Intrinsic value of Cooper-Standard Holdings - CPS

Previous Close

$132.87

  Intrinsic Value

$212.59

stock screener

  Rating & Target

str. buy

+60%

Previous close

$132.87

 
Intrinsic value

$212.59

 
Up/down potential

+60%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CPS 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.89
  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
  3,473
  3,542
  3,624
  3,717
  3,822
  3,937
  4,065
  4,203
  4,353
  4,514
  4,688
  4,873
  5,071
  5,281
  5,505
  5,743
  5,994
  6,261
  6,542
  6,840
  7,154
  7,486
  7,836
  8,204
  8,593
  9,002
  9,432
  9,886
  10,363
  10,865
  11,392
Variable operating expenses, $m
 
  1,824
  1,866
  1,913
  1,966
  2,026
  2,090
  2,161
  2,238
  2,320
  2,408
  2,486
  2,587
  2,694
  2,809
  2,930
  3,058
  3,194
  3,338
  3,490
  3,650
  3,819
  3,998
  4,186
  4,384
  4,593
  4,812
  5,044
  5,287
  5,543
  5,812
Fixed operating expenses, $m
 
  1,517
  1,555
  1,594
  1,634
  1,674
  1,716
  1,759
  1,803
  1,848
  1,895
  1,942
  1,990
  2,040
  2,091
  2,143
  2,197
  2,252
  2,308
  2,366
  2,425
  2,486
  2,548
  2,612
  2,677
  2,744
  2,812
  2,883
  2,955
  3,029
  3,104
Total operating expenses, $m
  3,234
  3,341
  3,421
  3,507
  3,600
  3,700
  3,806
  3,920
  4,041
  4,168
  4,303
  4,428
  4,577
  4,734
  4,900
  5,073
  5,255
  5,446
  5,646
  5,856
  6,075
  6,305
  6,546
  6,798
  7,061
  7,337
  7,624
  7,927
  8,242
  8,572
  8,916
Operating income, $m
  239
  201
  203
  210
  222
  237
  258
  283
  312
  346
  385
  445
  493
  547
  605
  669
  739
  814
  896
  984
  1,079
  1,181
  1,290
  1,407
  1,532
  1,665
  1,808
  1,959
  2,121
  2,293
  2,476
EBITDA, $m
  362
  324
  329
  338
  353
  372
  396
  426
  459
  498
  542
  591
  645
  705
  770
  842
  919
  1,002
  1,092
  1,189
  1,294
  1,405
  1,525
  1,653
  1,790
  1,935
  2,091
  2,256
  2,432
  2,619
  2,817
Interest expense (income), $m
  0
  26
  27
  28
  30
  32
  34
  36
  39
  41
  44
  47
  50
  54
  58
  62
  66
  70
  75
  80
  85
  91
  97
  103
  110
  117
  124
  131
  139
  148
  157
Earnings before tax, $m
  195
  176
  177
  182
  192
  206
  224
  247
  274
  305
  341
  398
  443
  493
  548
  608
  673
  744
  821
  904
  994
  1,090
  1,193
  1,304
  1,422
  1,549
  1,684
  1,828
  1,981
  2,145
  2,319
Tax expense, $m
  55
  47
  48
  49
  52
  56
  60
  67
  74
  82
  92
  107
  120
  133
  148
  164
  182
  201
  222
  244
  268
  294
  322
  352
  384
  418
  455
  494
  535
  579
  626
Net income, $m
  139
  128
  129
  133
  140
  150
  164
  180
  200
  223
  249
  290
  323
  360
  400
  444
  491
  543
  599
  660
  725
  796
  871
  952
  1,038
  1,131
  1,229
  1,334
  1,446
  1,566
  1,693

