Intrinsic value of General Cable - BGC

Previous Close

$29.60

  Intrinsic Value

$0.71

stock screener

  Rating & Target

str. sell

-98%

Previous close

$29.60

 
Intrinsic value

$0.71

 
Up/down potential

-98%

 
Rating

str. sell

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

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

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
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -14.55
  7.50
  7.25
  7.02
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.78
  5.71
  5.64
  5.57
  5.51
  5.46
  5.42
  5.38
  5.34
  5.30
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
Revenue, $m
  3,858
  4,147
  4,448
  4,761
  5,085
  5,423
  5,774
  6,140
  6,520
  6,916
  7,329
  7,759
  8,208
  8,676
  9,165
  9,676
  10,210
  10,768
  11,351
  11,961
  12,599
  13,268
  13,967
  14,700
  15,468
  16,272
  17,115
  17,998
  18,924
  19,895
  20,913
Variable operating expenses, $m
 
  3,932
  4,217
  4,513
  4,820
  5,140
  5,473
  5,820
  6,180
  6,556
  6,947
  7,353
  7,779
  8,223
  8,686
  9,170
  9,676
  10,204
  10,757
  11,335
  11,940
  12,574
  13,237
  13,931
  14,659
  15,421
  16,219
  17,057
  17,934
  18,854
  19,819
Fixed operating expenses, $m
 
  230
  235
  241
  247
  253
  260
  266
  273
  280
  287
  294
  301
  309
  317
  324
  333
  341
  349
  358
  367
  376
  386
  395
  405
  415
  426
  436
  447
  458
  470
Total operating expenses, $m
  3,877
  4,162
  4,452
  4,754
  5,067
  5,393
  5,733
  6,086
  6,453
  6,836
  7,234
  7,647
  8,080
  8,532
  9,003
  9,494
  10,009
  10,545
  11,106
  11,693
  12,307
  12,950
  13,623
  14,326
  15,064
  15,836
  16,645
  17,493
  18,381
  19,312
  20,289
Operating income, $m
  -18
  -14
  -4
  7
  18
  29
  41
  54
  67
  81
  95
  112
  128
  145
  163
  182
  202
  222
  244
  268
  292
  318
  345
  374
  404
  436
  470
  505
  543
  582
  624
EBITDA, $m
  68
  78
  94
  111
  129
  148
  168
  188
  210
  232
  256
  281
  307
  334
  362
  392
  424
  456
  491
  528
  566
  606
  649
  693
  740
  790
  842
  896
  954
  1,015
  1,079
Interest expense (income), $m
  81
  70
  74
  86
  98
  111
  125
  139
  153
  169
  184
  201
  218
  236
  255
  274
  295
  316
  338
  362
  386
  411
  438
  466
  495
  526
  558
  592
  627
  664
  703
Earnings before tax, $m
  -98
  -84
  -78
  -79
  -81
  -82
  -84
  -85
  -86
  -88
  -89
  -89
  -90
  -91
  -92
  -92
  -93
  -94
  -94
  -94
  -94
  -94
  -93
  -92
  -91
  -90
  -89
  -87
  -84
  -82
  -79
Tax expense, $m
  -4
  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
  -94
  -84
  -78
  -79
  -81
  -82
  -84
  -85
  -86
  -88
  -89
  -89
  -90
  -91
  -92
  -92
  -93
  -94
  -94
  -94
  -94
  -94
  -93
  -92
  -91
  -90
  -89
  -87
  -84
  -82
  -79

