Intrinsic value of Core-Mark Holding Company, Inc. - CORE

Previous Close

$39.35

  Intrinsic Value

$17.70

stock screener

  Rating & Target

str. sell

-55%

Previous close

$39.35

 
Intrinsic value

$17.70

 
Up/down potential

-55%

 
Rating

str. sell

We calculate the intrinsic value of CORE 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 1.8

 

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, %
  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
  16,723
  17,108
  17,547
  18,041
  18,588
  19,188
  19,841
  20,549
  21,311
  22,129
  23,004
  23,937
  24,931
  25,988
  27,109
  28,297
  29,554
  30,884
  32,289
  33,773
  35,338
  36,989
  38,729
  40,563
  42,494
  44,527
  46,667
  48,919
  51,288
  53,780
Variable operating expenses, $m
  16,321
  16,696
  17,124
  17,606
  18,139
  18,723
  19,360
  20,050
  20,792
  21,590
  22,419
  23,329
  24,298
  25,328
  26,420
  27,578
  28,804
  30,100
  31,469
  32,915
  34,441
  36,050
  37,746
  39,533
  41,415
  43,396
  45,482
  47,677
  49,986
  52,414
Fixed operating expenses, $m
  330
  337
  345
  352
  360
  368
  376
  384
  393
  402
  410
  419
  429
  438
  448
  458
  468
  478
  488
  499
  510
  521
  533
  545
  557
  569
  581
  594
  607
  620
Total operating expenses, $m
  16,651
  17,033
  17,469
  17,958
  18,499
  19,091
  19,736
  20,434
  21,185
  21,992
  22,829
  23,748
  24,727
  25,766
  26,868
  28,036
  29,272
  30,578
  31,957
  33,414
  34,951
  36,571
  38,279
  40,078
  41,972
  43,965
  46,063
  48,271
  50,593
  53,034
Operating income, $m
  72
  74
  78
  83
  89
  96
  105
  115
  125
  138
  174
  189
  205
  222
  241
  261
  283
  306
  332
  359
  387
  418
  451
  486
  523
  562
  604
  648
  695
  745
EBITDA, $m
  143
  147
  152
  158
  166
  175
  185
  197
  210
  225
  241
  258
  277
  297
  319
  343
  369
  396
  425
  457
  490
  525
  563
  603
  646
  691
  739
  790
  844
  901
Interest expense (income), $m
  4
  21
  23
  24
  26
  27
  29
  32
  34
  36
  39
  42
  45
  49
  52
  56
  60
  65
  69
  74
  79
  84
  90
  96
  102
  109
  116
  123
  131
  139
  148
Earnings before tax, $m
  50
  52
  54
  57
  62
  67
  73
  81
  89
  98
  132
  143
  156
  170
  185
  201
  218
  237
  258
  280
  303
  328
  355
  383
  414
  446
  481
  517
  556
  598
Tax expense, $m
  14
  14
  15
  15
  17
  18
  20
  22
  24
  27
  36
  39
  42
  46
  50
  54
  59
  64
  70
  75
  82
  89
  96
  104
  112
  120
  130
  140
  150
  161
Net income, $m
  37
  38
  39
  42
  45
  49
  54
  59
  65
  72
  96
  105
  114
  124
  135
  147
  159
  173
  188
  204
  221
  239
  259
  280
  302
  326
  351
  378
  406
  436

