Intrinsic value of Foundation Building Materials, Inc. - FBM

Previous Close

$17.33

  Intrinsic Value

$22.45

stock screener

  Rating & Target

buy

+30%

Previous close

$17.33

 
Intrinsic value

$22.45

 
Up/down potential

+30%

 
Rating

buy

We calculate the intrinsic value of FBM 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, %
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.01
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.59
  7.33
  7.09
  6.88
  6.70
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
Revenue, $m
  2,377
  2,738
  3,125
  3,539
  3,978
  4,443
  4,932
  5,445
  5,982
  6,543
  7,128
  7,737
  8,371
  9,030
  9,714
  10,426
  11,166
  11,935
  12,734
  13,565
  14,429
  15,329
  16,266
  17,242
  18,260
  19,321
  20,428
  21,584
  22,791
  24,052
Variable operating expenses, $m
  2,210
  2,536
  2,886
  3,259
  3,656
  4,075
  4,517
  4,980
  5,465
  5,972
  6,437
  6,987
  7,560
  8,155
  8,773
  9,416
  10,084
  10,778
  11,500
  12,251
  13,032
  13,844
  14,691
  15,572
  16,491
  17,449
  18,449
  19,493
  20,583
  21,722
Fixed operating expenses, $m
  68
  70
  72
  73
  75
  76
  78
  80
  81
  83
  85
  87
  89
  91
  93
  95
  97
  99
  101
  104
  106
  108
  111
  113
  115
  118
  121
  123
  126
  129
Total operating expenses, $m
  2,278
  2,606
  2,958
  3,332
  3,731
  4,151
  4,595
  5,060
  5,546
  6,055
  6,522
  7,074
  7,649
  8,246
  8,866
  9,511
  10,181
  10,877
  11,601
  12,355
  13,138
  13,952
  14,802
  15,685
  16,606
  17,567
  18,570
  19,616
  20,709
  21,851
Operating income, $m
  99
  132
  168
  207
  248
  291
  337
  385
  435
  487
  605
  662
  722
  784
  848
  915
  985
  1,057
  1,132
  1,210
  1,292
  1,377
  1,465
  1,557
  1,653
  1,754
  1,858
  1,968
  2,082
  2,201
EBITDA, $m
  215
  257
  302
  349
  400
  454
  511
  570
  633
  698
  766
  837
  910
  987
  1,067
  1,150
  1,236
  1,326
  1,419
  1,516
  1,617
  1,722
  1,831
  1,945
  2,064
  2,188
  2,318
  2,453
  2,595
  2,742
Interest expense (income), $m
  20
  54
  68
  83
  99
  117
  135
  155
  176
  198
  220
  244
  269
  295
  321
  349
  378
  408
  440
  472
  506
  541
  578
  616
  656
  697
  740
  785
  832
  881
  932
Earnings before tax, $m
  45
  64
  85
  107
  131
  155
  181
  209
  237
  267
  361
  394
  427
  462
  499
  537
  576
  617
  660
  704
  751
  799
  849
  902
  956
  1,014
  1,073
  1,136
  1,201
  1,269
Tax expense, $m
  12
  17
  23
  29
  35
  42
  49
  56
  64
  72
  98
  106
  115
  125
  135
  145
  156
  167
  178
  190
  203
  216
  229
  243
  258
  274
  290
  307
  324
  343
Net income, $m
  33
  47
  62
  78
  95
  113
  132
  152
  173
  195
  264
  287
  312
  338
  364
  392
  421
  451
  482
  514
  548
  583
  620
  658
  698
  740
  784
  829
  877
  927

