Intrinsic value of Columbus McKinnon - CMCO

Previous Close

$36.27

  Intrinsic Value

$64.81

stock screener

  Rating & Target

str. buy

+79%

Previous close

$36.27

 
Intrinsic value

$64.81

 
Up/down potential

+79%

 
Rating

str. buy

We calculate the intrinsic value of CMCO 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 0.8

 

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, %
  10.40
  9.86
  9.37
  8.94
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
Revenue, $m
  927
  1,018
  1,114
  1,213
  1,317
  1,424
  1,537
  1,653
  1,774
  1,900
  2,031
  2,167
  2,308
  2,455
  2,608
  2,768
  2,934
  3,107
  3,287
  3,476
  3,672
  3,878
  4,092
  4,316
  4,551
  4,796
  5,053
  5,321
  5,602
  5,896
Variable operating expenses, $m
  719
  784
  852
  923
  996
  1,073
  1,152
  1,235
  1,321
  1,410
  1,442
  1,539
  1,639
  1,744
  1,852
  1,966
  2,084
  2,206
  2,335
  2,468
  2,608
  2,754
  2,906
  3,065
  3,232
  3,406
  3,588
  3,779
  3,979
  4,188
Fixed operating expenses, $m
  117
  119
  122
  124
  127
  130
  133
  136
  139
  142
  145
  148
  151
  155
  158
  161
  165
  169
  172
  176
  180
  184
  188
  192
  196
  201
  205
  210
  214
  219
Total operating expenses, $m
  836
  903
  974
  1,047
  1,123
  1,203
  1,285
  1,371
  1,460
  1,552
  1,587
  1,687
  1,790
  1,899
  2,010
  2,127
  2,249
  2,375
  2,507
  2,644
  2,788
  2,938
  3,094
  3,257
  3,428
  3,607
  3,793
  3,989
  4,193
  4,407
Operating income, $m
  91
  115
  140
  166
  193
  222
  251
  282
  314
  348
  444
  480
  518
  557
  598
  641
  685
  732
  780
  831
  884
  940
  998
  1,059
  1,122
  1,189
  1,259
  1,332
  1,409
  1,490
EBITDA, $m
  175
  201
  229
  258
  287
  319
  351
  385
  420
  456
  495
  534
  575
  618
  663
  710
  759
  810
  863
  918
  976
  1,037
  1,100
  1,167
  1,236
  1,309
  1,386
  1,466
  1,549
  1,637
Interest expense (income), $m
  11
  20
  24
  28
  33
  37
  42
  47
  53
  58
  64
  70
  76
  82
  89
  96
  103
  111
  119
  127
  135
  144
  154
  163
  174
  184
  195
  207
  219
  232
  245
Earnings before tax, $m
  71
  91
  112
  133
  156
  180
  204
  230
  256
  284
  374
  404
  435
  468
  502
  537
  574
  613
  653
  696
  740
  786
  835
  885
  938
  994
  1,052
  1,113
  1,178
  1,245
Tax expense, $m
  19
  25
  30
  36
  42
  48
  55
  62
  69
  77
  101
  109
  117
  126
  135
  145
  155
  166
  176
  188
  200
  212
  225
  239
  253
  268
  284
  301
  318
  336
Net income, $m
  52
  66
  82
  97
  114
  131
  149
  168
  187
  207
  273
  295
  318
  341
  366
  392
  419
  447
  477
  508
  540
  574
  609
  646
  685
  726
  768
  813
  860
  909

