Intrinsic value of Gardner Denver Holdings, Inc. - GDI

Previous Close

$28.20

  Intrinsic Value

$13.43

stock screener

  Rating & Target

str. sell

-52%

Previous close

$28.20

 
Intrinsic value

$13.43

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of GDI 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 5.6

 

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, %
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
Revenue, $m
  2,884
  3,085
  3,294
  3,512
  3,738
  3,973
  4,219
  4,474
  4,740
  5,017
  5,307
  5,609
  5,924
  6,253
  6,597
  6,957
  7,333
  7,727
  8,139
  8,570
  9,021
  9,494
  9,989
  10,508
  11,052
  11,622
  12,220
  12,847
  13,504
  14,193
Variable operating expenses, $m
  2,732
  2,904
  3,083
  3,269
  3,462
  3,664
  3,873
  4,092
  4,319
  4,557
  4,538
  4,797
  5,066
  5,348
  5,642
  5,950
  6,271
  6,608
  6,960
  7,329
  7,715
  8,119
  8,543
  8,987
  9,452
  9,939
  10,450
  10,986
  11,548
  12,138
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
  2,732
  2,904
  3,083
  3,269
  3,462
  3,664
  3,873
  4,092
  4,319
  4,557
  4,538
  4,797
  5,066
  5,348
  5,642
  5,950
  6,271
  6,608
  6,960
  7,329
  7,715
  8,119
  8,543
  8,987
  9,452
  9,939
  10,450
  10,986
  11,548
  12,138
Operating income, $m
  152
  181
  211
  243
  276
  310
  345
  382
  421
  461
  768
  812
  858
  906
  955
  1,007
  1,062
  1,119
  1,179
  1,241
  1,306
  1,375
  1,447
  1,522
  1,600
  1,683
  1,770
  1,860
  1,955
  2,055
EBITDA, $m
  526
  563
  601
  641
  682
  725
  770
  816
  865
  915
  968
  1,023
  1,081
  1,141
  1,203
  1,269
  1,338
  1,410
  1,485
  1,563
  1,646
  1,732
  1,822
  1,917
  2,016
  2,120
  2,229
  2,343
  2,463
  2,589
Interest expense (income), $m
  154
  90
  101
  113
  124
  137
  149
  163
  177
  191
  206
  222
  238
  255
  273
  291
  311
  331
  352
  375
  398
  422
  448
  474
  502
  532
  562
  594
  628
  663
  701
Earnings before tax, $m
  61
  80
  99
  118
  139
  160
  182
  206
  230
  255
  547
  574
  603
  633
  664
  697
  731
  767
  804
  843
  884
  927
  972
  1,019
  1,069
  1,121
  1,175
  1,232
  1,292
  1,355
Tax expense, $m
  17
  22
  27
  32
  37
  43
  49
  55
  62
  69
  148
  155
  163
  171
  179
  188
  197
  207
  217
  228
  239
  250
  263
  275
  289
  303
  317
  333
  349
  366
Net income, $m
  45
  58
  72
  86
  101
  117
  133
  150
  168
  186
  399
  419
  440
  462
  485
  509
  534
  560
  587
  616
  646
  677
  710
  744
  780
  818
  858
  900
  943
  989