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
  1,532
  1,764
  2,014
  2,280
  2,563
  2,863
  3,178
  3,508
  3,854
  4,216
  4,593
  4,985
  5,393
  5,818
  6,259
  6,718
  7,194
  7,690
  8,205
  8,740
  9,297
  9,877
  10,481
  11,110
  11,765
  12,449
  13,163
  13,907
  14,685
  15,497
Adjusted assets (=assets-cash), $m
  1,532
  1,764
  2,014
  2,280
  2,563
  2,863
  3,178
  3,508
  3,854
  4,216
  4,593
  4,985
  5,393
  5,818
  6,259
  6,718
  7,194
  7,690
  8,205
  8,740
  9,297
  9,877
  10,481
  11,110
  11,765
  12,449
  13,163
  13,907
  14,685
  15,497
Revenue / Adjusted assets
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
Average production assets, $m
  535
  616
  703
  796
  895
  1,000
  1,110
  1,225
  1,346
  1,472
  1,604
  1,741
  1,883
  2,032
  2,186
  2,346
  2,512
  2,685
  2,865
  3,052
  3,247
  3,449
  3,660
  3,880
  4,109
  4,347
  4,596
  4,856
  5,128
  5,412
Working capital, $m
  342
  394
  450
  510
  573
  640
  710
  784
  861
  942
  1,026
  1,114
  1,205
  1,300
  1,399
  1,501
  1,608
  1,719
  1,834
  1,953
  2,078
  2,207
  2,342
  2,483
  2,629
  2,782
  2,942
  3,108
  3,282
  3,463
Total debt, $m
  744
  912
  1,092
  1,284
  1,489
  1,705
  1,932
  2,171
  2,421
  2,682
  2,954
  3,237
  3,532
  3,839
  4,157
  4,488
  4,833
  5,190
  5,562
  5,949
  6,351
  6,769
  7,205
  7,659
  8,133
  8,626
  9,141
  9,679
  10,241
  10,827
Total liabilities, $m
  1,106
  1,274
  1,454
  1,646
  1,851
  2,067
  2,294
  2,533
  2,783
  3,044
  3,316
  3,599
  3,894
  4,201
  4,519
  4,850
  5,194
  5,552
  5,924
  6,310
  6,713
  7,131
  7,567
  8,021
  8,495
  8,988
  9,503
  10,041
  10,602
  11,189
Total equity, $m
  426
  490
  560
  634
  713
  796
  883
  975
  1,071
  1,172
  1,277
  1,386
  1,499
  1,617
  1,740
  1,868
  2,000
  2,138
  2,281
  2,430
  2,585
  2,746
  2,914
  3,089
  3,271
  3,461
  3,659
  3,866
  4,082
  4,308
Total liabilities and equity, $m
  1,532
  1,764
  2,014
  2,280
  2,564
  2,863
  3,177
  3,508
  3,854
  4,216
  4,593
  4,985
  5,393
  5,818
  6,259
  6,718
  7,194
  7,690
  8,205
  8,740
  9,298
  9,877
  10,481
  11,110
  11,766
  12,449
  13,162
  13,907
  14,684
  15,497
Debt-to-equity ratio
  1.750
  1.860
  1.950
  2.030
  2.090
  2.140
  2.190
  2.230
  2.260
  2.290
  2.310
  2.340
  2.360
  2.370
  2.390
  2.400
  2.420
  2.430
  2.440
  2.450
  2.460
  2.470
  2.470
  2.480
  2.490
  2.490
  2.500
  2.500
  2.510
  2.510
Adjusted equity ratio
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278
  0.278

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  33
  47
  62
  78
  95
  113
  132
  152
  173
  195
  264
  287
  312
  338
  364
  392
  421
  451
  482
  514
  548
  583
  620
  658
  698
  740
  784
  829
  877
  927
Depreciation, amort., depletion, $m
  117
  125
  133
  143
  153
  163
  174
  186
  198
  210
  160
  174
  188
  203
  219
  235
  251
  269
  287
  305
  325
  345
  366
  388
  411
  435
  460
  486
  513
  541
Funds from operations, $m
  150
  172
  196
  221
  248
  277
  307
  338
  371
  405
  424
  461
  500
  541
  583
  626
  672
  719
  768
  819
  873
  928
  986
  1,046
  1,109
  1,175
  1,243
  1,315
  1,390
  1,468
Change in working capital, $m
  48
  52
  56
  60
  63
  67
  70
  74
  77
  81
  84
  88
  91
  95
  99
  102
  107
  111
  115
  120
  125
  130
  135
  141
  147
  153
  159
  166
  174
  182
Cash from operations, $m
  102
  120
  140
  161
  185
  210
  236
  264
  294
  325
  340
  374
  409
  446
  484
  524
  565
  608
  653
  700
  748
  799
  851
  906
  963
  1,022
  1,084
  1,148
  1,216
  1,286
Maintenance CAPEX, $m
  -46
  -53
  -62
  -70
  -80
  -90
  -100
  -111
  -123
  -135
  -147
  -160
  -174
  -188
  -203
  -219
  -235
  -251
  -269
  -287
  -305
  -325
  -345
  -366
  -388
  -411
  -435
  -460
  -486
  -513
New CAPEX, $m
  -75
  -81
  -87
  -93
  -99
  -104
  -110
  -115
  -121
  -126
  -132
  -137
  -143
  -148
  -154
  -160
  -166
  -173
  -180
  -187
  -195
  -202
  -211
  -220
  -229
  -239
  -249
  -260
  -272
  -284
Cash from investing activities, $m
  -121
  -134
  -149
  -163
  -179
  -194
  -210
  -226
  -244
  -261
  -279
  -297
  -317
  -336
  -357
  -379
  -401
  -424
  -449
  -474
  -500
  -527
  -556
  -586
  -617
  -650
  -684
  -720
  -758
  -797
Free cash flow, $m
  -19
  -15
  -9
  -2
  6
  16
  26
  38
  50
  64
  61
  76
  92
  109
  127
  145
  164
  184
  205
  226
  248
  271
  295
  320
  346
  372
  400
  429
  459
  490
Issuance/(repayment) of debt, $m
  156
  168
  180
  192
  204
  216
  227
  239
  250
  261
  272
  283
  295
  307
  319
  331
  344
  358
  372
  387
  402
  419
  436
  454
  473
  494
  515
  538
  561
  587
Issuance/(repurchase) of shares, $m
  26
  18
  7
  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  
  182
  186
  187
  192
  204
  216
  227
  239
  250
  261
  272
  283
  295
  307
  319
  331
  344
  358
  372
  387
  402
  419
  436
  454
  473
  494
  515
  538
  561
  587
Total cash flow (excl. dividends), $m
  163
  171
  179
  191
  211
  232
  254
  276
  300
  325
  333
  360
  387
  416
  445
  476
  508
  542
  577
  613
  651
  690
  731
  774
  819
  866
  915
  966
  1,020
  1,076
Retained Cash Flow (-), $m
  -59
  -65
  -69
  -74
  -79
  -83
  -88
  -92
  -96
  -100
  -105
  -109
  -114
  -118
  -123
  -127
  -132
  -138
  -143
  -149
  -155
  -161
  -168
  -175
  -182
  -190
  -198
  -207
  -216
  -226
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
  103
  106
  109
  116
  132
  149
  166
  184
  204
  224
  228
  251
  274
  298
  323
  349
  376
  404
  433
  464
  496
  529
  563
  599
  637
  676
  717
  759
  804
  850
Discount rate, %
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
  95
  88
  81
  77
  77
  76
  73
  69
  64
  58
  48
  43
  37
  31
  26
  21
  16
  12
  9
  7
  5
  3
  2
  1
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.6
  94.6
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0

