Intrinsic value of Columbus McKinnon Corporation - CMCO

Previous Close

$40.00

  Intrinsic Value

$22.54

stock screener

  Rating & Target

sell

-44%

Previous close

$40.00

 
Intrinsic value

$22.54

 
Up/down potential

-44%

 
Rating

sell

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 0.9

 

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, %
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  874
  912
  951
  993
  1,038
  1,085
  1,134
  1,187
  1,242
  1,300
  1,362
  1,426
  1,494
  1,566
  1,642
  1,721
  1,804
  1,892
  1,985
  2,082
  2,184
  2,291
  2,404
  2,522
  2,647
  2,778
  2,915
  3,059
  3,211
  3,370
Variable operating expenses, $m
  684
  713
  743
  776
  810
  846
  884
  925
  967
  1,012
  1,048
  1,098
  1,150
  1,205
  1,263
  1,324
  1,389
  1,456
  1,527
  1,602
  1,680
  1,763
  1,850
  1,941
  2,037
  2,137
  2,243
  2,354
  2,471
  2,594
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
  801
  832
  865
  900
  937
  976
  1,017
  1,061
  1,106
  1,154
  1,193
  1,246
  1,301
  1,360
  1,421
  1,485
  1,554
  1,625
  1,699
  1,778
  1,860
  1,947
  2,038
  2,133
  2,233
  2,338
  2,448
  2,564
  2,685
  2,813
Operating income, $m
  74
  80
  86
  93
  101
  109
  117
  127
  136
  147
  169
  181
  193
  206
  220
  235
  251
  267
  285
  304
  323
  344
  366
  389
  414
  439
  467
  495
  526
  558
EBITDA, $m
  107
  114
  121
  129
  138
  147
  157
  168
  179
  191
  203
  216
  231
  246
  261
  278
  296
  315
  335
  356
  378
  401
  426
  452
  480
  509
  540
  572
  606
  642
Interest expense (income), $m
  11
  20
  21
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  47
  51
  54
  58
  61
  65
  69
  74
  78
  83
  88
  94
  99
  105
  111
  118
  125
  132
Earnings before tax, $m
  54
  58
  63
  68
  74
  80
  86
  93
  100
  108
  128
  136
  146
  156
  166
  178
  189
  202
  216
  230
  245
  261
  278
  295
  314
  334
  355
  378
  401
  426
Tax expense, $m
  15
  16
  17
  18
  20
  22
  23
  25
  27
  29
  34
  37
  39
  42
  45
  48
  51
  55
  58
  62
  66
  70
  75
  80
  85
  90
  96
  102
  108
  115
Net income, $m
  39
  43
  46
  50
  54
  58
  63
  68
  73
  79
  93
  100
  106
  114
  121
  130
  138
  148
  157
  168
  179
  190
  203
  216
  229
  244
  259
  276
  293
  311