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
  4,814
  5,150
  5,499
  5,863
  6,240
  6,633
  7,043
  7,469
  7,913
  8,376
  8,859
  9,363
  9,890
  10,440
  11,014
  11,615
  12,243
  12,900
  13,587
  14,307
  15,061
  15,850
  16,677
  17,543
  18,451
  19,403
  20,401
  21,447
  22,544
  23,694
Adjusted assets (=assets-cash), $m
  4,814
  5,150
  5,499
  5,863
  6,240
  6,633
  7,043
  7,469
  7,913
  8,376
  8,859
  9,363
  9,890
  10,440
  11,014
  11,615
  12,243
  12,900
  13,587
  14,307
  15,061
  15,850
  16,677
  17,543
  18,451
  19,403
  20,401
  21,447
  22,544
  23,694
Revenue / Adjusted assets
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
Average production assets, $m
  1,811
  1,937
  2,069
  2,205
  2,347
  2,495
  2,649
  2,810
  2,977
  3,151
  3,333
  3,522
  3,720
  3,927
  4,143
  4,369
  4,605
  4,853
  5,111
  5,382
  5,665
  5,962
  6,273
  6,599
  6,941
  7,299
  7,674
  8,068
  8,480
  8,913
Working capital, $m
  559
  598
  639
  681
  725
  771
  818
  868
  920
  973
  1,030
  1,088
  1,149
  1,213
  1,280
  1,350
  1,423
  1,499
  1,579
  1,663
  1,750
  1,842
  1,938
  2,039
  2,144
  2,255
  2,371
  2,492
  2,620
  2,753
Total debt, $m
  1,875
  2,085
  2,304
  2,531
  2,767
  3,014
  3,270
  3,537
  3,815
  4,105
  4,407
  4,723
  5,052
  5,396
  5,756
  6,132
  6,525
  6,936
  7,367
  7,817
  8,289
  8,783
  9,301
  9,843
  10,411
  11,007
  11,632
  12,287
  12,973
  13,694
Total liabilities, $m
  3,014
  3,224
  3,443
  3,670
  3,906
  4,153
  4,409
  4,676
  4,954
  5,244
  5,546
  5,862
  6,191
  6,535
  6,895
  7,271
  7,664
  8,075
  8,506
  8,956
  9,428
  9,922
  10,440
  10,982
  11,550
  12,146
  12,771
  13,426
  14,112
  14,833
Total equity, $m
  1,800
  1,926
  2,057
  2,193
  2,334
  2,481
  2,634
  2,793
  2,960
  3,133
  3,313
  3,502
  3,699
  3,904
  4,119
  4,344
  4,579
  4,825
  5,082
  5,351
  5,633
  5,928
  6,237
  6,561
  6,901
  7,257
  7,630
  8,021
  8,431
  8,862
Total liabilities and equity, $m
  4,814
  5,150
  5,500
  5,863
  6,240
  6,634
  7,043
  7,469
  7,914
  8,377
  8,859
  9,364
  9,890
  10,439
  11,014
  11,615
  12,243
  12,900
  13,588
  14,307
  15,061
  15,850
  16,677
  17,543
  18,451
  19,403
  20,401
  21,447
  22,543
  23,695
Debt-to-equity ratio
  1.040
  1.080
  1.120
  1.150
  1.190
  1.210
  1.240
  1.270
  1.290
  1.310
  1.330
  1.350
  1.370
  1.380
  1.400
  1.410
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.520
  1.520
  1.530
  1.540
  1.550
Adjusted equity ratio
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  45
  58
  72
  86
  101
  117
  133
  150
  168
  186
  399
  419
  440
  462
  485
  509
  534
  560
  587
  616
  646
  677
  710
  744
  780
  818
  858
  900
  943
  989
Depreciation, amort., depletion, $m
  374
  382
  390
  398
  406
  415
  424
  434
  444
  454
  200
  211
  223
  235
  248
  262
  276
  291
  306
  322
  339
  357
  376
  395
  416
  437
  460
  483
  508
  534
Funds from operations, $m
  419
  440
  462
  484
  508
  532
  558
  584
  612
  640
  599
  630
  663
  697
  733
  770
  809
  850
  893
  938
  985
  1,034
  1,085
  1,139
  1,196
  1,255
  1,317
  1,383
  1,451
  1,523
Change in working capital, $m
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
  127
  134
Cash from operations, $m
  382
  401
  421
  442
  464
  486
  510
  535
  560
  587
  543
  572
  602
  633
  666
  700
  736
  774
  813
  854
  897
  942
  989
  1,039
  1,090
  1,145
  1,201
  1,261
  1,323
  1,389
Maintenance CAPEX, $m
  -101
  -108
  -116
  -124
  -132
  -141
  -149
  -159
  -168
  -178
  -189
  -200
  -211
  -223
  -235
  -248
  -262
  -276
  -291
  -306
  -322
  -339
  -357
  -376
  -395
  -416
  -437
  -460
  -483
  -508
New CAPEX, $m
  -122
  -126
  -131
  -137
  -142
  -148
  -154
  -160
  -167
  -174
  -182
  -190
  -198
  -207
  -216
  -226
  -236
  -247
  -259
  -271
  -283
  -297
  -311
  -326
  -342
  -358
  -375
  -394
  -413
  -433
Cash from investing activities, $m
  -223
  -234
  -247
  -261
  -274
  -289
  -303
  -319
  -335
  -352
  -371
  -390
  -409
  -430
  -451
  -474
  -498
  -523
  -550
  -577
  -605
  -636
  -668
  -702
  -737
  -774
  -812
  -854
  -896
  -941
Free cash flow, $m
  159
  166
  174
  182
  190
  198
  207
  216
  225
  234
  172
  182
  193
  204
  215
  226
  238
  251
  264
  277
  291
  306
  321
  337
  354
  371
  389
  408
  428
  448
Issuance/(repayment) of debt, $m
  203
  210
  219
  227
  236
  246
  256
  267
  278
  290
  302
  316
  329
  344
  360
  376
  393
  411
  430
  451
  472
  494
  518
  542
  568
  596
  625
  655
  687
  720
Issuance/(repurchase) of shares, $m
  80
  67
  59
  49
  40
  30
  20
  9
  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  
  283
  277
  278
  276
  276
  276
  276
  276
  278
  290
  302
  316
  329
  344
  360
  376
  393
  411
  430
  451
  472
  494
  518
  542
  568
  596
  625
  655
  687
  720
Total cash flow (excl. dividends), $m
  441
  444
  451
  458
  466
  474
  483
  492
  503
  524
  475
  498
  522
  548
  574
  602
  632
  662
  694
  728
  763
  800
  839
  880
  922
  967
  1,014
  1,063
  1,114
  1,169
Retained Cash Flow (-), $m
  -124
  -126
  -131
  -136
  -141
  -147
  -153
  -159
  -166
  -173
  -181
  -189
  -197
  -206
  -215
  -225
  -235
  -246
  -257
  -269
  -282
  -295
  -309
  -324
  -340
  -356
  -373
  -391
  -410
  -430
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
  316
  318
  320
  323
  325
  327
  330
  332
  337
  351
  294
  309
  325
  342
  360
  378
  397
  416
  437
  459
  481
  505
  530
  555
  583
  611
  641
  672
  704
  738
Discount rate, %
  6.40
  6.72
  7.06
  7.41
  7.78
  8.17
  8.58
  9.01
  9.46
  9.93
  10.42
  10.95
  11.49
  12.07
  12.67
  13.31
  13.97
  14.67
  15.40
  16.17
  16.98
  17.83
  18.72
  19.66
  20.64
  21.67
  22.76
  23.89
  25.09
  26.34
PV of cash for distribution, $m
  297
  279
  261
  242
  223
  204
  185
  167
  149
  136
  99
  89
  79
  69
  60
  51
  43
  35
  29
  23
  18
  14
  10
  7
  5
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  98.6
  97.5
  96.6
  95.9
  95.4
  95.1
  94.8
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7

