Intrinsic value of Curtiss-Wright Corporation - CW

Previous Close

$127.87

  Intrinsic Value

$157.74

stock screener

  Rating & Target

buy

+23%

Previous close

$127.87

 
Intrinsic value

$157.74

 
Up/down potential

+23%

 
Rating

buy

We calculate the intrinsic value of CW 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 5.5

 

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, %
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  2,557
  2,708
  2,865
  3,029
  3,200
  3,379
  3,566
  3,762
  3,966
  4,179
  4,403
  4,637
  4,882
  5,138
  5,407
  5,689
  5,984
  6,293
  6,617
  6,957
  7,313
  7,686
  8,078
  8,489
  8,921
  9,373
  9,848
  10,346
  10,869
  11,417
Variable operating expenses, $m
  1,666
  1,755
  1,848
  1,945
  2,047
  2,153
  2,263
  2,379
  2,500
  2,626
  2,607
  2,745
  2,890
  3,042
  3,201
  3,368
  3,543
  3,726
  3,918
  4,119
  4,330
  4,551
  4,783
  5,026
  5,282
  5,550
  5,831
  6,125
  6,435
  6,760
Fixed operating expenses, $m
  479
  490
  501
  512
  523
  534
  546
  558
  570
  583
  596
  609
  622
  636
  650
  664
  679
  694
  709
  725
  741
  757
  774
  791
  808
  826
  844
  863
  882
  901
Total operating expenses, $m
  2,145
  2,245
  2,349
  2,457
  2,570
  2,687
  2,809
  2,937
  3,070
  3,209
  3,203
  3,354
  3,512
  3,678
  3,851
  4,032
  4,222
  4,420
  4,627
  4,844
  5,071
  5,308
  5,557
  5,817
  6,090
  6,376
  6,675
  6,988
  7,317
  7,661
Operating income, $m
  412
  463
  516
  572
  631
  692
  757
  824
  896
  970
  1,200
  1,283
  1,369
  1,460
  1,556
  1,656
  1,762
  1,873
  1,990
  2,113
  2,242
  2,379
  2,522
  2,672
  2,831
  2,998
  3,173
  3,358
  3,552
  3,757
EBITDA, $m
  630
  684
  742
  802
  865
  931
  1,001
  1,073
  1,150
  1,230
  1,314
  1,402
  1,495
  1,593
  1,695
  1,803
  1,916
  2,035
  2,161
  2,292
  2,431
  2,577
  2,730
  2,891
  3,061
  3,239
  3,427
  3,625
  3,832
  4,051
Interest expense (income), $m
  0
  41
  47
  53
  59
  65
  72
  79
  86
  93
  101
  109
  118
  127
  137
  147
  157
  168
  179
  191
  204
  217
  230
  245
  260
  276
  293
  310
  328
  348
  368
Earnings before tax, $m
  371
  416
  464
  513
  566
  621
  678
  739
  802
  869
  1,091
  1,165
  1,242
  1,323
  1,409
  1,499
  1,594
  1,694
  1,799
  1,909
  2,026
  2,148
  2,277
  2,412
  2,555
  2,705
  2,863
  3,030
  3,205
  3,389
Tax expense, $m
  100
  112
  125
  139
  153
  168
  183
  199
  217
  235
  295
  314
  335
  357
  380
  405
  430
  457
  486
  516
  547
  580
  615
  651
  690
  730
  773
  818
  865
  915
Net income, $m
  271
  304
  338
  375
  413
  453
  495
  539
  586
  634
  796
  850
  907
  966
  1,029
  1,095
  1,164
  1,237
  1,313
  1,394
  1,479
  1,568
  1,662
  1,761
  1,865
  1,975
  2,090
  2,212
  2,339
  2,474

