86
  90
  95
  100
  105
  111
  117
  123
  129
Issuance/(repurchase) of shares, $m
  -2
  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  
  -68
  17
  20
  23
  26
  28
  31
  34
  37
  39
  42
  45
  48
  52
  55
  58
  62
  65
  69
  73
  77
  81
  86
  90
  95
  100
  105
  111
  117
  123
  129
Total cash flow (excl. dividends), $m
  -155
  94
  96
  99
  102
  105
  108
  112
  115
  119
  124
  125
  129
  135
  140
  146
  152
  159
  166
  173
  181
  189
  197
  206
  216
  226
  236
  247
  259
  271
  284
Retained Cash Flow (-), $m
  -104
  -6
  -7
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
Prev. year cash balance distribution, $m
 
  42
  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
 
  129
  89
  90
  92
  94
  96
  99
  102
  105
  108
  107
  111
  115
  120
  124
  129
  134
  140
  146
  152
  158
  165
  172
  180
  188
  197
  206
  215
  225
  235
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  120
  76
  70
  65
  60
  55
  49
  44
  39
  34
  29
  25
  21
  18
  14
  12
  9
  7
  6
  4
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  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 (ATKR)

Valuation Ratios
P/E Ratio 15.9
Price to Sales 0.9
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 11.1
Price to Free Cash Flow 13.9
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 $1504 million for the last fiscal year's total revenue generated by Atkore International Group. The default revenue input number comes from 2017 income statement of Atkore International Group. 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 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 7.8%, whose default value for ATKR is calculated based on our internal credit rating of Atkore International Group, 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.
    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 91.6%.

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 4.3% for Atkore International Group.

Corporate tax rate of 27% is the nominal tax rate for Atkore International Group. 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 33.6%.

Life of production assets of 11.6 years is the average useful life of capital assets used in Atkore International Group 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 16.8%. 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 - $361 million for Atkore International Group - 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 62.937 million for Atkore International Group 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 at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Atkore International Group Inc. to Host Earnings Call   [Feb-06-18 06:30AM  ACCESSWIRE]
▶ New Strong Sell Stocks for December 7th   [Dec-07-17 09:01AM  Zacks]
▶ Atkore International Group Inc. Acquires Flexicon Limited   [Sep-05-17 05:00AM  Business Wire]
▶ Atkore International Inc. Acquires Marco Cable Management   [May-22-17 02:43PM  Business Wire]
▶ New Strong Buy Stocks for March 13th   [Mar-13-17 07:29AM  Zacks]
▶ Is Atkore International Group Inc (ATKR) a Good Stock to Buy?   [Dec-12-16 06:04PM  at Insider Monkey]
Financial statements of ATKR
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