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
  1,699
  1,739
  1,783
  1,833
  1,889
  1,950
  2,016
  2,088
  2,166
  2,249
  2,338
  2,433
  2,534
  2,641
  2,755
  2,876
  3,003
  3,139
  3,281
  3,432
  3,591
  3,759
  3,936
  4,122
  4,318
  4,525
  4,743
  4,971
  5,212
  5,465
Adjusted assets (=assets-cash), $m
  1,699
  1,739
  1,783
  1,833
  1,889
  1,950
  2,016
  2,088
  2,166
  2,249
  2,338
  2,433
  2,534
  2,641
  2,755
  2,876
  3,003
  3,139
  3,281
  3,432
  3,591
  3,759
  3,936
  4,122
  4,318
  4,525
  4,743
  4,971
  5,212
  5,465
Revenue / Adjusted assets
  9.843
  9.838
  9.841
  9.842
  9.840
  9.840
  9.842
  9.841
  9.839
  9.839
  9.839
  9.838
  9.839
  9.840
  9.840
  9.839
  9.841
  9.839
  9.841
  9.841
  9.841
  9.840
  9.840
  9.841
  9.841
  9.840
  9.839
  9.841
  9.840
  9.841
Average production assets, $m
  301
  308
  316
  325
  335
  345
  357
  370
  384
  398
  414
  431
  449
  468
  488
  509
  532
  556
  581
  608
  636
  666
  697
  730
  765
  801
  840
  881
  923
  968
Working capital, $m
  635
  650
  667
  686
  706
  729
  754
  781
  810
  841
  874
  910
  947
  988
  1,030
  1,075
  1,123
  1,174
  1,227
  1,283
  1,343
  1,406
  1,472
  1,541
  1,615
  1,692
  1,773
  1,859
  1,949
  2,044
Total debt, $m
  418
  444
  473
  507
  543
  583
  627
  675
  726
  781
  839
  902
  969
  1,040
  1,115
  1,194
  1,279
  1,368
  1,462
  1,562
  1,667
  1,777
  1,894
  2,017
  2,147
  2,283
  2,427
  2,578
  2,737
  2,904
Total liabilities, $m
  1,122
  1,147
  1,177
  1,210
  1,247
  1,287
  1,331
  1,378
  1,429
  1,484
  1,543
  1,606
  1,672
  1,743
  1,818
  1,898
  1,982
  2,071
  2,166
  2,265
  2,370
  2,481
  2,598
  2,721
  2,850
  2,987
  3,130
  3,281
  3,440
  3,607
Total equity, $m
  578
  591
  606
  623
  642
  663
  686
  710
  736
  765
  795
  827
  861
  898
  937
  978
  1,021
  1,067
  1,116
  1,167
  1,221
  1,278
  1,338
  1,402
  1,468
  1,539
  1,612
  1,690
  1,772
  1,858
Total liabilities and equity, $m
  1,700
  1,738
  1,783
  1,833
  1,889
  1,950
  2,017
  2,088
  2,165
  2,249
  2,338
  2,433
  2,533
  2,641
  2,755
  2,876
  3,003
  3,138
  3,282
  3,432
  3,591
  3,759
  3,936
  4,123
  4,318
  4,526
  4,742
  4,971
  5,212
  5,465
Debt-to-equity ratio
  0.720
  0.750
  0.780
  0.810
  0.850
  0.880
  0.920
  0.950
  0.990
  1.020
  1.060
  1.090
  1.120
  1.160
  1.190
  1.220
  1.250
  1.280
  1.310
  1.340
  1.370
  1.390
  1.420
  1.440
  1.460
  1.480
  1.500
  1.520
  1.540
  1.560
Adjusted equity ratio
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  37
  38
  39
  42
  45
  49
  54
  59
  65
  72
  96
  105
  114
  124
  135
  147
  159
  173
  188
  204
  221
  239
  259
  280
  302
  326
  351
  378
  406
  436
Depreciation, amort., depletion, $m
  71
  73
  74
  75
  77
  79
  81
  83
  85
  87
  67
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  142
  149
  156
Funds from operations, $m
  108
  110
  113
  117
  122
  128
  134
  141
  150
  159
  163
  174
  186
  199
  214
  229
  245
  263
  282
  302
  324
  347
  371
  398
  425
  455
  486
  520
  555
  592
Change in working capital, $m
  12
  15
  17
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  45
  48
  51
  53
  56
  59
  63
  66
  70
  73
  77
  81
  86
  90
  95
Cash from operations, $m
  96
  96
  97
  98
  101
  105
  109
  115
  121
  128
  130
  139
  148
  159
  171
  184
  198
  212
  229
  246
  264
  284
  305
  328
  352
  378
  405
  434
  465
  498
Maintenance CAPEX, $m
  -49
  -49
  -50
  -51
  -52
  -54
  -56
  -58
  -60
  -62
  -64
  -67
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -142
  -149
New CAPEX, $m
  2
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
Cash from investing activities, $m
  -47
  -56
  -58
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -126
  -133
  -138
  -145
  -153
  -160
  -168
  -176
  -185
  -194
Free cash flow, $m
  49
  40
  39
  39
  39
  40
  42
  44
  47
  51
  50
  55
  61
  68
  75
  84
  93
  103
  114
  125
  138
  152
  167
  182
  200
  218
  237
  258
  280
  304
Issuance/(repayment) of debt, $m
  23
  26
  29
  33
  37
  40
  44
  47
  51
  55
  59
  63
  67
  71
  75
  80
  84
  89
  94
  100
  105
  111
  117
  123
  130
  136
  144
  151
  159
  167
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  
  23
  26
  29
  33
  37
  40
  44
  47
  51
  55
  59
  63
  67
  71
  75
  80
  84
  89
  94
  100
  105
  111
  117
  123
  130
  136
  144
  151
  159
  167
Total cash flow (excl. dividends), $m
  71
  66
  68
  72
  76
  80
  86
  92
  99
  106
  108
  118
  128
  139
  150
  163
  177
  192
  208
  225
  243
  263
  283
  305
  329
  354
  381
  409
  439
  471
Retained Cash Flow (-), $m
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
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
  61
  53
  53
  55
  57
  59
  63
  67
  72
  78
  78
  85
  93
  102
  112
  122
  134
  146
  159
  174
  189
  206
  223
  242
  262
  284
  307
  331
  357
  385
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
  58
  48
  46
  44
  43
  42
  41
  41
  40
  39
  35
  34
  33
  32
  30
  28
  26
  24
  22
  19
  17
  14
  12
  10
  8
  7
  5
  4
  3
  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

