Intrinsic value of Enersys - ENS

Previous Close

$66.12

  Intrinsic Value

$65.22

stock screener

  Rating & Target

hold

-1%

Previous close

$66.12

 
Intrinsic value

$65.22

 
Up/down potential

-1%

 
Rating

hold

We calculate the intrinsic value of ENS 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 2.8

 

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, %
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
Revenue, $m
  2,665
  2,755
  2,852
  2,957
  3,070
  3,191
  3,320
  3,458
  3,604
  3,759
  3,923
  4,097
  4,281
  4,476
  4,681
  4,898
  5,126
  5,367
  5,621
  5,889
  6,170
  6,466
  6,778
  7,106
  7,452
  7,814
  8,196
  8,597
  9,019
  9,462
Variable operating expenses, $m
  2,247
  2,322
  2,402
  2,489
  2,582
  2,682
  2,788
  2,901
  3,022
  3,150
  3,235
  3,379
  3,530
  3,691
  3,860
  4,039
  4,227
  4,426
  4,635
  4,856
  5,088
  5,332
  5,590
  5,860
  6,145
  6,444
  6,759
  7,090
  7,437
  7,803
Fixed operating expenses, $m
  140
  143
  146
  149
  153
  156
  160
  163
  167
  170
  174
  178
  182
  186
  190
  194
  198
  203
  207
  212
  216
  221
  226
  231
  236
  241
  247
  252
  258
  263
Total operating expenses, $m
  2,387
  2,465
  2,548
  2,638
  2,735
  2,838
  2,948
  3,064
  3,189
  3,320
  3,409
  3,557
  3,712
  3,877
  4,050
  4,233
  4,425
  4,629
  4,842
  5,068
  5,304
  5,553
  5,816
  6,091
  6,381
  6,685
  7,006
  7,342
  7,695
  8,066
Operating income, $m
  277
  290
  304
  319
  336
  354
  373
  393
  415
  439
  514
  541
  569
  599
  631
  665
  701
  739
  779
  821
  866
  913
  963
  1,015
  1,071
  1,129
  1,191
  1,256
  1,324
  1,396
EBITDA, $m
  367
  381
  397
  414
  432
  452
  473
  495
  520
  545
  573
  602
  633
  667
  702
  739
  778
  819
  863
  910
  959
  1,010
  1,065
  1,122
  1,183
  1,247
  1,314
  1,385
  1,460
  1,539
Interest expense (income), $m
  0
  32
  34
  37
  39
  42
  45
  48
  52
  56
  59
  64
  68
  73
  78
  83
  88
  94
  100
  106
  113
  120
  128
  136
  144
  153
  162
  172
  182
  192
  204
Earnings before tax, $m
  245
  256
  267
  280
  293
  308
  324
  341
  360
  379
  450
  473
  496
  522
  548
  577
  607
  639
  672
  708
  745
  785
  827
  871
  918
  967
  1,019
  1,074
  1,132
  1,193
Tax expense, $m
  66
  69
  72
  76
  79
  83
  88
  92
  97
  102
  122
  128
  134
  141
  148
  156
  164
  172
  181
  191
  201
  212
  223
  235
  248
  261
  275
  290
  306
  322
Net income, $m
  179
  187
  195
  204
  214
  225
  237
  249
  263
  277
  329
  345
  362
  381
  400
  421
  443
  466
  491
  517
  544
  573
  604
  636
  670
  706
  744
  784
  826
  871

