Intrinsic value of Haynes International, Inc. - HAYN

Previous Close

$30.53

  Intrinsic Value

$59.75

stock screener

  Rating & Target

str. buy

+96%

Previous close

$30.53

 
Intrinsic value

$59.75

 
Up/down potential

+96%

 
Rating

str. buy

We calculate the intrinsic value of HAYN 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 0.4

 

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, %
  19.40
  17.96
  16.66
  15.50
  14.45
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
Revenue, $m
  519
  613
  715
  826
  945
  1,072
  1,208
  1,352
  1,503
  1,662
  1,829
  2,003
  2,184
  2,373
  2,570
  2,775
  2,988
  3,209
  3,439
  3,678
  3,926
  4,184
  4,453
  4,732
  5,023
  5,326
  5,642
  5,971
  6,315
  6,673
Variable operating expenses, $m
  347
  406
  470
  540
  616
  697
  782
  873
  969
  1,070
  1,157
  1,267
  1,382
  1,502
  1,627
  1,756
  1,891
  2,031
  2,176
  2,327
  2,484
  2,648
  2,818
  2,995
  3,179
  3,371
  3,570
  3,779
  3,996
  4,223
Fixed operating expenses, $m
  152
  156
  159
  163
  166
  170
  174
  177
  181
  185
  189
  193
  198
  202
  207
  211
  216
  220
  225
  230
  235
  240
  246
  251
  257
  262
  268
  274
  280
  286
Total operating expenses, $m
  499
  562
  629
  703
  782
  867
  956
  1,050
  1,150
  1,255
  1,346
  1,460
  1,580
  1,704
  1,834
  1,967
  2,107
  2,251
  2,401
  2,557
  2,719
  2,888
  3,064
  3,246
  3,436
  3,633
  3,838
  4,053
  4,276
  4,509
Operating income, $m
  21
  51
  85
  123
  163
  206
  252
  301
  353
  407
  482
  542
  604
  669
  737
  808
  881
  958
  1,037
  1,120
  1,206
  1,296
  1,389
  1,486
  1,587
  1,693
  1,803
  1,918
  2,038
  2,164
EBITDA, $m
  65
  101
  140
  183
  230
  279
  333
  389
  448
  511
  577
  645
  717
  792
  870
  951
  1,036
  1,124
  1,215
  1,310
  1,409
  1,512
  1,619
  1,731
  1,847
  1,969
  2,095
  2,227
  2,365
  2,509
Interest expense (income), $m
  1
  1
  6
  13
  19
  27
  34
  43
  52
  61
  71
  82
  93
  104
  116
  128
  141
  155
  169
  183
  199
  214
  231
  248
  265
  284
  303
  323
  343
  365
  388
Earnings before tax, $m
  20
  45
  73
  103
  136
  172
  209
  249
  291
  336
  400
  449
  500
  553
  609
  666
  726
  789
  854
  921
  992
  1,065
  1,141
  1,221
  1,304
  1,390
  1,481
  1,575
  1,673
  1,776
Tax expense, $m
  5
  12
  20
  28
  37
  46
  56
  67
  79
  91
  108
  121
  135
  149
  164
  180
  196
  213
  231
  249
  268
  288
  308
  330
  352
  375
  400
  425
  452
  480
Net income, $m
  14
  33
  53
  75
  99
  125
  153
  182
  213
  245
  292
  328
  365
  404
  444
  486
  530
  576
  623
  673
  724
  778
  833
  891
  952
  1,015
  1,081
  1,150
  1,222
  1,297