Core-Mark Holding Company, Inc. is a wholesale distributor to the convenience retail industry in North America. The Company provides sales, marketing, distribution and logistics services. As of December 31, 2016, the Company offered services to over 43,000 customer locations across the United States and Canada through 30 distribution centers. The Company's segments include the United States, Canada and Corporate. The Company's primary customer base consists of traditional convenience stores, as well as alternative outlets selling consumer packaged goods. The Company's traditional convenience store customers include various national and super-regional convenience store operators, as well as independently owned convenience stores. Its alternative outlet customers include a range of store formats, including grocery stores, drug stores, liquor stores, cigarette and tobacco shops, hotel gift shops, military exchanges, college and corporate campuses, casinos and hardware stores.

FINANCIAL RATIOS  of  Core-Mark Holding Company, Inc. (CORE)

Valuation Ratios
P/E Ratio 33.6
Price to Sales 0.1
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow -18.5
Price to Free Cash Flow -11.4
Growth Rates
Sales Growth Rate 31.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 59%
Cap. Spend. - 3 Yr. Gr. Rate 28.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 65.7%
Total Debt to Equity 72.8%
Interest Coverage 23
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. 8.1%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 10.3%
Asset Turnover 11.3
Profitability Ratios
Gross Margin 5.1%
Gross Margin - 3 Yr. Avg. 5.5%
EBITDA Margin 0.9%
EBITDA Margin - 3 Yr. Avg. 1%
Operating Margin 0.6%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin 0.6%
Pre-Tax Margin - 3 Yr. Avg. 0.7%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 0.4%
Effective Tax Rate 37.2%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 29.6%

CORE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CORE stock intrinsic value calculation we used $16395 million for the last fiscal year's total revenue generated by Core-Mark Holding Company, Inc.. The default revenue input number comes from 0001 income statement of Core-Mark Holding Company, 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 CORE 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 4.6%, whose default value for CORE is calculated based on our internal credit rating of Core-Mark Holding Company, 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 Core-Mark Holding Company, 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 CORE stock the variable cost ratio is equal to 97.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $323 million in the base year in the intrinsic value calculation for CORE 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 Core-Mark Holding Company, Inc..

Corporate tax rate of 27% is the nominal tax rate for Core-Mark Holding Company, 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 CORE 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 CORE are equal to 1.8%.

Life of production assets of 6.2 years is the average useful life of capital assets used in Core-Mark Holding Company, 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 CORE is equal to 3.8%. 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 - $567 million for Core-Mark Holding Company, 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 45.996 million for Core-Mark Holding Company, 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 Core-Mark Holding Company, Inc. at the current share price and the inputted number of shares is $1.8 billion.

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