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
  3,450
  3,654
  3,866
  4,088
  4,319
  4,560
  4,813
  5,076
  5,352
  5,640
  5,942
  6,258
  6,588
  6,934
  7,297
  7,677
  8,075
  8,492
  8,930
  9,388
  9,869
  10,373
  10,902
  11,457
  12,039
  12,649
  13,290
  13,962
  14,668
  15,408
Adjusted assets (=assets-cash), $m
  3,450
  3,654
  3,866
  4,088
  4,319
  4,560
  4,813
  5,076
  5,352
  5,640
  5,942
  6,258
  6,588
  6,934
  7,297
  7,677
  8,075
  8,492
  8,930
  9,388
  9,869
  10,373
  10,902
  11,457
  12,039
  12,649
  13,290
  13,962
  14,668
  15,408
Revenue / Adjusted assets
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
Average production assets, $m
  1,186
  1,256
  1,329
  1,405
  1,485
  1,568
  1,655
  1,745
  1,840
  1,939
  2,043
  2,152
  2,265
  2,384
  2,509
  2,639
  2,776
  2,920
  3,070
  3,228
  3,393
  3,567
  3,748
  3,939
  4,139
  4,349
  4,569
  4,801
  5,043
  5,298
Working capital, $m
  404
  428
  453
  479
  506
  534
  563
  594
  627
  660
  696
  733
  771
  812
  854
  899
  945
  994
  1,045
  1,099
  1,155
  1,214
  1,276
  1,341
  1,409
  1,481
  1,556
  1,635
  1,717
  1,804
Total debt, $m
  867
  975
  1,087
  1,204
  1,327
  1,455
  1,589
  1,728
  1,874
  2,027
  2,187
  2,355
  2,530
  2,713
  2,905
  3,107
  3,318
  3,539
  3,771
  4,014
  4,268
  4,536
  4,816
  5,110
  5,418
  5,742
  6,082
  6,438
  6,812
  7,204
Total liabilities, $m
  1,829
  1,937
  2,049
  2,166
  2,289
  2,417
  2,551
  2,690
  2,837
  2,989
  3,149
  3,317
  3,492
  3,675
  3,867
  4,069
  4,280
  4,501
  4,733
  4,976
  5,231
  5,498
  5,778
  6,072
  6,381
  6,704
  7,044
  7,400
  7,774
  8,166
Total equity, $m
  1,622
  1,717
  1,817
  1,921
  2,030
  2,143
  2,262
  2,386
  2,515
  2,651
  2,793
  2,941
  3,096
  3,259
  3,430
  3,608
  3,795
  3,991
  4,197
  4,412
  4,638
  4,875
  5,124
  5,385
  5,658
  5,945
  6,246
  6,562
  6,894
  7,242
Total liabilities and equity, $m
  3,451
  3,654
  3,866
  4,087
  4,319
  4,560
  4,813
  5,076
  5,352
  5,640
  5,942
  6,258
  6,588
  6,934
  7,297
  7,677
  8,075
  8,492
  8,930
  9,388
  9,869
  10,373
  10,902
  11,457
  12,039
  12,649
  13,290
  13,962
  14,668
  15,408
Debt-to-equity ratio
  0.530
  0.570
  0.600
  0.630
  0.650
  0.680
  0.700
  0.720
  0.750
  0.760
  0.780
  0.800
  0.820
  0.830
  0.850
  0.860
  0.870
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.960
  0.970
  0.970
  0.980
  0.990
  0.990
Adjusted equity ratio
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  271
  304
  338
  375
  413
  453
  495
  539
  586
  634
  796
  850
  907
  966
  1,029
  1,095
  1,164
  1,237
  1,313
  1,394
  1,479
  1,568
  1,662
  1,761
  1,865
  1,975
  2,090
  2,212
  2,339
  2,474
Depreciation, amort., depletion, $m
  218
  222
  226
  230
  234
  239
  244
  249
  254
  260
  113
  120
  126
  132
  139
  147
  154
  162
  171
  179
  189
  198
  208
  219
  230
  242
  254
  267
  280
  294
Funds from operations, $m
  488
  525
  564
  605
  647
  692
  739
  788
  840
  894
  910
  970
  1,033
  1,099
  1,168
  1,241
  1,318
  1,399
  1,484
  1,573
  1,667
  1,766
  1,870
  1,980
  2,095
  2,216
  2,344
  2,478
  2,619
  2,768
Change in working capital, $m
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  79
  83
  87
Cash from operations, $m
  465
  501
  539
  579
  620
  664
  709
  757
  807
  860
  874
  933
  994
  1,058
  1,126
  1,197
  1,271
  1,350
  1,433
  1,520
  1,611
  1,707
  1,808
  1,915
  2,027
  2,145
  2,269
  2,400
  2,537
  2,681
Maintenance CAPEX, $m
  -62
  -66
  -70
  -74
  -78
  -82
  -87
  -92
  -97
  -102
  -108
  -113
  -120
  -126
  -132
  -139
  -147
  -154
  -162
  -171
  -179
  -189
  -198
  -208
  -219
  -230
  -242
  -254
  -267
  -280
New CAPEX, $m
  -68
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -143
  -150
  -158
  -165
  -173
  -182
  -191
  -200
  -210
  -220
  -231
  -243
  -255
Cash from investing activities, $m
  -130
  -136
  -143
  -150
  -157
  -165
  -174
  -183
  -192
  -201
  -212
  -222
  -234
  -245
  -257
  -270
  -284
  -297
  -312
  -329
  -344
  -362
  -380
  -399
  -419
  -440
  -462
  -485
  -510
  -535
Free cash flow, $m
  335
  366
  396
  429
  463
  498
  535
  575
  616
  659
  663
  711
  761
  813
  869
  927
  988
  1,052
  1,120
  1,191
  1,266
  1,345
  1,428
  1,516
  1,608
  1,705
  1,807
  1,915
  2,028
  2,147
Issuance/(repayment) of debt, $m
  104
  108
  113
  117
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  232
  243
  255
  267
  280
  294
  308
  324
  340
  356
  374
  392
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  
  104
  108
  113
  117
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  232
  243
  255
  267
  280
  294
  308
  324
  340
  356
  374
  392
Total cash flow (excl. dividends), $m
  439
  473
  509
  546
  585
  626
  669
  714
  762
  812
  823
  878
  936
  997
  1,061
  1,128
  1,199
  1,273
  1,352
  1,434
  1,521
  1,613
  1,709
  1,810
  1,917
  2,029
  2,147
  2,271
  2,402
  2,539
Retained Cash Flow (-), $m
  -91
  -96
  -100
  -104
  -109
  -113
  -119
  -124
  -130
  -136
  -142
  -148
  -155
  -163
  -170
  -179
  -187
  -196
  -206
  -216
  -226
  -237
  -249
  -261
  -274
  -287
  -301
  -316
  -332
  -348
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
  349
  378
  409
  442
  477
  513
  551
  590
  632
  676
  681
  730
  780
  834
  890
  949
  1,012
  1,077
  1,146
  1,219
  1,295
  1,376
  1,460
  1,549
  1,643
  1,742
  1,846
  1,955
  2,070
  2,191
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
  334
  346
  356
  364
  369
  372
  372
  369
  363
  354
  323
  311
  297
  280
  261
  241
  220
  198
  176
  155
  134
  114
  96
  79
  64
  51
  40
  30
  23
  16
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

