Intrinsic value of Continental Building Products - CBPX

Previous Close

$29.57

  Intrinsic Value

$31.77

stock screener

  Rating & Target

hold

+7%

Previous close

$29.57

 
Intrinsic value

$31.77

 
Up/down potential

+7%

 
Rating

hold

We calculate the intrinsic value of CBPX 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, %
  15.50
  14.45
  13.51
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
Revenue, $m
  565
  647
  734
  827
  925
  1,029
  1,138
  1,252
  1,371
  1,495
  1,625
  1,759
  1,899
  2,045
  2,196
  2,354
  2,517
  2,687
  2,864
  3,048
  3,239
  3,438
  3,646
  3,862
  4,087
  4,322
  4,568
  4,824
  5,092
  5,372
Variable operating expenses, $m
  456
  519
  586
  658
  734
  814
  898
  987
  1,079
  1,175
  1,256
  1,360
  1,468
  1,581
  1,698
  1,819
  1,946
  2,077
  2,214
  2,356
  2,504
  2,658
  2,818
  2,985
  3,160
  3,341
  3,531
  3,729
  3,936
  4,152
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
  456
  519
  586
  658
  734
  814
  898
  987
  1,079
  1,175
  1,256
  1,360
  1,468
  1,581
  1,698
  1,819
  1,946
  2,077
  2,214
  2,356
  2,504
  2,658
  2,818
  2,985
  3,160
  3,341
  3,531
  3,729
  3,936
  4,152
Operating income, $m
  109
  128
  148
  169
  191
  214
  239
  265
  292
  320
  369
  399
  431
  464
  499
  534
  571
  610
  650
  692
  735
  780
  828
  877
  928
  981
  1,037
  1,095
  1,156
  1,219
EBITDA, $m
  171
  196
  223
  251
  281
  312
  345
  380
  416
  453
  493
  534
  576
  620
  666
  714
  763
  815
  869
  924
  982
  1,043
  1,106
  1,171
  1,240
  1,311
  1,385
  1,463
  1,544
  1,629
Interest expense (income), $m
  0
  14
  17
  20
  23
  26
  30
  33
  37
  41
  46
  50
  55
  59
  64
  70
  75
  81
  86
  92
  99
  105
  112
  119
  127
  134
  142
  151
  159
  168
  178
Earnings before tax, $m
  95
  111
  128
  146
  165
  185
  206
  228
  251
  275
  319
  345
  372
  400
  429
  459
  491
  524
  558
  593
  630
  668
  708
  750
  794
  839
  886
  936
  987
  1,041
Tax expense, $m
  26
  30
  34
  39
  44
  50
  56
  61
  68
  74
  86
  93
  100
  108
  116
  124
  133
  141
  151
  160
  170
  180
  191
  203
  214
  227
  239
  253
  267
  281
Net income, $m
  69
  81
  93
  106
  120
  135
  150
  166
  183
  200
  233
  252
  271
  292
  313
  335
  358
  382
  407
  433
  460
  488
  517
  548
  579
  612
  647
  683
  721
  760