Gardner Denver Holdings, Inc. is a global provider of mission-critical flow control and compression equipments and associated aftermarket parts, consumables and services. The Company operates through three business segments: Industry, Energy and Medical. Industry segment designs, manufactures, markets and services a range of air compression, vacuum and blower products. Energy segment supplies positive displacement pumps, liquid ring vacuum pumps, compressors and integrated systems, engineered fluid loading and transfer equipment and associated aftermarket parts. Medical segment designs, manufactures and supplies medical equipment, laboratory vacuum and automated liquid handling end-markets The Company’s products are sold under a range of brands namely Gardner Denver, CompAir, Nash, Emco Wheaton, Robuschi, Elmo Rietschle and Thomas.

FINANCIAL RATIOS  of  Gardner Denver Holdings, Inc. (GDI)

Valuation Ratios
P/E Ratio -144.6
Price to Sales 2.8
Price to Book 20.1
Price to Tangible Book
Price to Cash Flow 32.2
Price to Free Cash Flow 58.2
Growth Rates
Sales Growth Rate -8.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.2%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 11
Current Ratio 0.1
LT Debt to Equity 1035.3%
Total Debt to Equity 1044.4%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.9%
Ret/ On Assets - 3 Yr. Avg. -2.9%
Return On Total Capital -1.2%
Ret/ On T. Cap. - 3 Yr. Avg. -7.7%
Return On Equity -11.3%
Return On Equity - 3 Yr. Avg. -63.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 37%
Gross Margin - 3 Yr. Avg. 36.7%
EBITDA Margin 13.6%
EBITDA Margin - 3 Yr. Avg. 6.2%
Operating Margin 5.4%
Oper. Margin - 3 Yr. Avg. -0.8%
Pre-Tax Margin -3.2%
Pre-Tax Margin - 3 Yr. Avg. -8.3%
Net Profit Margin -1.9%
Net Profit Margin - 3 Yr. Avg. -7.9%
Effective Tax Rate 50.8%
Eff/ Tax Rate - 3 Yr. Avg. 11.5%
Payout Ratio 0%

GDI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GDI stock intrinsic value calculation we used $2690 million for the last fiscal year's total revenue generated by Gardner Denver Holdings, Inc.. The default revenue input number comes from 0001 income statement of Gardner Denver 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 GDI stock valuation model: a) initial revenue growth rate of 7.2% 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 6.4%, whose default value for GDI is calculated based on our internal credit rating of Gardner Denver 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 Gardner Denver 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 GDI stock the variable cost ratio is equal to 95.4%.

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 GDI 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 Gardner Denver Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for Gardner Denver 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 GDI 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 GDI are equal to 62.8%.

Life of production assets of 16.7 years is the average useful life of capital assets used in Gardner Denver 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 GDI is equal to 19.4%. 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 - $1676 million for Gardner Denver 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 198.853 million for Gardner Denver 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 Gardner Denver Holdings, Inc. at the current share price and the inputted number of shares is $5.6 billion.

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