Curtiss-Wright Corporation is a manufacturing and service company that designs, manufactures, and overhauls precision components and provides engineered products and services to the aerospace, defense, power generation and general industrial markets. The Company operates through three segments: Commercial/Industrial, Defense and Power. The Commercial/Industrial segment's products include electronic throttle control devices and transmission shifters, electro-mechanical actuation control components, valves, and surface technology services. The Defense segment's products include commercial off-the-shelf (COTS) embedded computing board level modules, turret aiming and stabilization products, weapons handling systems, avionics and electronics, flight test equipment, and aircraft data management solutions. The Power segment's products include a range of hardware, pumps, valves, fastening systems, specialized containment doors, airlock hatches and spent fuel management products.

FINANCIAL RATIOS  of  Curtiss-Wright Corporation (CW)

Valuation Ratios
P/E Ratio 30.2
Price to Sales 2.7
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 15
Growth Rates
Sales Growth Rate -4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30.6%
Cap. Spend. - 3 Yr. Gr. Rate -8.2%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 63.1%
Total Debt to Equity 74.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 8.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.4%
Return On Equity 14.7%
Return On Equity - 3 Yr. Avg. 10.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 35.6%
Gross Margin - 3 Yr. Avg. 35.2%
EBITDA Margin 17.3%
EBITDA Margin - 3 Yr. Avg. 16.9%
Operating Margin 14.6%
Oper. Margin - 3 Yr. Avg. 13.8%
Pre-Tax Margin 12.7%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 8.9%
Net Profit Margin - 3 Yr. Avg. 6.8%
Effective Tax Rate 29.5%
Eff/ Tax Rate - 3 Yr. Avg. 30.3%
Payout Ratio 12.3%

CW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CW stock intrinsic value calculation we used $2412 million for the last fiscal year's total revenue generated by Curtiss-Wright Corporation. The default revenue input number comes from 0001 income statement of Curtiss-Wright Corporation. 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 CW stock valuation model: a) initial revenue growth rate of 6% 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 CW is calculated based on our internal credit rating of Curtiss-Wright Corporation, 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 Curtiss-Wright Corporation.
    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 CW stock the variable cost ratio is equal to 65.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $469 million in the base year in the intrinsic value calculation for CW 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 Curtiss-Wright Corporation.

Corporate tax rate of 27% is the nominal tax rate for Curtiss-Wright Corporation. 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 CW 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 CW are equal to 46.4%.

Life of production assets of 18 years is the average useful life of capital assets used in Curtiss-Wright Corporation 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 CW is equal to 15.8%. 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 - $1530.781 million for Curtiss-Wright Corporation - 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 42.762 million for Curtiss-Wright Corporation 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 Curtiss-Wright Corporation at the current share price and the inputted number of shares is $5.5 billion.

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