Intrinsic value of BMC Stock Holdings, Inc. - BMCH

Previous Close

$16.90

  Intrinsic Value

$27.73

stock screener

  Rating & Target

str. buy

+64%

Previous close

$16.90

 
Intrinsic value

$27.73

 
Up/down potential

+64%

 
Rating

str. buy

We calculate the intrinsic value of BMCH 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, %
  2.20
  2.48
  2.73
  2.96
  3.16
  3.35
  3.51
  3.66
  3.79
  3.92
  4.02
  4.12
  4.21
  4.29
  4.36
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
Revenue, $m
  3,763
  3,856
  3,962
  4,079
  4,208
  4,349
  4,501
  4,666
  4,843
  5,033
  5,235
  5,451
  5,681
  5,924
  6,183
  6,456
  6,745
  7,051
  7,374
  7,715
  8,074
  8,453
  8,853
  9,273
  9,716
  10,183
  10,673
  11,190
  11,733
  12,304
Variable operating expenses, $m
  2,946
  3,018
  3,100
  3,191
  3,291
  3,400
  3,518
  3,646
  3,783
  3,930
  4,058
  4,225
  4,403
  4,591
  4,792
  5,004
  5,228
  5,465
  5,715
  5,979
  6,258
  6,551
  6,861
  7,187
  7,530
  7,892
  8,272
  8,672
  9,093
  9,536
Fixed operating expenses, $m
  659
  674
  689
  704
  719
  735
  751
  768
  785
  802
  819
  837
  856
  875
  894
  914
  934
  954
  975
  997
  1,019
  1,041
  1,064
  1,087
  1,111
  1,136
  1,161
  1,186
  1,212
  1,239
Total operating expenses, $m
  3,605
  3,692
  3,789
  3,895
  4,010
  4,135
  4,269
  4,414
  4,568
  4,732
  4,877
  5,062
  5,259
  5,466
  5,686
  5,918
  6,162
  6,419
  6,690
  6,976
  7,277
  7,592
  7,925
  8,274
  8,641
  9,028
  9,433
  9,858
  10,305
  10,775
Operating income, $m
  158
  165
  173
  185
  198
  214
  232
  253
  276
  301
  358
  389
  422
  458
  497
  539
  584
  632
  684
  739
  798
  861
  928
  999
  1,075
  1,155
  1,241
  1,331
  1,427
  1,529
EBITDA, $m
  235
  242
  253
  265
  280
  298
  318
  341
  366
  394
  424
  457
  493
  532
  575
  620
  668
  721
  776
  836
  899
  967
  1,039
  1,115
  1,197
  1,283
  1,374
  1,472
  1,574
  1,683
Interest expense (income), $m
  28
  24
  25
  26
  27
  29
  30
  32
  34
  36
  38
  41
  43
  46
  49
  52
  55
  59
  62
  66
  70
  75
  79
  84
  89
  94
  100
  106
  112
  118
  125
Earnings before tax, $m
  134
  140
  147
  157
  169
  184
  200
  219
  240
  263
  318
  346
  376
  409
  445
  484
  525
  570
  618
  669
  723
  782
  844
  910
  981
  1,055
  1,135
  1,220
  1,309
  1,404
Tax expense, $m
  36
  38
  40
  42
  46
  50
  54
  59
  65
  71
  86
  93
  102
  110
  120
  131
  142
  154
  167
  181
  195
  211
  228
  246
  265
  285
  306
  329
  353
  379
Net income, $m
  98
  102
  108
  115
  124
  134
  146
  160
  175
  192
  232
  252
  275
  299
  325
  353
  383
  416
  451
  488
  528
  571
  616
  664
  716
  771
  829
  890
  956
  1,025