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  480
  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
  2,492
  2,052
  2,100
  2,154
  2,214
  2,281
  2,355
  2,435
  2,522
  2,615
  2,716
  2,823
  2,938
  3,060
  3,189
  3,327
  3,473
  3,627
  3,790
  3,963
  4,145
  4,337
  4,540
  4,753
  4,978
  5,215
  5,465
  5,727
  6,004
  6,295
  6,600
Adjusted assets (=assets-cash), $m
  2,012
  2,052
  2,100
  2,154
  2,214
  2,281
  2,355
  2,435
  2,522
  2,615
  2,716
  2,823
  2,938
  3,060
  3,189
  3,327
  3,473
  3,627
  3,790
  3,963
  4,145
  4,337
  4,540
  4,753
  4,978
  5,215
  5,465
  5,727
  6,004
  6,295
  6,600
Revenue / Adjusted assets
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
  1.726
Average production assets, $m
  875
  893
  913
  937
  963
  992
  1,024
  1,059
  1,097
  1,138
  1,181
  1,228
  1,278
  1,331
  1,387
  1,447
  1,511
  1,578
  1,649
  1,724
  1,803
  1,886
  1,975
  2,067
  2,165
  2,268
  2,377
  2,491
  2,611
  2,738
  2,871
Working capital, $m
  537
  92
  94
  97
  99
  102
  106
  109
  113
  117
  122
  127
  132
  137
  143
  149
  156
  163
  170
  178
  186
  195
  204
  213
  223
  234
  245
  257
  269
  282
  296
Total debt, $m
  763
  766
  807
  855
  908
  966
  1,031
  1,101
  1,177
  1,259
  1,347
  1,441
  1,542
  1,648
  1,762
  1,883
  2,010
  2,145
  2,288
  2,439
  2,599
  2,767
  2,945
  3,132
  3,329
  3,537
  3,755
  3,985
  4,227
  4,482
  4,750
Total liabilities, $m
  1,794
  1,798
  1,839
  1,887
  1,940
  1,998
  2,063
  2,133
  2,209
  2,291
  2,379
  2,473
  2,574
  2,680
  2,794
  2,915
  3,042
  3,177
  3,320
  3,471
  3,631
  3,799
  3,977
  4,164
  4,361
  4,569
  4,787
  5,017
  5,259
  5,514
  5,782
Total equity, $m
  697
  254
  260
  267
  275
  283
  292
  302
  313
  324
  337
  350
  364
  379
  395
  413
  431
  450
  470
  491
  514
  538
  563
  589
  617
  647
  678
  710
  744
  781
  818
Total liabilities and equity, $m
  2,491
  2,052
  2,099
  2,154
  2,215
  2,281
  2,355
  2,435
  2,522
  2,615
  2,716
  2,823
  2,938
  3,059
  3,189
  3,328
  3,473
  3,627
  3,790
  3,962
  4,145
  4,337
  4,540
  4,753
  4,978
  5,216
  5,465
  5,727
  6,003
  6,295
  6,600
Debt-to-equity ratio
  1.095
  3.010
  3.100
  3.200
  3.310
  3.420
  3.530
  3.650
  3.760
  3.880
  4.000
  4.120
  4.230
  4.340
  4.460
  4.560
  4.670
  4.770
  4.870
  4.960
  5.060
  5.150
  5.230
  5.310
  5.390
  5.470
  5.540
  5.610
  5.680
  5.740
  5.800
Adjusted equity ratio
  0.108
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  139
  128
  129
  133
  140
  150
  164
  180
  200
  223
  249
  290
  323
  360
  400
  444
  491
  543
  599
  660
  725
  796
  871
  952
  1,038
  1,131
  1,229
  1,334
  1,446
  1,566
  1,693
Depreciation, amort., depletion, $m
  123
  123
  125
  128
  131
  135
  139
  143
  147
  152
  157
  146
  152
  158
  165
  172
  180
  188
  196
  205
  215
  225
  235
  246
  258
  270
  283
  297
  311
  326
  342
Funds from operations, $m
  428
  251
  254
  261
  271
  285
  302
  323
  347
  375
  406
  437
  475
  518
  565
  616
  671
  731
  796
  865
  940
  1,020
  1,106
  1,198
  1,296
  1,401
  1,512
  1,631
  1,757
  1,892
  2,035
Change in working capital, $m
  64
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
Cash from operations, $m
  364
  250
  252
  259
  269
  282
  299
  319
  343
  371
  402
  432
  470
  513
  559
  610
  665
  724
  788
  857
  932
  1,012
  1,097
  1,188
  1,286
  1,390
  1,501
  1,619
  1,745
  1,879
  2,021
Maintenance CAPEX, $m
  0
  -104
  -106
  -109
  -112
  -115
  -118
  -122
  -126
  -131
  -135
  -141
  -146
  -152
  -158
  -165
  -172
  -180
  -188
  -196
  -205
  -215
  -225
  -235
  -246
  -258
  -270
  -283
  -297
  -311
  -326
New CAPEX, $m
  -164
  -18
  -21
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -109
  -114
  -120
  -126
  -133
Cash from investing activities, $m
  -198
  -122
  -127
  -132
  -138
  -144
  -150
  -157
  -164
  -172
  -179
  -188
  -196
  -205
  -214
  -225
  -235
  -247
  -259
  -271
  -284
  -299
  -313
  -328
  -344
  -361
  -379
  -397
  -417
  -437
  -459
Free cash flow, $m
  166
  128
  125
  126
  131
  138
  149
  162
  179
  199
  222
  244
  274
  307
  344
  385
  429
  477
  530
  586
  647
  713
  784
  860
  942
  1,029
  1,122
  1,222
  1,328
  1,441
  1,562
Issuance/(repayment) of debt, $m
  -27
  36
  41
  47
  53
  59
  65
  70
  76
  82
  88
  94
  100
  107
  114
  121
  128
  135
  143
  151
  160
  168
  177
  187
  197
  208
  219
  230
  242
  255
  268
Issuance/(repurchase) of shares, $m
  -21
  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  
  -63
  36
  41
  47
  53
  59
  65
  70
  76
  82
  88
  94
  100
  107
  114
  121
  128
  135
  143
  151
  160
  168
  177
  187
  197
  208
  219
  230
  242
  255
  268
Total cash flow (excl. dividends), $m
  102
  164
  167
  174
  184
  197
  213
  233
  255
  281
  310
  338
  375
  414
  458
  505
  557
  612
  672
  737
  807
  882
  962
  1,047
  1,139
  1,237
  1,341
  1,452
  1,570
  1,696
  1,830
Retained Cash Flow (-), $m
  -94
  -4
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
Prev. year cash balance distribution, $m
 