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
  707
  809
  919
  1,035
  1,158
  1,288
  1,424
  1,566
  1,716
  1,871
  2,033
  2,202
  2,377
  2,560
  2,749
  2,946
  3,151
  3,363
  3,584
  3,814
  4,054
  4,303
  4,563
  4,833
  5,116
  5,410
  5,717
  6,038
  6,373
  6,723
Adjusted assets (=assets-cash), $m
  707
  809
  919
  1,035
  1,158
  1,288
  1,424
  1,566
  1,716
  1,871
  2,033
  2,202
  2,377
  2,560
  2,749
  2,946
  3,151
  3,363
  3,584
  3,814
  4,054
  4,303
  4,563
  4,833
  5,116
  5,410
  5,717
  6,038
  6,373
  6,723
Revenue / Adjusted assets
  0.799
  0.800
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
Average production assets, $m
  461
  528
  599
  675
  755
  839
  928
  1,021
  1,119
  1,220
  1,326
  1,436
  1,550
  1,669
  1,792
  1,921
  2,054
  2,193
  2,337
  2,487
  2,643
  2,806
  2,975
  3,151
  3,335
  3,527
  3,727
  3,937
  4,155
  4,383
Working capital, $m
  37
  43
  48
  55
  61
  68
  75
  83
  90
  99
  107
  116
  125
  135
  145
  155
  166
  177
  189
  201
  214
  227
  241
  255
  270
  285
  301
  318
  336
  355
Total debt, $m
  315
  369
  426
  487
  552
  620
  692
  767
  846
  927
  1,013
  1,101
  1,194
  1,289
  1,389
  1,493
  1,600
  1,712
  1,828
  1,950
  2,075
  2,207
  2,343
  2,485
  2,634
  2,789
  2,950
  3,119
  3,295
  3,479
Total liabilities, $m
  372
  426
  483
  544
  609
  677
  749
  824
  902
  984
  1,069
  1,158
  1,250
  1,346
  1,446
  1,550
  1,657
  1,769
  1,885
  2,006
  2,132
  2,263
  2,400
  2,542
  2,691
  2,846
  3,007
  3,176
  3,352
  3,536
Total equity, $m
  335
  384
  435
  491
  549
  610
  675
  743
  813
  887
  964
  1,044
  1,127
  1,213
  1,303
  1,396
  1,493
  1,594
  1,699
  1,808
  1,922
  2,040
  2,163
  2,291
  2,425
  2,564
  2,710
  2,862
  3,021
  3,187
Total liabilities and equity, $m
  707
  810
  918
  1,035
  1,158
  1,287
  1,424
  1,567
  1,715
  1,871
  2,033
  2,202
  2,377
  2,559
  2,749
  2,946
  3,150
  3,363
  3,584
  3,814
  4,054
  4,303
  4,563
  4,833
  5,116
  5,410
  5,717
  6,038
  6,373
  6,723
Debt-to-equity ratio
  0.940
  0.960
  0.980
  0.990
  1.010
  1.020
  1.030
  1.030
  1.040
  1.050
  1.050
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
  1.080
  1.080
  1.080
  1.080
  1.080
  1.080
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
Adjusted equity ratio
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  69
  81
  93
  106
  120
  135
  150
  166
  183
  200
  233
  252
  271
  292
  313
  335
  358
  382
  407
  433
  460
  488
  517
  548
  579
  612
  647
  683
  721
  760
Depreciation, amort., depletion, $m
  62
  68
  75
  82
  90
  98
  106
  115
  124
  133
  124
  134
  145
  156
  168
  180
  192
  205
  218
  232
  247
  262
  278
  295
  312
  330
  348
  368
  388
  410
Funds from operations, $m
  131
  149
  168
  188
  210
  232
  256
  281
  307
  334
  357
  386
  416
  448
  481
  515
  550
  587
  625
  665
  707
  750
  795
  842
  891
  942
  995
  1,051
  1,109
  1,170
Change in working capital, $m
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
Cash from operations, $m
  126
  144
  162
  182
  203
  225
  249
  273
  299
  325
  348
  377
  407
  438
  471
  504
  539
  576
  614
  653
  694
  737
  781
  828
  876
  927
  979
  1,034
  1,091
  1,151
Maintenance CAPEX, $m
  -37
  -43
  -49
  -56
  -63
  -71
  -78
  -87
  -95
  -105
  -114
  -124
  -134
  -145
  -156
  -168
  -180
  -192
  -205
  -218
  -232
  -247
  -262
  -278
  -295
  -312
  -330
  -348
  -368
  -388
New CAPEX, $m
  -62
  -67
  -71
  -76
  -80
  -85
  -89
  -93
  -97
  -101
  -106
  -110
  -114
  -119
  -124
  -128
  -133
  -139
  -144
  -150
  -156
  -163
  -169
  -176
  -184
  -192
  -200
  -209
  -218
  -228
Cash from investing activities, $m
  -99
  -110
  -120
  -132
  -143
  -156
  -167
  -180
  -192
  -206
  -220
  -234
  -248
  -264
  -280
  -296
  -313
  -331
  -349
  -368
  -388
  -410
  -431
  -454
  -479
  -504
  -530
  -557
  -586
  -616
Free cash flow, $m
  27
  34
  42
  51
  60
  70
  82
  93
  106
  119
  128
  143
  158
  174
  191
  209
  227
  245
  265
  285
  306
  327
  350
  373
  398
  423
  449
  477
  505
  535
Issuance/(repayment) of debt, $m
  50
  54
  57
  61
  65
  68
  72
  75
  78
  82
  85
  89
  92
  96
  100
  104
  108
  112
  116
  121
  126
  131
  137
  142
  148
  155
  162
  169
  176
  184
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  
  50
  54
  57
  61
  65
  68
  72
  75
  78
  82
  85
  89
  92
  96
  100
  104
  108
  112
  116
  121
  126
  131
  137
  142
  148
  155
  162
  169
  176
  184
Total cash flow (excl. dividends), $m
  77
  88
  99
  112
  125
  139
  153
  168
  184
  201
  214
  232
  251
  270
  291
  312
  334
  357
  381
  406
  432
  459
  487
  516
  546
  578
  611
  645
  681
  719
Retained Cash Flow (-), $m
  -45
  -48
  -52
  -55
  -58
  -61
  -65
  -68
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -97
  -101
  -105
  -109
  -113
  -118
  -123
  -128
  -134
  -140
  -146
  -152
  -159
  -166
Prev. year cash balance distribution, $m
  28
  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
  60
  39
  48
  57
  66
  77
  89
  101
  114
  127
  137
  152
  168
  184
  201
  219
  237
  256
  276
  297
  318
  340
  363
  387
  412
  438
  465
  493
  523
  553
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  57
  36
  41
  46
  51
  55
  58
  61
  63
  64
  62
  61
  60
  57
  54
  51
  47
  42
  38
  33
  28
  24
  20
  16
  13
  10
  8
  6
  4
  3
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

