Intrinsic value of Columbus McKinnon - CMCO

Previous Close

$40.12

  Intrinsic Value

$29.03

stock screener

  Rating & Target

sell

-28%

Previous close

$40.12

 
Intrinsic value

$29.03

 
Up/down potential

-28%

 
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 2017), $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
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
Revenue, $m
  680
  724
  770
  818
  868
  920
  975
  1,031
  1,091
  1,152
  1,217
  1,284
  1,354
  1,428
  1,505
  1,585
  1,670
  1,758
  1,850
  1,947
  2,049
  2,155
  2,266
  2,383
  2,505
  2,634
  2,768
  2,909
  3,057
  3,213
Variable operating expenses, $m
  630
  667
  706
  746
  788
  832
  878
  926
  975
  1,027
  1,024
  1,081
  1,140
  1,202
  1,267
  1,335
  1,405
  1,480
  1,558
  1,639
  1,724
  1,814
  1,907
  2,006
  2,109
  2,217
  2,330
  2,449
  2,573
  2,704
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
  630
  667
  706
  746
  788
  832
  878
  926
  975
  1,027
  1,024
  1,081
  1,140
  1,202
  1,267
  1,335
  1,405
  1,480
  1,558
  1,639
  1,724
  1,814
  1,907
  2,006
  2,109
  2,217
  2,330
  2,449
  2,573
  2,704
Operating income, $m
  50
  57
  64
  72
  80
  88
  97
  106
  115
  125
  193
  203
  214
  226
  238
  251
  264
  278
  293
  308
  324
  341
  359
  377
  396
  417
  438
  460
  484
  508
EBITDA, $m
  165
  176
  188
  199
  211
  224
  237
  251
  266
  281
  296
  313
  330
  348
  366
  386
  407
  428
  451
  474
  499
  525
  552
  580
  610
  641
  674
  708
  744
  782
Interest expense (income), $m
  11
  23
  26
  28
  31
  35
  38
  41
  45
  49
  52
  57
  61
  65
  70
  75
  80
  85
  90
  96
  102
  109
  115
  122
  129
  137
  145
  154
  162
  172
  181
Earnings before tax, $m
  27
  32
  36
  41
  45
  50
  55
  61
  67
  72
  136
  142
  149
  156
  164
  171
  179
  188
  197
  206
  216
  226
  236
  248
  259
  272
  285
  298
  312
  327
Tax expense, $m
  7
  9
  10
  11
  12
  14
  15
  16
  18
  20
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
Net income, $m
  20
  23
  26
  30
  33
  37
  40
  44
  49
  53
  99
  104
  109
  114
  119
  125
  131
  137
  144
  150
  157
  165
  173
  181
  189
  198
  208
  218
  228
  239

