Intrinsic value of Global Brass and Copper Holdings, Inc. - BRSS

Previous Close

$43.98

  Intrinsic Value

$43.54

stock screener

  Rating & Target

hold

-1%

Previous close

$43.98

 
Intrinsic value

$43.54

 
Up/down potential

-1%

 
Rating

hold

We calculate the intrinsic value of BRSS 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 1.0

 

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
  1,800
  1,842
  1,889
  1,942
  2,001
  2,066
  2,136
  2,212
  2,294
  2,382
  2,476
  2,577
  2,684
  2,798
  2,918
  3,046
  3,182
  3,325
  3,476
  3,636
  3,804
  3,982
  4,169
  4,367
  4,575
  4,794
  5,024
  5,266
  5,521
  5,790
Variable operating expenses, $m
  1,687
  1,726
  1,770
  1,820
  1,875
  1,935
  2,001
  2,073
  2,149
  2,232
  2,320
  2,414
  2,514
  2,620
  2,734
  2,853
  2,980
  3,114
  3,256
  3,406
  3,563
  3,730
  3,905
  4,090
  4,285
  4,490
  4,706
  4,933
  5,172
  5,423
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
  1,687
  1,726
  1,770
  1,820
  1,875
  1,935
  2,001
  2,073
  2,149
  2,232
  2,320
  2,414
  2,514
  2,620
  2,734
  2,853
  2,980
  3,114
  3,256
  3,406
  3,563
  3,730
  3,905
  4,090
  4,285
  4,490
  4,706
  4,933
  5,172
  5,423
Operating income, $m
  113
  116
  119
  122
  126
  130
  135
  140
  145
  150
  157
  163
  170
  177
  185
  193
  202
  211
  220
  230
  241
  252
  264
  277
  290
  304
  318
  334
  350
  367
EBITDA, $m
  135
  138
  142
  146
  150
  155
  161
  166
  172
  179
  186
  194
  202
  210
  219
  229
  239
  250
  261
  273
  286
  299
  313
  328
  344
  360
  378
  396
  415
  435
Interest expense (income), $m
  27
  17
  17
  18
  19
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  64
  67
  71
  75
Earnings before tax, $m
  97
  99
  101
  104
  107
  110
  113
  117
  121
  125
  131
  135
  141
  146
  152
  158
  165
  172
  179
  187
  195
  204
  213
  222
  233
  243
  254
  266
  279
  292
Tax expense, $m
  26
  27
  27
  28
  29
  30
  31
  32
  33
  34
  35
  37
  38
  39
  41
  43
  45
  46
  48
  50
  53
  55
  57
  60
  63
  66
  69
  72
  75
  79
Net income, $m
  71
  72
  74
  76
  78
  80
  83
  85
  88
  91
  95
  99
  103
  107
  111
  116
  120
  125
  131
  136
  142
  149
  155
  162
  170
  178
  186
  194
  203
  213

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
  705
  721
  740
  760
  783
  809
  836
  866
  898
  933
  970
  1,009
  1,051
  1,095
  1,143
  1,193
  1,246
  1,302
  1,361
  1,424
  1,490
  1,559
  1,632
  1,710
  1,791
  1,877
  1,967
  2,062
  2,162
  2,267
Adjusted assets (=assets-cash), $m
  705
  721
  740
  760
  783
  809
  836
  866
  898
  933
  970
  1,009
  1,051
  1,095
  1,143
  1,193
  1,246
  1,302
  1,361
  1,424
  1,490
  1,559
  1,632
  1,710
  1,791
  1,877
  1,967
  2,062
  2,162
  2,267
Revenue / Adjusted assets
  2.553
  2.555
  2.553
  2.555
  2.556
  2.554
  2.555
  2.554
  2.555
  2.553
  2.553
  2.554
  2.554
  2.555
  2.553
  2.553
  2.554
  2.554
  2.554
  2.553
  2.553
  2.554
  2.555
  2.554
  2.554
  2.554
  2.554
  2.554
  2.554
  2.554
Average production assets, $m
  151
  155
  159
  163
  168
  174
  179
  186
  193
  200
  208
  216
  225
  235
  245
  256
  267
  279
  292
  305
  320
  334
  350
  367
  384
  403
  422
  442
  464
  486
Working capital, $m
  245
  250
  257
  264
  272
  281
  290
  301
  312
  324
  337
  350
  365
  380
  397
  414
  433
  452
  473
  494
  517
  542
  567
  594
  622
  652
  683
  716
  751
  787
Total debt, $m
  320
  332
  346
  361
  378
  397
  417
  439
  462
  488
  515
  544
  575
  607
  642
  679
  718
  759
  802
  848
  897
  948
  1,002
  1,059
  1,119
  1,182
  1,248
  1,318
  1,391
  1,468
Total liabilities, $m
  518
  530
  544
  559
  576
  594
  615
  637
  660
  686
  713
  742
  772
  805
  840
  877
  916
  957
  1,000
  1,046
  1,095
  1,146
  1,200
  1,257
  1,317
  1,380
  1,446
  1,516
  1,589
  1,666
Total equity, $m
  187
  191
  196
  202
  208
  214
  222
  230
  238
  247
  257
  267
  278
  290
  303
  316
  330
  345
  361
  377
  395
  413
  433
  453
  475
  497
  521
  546
  573
  601
Total liabilities and equity, $m
  705
  721
  740
  761
  784
  808
  837
  867
  898
  933
  970
  1,009
  1,050
  1,095
  1,143
  1,193
  1,246
  1,302
  1,361
  1,423
  1,490
  1,559
  1,633
  1,710
  1,792
  1,877
  1,967
  2,062
  2,162
  2,267
Debt-to-equity ratio
  1.710
  1.740
  1.760
  1.790
  1.820
  1.850
  1.880
  1.910
  1.940
  1.970
  2.000
  2.030
  2.060
  2.090
  2.120
  2.150
  2.170
  2.200
  2.220
  2.250
  2.270
  2.290
  2.320
  2.340
  2.360
  2.380
  2.390
  2.410
  2.430
  2.440
Adjusted equity ratio
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  71
  72
  74
  76
  78
  80
  83
  85
  88
  91
  95
  99
  103
  107
  111
  116
  120
  125
  131
  136
  142
  149
  155
  162
  170
  178
  186
  194
  203
  213
Depreciation, amort., depletion, $m
  22
  22
  23
  24
  24
  25
  26
  27
  28
  29
  29
  30
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
Funds from operations, $m
  92
  94
  97
  99
  102
  105
  109
  112
  116
  120
  125
  129
  134
  140
  146
  152
  158
  165
  172
  179
  187
  196
  205
  214
  224
  234
  245
  257
  269
  281
Change in working capital, $m
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
Cash from operations, $m
  88
  89
  90
  92
  94
  96
  99
  102
  105
  108
  112
  116
  120
  124
  129
  134
  140
  145
  151
  158
  165
  172
  179
  187
  196
  204
  214
  224
  234
  245
Maintenance CAPEX, $m
  -21
  -21
  -22
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
New CAPEX, $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -23
Cash from investing activities, $m
  -24
  -24
  -26
  -26
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -42
  -43
  -46
  -47
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -88
Free cash flow, $m
  64
  64
  65
  65
  66
  67
  69
  70
  72
  74
  76
  78
  80
  83
  86
  89
  92
  96
  99
  103
  107
  112
  116
  121
  127
  132
  138
  144
  150
  157
Issuance/(repayment) of debt, $m
  10
  12
  14
  15
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
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  
  10
  12
  14
  15
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
Total cash flow (excl. dividends), $m
  74
  76
  78
  81
  83
  86
  89
  92
  95
  99
  103
  107
  111
  116
  121
  126
  131
  137
  143
  149
  156
  163
  170
  178
  186
  195
  204
  214
  224
  234
Retained Cash Flow (-), $m
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -26
  -28
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
  70
  72
  73
  75
  77
  79
  82
  84
  87
  90
  93
  96
  100
  104
  108
  112
  117
  122
  127
  133
  138
  144
  151
  158
  165
  172
  180
  188
  197
  206
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
  67
  66
  64
  62
  60
  57
  55
  53
  50
  47
  44
  41
  38
  35
  32
  29
  25
  22
  20
  17
  14
  12
  10
  8
  6
  5
  4
  3
  2
  2
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

