Intrinsic value of Astronics Corporation - ATRO

Previous Close

$32.42

  Intrinsic Value

$23.04

stock screener

  Rating & Target

sell

-29%

Previous close

$32.42

 
Intrinsic value

$23.04

 
Up/down potential

-29%

 
Rating

sell

We calculate the intrinsic value of ATRO 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, %
  18.40
  17.06
  15.85
  14.77
  13.79
  12.91
  12.12
  11.41
  10.77
  10.19
  9.67
  9.21
  8.78
  8.41
  8.07
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
Revenue, $m
  951
  1,113
  1,289
  1,480
  1,684
  1,901
  2,132
  2,375
  2,631
  2,899
  3,179
  3,472
  3,777
  4,094
  4,425
  4,768
  5,125
  5,496
  5,881
  6,281
  6,698
  7,131
  7,581
  8,051
  8,539
  9,048
  9,579
  10,133
  10,710
  11,313
Variable operating expenses, $m
  781
  912
  1,055
  1,209
  1,374
  1,550
  1,737
  1,933
  2,140
  2,357
  2,572
  2,809
  3,055
  3,312
  3,579
  3,857
  4,146
  4,446
  4,757
  5,081
  5,418
  5,768
  6,133
  6,512
  6,908
  7,319
  7,749
  8,197
  8,664
  9,152
Fixed operating expenses, $m
  83
  85
  86
  88
  90
  92
  94
  96
  99
  101
  103
  105
  107
  110
  112
  115
  117
  120
  122
  125
  128
  131
  134
  137
  140
  143
  146
  149
  152
  156
Total operating expenses, $m
  864
  997
  1,141
  1,297
  1,464
  1,642
  1,831
  2,029
  2,239
  2,458
  2,675
  2,914
  3,162
  3,422
  3,691
  3,972
  4,263
  4,566
  4,879
  5,206
  5,546
  5,899
  6,267
  6,649
  7,048
  7,462
  7,895
  8,346
  8,816
  9,308
Operating income, $m
  87
  116
  148
  182
  219
  259
  301
  345
  392
  441
  505
  558
  614
  672
  733
  796
  862
  930
  1,001
  1,075
  1,152
  1,232
  1,315
  1,402
  1,492
  1,586
  1,684
  1,787
  1,894
  2,006
EBITDA, $m
  126
  160
  197
  237
  280
  325
  374
  425
  480
  536
  596
  658
  722
  790
  860
  933
  1,009
  1,088
  1,170
  1,255
  1,344
  1,436
  1,532
  1,632
  1,737
  1,846
  1,959
  2,077
  2,201
  2,330
Interest expense (income), $m
  5
  13
  16
  21
  25
  30
  36
  41
  47
  54
  60
  67
  75
  82
  90
  99
  107
  116
  125
  135
  145
  156
  166
  178
  189
  202
  214
  228
  242
  256
  271
Earnings before tax, $m
  74
  99
  127
  157
  189
  223
  260
  298
  338
  381
  437
  484
  532
  582
  635
  689
  746
  805
  866
  930
  996
  1,065
  1,137
  1,212
  1,290
  1,372
  1,457
  1,545
  1,638
  1,735
Tax expense, $m
  20
  27
  34
  42
  51
  60
  70
  80
  91
  103
  118
  131
  144
  157
  171
  186
  201
  217
  234
  251
  269
  288
  307
  327
  348
  370
  393
  417
  442
  468
Net income, $m
  54
  73
  93
  115
  138
  163
  190
  218
  247
  278
  319
  353
  388
  425
  463
  503
  544
  588
  632
  679
  727
  778
  830
  885
  942
  1,001
  1,063
  1,128
  1,196
  1,267