  447
  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
 
  606
  161
  167
  176
  189
  204
  223
  245
  270
  298
  325
  360
  399
  442
  488
  539
  593
  652
  716
  784
  858
  937
  1,021
  1,111
  1,207
  1,310
  1,419
  1,536
  1,660
  1,792
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  581
  147
  145
  145
  146
  148
  150
  153
  155
  156
  154
  154
  152
  148
  143
  137
  129
  120
  110
  100
  89
  78
  67
  57
  47
  38
  30
  24
  18
  13
Current shareholders' claim on cash, %
  100
  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

Cooper-Standard Holdings Inc. is a holding company. The Company designs, manufactures and sells sealing, fuel and brake delivery, fluid transfer and anti-vibration systems for use in passenger vehicles and light trucks manufactured by global original equipment manufacturers (OEMs). The Company operates through four segments: North America, Europe, Asia Pacific and South America. The Company's products are used in passenger vehicles and light trucks. As of December 31, 2016, the Company's operations were conducted through 123 leased and joint venture facilities in 20 countries (North America: Canada, Mexico and the United States; Asia Pacific: China, India, Japan, South Korea and Thailand; Europe: Czech Republic, France, Germany, Italy, the Netherlands, Poland, Romania, Serbia, Spain, Sweden and the United Kingdom, and South America: Brazil), of which 90 are manufacturing facilities and 33 have design, engineering, administrative or logistics designations.

FINANCIAL RATIOS  of  Cooper-Standard Holdings (CPS)

Valuation Ratios
P/E Ratio 16.9
Price to Sales 0.7
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 6.5
Price to Free Cash Flow 11.8
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.2%
Cap. Spend. - 3 Yr. Gr. Rate -2.2%
Financial Strength
Quick Ratio 15
Current Ratio 0.1
LT Debt to Equity 104.7%
Total Debt to Equity 109.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 21.4%
Return On Equity - 3 Yr. Avg. 16.1%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 19.1%
Gross Margin - 3 Yr. Avg. 17.5%
EBITDA Margin 9.2%
EBITDA Margin - 3 Yr. Avg. 7.8%
Operating Margin 6.9%
Oper. Margin - 3 Yr. Avg. 5.4%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 4%
Net Profit Margin - 3 Yr. Avg. 2.9%
Effective Tax Rate 28.2%
Eff/ Tax Rate - 3 Yr. Avg. 34.6%
Payout Ratio 0%

CPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPS stock intrinsic value calculation we used $3473 million for the last fiscal year's total revenue generated by Cooper-Standard Holdings. The default revenue input number comes from 2016 income statement of Cooper-Standard Holdings. 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 CPS 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 4.3%, whose default value for CPS is calculated based on our internal credit rating of Cooper-Standard Holdings, 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 Cooper-Standard Holdings.
    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 CPS stock the variable cost ratio is equal to 51.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1480 million in the base year in the intrinsic value calculation for CPS 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 3.5% for Cooper-Standard Holdings.

Corporate tax rate of 27% is the nominal tax rate for Cooper-Standard Holdings. 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 CPS 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 CPS are equal to 25.2%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Cooper-Standard Holdings 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 CPS is equal to 2.6%. 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 - $697 million for Cooper-Standard Holdings - 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 17.714 million for Cooper-Standard Holdings 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 Cooper-Standard Holdings at the current share price and the inputted number of shares is $2.4 billion.

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COMPANY NEWS

▶ Cooper-Standard misses 3Q profit forecasts   [Oct-31-17 05:03PM  Associated Press]
▶ Cooper Standard Unveils Global Technology Center   [Oct-25-17 08:30AM  PR Newswire]
▶ Cooper-Standard beats Street 2Q forecasts   [02:36AM  Associated Press]
▶ Cooper-Standard tops Street 1Q forecasts   [May-02-17 07:41PM  Associated Press]
▶ /C O R R E C T I O N -- Cooper-Standard Holdings Inc./   [Feb-16-17 10:34PM  PR Newswire]
▶ Cooper-Standard tops Street 4Q forecasts   [06:04PM  Associated Press]
▶ [$$] User's Manual for a Mixed-Up Market   [Jan-21-17 12:01AM  at Barrons.com]
▶ SVP Pumphrey Sells Cooper Standard Shares (CPS)   [Dec-08-16 02:13PM  at Investopedia]
▶ 17 undervalued small-cap stocks to consider as markets rally   [Nov-30-16 05:30PM  at MarketWatch]
Financial statements of CPS
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