Intrinsic value of Belden Inc - BDC

Previous Close

$53.90

  Intrinsic Value

$165.47

stock screener

  Rating & Target

str. buy

+207%

Previous close

$53.90

 
Intrinsic value

$165.47

 
Up/down potential

+207%

 
Rating

str. buy

We calculate the intrinsic value of BDC 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 2.1

 

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, %
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  2,800
  3,023
  3,255
  3,496
  3,746
  4,006
  4,277
  4,558
  4,851
  5,156
  5,473
  5,803
  6,147
  6,506
  6,881
  7,271
  7,679
  8,106
  8,551
  9,017
  9,504
  10,013
  10,546
  11,105
  11,689
  12,301
  12,943
  13,614
  14,319
  15,057
Variable operating expenses, $m
  1,791
  1,918
  2,049
  2,185
  2,327
  2,474
  2,628
  2,787
  2,952
  3,125
  3,097
  3,284
  3,479
  3,682
  3,894
  4,115
  4,346
  4,587
  4,840
  5,103
  5,379
  5,667
  5,969
  6,285
  6,616
  6,962
  7,325
  7,705
  8,104
  8,522
Fixed operating expenses, $m
  636
  650
  664
  679
  693
  709
  724
  740
  757
  773
  790
  808
  825
  844
  862
  881
  900
  920
  940
  961
  982
  1,004
  1,026
  1,049
  1,072
  1,095
  1,119
  1,144
  1,169
  1,195
Total operating expenses, $m
  2,427
  2,568
  2,713
  2,864
  3,020
  3,183
  3,352
  3,527
  3,709
  3,898
  3,887
  4,092
  4,304
  4,526
  4,756
  4,996
  5,246
  5,507
  5,780
  6,064
  6,361
  6,671
  6,995
  7,334
  7,688
  8,057
  8,444
  8,849
  9,273
  9,717
Operating income, $m
  373
  455
  542
  632
  726
  823
  925
  1,031
  1,142
  1,258
  1,585
  1,711
  1,843
  1,980
  2,124
  2,275
  2,433
  2,598
  2,771
  2,952
  3,143
  3,342
  3,552
  3,771
  4,002
  4,244
  4,498
  4,765
  5,046
  5,340
EBITDA, $m
  673
  763
  857
  955
  1,057
  1,164
  1,275
  1,390
  1,511
  1,636
  1,768
  1,905
  2,048
  2,197
  2,354
  2,517
  2,689
  2,868
  3,056
  3,253
  3,459
  3,676
  3,903
  4,141
  4,391
  4,654
  4,930
  5,219
  5,523
  5,842
Interest expense (income), $m
  87
  79
  90
  101
  112
  125
  137
  150
  164
  178
  192
  207
  223
  240
  257
  275
  294
  313
  334
  355
  377
  400
  425
  450
  477
  505
  534
  565
  597
  630
  665
Earnings before tax, $m
  294
  366
  441
  519
  601
  686
  775
  868
  964
  1,065
  1,378
  1,488
  1,603
  1,723
  1,849
  1,981
  2,119
  2,264
  2,416
  2,575
  2,742
  2,917
  3,101
  3,294
  3,497
  3,710
  3,934
  4,169
  4,416
  4,675
Tax expense, $m
  79
  99
  119
  140
  162
  185
  209
  234
  260
  288
  372
  402
  433
  465
  499
  535
  572
  611
  652
  695
  740
  788
  837
  889
  944
  1,002
  1,062
  1,126
  1,192
  1,262
Net income, $m
  214
  267
  322
  379
  439
  501
  566
  633
  704
  778
  1,006
  1,086
  1,170
  1,258
  1,350
  1,446
  1,547
  1,653
  1,764
  1,880
  2,002
  2,130
  2,264
  2,405
  2,553
  2,708
  2,872
  3,043
  3,223
  3,413