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
  917
  1,073
  1,243
  1,427
  1,624
  1,834
  2,056
  2,290
  2,537
  2,795
  3,066
  3,348
  3,642
  3,948
  4,267
  4,598
  4,942
  5,299
  5,671
  6,057
  6,459
  6,876
  7,311
  7,763
  8,235
  8,725
  9,237
  9,771
  10,328
  10,910
Adjusted assets (=assets-cash), $m
  917
  1,073
  1,243
  1,427
  1,624
  1,834
  2,056
  2,290
  2,537
  2,795
  3,066
  3,348
  3,642
  3,948
  4,267
  4,598
  4,942
  5,299
  5,671
  6,057
  6,459
  6,876
  7,311
  7,763
  8,235
  8,725
  9,237
  9,771
  10,328
  10,910
Revenue / Adjusted assets
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
Average production assets, $m
  305
  357
  414
  475
  541
  610
  684
  762
  844
  931
  1,021
  1,114
  1,212
  1,314
  1,420
  1,531
  1,645
  1,764
  1,888
  2,016
  2,150
  2,289
  2,434
  2,584
  2,741
  2,905
  3,075
  3,253
  3,438
  3,632
Working capital, $m
  274
  321
  371
  426
  485
  548
  614
  684
  758
  835
  916
  1,000
  1,088
  1,179
  1,274
  1,373
  1,476
  1,583
  1,694
  1,809
  1,929
  2,054
  2,183
  2,319
  2,459
  2,606
  2,759
  2,918
  3,085
  3,258
Total debt, $m
  305
  384
  469
  561
  660
  765
  876
  993
  1,117
  1,247
  1,382
  1,523
  1,671
  1,824
  1,984
  2,150
  2,322
  2,501
  2,687
  2,881
  3,082
  3,291
  3,509
  3,735
  3,971
  4,217
  4,474
  4,741
  5,020
  5,312
Total liabilities, $m
  459
  538
  623
  715
  814
  919
  1,030
  1,147
  1,271
  1,401
  1,536
  1,677
  1,825
  1,978
  2,138
  2,304
  2,476
  2,655
  2,841
  3,035
  3,236
  3,445
  3,663
  3,889
  4,125
  4,371
  4,628
  4,895
  5,174
  5,466
Total equity, $m
  457
  536
  620
  712
  810
  915
  1,026
  1,143
  1,266
  1,395
  1,530
  1,671
  1,817
  1,970
  2,129
  2,294
  2,466
  2,644
  2,830
  3,023
  3,223
  3,431
  3,648
  3,874
  4,109
  4,354
  4,609
  4,876
  5,154
  5,444
Total liabilities and equity, $m
  916
  1,074
  1,243
  1,427
  1,624
  1,834
  2,056
  2,290
  2,537
  2,796
  3,066
  3,348
  3,642
  3,948
  4,267
  4,598
  4,942
  5,299
  5,671
  6,058
  6,459
  6,876
  7,311
  7,763
  8,234
  8,725
  9,237
  9,771
  10,328
  10,910
Debt-to-equity ratio
  0.670
  0.720
  0.760
  0.790
  0.810
  0.840
  0.850
  0.870
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.930
  0.940
  0.940
  0.950
  0.950
  0.950
  0.960
  0.960
  0.960
  0.960
  0.970
  0.970
  0.970
  0.970
  0.970
  0.980
Adjusted equity ratio
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  54
  73
  93
  115
  138
  163
  190
  218
  247
  278
  319
  353
  388
  425
  463
  503
  544
  588
  632
  679
  727
  778
  830
  885
  942
  1,001
  1,063
  1,128
  1,196
  1,267
Depreciation, amort., depletion, $m
  39
  44
  49
  55
  60
  67
  73
  80
  88
  95
  91
  100
  108
  117
  127
  137
  147
  158
  169
  180
  192
  204
  217
  231
  245
  259
  275
  290
  307
  324
Funds from operations, $m
  93
  117
  142
  169
  198
  230
  263
  298
  335
  373
  410
  453
  497
  542
  590
  640
  691
  745
  801
  859
  919
  982
  1,047
  1,116
  1,187
  1,261
  1,338
  1,419
  1,503
  1,591
Change in working capital, $m
  43
  47
  51
  55
  59
  63
  66
  70
  74
  77
  81
  84
  88
  91
  95
  99
  103
  107
  111
  115
  120
  125
  130
  135
  141
  147
  153
  159
  166
  174
Cash from operations, $m
  51
  70
  91
  114
  140
  167
  196
  228
  261
  296
  330
  368
  409
  451
  495
  541
  589
  638
  690
  744
  799
  857
  918
  981
  1,046
  1,114
  1,185
  1,259
  1,336
  1,417
Maintenance CAPEX, $m
  -23
  -27
  -32
  -37
  -42
  -48
  -54
  -61
  -68
  -75
  -83
  -91
  -100
  -108
  -117
  -127
  -137
  -147
  -158
  -169
  -180
  -192
  -204
  -217
  -231
  -245
  -259
  -275
  -290
  -307
New CAPEX, $m
  -47
  -52
  -57
  -61
  -66
  -70
  -74
  -78
  -82
  -86
  -90
  -94
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -134
  -139
  -145
  -151
  -157
  -163
  -170
  -178
  -185
  -194
Cash from investing activities, $m
  -70
  -79
  -89
  -98
  -108
  -118
  -128
  -139
  -150
  -161
  -173
  -185
  -198
  -210
  -223
  -237
  -252
  -266
  -282
  -298
  -314
  -331
  -349
  -368
  -388
  -408
  -429
  -453
  -475
  -501
Free cash flow, $m
  -20
  -9
  2
  16
  32
  49
  68
  88
  111
  134
  156
  183
  211
  241
  272
  304
  337
  372
  409
  446
  486
  526
  569
  613
  658
  706
  755
  807
  861
  916
Issuance/(repayment) of debt, $m
  71
  78
  85
  92
  99
  105
  111
  118
  124
  130
  135
  141
  147
  153
  160
  166
  172
  179
  186
  193
  201
  209
  218
  227
  236
  246
  256
  267
  279
  291
Issuance/(repurchase) of shares, $m
  17
  5
  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  
  88
  83
  85
  92
  99
  105
  111
  118
  124
  130
  135
  141
  147
  153
  160
  166
  172
  179
  186
  193
  201
  209
  218
  227
  236
  246
  256
  267
  279
  291
Total cash flow (excl. dividends), $m
  68
  74
  88
  108
  130
  154
  179
  206
  234
  264
  292
  325
  359
  394
  431
  470
  510
  551
  595
  640
  687
  736
  786
  839
  894
  952
  1,012
  1,074
  1,140
  1,208
Retained Cash Flow (-), $m
  -71
  -78
  -85
  -92
  -98
  -105
  -111
  -117
  -123
  -129
  -135
  -141
  -147
  -153
  -159
  -165
  -172
  -178
  -185
  -193
  -200
  -208
  -217
  -226
  -235
  -245
  -255
  -266
  -278
  -290
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
  -2
  -4
  3
  17
  32
  49
  68
  89
  111
  135
  157
  184
  212
  241
  272
  305
  338
  373
  409
  447
  486
  527
  570
  614
  659
  707
  756
  808
  862
  918
Discount rate, %
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
  -2
  -3
  2
  13
  22
  31
  39
  46
  51
  54
  54
  55
  54
  51
  48
  44
  39
  34
  29
  24
  20
  16
  12
  9
  7
  5
  3
  2
  2
  1
Current shareholders' claim on cash, %
  98.4
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0