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  101
  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
  2,242
  2,302
  2,468
  2,642
  2,822
  3,009
  3,204
  3,407
  3,618
  3,838
  4,067
  4,306
  4,555
  4,815
  5,086
  5,370
  5,666
  5,975
  6,299
  6,638
  6,992
  7,363
  7,751
  8,158
  8,584
  9,030
  9,498
  9,988
  10,502
  11,041
  11,606
Adjusted assets (=assets-cash), $m
  2,141
  2,302
  2,468
  2,642
  2,822
  3,009
  3,204
  3,407
  3,618
  3,838
  4,067
  4,306
  4,555
  4,815
  5,086
  5,370
  5,666
  5,975
  6,299
  6,638
  6,992
  7,363
  7,751
  8,158
  8,584
  9,030
  9,498
  9,988
  10,502
  11,041
  11,606
Revenue / Adjusted assets
  1.802
  1.801
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
  1.802
Average production assets, $m
  579
  622
  667
  714
  763
  813
  866
  921
  978
  1,037
  1,099
  1,164
  1,231
  1,301
  1,375
  1,451
  1,531
  1,615
  1,703
  1,794
  1,890
  1,990
  2,095
  2,205
  2,320
  2,441
  2,567
  2,700
  2,839
  2,984
  3,137
Working capital, $m
  698
  713
  765
  819
  875
  933
  993
  1,056
  1,121
  1,190
  1,261
  1,335
  1,412
  1,492
  1,576
  1,664
  1,756
  1,852
  1,952
  2,057
  2,167
  2,282
  2,402
  2,528
  2,660
  2,799
  2,944
  3,096
  3,255
  3,422
  3,597
Total debt, $m
  939
  921
  1,072
  1,228
  1,390
  1,558
  1,734
  1,916
  2,106
  2,304
  2,510
  2,725
  2,950
  3,183
  3,428
  3,683
  3,949
  4,228
  4,519
  4,824
  5,143
  5,476
  5,826
  6,192
  6,575
  6,977
  7,398
  7,839
  8,302
  8,786
  9,295
Total liabilities, $m
  2,089
  2,071
  2,222
  2,378
  2,540
  2,708
  2,884
  3,066
  3,256
  3,454
  3,660
  3,875
  4,100
  4,333
  4,578
  4,833
  5,099
  5,378
  5,669
  5,974
  6,293
  6,626
  6,976
  7,342
  7,725
  8,127
  8,548
  8,989
  9,452
  9,936
  10,445
Total equity, $m
  153
  230
  247
  264
  282
  301
  320
  341
  362
  384
  407
  431
  456
  481
  509
  537
  567
  598
  630
  664
  699
  736
  775
  816
  858
  903
  950
  999
  1,050
  1,104
  1,161
Total liabilities and equity, $m
  2,242
  2,301
  2,469
  2,642
  2,822
  3,009
  3,204
  3,407
  3,618
  3,838
  4,067
  4,306
  4,556
  4,814
  5,087
  5,370
  5,666
  5,976
  6,299
  6,638
  6,992
  7,362
  7,751
  8,158
  8,583
  9,030
  9,498
  9,988
  10,502
  11,040
  11,606
Debt-to-equity ratio
  6.137
  4.000
  4.340
  4.650
  4.920
  5.180
  5.410
  5.620
  5.820
  6.000
  6.170
  6.330
  6.480
  6.610
  6.740
  6.860
  6.970
  7.080
  7.170
  7.270
  7.360
  7.440
  7.520
  7.590
  7.660
  7.730
  7.790
  7.850
  7.900
  7.960
  8.010
Adjusted equity ratio
  0.024
  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
  -94
  -84
  -78
  -79
  -81
  -82
  -84
  -85
  -86
  -88
  -89
  -89
  -90
  -91
  -92
  -92
  -93
  -94
  -94
  -94
  -94
  -94
  -93
  -92
  -91
  -90
  -89
  -87
  -84
  -82
  -79
Depreciation, amort., depletion, $m
  86
  91
  98
  105
  112
  119
  127
  135
  143
  152
  161
  169
  178
  189
  199
  210
  222
  234
  247
  260
  274
  288
  304
  320
  336
  354
  372
  391
  411
  433
  455
Funds from operations, $m
  298
  8
  20
  26
  31
  37
  43
  50
  57
  64
  72
  80
  89
  98
  108
  118
  129
  141
  153
  166
  180
  195
  211
  227
  245
  264
  284
  305
  327
  351
  376
Change in working capital, $m
  143
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
  175
Cash from operations, $m
  155
  -42
  -31
  -28
  -25
  -21
  -17
  -13
  -9
  -4
  1
  6
  11
  17
  23
  30
  37
  45
  53
  61
  70
  80
  90
  101
  113
  125
  139
  153
  168
  184
  201
Maintenance CAPEX, $m
  0
  -84
  -90
  -97
  -103
  -111
  -118
  -126
  -133
  -142
  -150
  -159
  -169
  -178
  -189
  -199
  -210
  -222
  -234
  -247
  -260
  -274
  -288
  -304
  -320
  -336
  -354
  -372
  -391
  -411
  -433
New CAPEX, $m
  -84
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -65
  -67
  -70
  -73
  -77
  -80
  -84
  -87
  -92
  -96
  -100
  -105
  -110
  -115
  -121
  -126
  -133
  -139
  -146
  -153
Cash from investing activities, $m
  -1
  -127
  -135
  -144
  -152
  -162
  -171
  -181
  -190
  -201
  -212
  -224
  -236
  -248
  -262
  -276
  -290
  -306
  -321
  -339
  -356
  -374
  -393
  -414
  -435
  -457
  -480
  -505
  -530
  -557
  -586
Free cash flow, $m
  154
  -169
  -167
  -172
  -177
  -182
  -188
  -194
  -199
  -205
  -212
  -218
  -225
  -232
  -239
  -246
  -253
  -261
  -269
  -277
  -286
  -294
  -303
  -312
  -322
  -332
  -342
  -352
  -362
  -373
  -385
Issuance/(repayment) of debt, $m
  -119
  50
  150
  156
  162
  169
  175
  183
  190
  198
  206
  215
  224
  234
  244
  255
  267
  279
  291
  305
  319
  334
  349
  366
  383
  402
  421
  441
  463
  485
  509
Issuance/(repurchase) of shares, $m
  1
  194
  94
  96
  99
  101
  103
  105
  107
  110
  112
  113
  115
  117
  119
  121
  123
  124
  126
  128
  129
  131
  132
  133
  134
  135
  135
  136
  136
  136
  135
Cash from financing (excl. dividends), $m  
  -129
  244
  244
  252
  261
  270
  278
  288
  297
  308
  318
  328
  339
  351
  363
  376
  390
  403
  417
  433
  448
  465
  481
  499
  517
  537
  556
  577
  599
  621
  644
Total cash flow (excl. dividends), $m
  25
  75
  78
  81
  84
  87
  91
  94
  98
  102
  106
  110
  114
  119
  125
  130
  136
  142
  149
  155
  163
  170
  178
  187
  195
  205
  215
  225
  236
  247
  259
Retained Cash Flow (-), $m
  75
  -194
  -94
  -96
  -99
  -101
  -103
  -105
  -107
  -110
  -112
  -113
  -115
  -117
  -119
  -121
  -123
  -124
  -126
  -128
  -129
  -131
  -132
  -133
  -134
  -135
  -135
  -136
  -136
  -136
  -135
Prev. year cash balance distribution, $m
 
