Intrinsic value of Actuant Corporation - ATU

Previous Close

$22.25

  Intrinsic Value

$15.97

stock screener

  Rating & Target

sell

-28%

Previous close

$22.25

 
Intrinsic value

$15.97

 
Up/down potential

-28%

 
Rating

sell

We calculate the intrinsic value of ATU 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 1.4

 

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
  1,207
  1,234
  1,266
  1,302
  1,341
  1,385
  1,432
  1,483
  1,538
  1,597
  1,660
  1,727
  1,799
  1,875
  1,956
  2,042
  2,133
  2,228
  2,330
  2,437
  2,550
  2,669
  2,795
  2,927
  3,066
  3,213
  3,367
  3,530
  3,701
  3,881
Variable operating expenses, $m
  252
  256
  261
  266
  272
  279
  286
  294
  302
  311
  251
  262
  272
  284
  296
  309
  323
  337
  353
  369
  386
  404
  423
  443
  464
  486
  510
  534
  560
  588
Fixed operating expenses, $m
  956
  977
  998
  1,020
  1,042
  1,065
  1,089
  1,113
  1,137
  1,162
  1,188
  1,214
  1,241
  1,268
  1,296
  1,324
  1,354
  1,383
  1,414
  1,445
  1,477
  1,509
  1,542
  1,576
  1,611
  1,646
  1,683
  1,720
  1,757
  1,796
Total operating expenses, $m
  1,208
  1,233
  1,259
  1,286
  1,314
  1,344
  1,375
  1,407
  1,439
  1,473
  1,439
  1,476
  1,513
  1,552
  1,592
  1,633
  1,677
  1,720
  1,767
  1,814
  1,863
  1,913
  1,965
  2,019
  2,075
  2,132
  2,193
  2,254
  2,317
  2,384
Operating income, $m
  -1
  2
  7
  15
  26
  40
  57
  76
  98
  123
  221
  252
  286
  323
  364
  408
  456
  508
  563
  623
  687
  756
  829
  907
  991
  1,080
  1,175
  1,276
  1,383
  1,497
EBITDA, $m
  91
  95
  101
  110
  121
  136
  153
  174
  197
  223
  252
  285
  320
  359
  401
  447
  497
  550
  608
  670
  736
  807
  883
  963
  1,050
  1,142
  1,239
  1,343
  1,454
  1,571
Interest expense (income), $m
  27
  31
  32
  33
  35
  36
  38
  40
  42
  44
  47
  50
  52
  55
  59
  62
  66
  70
  74
  78
  83
  88
  93
  98
  104
  110
  116
  123
  130
  137
  145
Earnings before tax, $m
  -32
  -30
  -26
  -19
  -10
  2
  17
  34
  54
  76
  171
  199
  230
  264
  302
  342
  386
  434
  485
  540
  600
  663
  731
  804
  881
  964
  1,052
  1,146
  1,246
  1,352
Tax expense, $m
  0
  0
  0
  0
  0
  1
  5
  9
  15
  21
  46
  54
  62
  71
  81
  92
  104
  117
  131
  146
  162
  179
  197
  217
  238
  260
  284
  309
  336
  365
Net income, $m
  -32
  -30
  -26
  -19
  -10
  2
  12
  25
  39
  56
  125
  145
  168
  193
  220
  250
  282
  317
  354
  394
  438
  484
  534
  587
  643
  704
  768
  837
  910
  987

