Intrinsic value of Cooper-Standard Holdings - CPS

Previous Close

$75.31

  Intrinsic Value

$141.41

stock screener

  Rating & Target

str. buy

+88%

Previous close

$75.31

 
Intrinsic value

$141.41

 
Up/down potential

+88%

 
Rating

str. buy

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

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 1.3

 

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, %
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  3,694
  3,782
  3,883
  3,995
  4,118
  4,254
  4,401
  4,560
  4,731
  4,914
  5,110
  5,319
  5,542
  5,778
  6,029
  6,294
  6,575
  6,872
  7,186
  7,517
  7,866
  8,235
  8,623
  9,032
  9,462
  9,916
  10,393
  10,895
  11,423
  11,979
Variable operating expenses, $m
  3,346
  3,426
  3,516
  3,617
  3,728
  3,850
  3,982
  4,125
  4,279
  4,444
  4,596
  4,784
  4,984
  5,197
  5,422
  5,661
  5,913
  6,180
  6,462
  6,760
  7,074
  7,406
  7,755
  8,123
  8,510
  8,918
  9,347
  9,798
  10,273
  10,773
Fixed operating expenses, $m
  88
  90
  92
  94
  96
  98
  100
  102
  105
  107
  109
  112
  114
  117
  119
  122
  124
  127
  130
  133
  136
  139
  142
  145
  148
  151
  155
  158
  162
  165
Total operating expenses, $m
  3,434
  3,516
  3,608
  3,711
  3,824
  3,948
  4,082
  4,227
  4,384
  4,551
  4,705
  4,896
  5,098
  5,314
  5,541
  5,783
  6,037
  6,307
  6,592
  6,893
  7,210
  7,545
  7,897
  8,268
  8,658
  9,069
  9,502
  9,956
  10,435
  10,938
Operating income, $m
  260
  267
  275
  284
  295
  306
  319
  333
  348
  364
  405
  424
  444
  465
  488
  512
  537
  564
  593
  624
  656
  690
  726
  764
  804
  847
  891
  939
  988
  1,041
EBITDA, $m
  410
  420
  432
  445
  459
  475
  493
  512
  533
  556
  580
  605
  633
  662
  694
  727
  762
  799
  839
  880
  925
  971
  1,021
  1,073
  1,127
  1,185
  1,246
  1,311
  1,378
  1,450
Interest expense (income), $m
  0
  42
  44
  47
  49
  53
  56
  60
  64
  69
  74
  79
  85
  91
  97
  104
  111
  119
  127
  136
  145
  154
  164
  175
  186
  198
  211
  224
  237
  252
  267
Earnings before tax, $m
  218
  223
  228
  235
  242
  250
  259
  268
  279
  290
  326
  339
  353
  368
  383
  400
  418
  437
  457
  479
  502
  526
  551
  578
  606
  636
  668
  701
  736
  773
Tax expense, $m
  59
  60
  62
  63
  65
  67
  70
  72
  75
  78
  88
  92
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  149
  156
  164
  172
  180
  189
  199
  209
Net income, $m
  159
  163
  167
  171
  177
  182
  189
  196
  203
  212
  238
  247
  258
  268
  280
  292
  305
  319
  334
  350
  366
  384
  402
  422
  442
  464
  487
  512
  537
  565