Astronics Corporation is a supplier of products to the aerospace, defense, electronics and semiconductor industries. The Company's products and services include electrical power generation, distribution and motion systems, lighting and safety systems, avionics products, aircraft structures, systems certification and automated test systems. The Company operates through two segments: Aerospace and Test Systems. The Aerospace segment designs and manufactures products for the global aerospace industry. Its product lines include lighting and safety systems, electrical power generation, distribution and motions systems, aircraft structures, avionics products, systems certification and other products. The Test Systems segment designs, develops, manufactures and maintains automated test systems that support the semiconductor, aerospace, communications and weapons test systems, as well as training and simulation devices for both commercial and military applications.

FINANCIAL RATIOS  of  Astronics Corporation (ATRO)

Valuation Ratios
P/E Ratio 19.7
Price to Sales 1.5
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 19.3
Price to Free Cash Flow 26.2
Growth Rates
Sales Growth Rate -8.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.6%
Cap. Spend. - 3 Yr. Gr. Rate 13.2%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 43%
Total Debt to Equity 43.9%
Interest Coverage 15
Management Effectiveness
Return On Assets 8.5%
Ret/ On Assets - 3 Yr. Avg. 10.7%
Return On Total Capital 10.1%
Ret/ On T. Cap. - 3 Yr. Avg. 13.2%
Return On Equity 15.1%
Return On Equity - 3 Yr. Avg. 22.8%
Asset Turnover 1
Profitability Ratios
Gross Margin 25.1%
Gross Margin - 3 Yr. Avg. 25.9%
EBITDA Margin 15.8%
EBITDA Margin - 3 Yr. Avg. 17%
Operating Margin 11.5%
Oper. Margin - 3 Yr. Avg. 13%
Pre-Tax Margin 10.9%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 7.6%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 30.4%
Eff/ Tax Rate - 3 Yr. Avg. 29.4%
Payout Ratio 0%

ATRO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATRO stock intrinsic value calculation we used $803 million for the last fiscal year's total revenue generated by Astronics Corporation. The default revenue input number comes from 0001 income statement of Astronics 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 ATRO stock valuation model: a) initial revenue growth rate of 18.4% 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 6.2%, whose default value for ATRO is calculated based on our internal credit rating of Astronics 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 Astronics 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 ATRO stock the variable cost ratio is equal to 82.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $81 million in the base year in the intrinsic value calculation for ATRO 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 Astronics Corporation.

Corporate tax rate of 27% is the nominal tax rate for Astronics 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 ATRO 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 ATRO are equal to 32.1%.

Life of production assets of 11.2 years is the average useful life of capital assets used in Astronics 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 ATRO is equal to 28.8%. 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 - $386.625 million for Astronics 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 32.497 million for Astronics 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 Astronics Corporation at the current share price and the inputted number of shares is $1.1 billion.

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