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
  4,093
  4,419
  4,758
  5,111
  5,477
  5,857
  6,253
  6,664
  7,092
  7,537
  8,001
  8,484
  8,987
  9,512
  10,059
  10,631
  11,227
  11,850
  12,502
  13,182
  13,894
  14,639
  15,419
  16,235
  17,089
  17,984
  18,922
  19,904
  20,934
  22,013
Adjusted assets (=assets-cash), $m
  4,093
  4,419
  4,758
  5,111
  5,477
  5,857
  6,253
  6,664
  7,092
  7,537
  8,001
  8,484
  8,987
  9,512
  10,059
  10,631
  11,227
  11,850
  12,502
  13,182
  13,894
  14,639
  15,419
  16,235
  17,089
  17,984
  18,922
  19,904
  20,934
  22,013
Revenue / Adjusted assets
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
Average production assets, $m
  1,540
  1,662
  1,790
  1,923
  2,060
  2,204
  2,352
  2,507
  2,668
  2,836
  3,010
  3,192
  3,381
  3,578
  3,784
  3,999
  4,224
  4,458
  4,703
  4,959
  5,227
  5,507
  5,801
  6,108
  6,429
  6,766
  7,118
  7,488
  7,875
  8,281
Working capital, $m
  132
  142
  153
  164
  176
  188
  201
  214
  228
  242
  257
  273
  289
  306
  323
  342
  361
  381
  402
  424
  447
  471
  496
  522
  549
  578
  608
  640
  673
  708
Total debt, $m
  1,662
  1,868
  2,083
  2,306
  2,538
  2,779
  3,029
  3,289
  3,560
  3,842
  4,136
  4,441
  4,760
  5,092
  5,439
  5,800
  6,178
  6,572
  6,985
  7,415
  7,866
  8,338
  8,831
  9,348
  9,889
  10,455
  11,049
  11,670
  12,322
  13,005
Total liabilities, $m
  2,591
  2,797
  3,012
  3,235
  3,467
  3,708
  3,958
  4,218
  4,489
  4,771
  5,065
  5,370
  5,689
  6,021
  6,368
  6,729
  7,107
  7,501
  7,913
  8,344
  8,795
  9,267
  9,760
  10,277
  10,818
  11,384
  11,977
  12,599
  13,251
  13,934
Total equity, $m
  1,502
  1,622
  1,746
  1,876
  2,010
  2,150
  2,295
  2,446
  2,603
  2,766
  2,936
  3,114
  3,298
  3,491
  3,692
  3,901
  4,120
  4,349
  4,588
  4,838
  5,099
  5,373
  5,659
  5,958
  6,272
  6,600
  6,944
  7,305
  7,683
  8,079
Total liabilities and equity, $m
  4,093
  4,419
  4,758
  5,111
  5,477
  5,858
  6,253
  6,664
  7,092
  7,537
  8,001
  8,484
  8,987
  9,512
  10,060
  10,630
  11,227
  11,850
  12,501
  13,182
  13,894
  14,640
  15,419
  16,235
  17,090
  17,984
  18,921
  19,904
  20,934
  22,013
Debt-to-equity ratio
  1.110
  1.150
  1.190
  1.230
  1.260
  1.290
  1.320
  1.340
  1.370
  1.390
  1.410
  1.430
  1.440
  1.460
  1.470
  1.490
  1.500
  1.510
  1.520
  1.530
  1.540
  1.550
  1.560
  1.570
  1.580
  1.580
  1.590
  1.600
  1.600
  1.610
Adjusted equity ratio
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  214
  267
  322
  379
  439
  501
  566
  633
  704
  778
  1,006
  1,086
  1,170
  1,258
  1,350
  1,446
  1,547
  1,653
  1,764
  1,880
  2,002
  2,130
  2,264
  2,405
  2,553
  2,708
  2,872
  3,043
  3,223
  3,413
Depreciation, amort., depletion, $m
  300
  308
  315
  323
  332
  340
  349
  359
  369
  379
  182
  193
  205
  217
  229
  242
  256
  270
  285
  301
  317
  334
  352
  370
  390
  410
  431
  454
  477
  502
Funds from operations, $m
  514
  575
  637
  703
  771
  841
  915
  992
  1,073
  1,156
  1,188
  1,280
  1,375
  1,475
  1,579
  1,689
  1,803
  1,923
  2,049
  2,180
  2,319
  2,463
  2,615
  2,775
  2,942
  3,118
  3,303
  3,497
  3,701
  3,915
Change in working capital, $m
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
Cash from operations, $m
  504
  564
  626
  691
  759
  829
  903
  979
  1,059
  1,142
  1,173
  1,264
  1,359
  1,458
  1,562
  1,670
  1,784
  1,903
  2,028
  2,159
  2,296
  2,440
  2,590
  2,749
  2,915
  3,090
  3,273
  3,465
  3,668
  3,880
Maintenance CAPEX, $m
  -86
  -93
  -101
  -108
  -117
  -125
  -134
  -143
  -152
  -162
  -172
  -182
  -193
  -205
  -217
  -229
  -242
  -256
  -270
  -285
  -301
  -317
  -334
  -352
  -370
  -390
  -410
  -431
  -454
  -477
New CAPEX, $m
  -118
  -123
  -128
  -133
  -138
  -143
  -149
  -155
  -161
  -168
  -174
  -182
  -189
  -197
  -206
  -215
  -224
  -234
  -245
  -256
  -268
  -280
  -293
  -307
  -321
  -337
  -353
  -370
  -387
  -406
Cash from investing activities, $m
  -204
  -216
  -229
  -241
  -255
  -268
  -283
  -298
  -313
  -330
  -346
  -364
  -382
  -402
  -423
  -444
  -466
  -490
  -515
  -541
  -569
  -597
  -627
  -659
  -691
  -727
  -763
  -801
  -841
  -883
Free cash flow, $m
  301
  348
  398
  450
  504
  561
  620
  682
  746
  813
  827
  900
  976
  1,056
  1,139
  1,226
  1,317
  1,413
  1,513
  1,617
  1,727
  1,843
  1,963
  2,090
  2,223
  2,363
  2,510
  2,664
  2,826
  2,997
Issuance/(repayment) of debt, $m
  199
  206
  215
  223
  232
  241
  250
  260
  271
  282
  293
  306
  319
  332
  347
  362
  378
  394
  412
  431
  451
  472
  493
  517
  541
  567
  593
  622
  652
  683
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  
  199
  206
  215
  223
  232
  241
  250
  260
  271
  282
  293
  306
  319
  332
  347
  362
  378
  394
  412
  431
  451
  472
  493
  517
  541
  567
  593
  622
  652
  683
Total cash flow (excl. dividends), $m
  499
  555
  613
  673
  736
  802
  871
  942
  1,017
  1,095
  1,120
  1,206
  1,295
  1,388
  1,485
  1,588
  1,695
  1,807
  1,925
  2,048
  2,178
  2,314
  2,457
  2,607
  2,764
  2,930
  3,104
  3,286
  3,478
  3,680
Retained Cash Flow (-), $m
  -115
  -120
  -124
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -170
  -177
  -185
  -193
  -201
  -210
  -219
  -229
  -239
  -250
  -261
  -273
  -286
  -299
  -314
  -328
  -344
  -361
  -378
  -396
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
  384
  435
  488
  544
  602
  662
  725
  791
  860
  931
  950
  1,028
  1,110
  1,195
  1,285
  1,378
  1,476
  1,578
  1,686
  1,799
  1,917
  2,041
  2,171
  2,307
  2,451
  2,601
  2,759
  2,926
  3,100
  3,284
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  362
  384
  402
  414
  421
  422
  419
  409
  395
  377
  335
  313
  287
  260
  232
  204
  176
  150
  125
  102
  82
  65
  50
  37
  28
  20
  14
  9
  6
  4
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