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
  1,263
  1,387
  1,517
  1,653
  1,794
  1,941
  2,093
  2,252
  2,417
  2,589
  2,767
  2,952
  3,145
  3,345
  3,554
  3,771
  3,997
  4,233
  4,479
  4,735
  5,003
  5,283
  5,575
  5,881
  6,200
  6,534
  6,884
  7,249
  7,632
  8,033
Adjusted assets (=assets-cash), $m
  1,263
  1,387
  1,517
  1,653
  1,794
  1,941
  2,093
  2,252
  2,417
  2,589
  2,767
  2,952
  3,145
  3,345
  3,554
  3,771
  3,997
  4,233
  4,479
  4,735
  5,003
  5,283
  5,575
  5,881
  6,200
  6,534
  6,884
  7,249
  7,632
  8,033
Revenue / Adjusted assets
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
Average production assets, $m
  452
  497
  543
  592
  643
  695
  750
  807
  866
  927
  991
  1,057
  1,126
  1,198
  1,273
  1,351
  1,432
  1,516
  1,604
  1,696
  1,792
  1,892
  1,997
  2,106
  2,221
  2,340
  2,466
  2,597
  2,734
  2,877
Working capital, $m
  166
  182
  199
  217
  236
  255
  275
  296
  318
  340
  364
  388
  413
  439
  467
  495
  525
  556
  588
  622
  657
  694
  733
  773
  815
  858
  904
  952
  1,003
  1,055
Total debt, $m
  441
  521
  605
  692
  783
  877
  975
  1,077
  1,183
  1,294
  1,408
  1,527
  1,651
  1,780
  1,914
  2,054
  2,199
  2,351
  2,509
  2,674
  2,846
  3,026
  3,214
  3,410
  3,616
  3,831
  4,055
  4,290
  4,537
  4,795
Total liabilities, $m
  812
  892
  975
  1,063
  1,153
  1,248
  1,346
  1,448
  1,554
  1,664
  1,779
  1,898
  2,022
  2,151
  2,285
  2,425
  2,570
  2,722
  2,880
  3,045
  3,217
  3,397
  3,585
  3,781
  3,987
  4,201
  4,426
  4,661
  4,908
  5,165
Total equity, $m
  451
  495
  542
  590
  640
  693
  747
  804
  863
  924
  988
  1,054
  1,123
  1,194
  1,269
  1,346
  1,427
  1,511
  1,599
  1,691
  1,786
  1,886
  1,990
  2,099
  2,213
  2,333
  2,457
  2,588
  2,725
  2,868
Total liabilities and equity, $m
  1,263
  1,387
  1,517
  1,653
  1,793
  1,941
  2,093
  2,252
  2,417
  2,588
  2,767
  2,952
  3,145
  3,345
  3,554
  3,771
  3,997
  4,233
  4,479
  4,736
  5,003
  5,283
  5,575
  5,880
  6,200
  6,534
  6,883
  7,249
  7,633
  8,033
Debt-to-equity ratio
  0.980
  1.050
  1.120
  1.170
  1.220
  1.270
  1.300
  1.340
  1.370
  1.400
  1.430
  1.450
  1.470
  1.490
  1.510
  1.530
  1.540
  1.560
  1.570
  1.580
  1.590
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
  1.660
  1.660
  1.670
Adjusted equity ratio
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  52
  66
  82
  97
  114
  131
  149
  168
  187
  207
  273
  295
  318
  341
  366
  392
  419
  447
  477
  508
  540
  574
  609
  646
  685
  726
  768
  813
  860
  909
Depreciation, amort., depletion, $m
  84
  87
  89
  91
  94
  97
  100
  102
  106
  109
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  92
  97
  102
  108
  114
  120
  126
  133
  140
  148
Funds from operations, $m
  136
  153
  171
  189
  208
  228
  249
  270
  293
  316
  324
  349
  375
  403
  432
  461
  493
  525
  559
  595
  632
  671
  712
  754
  799
  846
  895
  946
  1,000
  1,056
Change in working capital, $m
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
Cash from operations, $m
  121
  137
  153
  171
  189
  209
  228
  249
  271
  293
  300
  325
  350
  377
  404
  433
  463
  494
  527
  561
  597
  634
  673
  714
  757
  802
  849
  898
  950
  1,004
Maintenance CAPEX, $m
  -21
  -23
  -25
  -28
  -30
  -33
  -36
  -38
  -41
  -44
  -48
  -51
  -54
  -58
  -61
  -65
  -69
  -73
  -78
  -82
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -140
New CAPEX, $m
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -109
  -114
  -120
  -125
  -131
  -137
  -144
Cash from investing activities, $m
  -64
  -68
  -72
  -77
  -81
  -86
  -91
  -95
  -100
  -105
  -112
  -117
  -123
  -130
  -136
  -143
  -150
  -157
  -166
  -174
  -183
  -192
  -202
  -211
  -222
  -234
  -245
  -257
  -270
  -284
Free cash flow, $m
  57
  69
  81
  95
  108
  123
  138
  154
  170
  188
  189
  208
  227
  247
  268
  290
  313
  336
  361
  387
  414
  442
  471
  502
  534
  568
  603
  640
  679
  720
Issuance/(repayment) of debt, $m
  78
  80
  84
  87
  91
  94
  98
  102
  106
  110
  115
  119
  124
  129
  134
  140
  145
  152
  158
  165
  172
  180
  188
  196
  205
  215
  225
  235
  246
  258
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  
  78
  80
  84
  87
  91
  94
  98
  102
  106
  110
  115
  119
  124
  129
  134
  140
  145
  152
  158
  165
  172
  180
  188
  196
  205
  215
  225
  235
  246
  258
Total cash flow (excl. dividends), $m
  135
  149
  165
  182
  199
  217
  236
  256
  277
  298
  304
  327
  351
  376
  402
  430
  458
  488
  519
  552
  586
  622
  659
  699
  740
  783
  828
  876
  925
  978
Retained Cash Flow (-), $m
  -43
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -74
  -78
  -81
  -84
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -143
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
  92
  105
  119
  133
  149
  165
  182
  199
  218
  237
  240
  261
  282
  304
  328
  352
  377
  404
  431
  460
  490
  522
  555
  590
  626
  664
  703
  745
  789
  835
Discount rate, %
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
  87
  91
  96
  99
  101
  102
  100
  98
  94
  89
  78
  72
  66
  59
  52
  45
  38
  32
  26
  21
  17
  13
  10
  7
  5
  4
  2
  2
  1
  1
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

