Intrinsic value of General Cable - BGC

Previous Close

$30.00

  Intrinsic Value

$0.48

stock screener

  Rating & Target

str. sell

-98%

Previous close

$30.00

 
Intrinsic value

$0.48

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of BGC 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 2017), $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 1.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  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
  3,914
  4,004
  4,107
  4,222
  4,350
  4,491
  4,644
  4,809
  4,987
  5,179
  5,384
  5,602
  5,835
  6,082
  6,344
  6,622
  6,917
  7,228
  7,557
  7,904
  8,270
  8,657
  9,064
  9,493
  9,945
  10,421
  10,922
  11,449
  12,003
  12,586
Variable operating expenses, $m
  3,933
  4,024
  4,127
  4,243
  4,371
  4,512
  4,666
  4,832
  5,011
  5,204
  5,406
  5,625
  5,859
  6,107
  6,370
  6,650
  6,945
  7,258
  7,588
  7,937
  8,304
  8,692
  9,101
  9,532
  9,986
  10,464
  10,967
  11,496
  12,053
  12,638
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
  3,933
  4,024
  4,127
  4,243
  4,371
  4,512
  4,666
  4,832
  5,011
  5,204
  5,406
  5,625
  5,859
  6,107
  6,370
  6,650
  6,945
  7,258
  7,588
  7,937
  8,304
  8,692
  9,101
  9,532
  9,986
  10,464
  10,967
  11,496
  12,053
  12,638
Operating income, $m
  -20
  -20
  -20
  -21
  -21
  -22
  -23
  -23
  -24
  -25
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
EBITDA, $m
  42
  43
  44
  45
  46
  48
  50
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  93
  97
  101
  106
  111
  117
  122
  128
  135
Interest expense (income), $m
  81
  85
  80
  84
  88
  93
  98
  104
  110
  117
  124
  132
  141
  149
  159
  169
  180
  191
  203
  216
  229
  244
  259
  274
  291
  309
  327
  346
  367
  388
  411
Earnings before tax, $m
  -104
  -100
  -104
  -109
  -114
  -120
  -126
  -133
  -141
  -149
  -154
  -164
  -173
  -184
  -195
  -207
  -220
  -233
  -247
  -262
  -278
  -294
  -312
  -330
  -349
  -370
  -391
  -414
  -438
  -463
Tax expense, $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
Net income, $m
  -104
  -100
  -104
  -109
  -114
  -120
  -126
  -133
  -141
  -149
  -154
  -164
  -173
  -184
  -195
  -207
  -220
  -233
  -247
  -262
  -278
  -294
  -312
  -330
  -349
  -370
  -391
  -414
  -438
  -463