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
  2,784
  2,850
  2,926
  3,010
  3,104
  3,206
  3,316
  3,436
  3,565
  3,703
  3,851
  4,009
  4,176
  4,354
  4,543
  4,743
  4,955
  5,179
  5,415
  5,665
  5,928
  6,205
  6,498
  6,806
  7,131
  7,472
  7,832
  8,210
  8,608
  9,027
Adjusted assets (=assets-cash), $m
  2,784
  2,850
  2,926
  3,010
  3,104
  3,206
  3,316
  3,436
  3,565
  3,703
  3,851
  4,009
  4,176
  4,354
  4,543
  4,743
  4,955
  5,179
  5,415
  5,665
  5,928
  6,205
  6,498
  6,806
  7,131
  7,472
  7,832
  8,210
  8,608
  9,027
Revenue / Adjusted assets
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
Average production assets, $m
  1,034
  1,059
  1,087
  1,119
  1,153
  1,191
  1,232
  1,277
  1,325
  1,376
  1,431
  1,489
  1,552
  1,618
  1,688
  1,762
  1,841
  1,924
  2,012
  2,105
  2,203
  2,306
  2,414
  2,529
  2,649
  2,776
  2,910
  3,051
  3,199
  3,354
Working capital, $m
  122
  125
  128
  132
  136
  140
  145
  150
  156
  162
  169
  176
  183
  191
  199
  208
  217
  227
  237
  248
  260
  272
  285
  298
  312
  327
  343
  360
  377
  395
Total debt, $m
  799
  846
  899
  957
  1,022
  1,093
  1,171
  1,254
  1,344
  1,440
  1,543
  1,653
  1,770
  1,894
  2,026
  2,165
  2,313
  2,469
  2,633
  2,807
  2,991
  3,184
  3,388
  3,603
  3,829
  4,067
  4,318
  4,582
  4,859
  5,151
Total liabilities, $m
  1,940
  1,987
  2,039
  2,098
  2,163
  2,234
  2,312
  2,395
  2,485
  2,581
  2,684
  2,794
  2,911
  3,035
  3,167
  3,306
  3,454
  3,609
  3,774
  3,948
  4,132
  4,325
  4,529
  4,744
  4,970
  5,208
  5,459
  5,723
  6,000
  6,292
Total equity, $m
  843
  864
  887
  912
  940
  971
  1,005
  1,041
  1,080
  1,122
  1,167
  1,215
  1,265
  1,319
  1,377
  1,437
  1,501
  1,569
  1,641
  1,716
  1,796
  1,880
  1,969
  2,062
  2,161
  2,264
  2,373
  2,488
  2,608
  2,735
Total liabilities and equity, $m
  2,783
  2,851
  2,926
  3,010
  3,103
  3,205
  3,317
  3,436
  3,565
  3,703
  3,851
  4,009
  4,176
  4,354
  4,544
  4,743
  4,955
  5,178
  5,415
  5,664
  5,928
  6,205
  6,498
  6,806
  7,131
  7,472
  7,832
  8,211
  8,608
  9,027
Debt-to-equity ratio
  0.950
  0.980
  1.010
  1.050
  1.090
  1.130
  1.170
  1.200
  1.240
  1.280
  1.320
  1.360
  1.400
  1.440
  1.470
  1.510
  1.540
  1.570
  1.610
  1.640
  1.670
  1.690
  1.720
  1.750
  1.770
  1.800
  1.820
  1.840
  1.860
  1.880
Adjusted equity ratio
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  159
  163
  167
  171
  177
  182
  189
  196
  203
  212
  238
  247
  258
  268
  280
  292
  305
  319
  334
  350
  366
  384
  402
  422
  442
  464
  487
  512
  537
  565
Depreciation, amort., depletion, $m
  150
  153
  157
  160
  165
  169
  174
  180
  186
  192
  175
  182
  189
  197
  206
  215
  225
  235
  245
  257
  269
  281
  294
  308
  323
  339
  355
  372
  390
  409
Funds from operations, $m
  309
  316
  323
  332
  341
  352
  363
  376
  389
  403
  412
  429
  447
  466
  486
  507
  530
  554
  579
  606
  635
  665
  697
  730
  766
  803
  842
  884
  928
  974
Change in working capital, $m
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  17
  17
  18
Cash from operations, $m
  307
  313
  320
  328
  337
  347
  358
  370
  383
  397
  406
  422
  439
  458
  478
  498
  521
  544
  569
  595
  623
  653
  684
  717
  751
  788
  827
  867
  910
  955
Maintenance CAPEX, $m
  -124
  -126
  -129
  -133
  -136
  -141
  -145
  -150
  -156
  -162
  -168
  -175
  -182
  -189
  -197
  -206
  -215
  -225
  -235
  -245
  -257
  -269
  -281
  -294
  -308
  -323
  -339
  -355
  -372
  -390
New CAPEX, $m
  -20
  -25
  -28
  -31
  -35
  -38
  -41
  -45
  -48
  -51
  -55
  -59
  -62
  -66
  -70
  -74
  -79
  -83
  -88
  -93
  -98
  -103
  -109
  -115
  -121
  -127
  -134
  -141
  -148
  -156
Cash from investing activities, $m
  -144
  -151
  -157
  -164
  -171
  -179
  -186
  -195
  -204
  -213
  -223
  -234
  -244
  -255
  -267
  -280
  -294
  -308
  -323
  -338
  -355
  -372
  -390
  -409
  -429
  -450
  -473
  -496
  -520
  -546
Free cash flow, $m
  164
  162
  163
  164
  166
  169
  172
  176
  180
  184
  183
  189
  196
  203
  210
  218
  227
  236
  246
  257
  269
  281
  294
  308
  322
  338
  354
  372
  390
  410
Issuance/(repayment) of debt, $m
  41
  46
  53
  59
  65
  71
  77
  84
  90
  96
  103
  110
  117
  124
  132
  139
  148
  156
  165
  174
  183
  193
  204
  215
  226
  238
  251
  264
  277
  292
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  
  41
  46
  53
  59
  65
  71
  77
  84
  90
  96
  103
  110
  117
  124
  132
  139
  148
  156
  165
  174
  183
  193
  204
  215
  226
  238
  251
  264
  277
  292
Total cash flow (excl. dividends), $m
  205
  209
  216
  223
  231
  240
  249
  259
  270
  281
  286
  299
  312
  327
  342
  358
  375
  392
  411
  431
  452
  474
  498
  523
  549
  576
  605
  635
  668
  701
Retained Cash Flow (-), $m
  -17
  -20
  -23
  -26
  -28
  -31
  -34
  -36
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -104
  -109
  -115
  -121
  -127
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
  188
  188
  193
  198
  203
  209
  216
  223
  231
  239
  241
  251
  262
  273
  284
  297
  310
  325
  340
  356
  372
  390
  409
  429
  450
  473
  496
  521
  547
  575
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
  180
  172
  168
  163
  157
  152
  146
  139
  132
  125
  115
  107
  99
  92
  84
  75
  68
  60
  52
  45
  39
  32
  27
  22
  18
  14
  11
  8
  6
  4
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

