Intrinsic value of Cooper-Standard Holdings Inc. - CPS

Previous Close

$39.65

  Intrinsic Value

$106.65

stock screener

  Rating & Target

str. buy

+169%

Previous close

$39.65

 
Intrinsic value

$106.65

 
Up/down potential

+169%

 
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 0.7

 

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
  3,702
  3,787
  3,884
  3,993
  4,114
  4,247
  4,392
  4,548
  4,717
  4,898
  5,092
  5,298
  5,518
  5,752
  6,000
  6,263
  6,542
  6,836
  7,147
  7,476
  7,822
  8,187
  8,573
  8,979
  9,406
  9,856
  10,330
  10,828
  11,353
  11,904
Variable operating expenses, $m
  3,427
  3,505
  3,595
  3,695
  3,807
  3,929
  4,062
  4,206
  4,361
  4,527
  4,681
  4,871
  5,073
  5,288
  5,516
  5,758
  6,014
  6,284
  6,570
  6,872
  7,191
  7,527
  7,881
  8,254
  8,647
  9,061
  9,496
  9,954
  10,436
  10,944
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
  3,427
  3,505
  3,595
  3,695
  3,807
  3,929
  4,062
  4,206
  4,361
  4,527
  4,681
  4,871
  5,073
  5,288
  5,516
  5,758
  6,014
  6,284
  6,570
  6,872
  7,191
  7,527
  7,881
  8,254
  8,647
  9,061
  9,496
  9,954
  10,436
  10,944
Operating income, $m
  274
  281
  289
  298
  308
  318
  330
  343
  356
  371
  411
  428
  445
  464
  484
  505
  528
  552
  577
  603
  631
  661
  692
  725
  759
  795
  834
  874
  916
  961
EBITDA, $m
  432
  442
  454
  467
  481
  496
  513
  531
  551
  572
  595
  619
  645
  672
  701
  732
  764
  799
  835
  873
  914
  957
  1,002
  1,049
  1,099
  1,152
  1,207
  1,265
  1,326
  1,391
Interest expense (income), $m
  0
  45
  47
  49
  52
  55
  58
  61
  65
  69
  74
  79
  84
  89
  95
  102
  108
  115
  123
  130
  139
  147
  157
  166
  177
  188
  199
  211
  224
  237
  251
Earnings before tax, $m
  230
  234
  240
  246
  253
  261
  269
  277
  287
  297
  332
  344
  356
  369
  383
  397
  413
  429
  446
  465
  484
  504
  525
  548
  571
  596
  623
  650
  679
  710
Tax expense, $m
  62
  63
  65
  66
  68
  70
  73
  75
  77
  80
  90
  93
  96
  100
  103
  107
  111
  116
  121
  125
  131
  136
  142
  148
  154
  161
  168
  176
  183
  192
Net income, $m
  168
  171
  175
  180
  185
  190
  196
  203
  209
  217
  242
  251
  260
  269
  279
  290
  301
  313
  326
  339
  353
  368
  383
  400
  417
  435
  454
  475
  496
  518