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
  2,516
  2,601
  2,693
  2,793
  2,899
  3,013
  3,135
  3,265
  3,403
  3,549
  3,705
  3,869
  4,043
  4,226
  4,420
  4,625
  4,841
  5,068
  5,308
  5,560
  5,826
  6,106
  6,401
  6,711
  7,036
  7,379
  7,739
  8,118
  8,517
  8,935
Adjusted assets (=assets-cash), $m
  2,516
  2,601
  2,693
  2,793
  2,899
  3,013
  3,135
  3,265
  3,403
  3,549
  3,705
  3,869
  4,043
  4,226
  4,420
  4,625
  4,841
  5,068
  5,308
  5,560
  5,826
  6,106
  6,401
  6,711
  7,036
  7,379
  7,739
  8,118
  8,517
  8,935
Revenue / Adjusted assets
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
  1.059
Average production assets, $m
  634
  656
  679
  704
  731
  760
  790
  823
  858
  895
  934
  975
  1,019
  1,065
  1,114
  1,166
  1,220
  1,277
  1,338
  1,401
  1,468
  1,539
  1,613
  1,691
  1,773
  1,860
  1,951
  2,046
  2,147
  2,252
Working capital, $m
  562
  581
  602
  624
  648
  673
  701
  730
  760
  793
  828
  865
  903
  944
  988
  1,033
  1,082
  1,133
  1,186
  1,242
  1,302
  1,364
  1,430
  1,499
  1,572
  1,649
  1,729
  1,814
  1,903
  1,997
Total debt, $m
  638
  683
  731
  783
  838
  898
  962
  1,029
  1,101
  1,178
  1,259
  1,345
  1,435
  1,531
  1,632
  1,739
  1,852
  1,971
  2,096
  2,228
  2,366
  2,512
  2,666
  2,828
  2,998
  3,177
  3,365
  3,563
  3,771
  3,989
Total liabilities, $m
  1,313
  1,358
  1,406
  1,458
  1,513
  1,573
  1,637
  1,704
  1,776
  1,853
  1,934
  2,020
  2,110
  2,206
  2,307
  2,414
  2,527
  2,646
  2,771
  2,903
  3,041
  3,187
  3,341
  3,503
  3,673
  3,852
  4,040
  4,238
  4,446
  4,664
Total equity, $m
  1,203
  1,243
  1,287
  1,335
  1,386
  1,440
  1,499
  1,561
  1,627
  1,697
  1,771
  1,849
  1,932
  2,020
  2,113
  2,211
  2,314
  2,423
  2,537
  2,658
  2,785
  2,919
  3,060
  3,208
  3,363
  3,527
  3,699
  3,881
  4,071
  4,271
Total liabilities and equity, $m
  2,516
  2,601
  2,693
  2,793
  2,899
  3,013
  3,136
  3,265
  3,403
  3,550
  3,705
  3,869
  4,042
  4,226
  4,420
  4,625
  4,841
  5,069
  5,308
  5,561
  5,826
  6,106
  6,401
  6,711
  7,036
  7,379
  7,739
  8,119
  8,517
  8,935
Debt-to-equity ratio
  0.530
  0.550
  0.570
  0.590
  0.600
  0.620
  0.640
  0.660
  0.680
  0.690
  0.710
  0.730
  0.740
  0.760
  0.770
  0.790
  0.800
  0.810
  0.830
  0.840
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.930
Adjusted equity ratio
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  179
  187
  195
  204
  214
  225
  237
  249
  263
  277
  329
  345
  362
  381
  400
  421
  443
  466
  491
  517
  544
  573
  604
  636
  670
  706
  744
  784
  826
  871
Depreciation, amort., depletion, $m
  90
  91
  93
  95
  96
  98
  100
  102
  104
  107
  59
  62
  64
  67
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
  123
  130
  136
  143
Funds from operations, $m
  269
  278
  288
  299
  310
  323
  337
  351
  367
  384
  388
  407
  427
  448
  471
  495
  520
  547
  575
  605
  637
  671
  706
  743
  782
  824
  867
  914
  962
  1,013
Change in working capital, $m
  17
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  56
  59
  63
  66
  69
  73
  77
  81
  85
  89
  94
Cash from operations, $m
  252
  259
  267
  277
  287
  298
  309
  322
  336
  351
  353
  370
  388
  407
  427
  449
  472
  496
  522
  549
  578
  608
  640
  674
  710
  747
  787
  829
  873
  920
Maintenance CAPEX, $m
  -39
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -118
  -123
  -130
  -136
New CAPEX, $m
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -106
Cash from investing activities, $m
  -58
  -61
  -64
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -106
  -110
  -116
  -123
  -128
  -134
  -141
  -149
  -156
  -164
  -171
  -180
  -189
  -198
  -209
  -218
  -230
  -242
Free cash flow, $m
  193
  197
  203
  209
  215
  223
  231
  240
  249
  260
  257
  270
  283
  296
  311
  327
  344
  362
  381
  401
  422
  445
  468
  494
  520
  549
  578
  610
  643
  678
Issuance/(repayment) of debt, $m
  41
  44
  48
  52
  56
  60
  64
  68
  72
  76
  81
  86
  91
  96
  101
  107
  113
  119
  125
  132
  139
  146
  154
  162
  170
  179
  188
  198
  208
  219
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
  44
  48
  52
  56
  60
  64
  68
  72
  76
  81
  86
  91
  96
  101
  107
  113
  119
  125
  132
  139
  146
  154
  162
  170
  179
  188
  198
  208
  219
Total cash flow (excl. dividends), $m
  234
  242
  251
  260
  271
  282
  294
  307
  321
  336
  338
  355
  373
  392
  412
  434
  456
  480
  506
  532
  561
  591
  622
  655
  690
  728
  767
  808
  851
  897
Retained Cash Flow (-), $m
  -38
  -41
  -44
  -47
  -51
  -55
  -58
  -62
  -66
  -70
  -74
  -79
  -83
  -88
  -93
  -98
  -103
  -109
  -115
  -121
  -127
  -134
  -141
  -148
  -156
  -164
  -172
  -181
  -190
  -200
Prev. year cash balance distribution, $m
  31
  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
  227
  201
  207
  213
  220
  228
  236
  245
  255
  266
  264
  277
  290
  304
  320
  336
  353
  372
  391
  412
  434
  457
  481
  507
  535
  564
  594
  627
  661
  697
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
  218
  184
  180
  175
  170
  165
  159
  153
  147
  140
  125
  118
  110
  102
  94
  85
  77
  68
  60
  52
  45
  38
  32
  26
  21
  16
  13
  10
  7
  5
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