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
  1,611
  1,651
  1,696
  1,746
  1,801
  1,862
  1,927
  1,998
  2,073
  2,155
  2,241
  2,334
  2,432
  2,536
  2,647
  2,764
  2,888
  3,018
  3,157
  3,303
  3,456
  3,619
  3,790
  3,970
  4,159
  4,359
  4,569
  4,790
  5,023
  5,267
Adjusted assets (=assets-cash), $m
  1,611
  1,651
  1,696
  1,746
  1,801
  1,862
  1,927
  1,998
  2,073
  2,155
  2,241
  2,334
  2,432
  2,536
  2,647
  2,764
  2,888
  3,018
  3,157
  3,303
  3,456
  3,619
  3,790
  3,970
  4,159
  4,359
  4,569
  4,790
  5,023
  5,267
Revenue / Adjusted assets
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.335
  2.336
  2.335
  2.336
  2.335
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
  2.336
Average production assets, $m
  519
  532
  547
  563
  581
  600
  621
  644
  668
  695
  722
  752
  784
  818
  853
  891
  931
  973
  1,018
  1,065
  1,114
  1,167
  1,222
  1,280
  1,341
  1,405
  1,473
  1,544
  1,619
  1,698
Working capital, $m
  414
  424
  436
  449
  463
  478
  495
  513
  533
  554
  576
  600
  625
  652
  680
  710
  742
  776
  811
  849
  888
  930
  974
  1,020
  1,069
  1,120
  1,174
  1,231
  1,291
  1,353
Total debt, $m
  376
  394
  414
  436
  461
  488
  517
  548
  582
  618
  657
  698
  741
  788
  837
  889
  944
  1,002
  1,064
  1,129
  1,197
  1,270
  1,346
  1,426
  1,510
  1,599
  1,692
  1,791
  1,894
  2,003
Total liabilities, $m
  717
  735
  755
  777
  802
  828
  858
  889
  923
  959
  997
  1,038
  1,082
  1,129
  1,178
  1,230
  1,285
  1,343
  1,405
  1,470
  1,538
  1,610
  1,686
  1,767
  1,851
  1,940
  2,033
  2,132
  2,235
  2,344
Total equity, $m
  894
  916
  941
  969
  1,000
  1,033
  1,069
  1,109
  1,151
  1,196
  1,244
  1,295
  1,350
  1,408
  1,469
  1,534
  1,603
  1,675
  1,752
  1,833
  1,918
  2,008
  2,103
  2,203
  2,308
  2,419
  2,536
  2,658
  2,788
  2,923
Total liabilities and equity, $m
  1,611
  1,651
  1,696
  1,746
  1,802
  1,861
  1,927
  1,998
  2,074
  2,155
  2,241
  2,333
  2,432
  2,537
  2,647
  2,764
  2,888
  3,018
  3,157
  3,303
  3,456
  3,618
  3,789
  3,970
  4,159
  4,359
  4,569
  4,790
  5,023
  5,267
Debt-to-equity ratio
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.590
  0.600
  0.610
  0.620
  0.620
  0.630
  0.640
  0.650
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
Adjusted equity ratio
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  98
  102
  108
  115
  124
  134
  146
  160
  175
  192
  232
  252
  275
  299
  325
  353
  383
  416
  451
  488
  528
  571
  616
  664
  716
  771
  829
  890
  956
  1,025
Depreciation, amort., depletion, $m
  77
  78
  79
  81
  82
  84
  86
  88
  90
  93
  66
  68
  71
  74
  78
  81
  85
  88
  93
  97
  101
  106
  111
  116
  122
  128
  134
  140
  147
  154
Funds from operations, $m
  175
  180
  187
  195
  206
  218
  232
  248
  265
  284
  298
  321
  346
  373
  402
  434
  468
  504
  543
  585
  629
  677
  727
  781
  838
  898
  962
  1,031
  1,103
  1,179
Change in working capital, $m
  9
  10
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  37
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
Cash from operations, $m
  166
  169
  175
  183
  192
  203
  215
  229
  246
  263
  275
  297
  321
  346
  374
  404
  436
  471
  508
  547
  590
  635
  683
  734
  789
  847
  909
  974
  1,043
  1,117
Maintenance CAPEX, $m
  -46
  -47
  -48
  -50
  -51
  -53
  -55
  -56
  -59
  -61
  -63
  -66
  -68
  -71
  -74
  -78
  -81
  -85
  -88
  -93
  -97
  -101
  -106
  -111
  -116
  -122
  -128
  -134
  -140
  -147
New CAPEX, $m
  -11
  -13
  -15
  -16
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
Cash from investing activities, $m
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
  -121
  -127
  -133
  -140
  -147
  -153
  -161
  -169
  -177
  -186
  -196
  -205
  -215
  -226
Free cash flow, $m
  108
  109
  112
  117
  123
  130
  139
  150
  163
  177
  184
  202
  221
  241
  264
  289
  315
  344
  375
  408
  443
  481
  522
  565
  612
  661
  713
  769
  828
  891
Issuance/(repayment) of debt, $m
  15
  18
  20
  22
  25
  27
  29
  31
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  62
  65
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
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  
  15
  18
  20
  22
  25
  27
  29
  31
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  62
  65
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
Total cash flow (excl. dividends), $m
  123
  127
  132
  139
  147
  157
  169
  182
  196
  213
  223
  243
  264
  288
  313
  341
  370
  402
  436
  473
  512
  554
  598
  646
  696
  750
  807
  867
  931
  999
Retained Cash Flow (-), $m
  -19
  -22
  -25
  -28
  -31
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -55
  -58
  -61
  -65
  -69
  -73
  -77
  -81
  -85
  -90
  -95
  -100
  -105
  -111
  -117
  -123
  -129
  -136
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
  104
  105
  107
  111
  117
  124
  132
  142
  154
  168
  175
  191
  210
  230
  252
  276
  302
  330
  360
  392
  427
  464
  503
  546
  591
  639
  690
  744
  802
  864
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  100
  96
  93
  91
  90
  90
  89
  89
  89
  88
  83
  82
  80
  77
  74
  70
  66
  61
  55
  50
  44
  38
  33
  28
  23
  19
  15
  12
  9
  7
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