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
  2,676
  2,738
  2,808
  2,887
  2,975
  3,071
  3,176
  3,289
  3,411
  3,542
  3,682
  3,831
  3,990
  4,159
  4,339
  4,529
  4,730
  4,943
  5,168
  5,405
  5,656
  5,920
  6,199
  6,492
  6,801
  7,127
  7,469
  7,829
  8,209
  8,607
Adjusted assets (=assets-cash), $m
  2,676
  2,738
  2,808
  2,887
  2,975
  3,071
  3,176
  3,289
  3,411
  3,542
  3,682
  3,831
  3,990
  4,159
  4,339
  4,529
  4,730
  4,943
  5,168
  5,405
  5,656
  5,920
  6,199
  6,492
  6,801
  7,127
  7,469
  7,829
  8,209
  8,607
Revenue / Adjusted assets
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
Average production assets, $m
  1,110
  1,136
  1,165
  1,198
  1,234
  1,274
  1,318
  1,365
  1,415
  1,469
  1,528
  1,590
  1,656
  1,726
  1,800
  1,879
  1,963
  2,051
  2,144
  2,243
  2,347
  2,456
  2,572
  2,694
  2,822
  2,957
  3,099
  3,248
  3,406
  3,571
Working capital, $m
  274
  280
  287
  296
  304
  314
  325
  337
  349
  362
  377
  392
  408
  426
  444
  463
  484
  506
  529
  553
  579
  606
  634
  664
  696
  729
  764
  801
  840
  881
Total debt, $m
  868
  910
  958
  1,012
  1,071
  1,137
  1,208
  1,286
  1,369
  1,458
  1,554
  1,656
  1,765
  1,880
  2,003
  2,133
  2,270
  2,416
  2,569
  2,731
  2,902
  3,083
  3,273
  3,474
  3,685
  3,907
  4,141
  4,387
  4,646
  4,918
Total liabilities, $m
  1,828
  1,870
  1,918
  1,972
  2,032
  2,097
  2,169
  2,246
  2,330
  2,419
  2,515
  2,617
  2,725
  2,841
  2,963
  3,093
  3,231
  3,376
  3,530
  3,692
  3,863
  4,043
  4,234
  4,434
  4,645
  4,867
  5,101
  5,348
  5,607
  5,879
Total equity, $m
  848
  868
  890
  915
  943
  974
  1,007
  1,043
  1,081
  1,123
  1,167
  1,214
  1,265
  1,318
  1,375
  1,436
  1,499
  1,567
  1,638
  1,713
  1,793
  1,877
  1,965
  2,058
  2,156
  2,259
  2,368
  2,482
  2,602
  2,729
Total liabilities and equity, $m
  2,676
  2,738
  2,808
  2,887
  2,975
  3,071
  3,176
  3,289
  3,411
  3,542
  3,682
  3,831
  3,990
  4,159
  4,338
  4,529
  4,730
  4,943
  5,168
  5,405
  5,656
  5,920
  6,199
  6,492
  6,801
  7,126
  7,469
  7,830
  8,209
  8,608
Debt-to-equity ratio
  1.020
  1.050
  1.080
  1.110
  1.140
  1.170
  1.200
  1.230
  1.270
  1.300
  1.330
  1.360
  1.400
  1.430
  1.460
  1.490
  1.510
  1.540
  1.570
  1.590
  1.620
  1.640
  1.670
  1.690
  1.710
  1.730
  1.750
  1.770
  1.790
  1.800
Adjusted equity ratio
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  168
  171
  175
  180
  185
  190
  196
  203
  209
  217
  242
  251
  260
  269
  279
  290
  301
  313
  326
  339
  353
  368
  383
  400
  417
  435
  454
  475
  496
  518
Depreciation, amort., depletion, $m
  158
  161
  165
  169
  173
  178
  183
  189
  195
  201
  184
  192
  199
  208
  217
  226
  236
  247
  258
  270
  283
  296
  310
  325
  340
  356
  373
  391
  410
  430
Funds from operations, $m
  326
  332
  340
  348
  358
  368
  379
  391
  404
  418
  426
  442
  459
  477
  496
  516
  538
  560
  584
  609
  636
  664
  693
  724
  757
  792
  828
  866
  906
  948
Change in working capital, $m
  5
  6
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
Cash from operations, $m
  320
  326
  333
  340
  349
  358
  368
  380
  392
  405
  412
  427
  443
  460
  478
  497
  517
  539
  561
  585
  610
  637
  665
  694
  726
  758
  793
  829
  867
  908
Maintenance CAPEX, $m
  -131
  -134
  -137
  -140
  -144
  -149
  -154
  -159
  -164
  -170
  -177
  -184
  -192
  -199
  -208
  -217
  -226
  -236
  -247
  -258
  -270
  -283
  -296
  -310
  -325
  -340
  -356
  -373
  -391
  -410
New CAPEX, $m
  -21
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -74
  -79
  -84
  -88
  -93
  -99
  -104
  -110
  -116
  -122
  -128
  -135
  -142
  -150
  -157
  -165
Cash from investing activities, $m
  -152
  -160
  -166
  -173
  -180
  -189
  -197
  -206
  -215
  -224
  -235
  -246
  -258
  -269
  -282
  -296
  -310
  -324
  -340
  -357
  -374
  -393
  -412
  -432
  -453
  -475
  -498
  -523
  -548
  -575
Free cash flow, $m
  168
  167
  167
  167
  168
  170
  172
  174
  177
  180
  177
  181
  185
  190
  196
  201
  207
  214
  221
  228
  236
  244
  253
  263
  273
  283
  294
  306
  319
  332
Issuance/(repayment) of debt, $m
  36
  42
  48
  54
  60
  66
  71
  77
  83
  89
  96
  102
  109
  115
  123
  130
  137
  145
  154
  162
  171
  180
  190
  200
  211
  222
  234
  246
  259
  272
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  
  36
  42
  48
  54
  60
  66
  71
  77
  83
  89
  96
  102
  109
  115
  123
  130
  137
  145
  154
  162
  171
  180
  190
  200
  211
  222
  234
  246
  259
  272
Total cash flow (excl. dividends), $m
  204
  209
  215
  221
  228
  235
  243
  251
  260
  269
  273
  283
  294
  306
  318
  331
  345
  359
  374
  390
  407
  425
  444
  463
  484
  506
  528
  552
  578
  604
Retained Cash Flow (-), $m
  -17
  -20
  -22
  -25
  -28
  -30
  -33
  -36
  -39
  -41
  -44
  -47
  -50
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -109
  -114
  -120
  -126
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
  187
  189
  192
  196
  200
  205
  210
  215
  221
  228
  228
  236
  244
  252
  261
  271
  281
  292
  303
  315
  328
  341
  355
  370
  386
  402
  420
  438
  457
  478
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  176
  167
  158
  149
  140
  131
  121
  111
  102
  92
  81
  72
  63
  55
  47
  40
  34
  28
  22
  18
  14
  11
  8
  6
  4
  3
  2
  1
  1
  1
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 Inc. (CPS)

Valuation Ratios
P/E Ratio 5
Price to Sales 0.2
Price to Book 1
Price to Tangible Book
Price to Cash Flow 1.9
Price to Free Cash Flow 3.5
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 $3629 million for the last fiscal year's total revenue generated by Cooper-Standard Holdings Inc.. The default revenue input number comes from 0001 income statement of Cooper-Standard Holdings 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 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 6.1%, whose default value for CPS is calculated based on our internal credit rating of Cooper-Standard Holdings 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 Cooper-Standard Holdings 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 CPS stock the variable cost ratio is equal to 92.6%.

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 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 5.4% for Cooper-Standard Holdings Inc..

Corporate tax rate of 27% is the nominal tax rate for Cooper-Standard Holdings 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 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 30%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Cooper-Standard Holdings 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 CPS is equal to 7.4%. 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 - $831.465 million for Cooper-Standard Holdings 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 17.436 million for Cooper-Standard Holdings 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 Cooper-Standard Holdings Inc. at the current share price and the inputted number of shares is $0.7 billion.

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