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
  703
  829
  967
  1,117
  1,279
  1,451
  1,635
  1,829
  2,034
  2,249
  2,474
  2,710
  2,956
  3,212
  3,478
  3,755
  4,043
  4,342
  4,653
  4,976
  5,312
  5,662
  6,025
  6,403
  6,797
  7,207
  7,634
  8,080
  8,545
  9,030
Adjusted assets (=assets-cash), $m
  703
  829
  967
  1,117
  1,279
  1,451
  1,635
  1,829
  2,034
  2,249
  2,474
  2,710
  2,956
  3,212
  3,478
  3,755
  4,043
  4,342
  4,653
  4,976
  5,312
  5,662
  6,025
  6,403
  6,797
  7,207
  7,634
  8,080
  8,545
  9,030
Revenue / Adjusted assets
  0.738
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
Average production assets, $m
  229
  270
  314
  363
  416
  472
  532
  595
  661
  731
  805
  881
  961
  1,044
  1,131
  1,221
  1,315
  1,412
  1,513
  1,618
  1,727
  1,841
  1,959
  2,082
  2,210
  2,343
  2,482
  2,627
  2,778
  2,936
Working capital, $m
  260
  306
  357
  413
  472
  536
  604
  676
  752
  831
  914
  1,001
  1,092
  1,187
  1,285
  1,388
  1,494
  1,604
  1,719
  1,839
  1,963
  2,092
  2,226
  2,366
  2,511
  2,663
  2,821
  2,986
  3,157
  3,337
Total debt, $m
  58
  113
  173
  238
  308
  383
  462
  547
  636
  729
  827
  929
  1,036
  1,147
  1,262
  1,383
  1,508
  1,638
  1,772
  1,913
  2,059
  2,210
  2,368
  2,532
  2,703
  2,881
  3,066
  3,260
  3,462
  3,672
Total liabilities, $m
  305
  360
  420
  485
  555
  630
  709
  794
  883
  976
  1,074
  1,176
  1,283
  1,394
  1,509
  1,630
  1,755
  1,885
  2,020
  2,160
  2,306
  2,457
  2,615
  2,779
  2,950
  3,128
  3,313
  3,507
  3,709
  3,919
Total equity, $m
  398
  469
  547
  632
  724
  821
  925
  1,035
  1,151
  1,273
  1,401
  1,534
  1,673
  1,818
  1,969
  2,125
  2,288
  2,458
  2,634
  2,817
  3,007
  3,205
  3,410
  3,624
  3,847
  4,079
  4,321
  4,573
  4,836
  5,111
Total liabilities and equity, $m
  703
  829
  967
  1,117
  1,279
  1,451
  1,634
  1,829
  2,034
  2,249
  2,475
  2,710
  2,956
  3,212
  3,478
  3,755
  4,043
  4,343
  4,654
  4,977
  5,313
  5,662
  6,025
  6,403
  6,797
  7,207
  7,634
  8,080
  8,545
  9,030
Debt-to-equity ratio
  0.150
  0.240
  0.320
  0.380
  0.430
  0.470
  0.500
  0.530
  0.550
  0.570
  0.590
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.710
  0.720
  0.720
Adjusted equity ratio
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  33
  53
  75
  99
  125
  153
  182
  213
  245
  292
  328
  365
  404
  444
  486
  530
  576
  623
  673
  724
  778
  833
  891
  952
  1,015
  1,081
  1,150
  1,222
  1,297
Depreciation, amort., depletion, $m
  45
  50
  55
  61
  67
  73
  80
  88
  96
  104
  95
  104
  113
  123
  133
  144
  155
  166
  178
  190
  203
  217
  230
  245
  260
  276
  292
  309
  327
  345
Funds from operations, $m
  59
  82
  108
  136
  166
  199
  233
  270
  308
  349
  387
  432
  478
  527
  577
  630
  685
  742
  801
  863
  927
  994
  1,064
  1,136
  1,212
  1,291
  1,373
  1,459
  1,548
  1,642
Change in working capital, $m
  42
  47
  51
  55
  60
  64
  68
  72
  76
  80
  83
  87
  91
  95
  98
  102
  106
  111
  115
  119
  124
  129
  134
  140
  145
  152
  158
  165
  172
  179
Cash from operations, $m
  17
  36
  57
  81
  107
  135
  165
  198
  233
  270
  304
  345
  387
  432
  479
  528
  579
  631
  686
  744
  803
  865
  929
  997
  1,066
  1,139
  1,215
  1,294
  1,377
  1,463
Maintenance CAPEX, $m
  -23
  -27
  -32
  -37
  -43
  -49
  -56
  -63
  -70
  -78
  -86
  -95
  -104
  -113
  -123
  -133
  -144
  -155
  -166
  -178
  -190
  -203
  -217
  -230
  -245
  -260
  -276
  -292
  -309
  -327
New CAPEX, $m
  -37
  -41
  -45
  -49
  -52
  -56
  -60
  -63
  -67
  -70
  -73
  -77
  -80
  -83
  -87
  -90
  -94
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -139
  -145
  -151
  -158
Cash from investing activities, $m
  -60
  -68
  -77
  -86
  -95
  -105
  -116
  -126
  -137
  -148
  -159
  -172
  -184
  -196
  -210
  -223
  -238
  -252
  -267
  -283
  -299
  -317
  -335
  -353
  -373
  -393
  -415
  -437
  -460
  -485
Free cash flow, $m
  -43
  -32
  -20
  -5
  11
  30
  50
  72
  96
  122
  144
  173
  204
  236
  270
  305
  341
  379
  419
  461
  504
  548
  595
  643
  693
  746
  800
  857
  916
  978
Issuance/(repayment) of debt, $m
  50
  55
  60
  65
  70
  75
  80
  84
  89
  93
  98
  102
  107
  111
  116
  120
  125
  130
  135
  140
  146
  152
  158
  164
  171
  178
  185
  193
  202
  211
Issuance/(repurchase) of shares, $m
  50
  39
  25
  9
  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  
  100
  94
  85
  74
  70
  75
  80
  84
  89
  93
  98
  102
  107
  111
  116
  120
  125
  130
  135
  140
  146
  152
  158
  164
  171
  178
  185
  193
  202
  211
Total cash flow (excl. dividends), $m
  57
  61
  65
  69
  81
  105
  130
  157
  185
  215
  242
  276
  310
  347
  385
  425
  466
  509
  554
  601
  649
  700
  752
  807
  864
  924
  986
  1,051
  1,118
  1,189
Retained Cash Flow (-), $m
  -65
  -71
  -78
  -85
  -91
  -98
  -104
  -110
  -116
  -122
  -128
  -133
  -139
  -145
  -151
  -157
  -163
  -169
  -176
  -183
  -190
  -198
  -206
  -214
  -223
  -232
  -242
  -252
  -263
  -275
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
  -8
  -10
  -13
  -15
  -10
  7
  26
  47
  69
  93
  115
  142
  171
  202
  234
  268
  303
  340
  378
  418
  459
  502
  547
  593
  641
  692
  744
  798
  855
  914
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
  -7
  -9
  -11
  -13
  -8
  5
  17
  29
  40
  49
  54
  61
  65
  68
  69
  68
  66
  63
  58
  53
  47
  42
  36
  30
  25
  20
  16
  12
  9
  7
Current shareholders' claim on cash, %
  88.4
  81.5
  77.8
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7
  76.7