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
  2,279
  2,332
  2,392
  2,459
  2,534
  2,615
  2,704
  2,801
  2,905
  3,016
  3,135
  3,263
  3,398
  3,542
  3,695
  3,857
  4,028
  4,210
  4,401
  4,603
  4,817
  5,042
  5,279
  5,529
  5,792
  6,069
  6,361
  6,668
  6,991
  7,330
Adjusted assets (=assets-cash), $m
  2,279
  2,332
  2,392
  2,459
  2,534
  2,615
  2,704
  2,801
  2,905
  3,016
  3,135
  3,263
  3,398
  3,542
  3,695
  3,857
  4,028
  4,210
  4,401
  4,603
  4,817
  5,042
  5,279
  5,529
  5,792
  6,069
  6,361
  6,668
  6,991
  7,330
Revenue / Adjusted assets
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
  1.717
Average production assets, $m
  579
  593
  608
  625
  644
  665
  687
  712
  738
  766
  797
  829
  864
  900
  939
  980
  1,024
  1,070
  1,118
  1,170
  1,224
  1,281
  1,341
  1,405
  1,472
  1,542
  1,616
  1,694
  1,776
  1,863
Working capital, $m
  305
  312
  320
  329
  339
  350
  362
  375
  389
  404
  420
  437
  455
  474
  495
  517
  540
  564
  589
  617
  645
  675
  707
  740
  776
  813
  852
  893
  936
  982
Total debt, $m
  1,031
  1,078
  1,132
  1,193
  1,260
  1,333
  1,413
  1,500
  1,594
  1,694
  1,801
  1,916
  2,038
  2,167
  2,305
  2,451
  2,605
  2,768
  2,940
  3,122
  3,314
  3,517
  3,730
  3,955
  4,192
  4,442
  4,704
  4,981
  5,271
  5,577
Total liabilities, $m
  2,051
  2,099
  2,153
  2,213
  2,280
  2,354
  2,434
  2,521
  2,614
  2,715
  2,822
  2,936
  3,058
  3,188
  3,326
  3,471
  3,626
  3,789
  3,961
  4,143
  4,335
  4,538
  4,751
  4,976
  5,213
  5,462
  5,725
  6,001
  6,292
  6,597
Total equity, $m
  228
  233
  239
  246
  253
  262
  270
  280
  290
  302
  314
  326
  340
  354
  370
  386
  403
  421
  440
  460
  482
  504
  528
  553
  579
  607
  636
  667
  699
  733
Total liabilities and equity, $m
  2,279
  2,332
  2,392
  2,459
  2,533
  2,616
  2,704
  2,801
  2,904
  3,017
  3,136
  3,262
  3,398
  3,542
  3,696
  3,857
  4,029
  4,210
  4,401
  4,603
  4,817
  5,042
  5,279
  5,529
  5,792
  6,069
  6,361
  6,668
  6,991
  7,330
Debt-to-equity ratio
  4.520
  4.620
  4.730
  4.850
  4.970
  5.100
  5.230
  5.360
  5.490
  5.620
  5.750
  5.870
  6.000
  6.120
  6.240
  6.350
  6.470
  6.580
  6.680
  6.780
  6.880
  6.980
  7.070
  7.150
  7.240
  7.320
  7.400
  7.470
  7.540
  7.610
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
  -104
  -100
  -104
  -109
  -114
  -120
  -126
  -133
  -141
  -149
  -154
  -164
  -173
  -184
  -195
  -207
  -220
  -233
  -247
  -262
  -278
  -294
  -312
  -330
  -349
  -370
  -391
  -414
  -438
  -463
Depreciation, amort., depletion, $m
  61
  63
  64
  66
  68
  70
  72
  75
  77
  80
  80
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  162
  169
  178
  186
Funds from operations, $m
  -43
  -38
  -40
  -43
  -47
  -50
  -54
  -59
  -64
  -69
  -75
  -81
  -87
  -94
  -101
  -109
  -117
  -126
  -135
  -145
  -155
  -166
  -177
  -190
  -202
  -216
  -230
  -245
  -260
  -277
Change in working capital, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
Cash from operations, $m
  -49
  -45
  -48
  -52
  -57
  -61
  -66
  -72
  -78
  -84
  -91
  -98
  -105
  -113
  -122
  -131
  -140
  -150
  -161
  -172
  -184
  -196
  -209
  -223
  -237
  -253
  -269
  -286
  -303
  -322
Maintenance CAPEX, $m
  -57
  -58
  -59
  -61
  -62
  -64
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -102
  -107
  -112
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -162
  -169
  -178
New CAPEX, $m
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -64
  -67
  -70
  -74
  -78
  -82
  -86
Cash from investing activities, $m
  -69
  -71
  -74
  -78
  -81
  -85
  -89
  -94
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -142
  -148
  -156
  -163
  -171
  -179
  -188
  -198
  -207
  -217
  -228
  -240
  -251
  -264
Free cash flow, $m
  -118
  -116
  -123
  -130
  -138
  -146
  -155
  -165
  -175
  -186
  -198
  -210
  -223
  -236
  -251
  -266
  -282
  -299
  -316
  -335
  -355
  -376
  -398
  -421
  -445
  -470
  -497
  -525
  -555
  -586
Issuance/(repayment) of debt, $m
  -55
  47
  54
  61
  67
  74
  80
  87
  93
  100
  107
  115
  122
  130
  138
  146
  154
  163
  172
  182
  192
  203
  213
  225
  237
  249
  263
  276
  291
  306
Issuance/(repurchase) of shares, $m
  203
  106
  110
  116
  122
  128
  135
  143
  151
  160
  166
  176
  187
  198
  210
  223
  237
  251
  266
  282
  299
  317
  335
  355
  376
  398
  421
  445
  470
  497
Cash from financing (excl. dividends), $m  
  148
  153
  164
  177
  189
  202
  215
  230
  244
  260
  273
  291
  309
  328
  348
  369
  391
  414
  438
  464
  491
  520
  548
  580
  613
  647
  684
  721
  761
  803
Total cash flow (excl. dividends), $m
  31
  37
  42
  46
  51
  56
  60
  65
  70
  74
  76
  81
  86
  92
  97
  103
  109
  116
  122
  129
  136
  143
  151
  159
  168
  177
  186
  196
  206
  216
Retained Cash Flow (-), $m
  -203
  -106
  -110
  -116
  -122
  -128
  -135
  -143
  -151
  -160
  -166
  -176
  -187
  -198
  -210
  -223
  -237
  -251
  -266
  -282
  -299
  -317
  -335
  -355
  -376
  -398
  -421
  -445
  -470
  -497
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
  -173
  -69
  -69
  -70
  -71
  -73
  -75
  -78
  -82
  -86
  -90
  -95
  -101
  -107
  -113
  -120
  -127
  -136
  -144
  -153
  -163
  -173
  -184
  -196
  -208
  -221
  -235
  -249
  -264
  -280
Discount rate, %
  13.10
  13.76
  14.44
  15.16
  15.92
  16.72
  17.56
  18.43
  19.35
  20.32
  21.34
  22.41
  23.53
  24.70
  25.94
  27.23
  28.60
  30.03
  31.53
  33.10
  34.76
  36.50
  38.32
  40.24
  42.25
  44.36
  46.58
  48.91
  51.35
  53.92
PV of cash for distribution, $m
  -153
  -53
  -46
  -40
  -34
  -29
  -24
  -20
  -17
  -13
  -11
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  86.4
  82.6
  78.8
  75.2
  71.7
  68.2
  64.8
  61.6
  58.4
  55.4
  52.5
  49.7
  47.0
  44.4
  41.9
  39.5
  37.2
  35.1
  33.0
  31.0
  29.1
  27.3
  25.6
  24.0
  22.5
  21.0
  19.7
  18.4
  17.2
  16.0