Foundation Building Materials, Inc. is a specialty distributor of wallboard and suspended ceiling systems in the United States and Canada. The Company’s segments include Specialty Building Products and Mechanical Insulation. The Company fabricates and distributes its products for specialty contractors seeking to improve or maintain energy efficiency in a range of commercial and industrial buildings. It serves markets across the United States and in Canada. Specialty building products segment distributes wallboard and accessories, metal framing, suspended ceiling systems and other products. Other products include stucco and Exterior insulation and finish system (EIFS), as well as offerings, such as tools, safety accessories and fasteners. Its Mechanical insulation segment includes insulation solutions for pipes and mechanical systems and the primary end markets served are new non-residential construction, non- residential repair and remodel construction and industrial markets.

FINANCIAL RATIOS  of  Foundation Building Materials, Inc. (FBM)

Valuation Ratios
P/E Ratio -26.5
Price to Sales 0.5
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 22.5
Price to Free Cash Flow 247.6
Growth Rates
Sales Growth Rate 69.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 130.8%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 223.1%
Total Debt to Equity 223.1%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.4%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital -3.2%
Ret/ On T. Cap. - 3 Yr. Avg. -4.5%
Return On Equity -9%
Return On Equity - 3 Yr. Avg. -13.2%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 28.5%
Gross Margin - 3 Yr. Avg. 27.8%
EBITDA Margin 2%
EBITDA Margin - 3 Yr. Avg. 2.1%
Operating Margin 1.2%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin -3.1%
Pre-Tax Margin - 3 Yr. Avg. -2.8%
Net Profit Margin -2%
Net Profit Margin - 3 Yr. Avg. -2.3%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. -17.1%
Payout Ratio 0%

FBM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FBM stock intrinsic value calculation we used $2044 million for the last fiscal year's total revenue generated by Foundation Building Materials, Inc.. The default revenue input number comes from 0001 income statement of Foundation Building Materials, 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 FBM stock valuation model: a) initial revenue growth rate of 16.3% 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 9.3%, whose default value for FBM is calculated based on our internal credit rating of Foundation Building Materials, 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 Foundation Building Materials, 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 FBM stock the variable cost ratio is equal to 93.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $67 million in the base year in the intrinsic value calculation for FBM 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 9.1% for Foundation Building Materials, Inc..

Corporate tax rate of 27% is the nominal tax rate for Foundation Building Materials, 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 FBM 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 FBM are equal to 22.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Foundation Building Materials, 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 FBM is equal to 14.4%. 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 - $366.349 million for Foundation Building Materials, 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 42.908 million for Foundation Building Materials, 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 Foundation Building Materials, Inc. at the current share price and the inputted number of shares is $0.7 billion.

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.