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
  1,510
  1,545
  1,585
  1,629
  1,679
  1,733
  1,792
  1,856
  1,925
  1,998
  2,077
  2,162
  2,251
  2,347
  2,448
  2,555
  2,669
  2,789
  2,916
  3,050
  3,191
  3,340
  3,498
  3,663
  3,838
  4,021
  4,214
  4,418
  4,632
  4,857
Adjusted assets (=assets-cash), $m
  1,510
  1,545
  1,585
  1,629
  1,679
  1,733
  1,792
  1,856
  1,925
  1,998
  2,077
  2,162
  2,251
  2,347
  2,448
  2,555
  2,669
  2,789
  2,916
  3,050
  3,191
  3,340
  3,498
  3,663
  3,838
  4,021
  4,214
  4,418
  4,632
  4,857
Revenue / Adjusted assets
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
Average production assets, $m
  462
  473
  485
  499
  514
  530
  548
  568
  589
  612
  636
  662
  689
  718
  749
  782
  817
  854
  892
  933
  977
  1,022
  1,070
  1,121
  1,174
  1,231
  1,290
  1,352
  1,417
  1,486
Working capital, $m
  112
  115
  118
  121
  125
  129
  133
  138
  143
  148
  154
  161
  167
  174
  182
  190
  198
  207
  217
  227
  237
  248
  260
  272
  285
  299
  313
  328
  344
  361
Total debt, $m
  551
  573
  597
  625
  656
  690
  726
  766
  809
  855
  904
  957
  1,013
  1,072
  1,135
  1,202
  1,273
  1,348
  1,427
  1,510
  1,598
  1,691
  1,789
  1,892
  2,001
  2,115
  2,236
  2,362
  2,496
  2,636
Total liabilities, $m
  941
  963
  987
  1,015
  1,046
  1,080
  1,116
  1,156
  1,199
  1,245
  1,294
  1,347
  1,403
  1,462
  1,525
  1,592
  1,663
  1,738
  1,817
  1,900
  1,988
  2,081
  2,179
  2,282
  2,391
  2,505
  2,626
  2,752
  2,886
  3,026
Total equity, $m
  569
  582
  597
  614
  633
  653
  676
  700
  726
  753
  783
  815
  849
  885
  923
  963
  1,006
  1,051
  1,099
  1,150
  1,203
  1,259
  1,319
  1,381
  1,447
  1,516
  1,589
  1,666
  1,746
  1,831
Total liabilities and equity, $m
  1,510
  1,545
  1,584
  1,629
  1,679
  1,733
  1,792
  1,856
  1,925
  1,998
  2,077
  2,162
  2,252
  2,347
  2,448
  2,555
  2,669
  2,789
  2,916
  3,050
  3,191
  3,340
  3,498
  3,663
  3,838
  4,021
  4,215
  4,418
  4,632
  4,857
Debt-to-equity ratio
  0.970
  0.980
  1.000
  1.020
  1.040
  1.060
  1.080
  1.100
  1.120
  1.130
  1.150
  1.170
  1.190
  1.210
  1.230
  1.250
  1.260
  1.280
  1.300
  1.310
  1.330
  1.340
  1.360
  1.370
  1.380
  1.400
  1.410
  1.420
  1.430
  1.440
Adjusted equity ratio
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -32
  -30
  -26
  -19
  -10
  2
  12
  25
  39
  56
  125
  145
  168
  193
  220
  250
  282
  317
  354
  394
  438
  484
  534
  587
  643
  704
  768
  837
  910
  987
Depreciation, amort., depletion, $m
  92
  93
  94
  94
  95
  96
  97
  98
  99
  100
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  64
  68
  71
  74
Funds from operations, $m
  61
  63
  67
  75
  85
  97
  109
  122
  138
  156
  157
  179
  203
  229
  258
  289
  323
  359
  399
  441
  486
  535
  587
  643
  702
  765
  833
  904
  980
  1,061
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
Cash from operations, $m
  58
  60
  64
  72
  81
  93
  105
  118
  133
  150
  151
  172
  196
  222
  250
  281
  314
  350
  389
  431
  476
  524
  575
  630
  689
  752
  818
  889
  964
  1,045
Maintenance CAPEX, $m
  -23
  -23
  -24
  -24
  -25
  -26
  -27
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -64
  -68
  -71
New CAPEX, $m
  -9
  -11
  -12
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -69
Cash from investing activities, $m
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -49
  -52
  -55
  -58
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -105
  -109
  -115
  -121
  -126
  -133
  -140
Free cash flow, $m
  27
  26
  29
  34
  41
  51
  60
  71
  83
  98
  96
  115
  135
  158
  183
  211
  241
  273
  308
  346
  386
  430
  476
  526
  580
  637
  698
  762
  831
  905
Issuance/(repayment) of debt, $m
  18
  22
  25
  28
  31
  34
  37
  40
  43
  46
  49
  53
  56
  59
  63
  67
  71
  75
  79
  83
  88
  93
  98
  103
  109
  114
  120
  127
  133
  140
Issuance/(repurchase) of shares, $m
  42
  43
  41
  36
  29
  19
  10
  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  
  60
  65
  66
  64
  60
  53
  47
  40
  43
  46
  49
  53
  56
  59
  63
  67
  71
  75
  79
  83
  88
  93
  98
  103
  109
  114
  120
  127
  133
  140
Total cash flow (excl. dividends), $m
  88
  91
  95
  98
  101
  104
  107
  111
  126
  144
  145
  167
  191
  218
  246
  278
  311
  348
  387
  429
  474
  522
  574
  629
  688
  751
  818
  889
  965
  1,045
Retained Cash Flow (-), $m
  -42
  -43
  -41
  -36
  -29
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -51
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
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
  45
  48
  53
  61
  72
  83
  85
  86
  100
  116
  115
  135
  157
  182
  208
  237
  269
  302
  339
  378
  421
  466
  515
  567
  623
  682
  745
  812
  884
  960
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  43
  43
  45
  49
  54
  57
  54
  50
  53
  55
  49
  51
  51
  51
  51
  49
  46
  43
  39
  35
  31
  26
  22
  18
  15
  12
  9
  7
  5
  3
Current shareholders' claim on cash, %
  97.0
  94.0
  91.4
  89.2
  87.5
  86.5
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9