Columbus McKinnon Corporation is a global designer, manufacturer and marketer of hoists, actuators, cranes, rigging tools, digital power control systems, and other material handling products serving various commercial and industrial end user markets. The Company's products include various electric, air-powered, lever, and hand hoists, hoist trolleys, winches, industrial crane systems, such as steel bridge, gantry and jib cranes and aluminum work station cranes; alloy and carbon steel chain; forged attachments, such as hooks, shackles, textile slings, clamps, logging tools and load binders; mechanical and electromechanical actuators and rotary unions; below-the-hook special purpose lifters and tire shredders; power and motion control systems, such as alternate current (AC) and direct current (DC) drive systems, radio remote controls, push button pendant stations, brakes, and collision avoidance and power delivery subsystems.

FINANCIAL RATIOS  of  Columbus McKinnon (CMCO)

Valuation Ratios
P/E Ratio 91
Price to Sales 1.3
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 17.8
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.4%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 107.9%
Total Debt to Equity 123.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.8%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 1.4%
Ret/ On T. Cap. - 3 Yr. Avg. 4%
Return On Equity 2.9%
Return On Equity - 3 Yr. Avg. 6.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 30.3%
Gross Margin - 3 Yr. Avg. 31%
EBITDA Margin 7.7%
EBITDA Margin - 3 Yr. Avg. 9.7%
Operating Margin 3.9%
Oper. Margin - 3 Yr. Avg. 6.7%
Pre-Tax Margin 2%
Pre-Tax Margin - 3 Yr. Avg. 4.5%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 31.1%
Payout Ratio 33.3%

CMCO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMCO stock intrinsic value calculation we used $839.419 million for the last fiscal year's total revenue generated by Columbus McKinnon. The default revenue input number comes from 0001 income statement of Columbus McKinnon. 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 CMCO stock valuation model: a) initial revenue growth rate of 10.4% 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 6.6%, whose default value for CMCO is calculated based on our internal credit rating of Columbus McKinnon, 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 Columbus McKinnon.
    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 CMCO 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 $114 million in the base year in the intrinsic value calculation for CMCO 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 Columbus McKinnon.

Corporate tax rate of 27% is the nominal tax rate for Columbus McKinnon. 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 CMCO 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 CMCO are equal to 48.8%.

Life of production assets of 19.5 years is the average useful life of capital assets used in Columbus McKinnon 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 CMCO is equal to 17.9%. 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 - $408.229 million for Columbus McKinnon - 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 23.272 million for Columbus McKinnon 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 Columbus McKinnon at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Columbus McKinnon: Fiscal 2Q Earnings Snapshot   [07:33AM  Associated Press]
▶ Sidoti & Co. CEO on oil and manufacturing opportunities   [Oct-09-18 08:46AM  CNBC Videos]
▶ U.S. Manufacturing Logs Best Gain in 14 Years: 5 Top Picks   [Sep-05-18 11:52AM  InvestorPlace]
▶ Columbus McKinnon: Fiscal 1Q Earnings Snapshot   [06:49AM  Associated Press]
▶ Biggest Buffalo public companies continue to grow   [Jun-03-18 08:10AM  American City Business Journals]
▶ Columbus McKinnon: Fiscal 4Q Earnings Snapshot   [May-30-18 06:58AM  Associated Press]
▶ Columbus McKinnon Q4 Earnings Outlook   [May-29-18 02:23PM  Benzinga]
▶ 5 Stocks in Focus on New Analyst Coverage   [May-21-18 10:09AM  Zacks]
▶ Columbus McKinnon Re-Prices Term Loan   [Feb-26-18 04:15PM  Business Wire]
▶ Columbus McKinnon reports 3Q loss   [06:39AM  Associated Press]
▶ New Strong Buy Stocks for December 20th   [Dec-20-17 09:18AM  Zacks]
▶ New Strong Buy Stocks for November 10th   [Nov-10-17 06:50AM  Zacks]
▶ Columbus McKinnon posts 2Q profit   [06:36AM  Associated Press]
▶ Stocks With Rising Composite Ratings: Columbus McKinnon   [Sep-19-17 03:00AM  Investor's Business Daily]

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