BMC Stock Holdings, Inc. is a provider of building products and services in the United States residential construction market. The Company's segments include Mid-Atlantic, Southeast, Texas, Intermountain, Western and Mountain West divisions. Its product offerings include lumber and lumber sheet goods and an array of products, including millwork, doors, windows, structural components, floor and roof trusses and wall panels. Its whole-house framing solution is Ready-Frame. It also offers its customers services, such as design, product specification, installation and installation management. It manufactures floor trusses, roof trusses, wall panels, stairs, specialty millwork, windows and pre-hung doors. It also provides a range of installation services and special order products. The Company groups its building products and services into four product categories: structural components; lumber & lumber sheet goods; millwork, doors & windows, and other building products & services.

FINANCIAL RATIOS  of  BMC Stock Holdings, Inc. (BMCH)

Valuation Ratios
P/E Ratio 36.4
Price to Sales 0.4
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 16.3
Growth Rates
Sales Growth Rate 96.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.6%
Cap. Spend. - 3 Yr. Gr. Rate 20.4%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 53.7%
Total Debt to Equity 55.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. 14.1%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 10.5%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. 21.6%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 23.1%
EBITDA Margin 4.6%
EBITDA Margin - 3 Yr. Avg. 4%
Operating Margin 2.3%
Oper. Margin - 3 Yr. Avg. 2.4%
Pre-Tax Margin 1.5%
Pre-Tax Margin - 3 Yr. Avg. 0.9%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. 2.6%
Effective Tax Rate 31.1%
Eff/ Tax Rate - 3 Yr. Avg. -46%
Payout Ratio 0%

BMCH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BMCH stock intrinsic value calculation we used $3682 million for the last fiscal year's total revenue generated by BMC Stock Holdings, Inc.. The default revenue input number comes from 0001 income statement of BMC Stock Holdings, 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 BMCH stock valuation model: a) initial revenue growth rate of 2.2% 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 4.3%, whose default value for BMCH is calculated based on our internal credit rating of BMC Stock Holdings, 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 BMC Stock Holdings, 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 BMCH stock the variable cost ratio is equal to 78.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $645 million in the base year in the intrinsic value calculation for BMCH 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 6.6% for BMC Stock Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for BMC Stock Holdings, 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 BMCH 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 BMCH are equal to 13.8%.

Life of production assets of 11 years is the average useful life of capital assets used in BMC Stock Holdings, 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 BMCH is equal to 11%. 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 - $874.659 million for BMC Stock Holdings, 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 66.852 million for BMC Stock Holdings, 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 BMC Stock Holdings, Inc. at the current share price and the inputted number of shares is $1.1 billion.

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