  33
  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
 
  -86
  -16
  -16
  -15
  -14
  -12
  -11
  -9
  -8
  -5
  -3
  -1
  2
  6
  9
  13
  18
  22
  28
  33
  40
  46
  54
  62
  70
  79
  89
  100
  112
  124
Discount rate, %
 
  12.70
  13.34
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.69
  21.72
  22.81
  23.95
  25.15
  26.40
  27.72
  29.11
  30.56
  32.09
  33.70
  35.38
  37.15
  39.01
  40.96
  43.01
  45.16
  47.41
  49.79
  52.27
PV of cash for distribution, $m
 
  -76
  -13
  -11
  -9
  -7
  -5
  -4
  -3
  -2
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  85.7
  82.2
  79.0
  76.1
  73.4
  70.9
  68.5
  66.4
  64.4
  62.5
  60.7
  59.1
  57.6
  56.1
  54.8
  53.5
  52.3
  51.2
  50.2
  49.2
  48.3
  47.4
  46.6
  45.8
  45.0
  44.4
  43.7
  43.1
  42.5
  42.0

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 -15.6
Price to Sales 0.4
Price to Book 9.6
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 20.6
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 $3858 million for the last fiscal year's total revenue generated by General Cable. The default revenue input number comes from 2016 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 7.5% 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 12.7%, 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 94.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $224 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 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 15%.

Life of production assets of 6.9 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 17.2%. 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 - $153 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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COMPANY NEWS

▶ Company News For Dec 5, 2017   [10:15AM  Zacks]
▶ General Cable Earns Relative Strength Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Top Merger Activity For Companies Not Named CVS Or Aetna   [04:08PM  Investor's Business Daily]
▶ Top 3 Wind Stocks as of November 2017   [Nov-13-17 10:30AM  Investopedia]
▶ Prysmian reports 3 pct rise in 9-mth core earnings   [Nov-07-17 10:30AM  Reuters]
▶ General Cable reports 3Q loss   [Nov-01-17 04:44PM  Associated Press]
▶ General Cable Declares Dividend   [Oct-30-17 04:20PM  Business Wire]
▶ General Cable Shows Rising Relative Strength; Still Shy Of Key Benchmark   [Oct-03-17 03:00AM  Investor's Business Daily]
▶ Stocks Showing Rising Market Leadership: General Cable Earns 82 RS Rating   [Sep-19-17 03:00AM  Investor's Business Daily]
Financial statements of BGC
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