EnerSys is a manufacturer, marketer and distributor of industrial batteries. The Company manufactures, markets and distributes related products, such as chargers, power equipment, outdoor cabinet enclosures and battery accessories, and provides related after-market and customer-support services for industrial batteries. Its segments based on geographic regions consist of Americas, which consists of North and South America; EMEA, which includes Europe, the Middle East and Africa, and Asia, which includes Asia, Australia and Oceania. The Company's product lines include reserve power and motive power products. Its Reserve power products also include thermally managed cabinets and enclosures for electronic equipment and batteries. The Company's motive power products are used to provide power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications. They are used as mining equipment, diesel locomotive starting and other rail equipment.

FINANCIAL RATIOS  of  Enersys (ENS)

Valuation Ratios
P/E Ratio 18
Price to Sales 1.2
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 11.7
Price to Free Cash Flow 14.7
Growth Rates
Sales Growth Rate 2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10.7%
Cap. Spend. - 3 Yr. Gr. Rate -4.2%
Financial Strength
Quick Ratio 28
Current Ratio 0
LT Debt to Equity 53.3%
Total Debt to Equity 54.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.1%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 9.5%
Ret/ On T. Cap. - 3 Yr. Avg. 9.9%
Return On Equity 15.1%
Return On Equity - 3 Yr. Avg. 14.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 27.5%
Gross Margin - 3 Yr. Avg. 26.5%
EBITDA Margin 11.3%
EBITDA Margin - 3 Yr. Avg. 11.3%
Operating Margin 10%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 9%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 6.8%
Net Profit Margin - 3 Yr. Avg. 6.6%
Effective Tax Rate 25.8%
Eff/ Tax Rate - 3 Yr. Avg. 26.7%
Payout Ratio 18.8%

ENS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENS stock intrinsic value calculation we used $2582 million for the last fiscal year's total revenue generated by Enersys. The default revenue input number comes from 0001 income statement of Enersys. 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 ENS stock valuation model: a) initial revenue growth rate of 3.2% 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 ENS is calculated based on our internal credit rating of Enersys, 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 Enersys.
    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 ENS stock the variable cost ratio is equal to 84.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $137 million in the base year in the intrinsic value calculation for ENS 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 Enersys.

Corporate tax rate of 27% is the nominal tax rate for Enersys. 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 ENS 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 ENS are equal to 23.8%.

Life of production assets of 15.8 years is the average useful life of capital assets used in Enersys 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 ENS is equal to 21.1%. 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 - $1195.675 million for Enersys - 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 43.052 million for Enersys 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 Enersys at the current share price and the inputted number of shares is $2.8 billion.

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