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
  1,191
  1,242
  1,296
  1,353
  1,414
  1,478
  1,546
  1,617
  1,692
  1,772
  1,855
  1,943
  2,036
  2,134
  2,236
  2,345
  2,458
  2,578
  2,704
  2,836
  2,975
  3,121
  3,275
  3,436
  3,606
  3,784
  3,971
  4,168
  4,375
  4,592
Adjusted assets (=assets-cash), $m
  1,191
  1,242
  1,296
  1,353
  1,414
  1,478
  1,546
  1,617
  1,692
  1,772
  1,855
  1,943
  2,036
  2,134
  2,236
  2,345
  2,458
  2,578
  2,704
  2,836
  2,975
  3,121
  3,275
  3,436
  3,606
  3,784
  3,971
  4,168
  4,375
  4,592
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
  427
  445
  464
  485
  506
  529
  554
  579
  606
  635
  665
  696
  729
  764
  801
  840
  881
  923
  968
  1,016
  1,066
  1,118
  1,173
  1,231
  1,292
  1,355
  1,423
  1,493
  1,567
  1,645
Working capital, $m
  156
  163
  170
  178
  186
  194
  203
  212
  222
  233
  244
  255
  268
  280
  294
  308
  323
  339
  355
  373
  391
  410
  430
  451
  474
  497
  522
  548
  575
  603
Total debt, $m
  395
  428
  462
  499
  538
  579
  623
  669
  717
  768
  822
  879
  938
  1,001
  1,067
  1,137
  1,210
  1,287
  1,368
  1,453
  1,542
  1,636
  1,735
  1,839
  1,948
  2,062
  2,183
  2,309
  2,442
  2,582
Total liabilities, $m
  766
  799
  833
  870
  909
  950
  994
  1,040
  1,088
  1,139
  1,193
  1,250
  1,309
  1,372
  1,438
  1,508
  1,581
  1,658
  1,739
  1,824
  1,913
  2,007
  2,106
  2,210
  2,319
  2,433
  2,554
  2,680
  2,813
  2,953
Total equity, $m
  425
  443
  463
  483
  505
  528
  552
  577
  604
  632
  662
  694
  727
  762
  798
  837
  878
  920
  965
  1,012
  1,062
  1,114
  1,169
  1,227
  1,287
  1,351
  1,418
  1,488
  1,562
  1,639
Total liabilities and equity, $m
  1,191
  1,242
  1,296
  1,353
  1,414
  1,478
  1,546
  1,617
  1,692
  1,771
  1,855
  1,944
  2,036
  2,134
  2,236
  2,345
  2,459
  2,578
  2,704
  2,836
  2,975
  3,121
  3,275
  3,437
  3,606
  3,784
  3,972
  4,168
  4,375
  4,592
Debt-to-equity ratio
  0.930
  0.960
  1.000
  1.030
  1.070
  1.100
  1.130
  1.160
  1.190
  1.210
  1.240
  1.270
  1.290
  1.310
  1.340
  1.360
  1.380
  1.400
  1.420
  1.430
  1.450
  1.470
  1.480
  1.500
  1.510
  1.530
  1.540
  1.550
  1.560
  1.570
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
  39
  43
  46
  50
  54
  58
  63
  68
  73
  79
  93
  100
  106
  114
  121
  130
  138
  148
  157
  168
  179
  190
  203
  216
  229
  244
  259
  276
  293
  311
Depreciation, amort., depletion, $m
  33
  34
  35
  36
  37
  38
  40
  41
  42
  44
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  70
  73
  77
  80
  84
Funds from operations, $m
  73
  77
  81
  86
  91
  97
  103
  109
  116
  123
  127
  135
  144
  153
  162
  173
  183
  195
  207
  220
  233
  248
  263
  279
  296
  313
  332
  352
  373
  395
Change in working capital, $m
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
Cash from operations, $m
  66
  70
  74
  78
  83
  88
  94
  99
  106
  112
  116
  124
  132
  140
  149
  158
  169
  179
  190
  202
  215
  228
  243
  258
  273
  290
  308
  326
  346
  367
Maintenance CAPEX, $m
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -80
New CAPEX, $m
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
Cash from investing activities, $m
  -38
  -40
  -42
  -45
  -47
  -49
  -51
  -54
  -57
  -59
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -137
  -143
  -151
  -158
Free cash flow, $m
  28
  30
  32
  34
  37
  39
  42
  45
  49
  53
  54
  58
  63
  68
  73
  79
  85
  91
  98
  105
  113
  121
  130
  140
  150
  160
  171
  183
  195
  209
Issuance/(repayment) of debt, $m
  32
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  89
  94
  99
  104
  109
  115
  120
  126
  133
  140
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  
  32
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  89
  94
  99
  104
  109
  115
  120
  126
  133
  140
Total cash flow (excl. dividends), $m
  60
  63
  67
  71
  76
  81
  86
  91
  97
  104
  107
  115
  122
  130
  139
  148
  158
  168
  179
  190
  203
  215
  229
  243
  259
  275
  292
  309
  328
  348
Retained Cash Flow (-), $m
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
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
  43
  44
  47
  51
  54
  58
  62
  66
  70
  75
  78
  83
  89
  96
  102
  110
  117
  125
  134
  143
  153
  163
  174
  186
  198
  211
  225
  239
  255
  271
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
  40
  39
  38
  38
  37
  35
  34
  32
  31
  28
  25
  23
  21
  18
  16
  14
  12
  10
  8
  7
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
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 Corporation (CMCO)

Valuation Ratios
P/E Ratio 100.3
Price to Sales 1.4
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 19.6
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 million for the last fiscal year's total revenue generated by Columbus McKinnon Corporation. The default revenue input number comes from 0001 income statement of Columbus McKinnon Corporation. 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 4.2% 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 6.6%, whose default value for CMCO is calculated based on our internal credit rating of Columbus McKinnon Corporation, 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 Corporation.
    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 Corporation.

Corporate tax rate of 27% is the nominal tax rate for Columbus McKinnon Corporation. 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 Corporation 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 Corporation - 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 23.355 million for Columbus McKinnon Corporation 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 Corporation at the current share price and the inputted number of shares is $0.9 billion.

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