Haynes International, Inc. (Haynes) is a producer of nickel- and cobalt-based alloys in flat product forms, such as sheet, coil and plate forms. The Company also produces its products as seamless and welded tubulars, and in slab, bar, billet and wire forms. It focuses on developing, manufacturing, marketing and distributing alloys, which are sold in the aerospace, chemical processing and industrial gas turbine industries. Its products consist of high-temperature resistant alloys (HTA) products and corrosion-resistant alloys (CRA) products. Its HTA products are used in manufacturing components for the hot sections of gas turbine engines. Its CRA products are used in a range of applications, such as chemical processing, power plant emissions control, hazardous waste treatment, sour gas production and pharmaceutical vessels. The Company has a four-high Steckel rolling mill used in hot rolling high-performance alloys. The Company has operations in the United States, Europe and China.

FINANCIAL RATIOS  of  Haynes International, Inc. (HAYN)

Valuation Ratios
P/E Ratio -38.2
Price to Sales 1
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 29.4
Price to Free Cash Flow -191
Growth Rates
Sales Growth Rate -2.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -53.1%
Cap. Spend. - 3 Yr. Gr. Rate -17.8%
Financial Strength
Quick Ratio 46
Current Ratio 0.1
LT Debt to Equity 2.4%
Total Debt to Equity 2.7%
Interest Coverage -16
Management Effectiveness
Return On Assets -1.5%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital -3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.4%
Return On Equity -3.1%
Return On Equity - 3 Yr. Avg. 2.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 7.6%
Gross Margin - 3 Yr. Avg. 12.9%
EBITDA Margin 1.8%
EBITDA Margin - 3 Yr. Avg. 7.3%
Operating Margin -4.3%
Oper. Margin - 3 Yr. Avg. 2.2%
Pre-Tax Margin -4.3%
Pre-Tax Margin - 3 Yr. Avg. 2.1%
Net Profit Margin -2.5%
Net Profit Margin - 3 Yr. Avg. 1.6%
Effective Tax Rate 41.2%
Eff/ Tax Rate - 3 Yr. Avg. 17.4%
Payout Ratio -110%

HAYN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HAYN stock intrinsic value calculation we used $435 million for the last fiscal year's total revenue generated by Haynes International, Inc.. The default revenue input number comes from 0001 income statement of Haynes International, 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 HAYN stock valuation model: a) initial revenue growth rate of 19.4% 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 HAYN is calculated based on our internal credit rating of Haynes International, 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 Haynes International, 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 HAYN stock the variable cost ratio is equal to 67.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $149 million in the base year in the intrinsic value calculation for HAYN 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 11.2% for Haynes International, Inc..

Corporate tax rate of 27% is the nominal tax rate for Haynes International, 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 HAYN 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 HAYN are equal to 44%.

Life of production assets of 8.5 years is the average useful life of capital assets used in Haynes International, 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 HAYN is equal to 50%. 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 - $333.22 million for Haynes International, 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 12.517 million for Haynes International, 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 Haynes International, Inc. at the current share price and the inputted number of shares is $0.4 billion.

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