Continental Building Products, Inc. is a manufacturer of gypsum wallboard and complementary finishing products. The Company operates through wallboard segment. Gypsum wallboard is a primary building material used in residential and commercial construction and in repair and remodel (R&R). It offers customers a range of gypsum wallboard products, including LiftLite, its lightweight product designed to lift and install; its Mold Defense line of products designed for protection against mold and mildew, and its Weather Defense line of moisture and mold-resistant exterior sheathing. The Company also operates a finishing products business that manufactures a line of joint compounds at its plant in Silver Grove (Kentucky) and its joint compound plant in Chambly (Quebec). The Company manufactures gypsum wallboard related products for commercial and residential buildings and houses. The Company's manufacturing facilities are concentrated in the eastern United States and eastern Canada.

FINANCIAL RATIOS  of  Continental Building Products (CBPX)

Valuation Ratios
P/E Ratio 26.7
Price to Sales 2.5
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow 11.3
Growth Rates
Sales Growth Rate 9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate 19.1%
Financial Strength
Quick Ratio 26
Current Ratio 0
LT Debt to Equity 85.4%
Total Debt to Equity 86.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 7.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 14.4%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 27.1%
Gross Margin - 3 Yr. Avg. 25%
EBITDA Margin 24.7%
EBITDA Margin - 3 Yr. Avg. 22.2%
Operating Margin 18.9%
Oper. Margin - 3 Yr. Avg. 14.6%
Pre-Tax Margin 14.5%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 9.5%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 34.3%
Eff/ Tax Rate - 3 Yr. Avg. 35.8%
Payout Ratio 0%

CBPX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBPX stock intrinsic value calculation we used $489.163 million for the last fiscal year's total revenue generated by Continental Building Products. The default revenue input number comes from 0001 income statement of Continental Building Products. 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 CBPX stock valuation model: a) initial revenue growth rate of 15.5% 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 4.6%, whose default value for CBPX is calculated based on our internal credit rating of Continental Building Products, 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 Continental Building Products.
    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 CBPX stock the variable cost ratio is equal to 81.2%.

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 CBPX 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 Continental Building Products.

Corporate tax rate of 27% is the nominal tax rate for Continental Building Products. 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 CBPX 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 CBPX are equal to 81.6%.

Life of production assets of 10.7 years is the average useful life of capital assets used in Continental Building Products 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 CBPX is equal to 6.6%. 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 - $318.026 million for Continental Building Products - 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 36.968 million for Continental Building Products 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 Continental Building Products at the current share price and the inputted number of shares is $1.1 billion.

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COMPANY NEWS

▶ Continental: 3Q Earnings Snapshot   [05:56PM  Associated Press]
▶ 6 Undervalued Stocks Trading Below Peter Lynch Value   [Oct-10-18 03:41PM  GuruFocus.com]
▶ Construction Spending Picks Up in July: 5 Picks   [Sep-05-18 10:33AM  Zacks]
▶ Continental: 2Q Earnings Snapshot   [06:50PM  Associated Press]
▶ Continental: 1Q Earnings Snapshot   [May-03-18 05:51PM  Associated Press]
▶ New Strong Buy Stocks for March 20th   [Mar-20-18 11:25AM  Zacks]
▶ Continental tops Street 4Q forecasts   [Feb-22-18 05:33PM  Associated Press]
▶ Here are the D.C.-area stocks getting pummeled in the market rout   [Feb-06-18 03:21PM  American City Business Journals]
▶ See the D.C.-area stocks hit hardest in the last week   [10:22AM  American City Business Journals]
▶ Continental meets 3Q profit forecasts   [Nov-09-17 04:47PM  Associated Press]
▶ Continental Building Prd Shows Market Leadership With Jump To 82 RS Rating   [Nov-01-17 03:00AM  Investor's Business Daily]
▶ Continental Supports Hurricane Irma Relief Efforts   [Sep-12-17 04:15PM  Business Wire]
▶ Continental posts 2Q profit   [Aug-04-17 02:36AM  Associated Press]
▶ 3 Stocks With Activision Blizzard-Like Return Potential   [Jun-13-17 09:31AM  Motley Fool]
▶ Continental beats 1Q profit forecasts   [May-04-17 06:28PM  Associated Press]

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