Actuant Corporation designs, manufactures and distributes a range of industrial products and systems to various end markets. The Company operates through three segments: Industrial, Energy and Engineered Solutions. The Company's Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Company's Energy segment provides joint integrity products and services, customized offshore vessel mooring solutions, as well as rope and cable solutions to the global oil and gas, power generation and other energy markets. The Company's Engineered Solutions segment provides engineered position and motion control systems to original equipment manufacturers (OEM) in various on and off-highway vehicle markets, as well as various other products to the industrial and agricultural markets.

FINANCIAL RATIOS  of  Actuant Corporation (ATU)

Valuation Ratios
P/E Ratio -20.1
Price to Sales 1.2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 22.2
Growth Rates
Sales Growth Rate -4.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 40%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 8
Current Ratio 0.2
LT Debt to Equity 106.2%
Total Debt to Equity 112.2%
Interest Coverage -2
Management Effectiveness
Return On Assets -3%
Ret/ On Assets - 3 Yr. Avg. -2%
Return On Total Capital -6.1%
Ret/ On T. Cap. - 3 Yr. Avg. -4.5%
Return On Equity -12.9%
Return On Equity - 3 Yr. Avg. -9.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 34.7%
Gross Margin - 3 Yr. Avg. 35.6%
EBITDA Margin -1.2%
EBITDA Margin - 3 Yr. Avg. 0.8%
Operating Margin -4.6%
Oper. Margin - 3 Yr. Avg. -3%
Pre-Tax Margin -7.6%
Pre-Tax Margin - 3 Yr. Avg. -5.6%
Net Profit Margin -6%
Net Profit Margin - 3 Yr. Avg. -4.5%
Effective Tax Rate 20.5%
Eff/ Tax Rate - 3 Yr. Avg. 19.9%
Payout Ratio -3%

ATU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATU stock intrinsic value calculation we used $1183 million for the last fiscal year's total revenue generated by Actuant Corporation. The default revenue input number comes from 0001 income statement of Actuant 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 ATU 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 5%, whose default value for ATU is calculated based on our internal credit rating of Actuant 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 Actuant 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 ATU stock the variable cost ratio is equal to 21%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $935 million in the base year in the intrinsic value calculation for ATU 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 5.8% for Actuant Corporation.

Corporate tax rate of 27% is the nominal tax rate for Actuant 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 ATU 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 ATU are equal to 38.3%.

Life of production assets of 20 years is the average useful life of capital assets used in Actuant 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 ATU is equal to 9.3%. 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 - $558.712 million for Actuant 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 61.315 million for Actuant 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 Actuant Corporation at the current share price and the inputted number of shares is $1.4 billion.

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