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 9.6
Price to Sales 0.4
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 3.7
Price to Free Cash Flow 6.7
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 $3618.126 million for the last fiscal year's total revenue generated by Cooper-Standard Holdings. The default revenue input number comes from 0001 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 2.1% 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 90.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $86 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 5.5% 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 28%.

Life of production assets of 8.2 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 3.3%. 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 - $826.569 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 17.819 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 $1.3 billion.

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COMPANY NEWS

▶ Cooper-Standard: 3Q Earnings Snapshot   [06:47PM  Associated Press]
▶ Auto Sales Dropped in Q3: ETF & Stocks in Focus   [Oct-04-18 10:45AM  Zacks]
▶ Cooper Standard Celebrates Manufacturing Day   [Oct-01-18 04:30PM  PR Newswire]
▶ Cooper-Standard: 2Q Earnings Snapshot   [Jul-31-18 07:57PM  Associated Press]
▶ Why Cooper-Standard Holdings Inc (NYSE:CPS) Could Be A Buy   [Jun-22-18 07:58AM  Simply Wall St.]
▶ Cooper-Standard: 1Q Earnings Snapshot   [May-01-18 06:59PM  Associated Press]
▶ Cooper-Standard Holdings Inc. to Host Earnings Call   [Feb-16-18 07:00AM  ACCESSWIRE]
▶ Cooper Standard Reports Record 2017 Results   [Feb-15-18 04:45PM  PR Newswire]
▶ 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]

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