Belden Inc. is a signal transmission solutions provider company. The Company operates through five segment: Broadcast Solutions (Broadcast), Enterprise Connectivity Solutions (Enterprise), Industrial Connectivity Solutions (Industrial Connectivity), Industrial IT Solutions (Industrial IT), and Network Security Solutions (Network Security). The segments design, manufacture, and market a portfolio of signal transmission solutions for applications used in a variety of end markets, including broadcast, enterprise, and industrial. The Company's portfolio of signal transmission solutions provides transmission of data, sound, and video for various applications. The Company's sells its products to distributors, end users, installers, and to original equipment manufacturers (OEMs). The Company has manufacturing facilities in the United States, other manufacturing and operating facilities in Brazil, Canada, China, Japan, Mexico, and St. Kitts, as well as in various countries in Europe.

FINANCIAL RATIOS  of  Belden Inc (BDC)

Valuation Ratios
P/E Ratio 17.8
Price to Sales 1
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 7.2
Price to Free Cash Flow 8.7
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.8%
Cap. Spend. - 3 Yr. Gr. Rate 6.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 111%
Total Debt to Equity 111%
Interest Coverage 2
Management Effectiveness
Return On Assets 6.1%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 9.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 41.6%
Gross Margin - 3 Yr. Avg. 39%
EBITDA Margin 15.2%
EBITDA Margin - 3 Yr. Avg. 12.8%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin 5.3%
Pre-Tax Margin - 3 Yr. Avg. 3.5%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 3.8%
Effective Tax Rate -1.6%
Eff/ Tax Rate - 3 Yr. Avg. -19.8%
Payout Ratio 12.5%

BDC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BDC stock intrinsic value calculation we used $2585 million for the last fiscal year's total revenue generated by Belden Inc. The default revenue input number comes from 0001 income statement of Belden 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 BDC stock valuation model: a) initial revenue growth rate of 8.3% 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 6.1%, whose default value for BDC is calculated based on our internal credit rating of Belden 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 Belden 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 BDC stock the variable cost ratio is equal to 64.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $622 million in the base year in the intrinsic value calculation for BDC 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 Belden Inc.

Corporate tax rate of 27% is the nominal tax rate for Belden 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 BDC 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 BDC are equal to 55%.

Life of production assets of 16.5 years is the average useful life of capital assets used in Belden 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 BDC is equal to 4.7%. 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 - $1387.147 million for Belden 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 39.347 million for Belden 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 Belden Inc at the current share price and the inputted number of shares is $2.1 billion.

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