General Cable Corporation is engaged in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for use in the energy, industrial, construction, specialty and communications markets. The Company's segments include North America, Europe, Latin America, and Africa/Asia Pacific. The Company produces and sells to a range of end markets, including markets for electric utility, electrical infrastructure, communications, construction and rod mill products. As of December 31, 2016, the North America segment included 17 manufacturing facilities across the region. The Europe segment consists of six manufacturing facilities across the region. The Latin America segment consists of six manufacturing facilities across the region. The Africa/Asia Pacific segment consists of four manufacturing facilities across the segment.

FINANCIAL RATIOS  of  General Cable (BGC)

Valuation Ratios
P/E Ratio -15.8
Price to Sales 0.4
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 9.6
Price to Free Cash Flow 20.9
Growth Rates
Sales Growth Rate -14.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 35.5%
Cap. Spend. - 3 Yr. Gr. Rate 0.7%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 569.3%
Total Debt to Equity 613.7%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.7%
Ret/ On Assets - 3 Yr. Avg. -5.1%
Return On Total Capital -7.8%
Ret/ On T. Cap. - 3 Yr. Avg. -14.7%
Return On Equity -49.3%
Return On Equity - 3 Yr. Avg. -52.6%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 10.5%
Gross Margin - 3 Yr. Avg. 8.9%
EBITDA Margin 1.8%
EBITDA Margin - 3 Yr. Avg. -1.4%
Operating Margin -0.5%
Oper. Margin - 3 Yr. Avg. -1.8%
Pre-Tax Margin -2.5%
Pre-Tax Margin - 3 Yr. Avg. -5.5%
Net Profit Margin -2.4%
Net Profit Margin - 3 Yr. Avg. -5.2%
Effective Tax Rate 4.1%
Eff/ Tax Rate - 3 Yr. Avg. 4.3%
Payout Ratio -38.3%

BGC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BGC stock intrinsic value calculation we used $3837 million for the last fiscal year's total revenue generated by General Cable. The default revenue input number comes from 2017 income statement of General Cable. 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 BGC 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 13.1%, whose default value for BGC is calculated based on our internal credit rating of General Cable, 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 General Cable.
    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 BGC stock the variable cost ratio is equal to 100.5%.

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 BGC 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 7.8% for General Cable.

Corporate tax rate of 27% is the nominal tax rate for General Cable. 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 BGC 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 BGC are equal to 14.8%.

Life of production assets of 10 years is the average useful life of capital assets used in General Cable 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 BGC is equal to 7.8%. 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 - $129 million for General Cable - 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 50 million for General Cable 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 General Cable at the current share price and the inputted number of shares is $1.5 billion.

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