Global Brass and Copper Holdings, Inc. is a converter, fabricator, processor and distributor of specialized non-ferrous products, including a range of sheet, strip, foil, rod, tube and fabricated metal component products. The Company operates through three segments: Olin Brass, Chase Brass and A.J. Oster. Its Olin Brass segment is engaged in manufacturing, fabricating and converting specialized copper and brass sheet, strip, foil, tube and fabricated products. The Chase Brass segment is engaged in manufacturing brass rod, including round, hexagonal and other shapes. The A.J. Oster segment is engaged in processing and distributing copper and copper-alloy sheet, strip and foil, operating six service centers in the United States, Puerto Rico and Mexico. Its products are used in a range of applications across markets, including the building and housing, munitions, automotive, transportation, coinage, industrial machinery and equipment, and general consumer end markets.

FINANCIAL RATIOS  of  Global Brass and Copper Holdings, Inc. (BRSS)

Valuation Ratios
P/E Ratio 29.7
Price to Sales 0.7
Price to Book 10.5
Price to Tangible Book
Price to Cash Flow 10
Price to Free Cash Flow 15.6
Growth Rates
Sales Growth Rate -11.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 61.9%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio 18
Current Ratio 0.1
LT Debt to Equity 341.8%
Total Debt to Equity 347.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 8.8%
Ret/ On Assets - 3 Yr. Avg. 10%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8.5%
Return On Equity 43.5%
Return On Equity - 3 Yr. Avg. 187.5%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 13.6%
Gross Margin - 3 Yr. Avg. 11.5%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 6.4%
Operating Margin 5.7%
Oper. Margin - 3 Yr. Avg. 5.4%
Pre-Tax Margin 3.7%
Pre-Tax Margin - 3 Yr. Avg. 3.3%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 2.2%
Effective Tax Rate 32.7%
Eff/ Tax Rate - 3 Yr. Avg. 32.5%
Payout Ratio 9.4%

BRSS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BRSS stock intrinsic value calculation we used $1765 million for the last fiscal year's total revenue generated by Global Brass and Copper Holdings, Inc.. The default revenue input number comes from 0001 income statement of Global Brass and Copper 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 BRSS 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 4.3%, whose default value for BRSS is calculated based on our internal credit rating of Global Brass and Copper 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 Global Brass and Copper 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 BRSS stock the variable cost ratio is equal to 93.7%.

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 BRSS 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 Global Brass and Copper Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for Global Brass and Copper 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 BRSS 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 BRSS are equal to 8.4%.

Life of production assets of 7.1 years is the average useful life of capital assets used in Global Brass and Copper 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 BRSS is equal to 13.6%. 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 - $182.8 million for Global Brass and Copper 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 21.881 million for Global Brass and Copper 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 Global Brass and Copper Holdings, Inc. at the current share price and the inputted number of shares is $1.0 billion.

RELATED COMPANIES Price Int.Val. Rating
MLI Mueller Indust 28.09 30.14  hold
MTRN Materion Corpo 64.04 26.96  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.