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
  1,188
  1,266
  1,347
  1,431
  1,518
  1,609
  1,704
  1,803
  1,907
  2,015
  2,127
  2,245
  2,368
  2,497
  2,631
  2,772
  2,919
  3,073
  3,235
  3,404
  3,581
  3,767
  3,962
  4,166
  4,380
  4,604
  4,839
  5,086
  5,345
  5,616
Adjusted assets (=assets-cash), $m
  1,188
  1,266
  1,347
  1,431
  1,518
  1,609
  1,704
  1,803
  1,907
  2,015
  2,127
  2,245
  2,368
  2,497
  2,631
  2,772
  2,919
  3,073
  3,235
  3,404
  3,581
  3,767
  3,962
  4,166
  4,380
  4,604
  4,839
  5,086
  5,345
  5,616
Revenue / Adjusted assets
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
Average production assets, $m
  579
  617
  656
  697
  740
  784
  831
  879
  929
  982
  1,037
  1,094
  1,154
  1,217
  1,282
  1,351
  1,423
  1,498
  1,577
  1,659
  1,745
  1,836
  1,931
  2,030
  2,134
  2,244
  2,358
  2,479
  2,605
  2,737
Working capital, $m
  96
  102
  109
  115
  122
  130
  137
  145
  154
  162
  172
  181
  191
  201
  212
  224
  235
  248
  261
  275
  289
  304
  320
  336
  353
  371
  390
  410
  431
  453
Total debt, $m
  473
  527
  583
  641
  702
  765
  831
  900
  972
  1,047
  1,125
  1,206
  1,292
  1,381
  1,474
  1,572
  1,674
  1,781
  1,894
  2,011
  2,134
  2,263
  2,398
  2,540
  2,688
  2,844
  3,007
  3,178
  3,358
  3,546
Total liabilities, $m
  825
  878
  935
  993
  1,054
  1,117
  1,183
  1,251
  1,323
  1,398
  1,476
  1,558
  1,643
  1,733
  1,826
  1,924
  2,026
  2,133
  2,245
  2,362
  2,485
  2,614
  2,749
  2,891
  3,040
  3,195
  3,358
  3,530
  3,709
  3,898
Total equity, $m
  364
  387
  412
  438
  465
  492
  521
  552
  583
  616
  651
  687
  725
  764
  805
  848
  893
  940
  990
  1,042
  1,096
  1,153
  1,212
  1,275
  1,340
  1,409
  1,481
  1,556
  1,636
  1,719
Total liabilities and equity, $m
  1,189
  1,265
  1,347
  1,431
  1,519
  1,609
  1,704
  1,803
  1,906
  2,014
  2,127
  2,245
  2,368
  2,497
  2,631
  2,772
  2,919
  3,073
  3,235
  3,404
  3,581
  3,767
  3,961
  4,166
  4,380
  4,604
  4,839
  5,086
  5,345
  5,617
Debt-to-equity ratio
  1.300
  1.360
  1.410
  1.460
  1.510
  1.550
  1.590
  1.630
  1.670
  1.700
  1.730
  1.760
  1.780
  1.810
  1.830
  1.850
  1.870
  1.890
  1.910
  1.930
  1.950
  1.960
  1.980
  1.990
  2.010
  2.020
  2.030
  2.040
  2.050
  2.060
Adjusted equity ratio
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  23
  26
  30
  33
  37
  40
  44
  49
  53
  99
  104
  109
  114
  119
  125
  131
  137
  144
  150
  157
  165
  173
  181
  189
  198
  208
  218
  228
  239
Depreciation, amort., depletion, $m
  115
  119
  123
  127
  131
  136
  141
  145
  150
  156
  104
  109
  115
  122
  128
  135
  142
  150
  158
  166
  175
  184
  193
  203
  213
  224
  236
  248
  260
  274
Funds from operations, $m
  135
  142
  149
  157
  165
  173
  181
  190
  199
  209
  203
  213
  224
  236
  248
  260
  273
  287
  301
  316
  332
  348
  366
  384
  403
  423
  444
  465
  488
  513
Change in working capital, $m
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
Cash from operations, $m
  129
  136
  143
  150
  157
  165
  173
  182
  191
  200
  194
  204
  214
  225
  237
  249
  261
  274
  288
  303
  318
  333
  350
  367
  386
  405
  425
  446
  468
  491
Maintenance CAPEX, $m
  -54
  -58
  -62
  -66
  -70
  -74
  -78
  -83
  -88
  -93
  -98
  -104
  -109
  -115
  -122
  -128
  -135
  -142
  -150
  -158
  -166
  -175
  -184
  -193
  -203
  -213
  -224
  -236
  -248
  -260
New CAPEX, $m
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -99
  -104
  -109
  -115
  -120
  -126
  -132
Cash from investing activities, $m
  -90
  -96
  -101
  -107
  -113
  -118
  -124
  -131
  -138
  -146
  -153
  -161
  -169
  -178
  -188
  -197
  -207
  -217
  -229
  -240
  -252
  -266
  -279
  -292
  -307
  -322
  -339
  -356
  -374
  -392
Free cash flow, $m
  39
  40
  42
  43
  45
  47
  49
  50
  52
  54
  41
  43
  45
  47
  50
  52
  54
  57
  60
  62
  65
  68
  72
  75
  78
  82
  86
  89
  94
  98
Issuance/(repayment) of debt, $m
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  85
  89
  93
  98
  102
  107
  112
  117
  123
  129
  135
  142
  148
  156
  163
  171
  180
  188
Issuance/(repurchase) of shares, $m
  3
  1
  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  
  55
  55
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  85
  89
  93
  98
  102
  107
  112
  117
  123
  129
  135
  142
  148
  156
  163
  171
  180
  188
Total cash flow (excl. dividends), $m
  93
  95
  98
  102
  106
  110
  115
  119
  124
  129
  119
  125
  130
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  216
  227
  238
  249
  261
  273
  286
Retained Cash Flow (-), $m
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -62
  -65
  -69
  -72
  -76
  -79
  -83
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
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
  23
  24
  25
  26
  28
Cash available for distribution, $m
  71
  71
  73
  76
  79
  82
  86
  89
  92
  96
  85
  89
  93
  97
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
  185
  194
  203
Discount rate, %
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
  66
  61
  57
  54
  51
  47
  43
  39
  35
  31
  23
  20
  17
  15
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  99.7
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6

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 100.6
Price to Sales 1.4
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 19.7
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 $637 million for the last fiscal year's total revenue generated by Columbus McKinnon. The default revenue input number comes from 2017 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 6.7% 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 7.7%, 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 93.2%.

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 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 0.9%.

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 85.2%.

Life of production assets of 10 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 14.1%. 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 - $341 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 21 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 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]
▶ 5 Stocks to Bet on New Analyst Coverage   [Aug-21-17 09:56AM  Zacks]
▶ Buy These 5 Stocks on New Analyst Coverage   [Aug-03-17 08:10AM  Zacks]
▶ Columbus McKinnon posts 1Q profit   [Aug-01-17 10:58PM  Associated Press]
▶ Gurus' Holdings With Negative Performances   [Jun-29-17 04:12PM  GuruFocus.com]
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