Intrinsic value of Hyster-Yale Materials Handling, Inc. - HY

Previous Close

$60.94

  Intrinsic Value

$46.93

stock screener

  Rating & Target

sell

-23%

Previous close

$60.94

 
Intrinsic value

$46.93

 
Up/down potential

-23%

 
Rating

sell

We calculate the intrinsic value of HY 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 1.0

 

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, %
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  3,342
  3,518
  3,703
  3,896
  4,099
  4,311
  4,533
  4,766
  5,011
  5,267
  5,536
  5,818
  6,114
  6,424
  6,750
  7,091
  7,450
  7,826
  8,221
  8,635
  9,070
  9,527
  10,006
  10,509
  11,037
  11,591
  12,173
  12,784
  13,425
  14,098
Variable operating expenses, $m
  3,254
  3,425
  3,604
  3,791
  3,987
  4,192
  4,408
  4,634
  4,870
  5,119
  5,361
  5,634
  5,921
  6,222
  6,537
  6,868
  7,215
  7,579
  7,962
  8,363
  8,784
  9,226
  9,690
  10,177
  10,689
  11,225
  11,789
  12,380
  13,001
  13,653
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
  3,254
  3,425
  3,604
  3,791
  3,987
  4,192
  4,408
  4,634
  4,870
  5,119
  5,361
  5,634
  5,921
  6,222
  6,537
  6,868
  7,215
  7,579
  7,962
  8,363
  8,784
  9,226
  9,690
  10,177
  10,689
  11,225
  11,789
  12,380
  13,001
  13,653
Operating income, $m
  88
  93
  99
  105
  112
  118
  125
  133
  140
  149
  175
  184
  193
  203
  213
  224
  235
  247
  259
  272
  286
  301
  316
  332
  348
  366
  384
  403
  423
  445
EBITDA, $m
  144
  151
  159
  167
  176
  185
  195
  205
  215
  226
  238
  250
  263
  276
  290
  305
  320
  336
  353
  371
  390
  410
  430
  452
  474
  498
  523
  550
  577
  606
Interest expense (income), $m
  2
  16
  20
  23
  27
  31
  35
  40
  44
  49
  54
  59
  65
  71
  77
  83
  90
  97
  105
  112
  121
  129
  138
  147
  157
  168
  179
  190
  202
  215
  228
Earnings before tax, $m
  72
  74
  76
  78
  81
  83
  86
  88
  91
  94
  115
  118
  122
  126
  130
  134
  138
  142
  147
  152
  157
  162
  168
  174
  180
  187
  194
  201
  209
  217
Tax expense, $m
  19
  20
  20
  21
  22
  22
  23
  24
  25
  25
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  50
  52
  54
  56
  59
Net income, $m
  52
  54
  55
  57
  59
  61
  63
  65
  67
  69
  84
  86
  89
  92
  95
  98
  101
  104
  107
  111
  115
  119
  123
  127
  132
  136
  142
  147
  152
  158

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
  1,834
  1,931
  2,032
  2,138
  2,249
  2,366
  2,488
  2,616
  2,750
  2,891
  3,038
  3,193
  3,356
  3,526
  3,705
  3,892
  4,089
  4,295
  4,512
  4,740
  4,978
  5,229
  5,492
  5,768
  6,058
  6,362
  6,681
  7,016
  7,368
  7,738
Adjusted assets (=assets-cash), $m
  1,834
  1,931
  2,032
  2,138
  2,249
  2,366
  2,488
  2,616
  2,750
  2,891
  3,038
  3,193
  3,356
  3,526
  3,705
  3,892
  4,089
  4,295
  4,512
  4,740
  4,978
  5,229
  5,492
  5,768
  6,058
  6,362
  6,681
  7,016
  7,368
  7,738
Revenue / Adjusted assets
  1.822
  1.822
  1.822
  1.822
  1.823
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
  1.822
Average production assets, $m
  371
  391
  411
  432
  455
  478
  503
  529
  556
  585
  614
  646
  679
  713
  749
  787
  827
  869
  913
  959
  1,007
  1,057
  1,111
  1,166
  1,225
  1,287
  1,351
  1,419
  1,490
  1,565
Working capital, $m
  381
  401
  422
  444
  467
  491
  517
  543
  571
  600
  631
  663
  697
  732
  769
  808
  849
  892
  937
  984
  1,034
  1,086
  1,141
  1,198
  1,258
  1,321
  1,388
  1,457
  1,530
  1,607
Total debt, $m
  365
  433
  503
  577
  655
  736
  821
  910
  1,004
  1,102
  1,205
  1,312
  1,426
  1,544
  1,669
  1,800
  1,937
  2,081
  2,232
  2,390
  2,557
  2,731
  2,915
  3,107
  3,309
  3,521
  3,744
  3,977
  4,222
  4,480
Total liabilities, $m
  1,279
  1,346
  1,417
  1,490
  1,568
  1,649
  1,734
  1,823
  1,917
  2,015
  2,118
  2,226
  2,339
  2,458
  2,582
  2,713
  2,850
  2,994
  3,145
  3,303
  3,470
  3,644
  3,828
  4,020
  4,222
  4,434
  4,657
  4,890
  5,136
  5,393
Total equity, $m
  556
  585
  616
  648
  682
  717
  754
  793
  833
  876
  921
  968
  1,017
  1,068
  1,122
  1,179
  1,239
  1,302
  1,367
  1,436
  1,508
  1,584
  1,664
  1,748
  1,835
  1,928
  2,024
  2,126
  2,233
  2,345
Total liabilities and equity, $m
  1,835
  1,931
  2,033
  2,138
  2,250
  2,366
  2,488
  2,616
  2,750
  2,891
  3,039
  3,194
  3,356
  3,526
  3,704
  3,892
  4,089
  4,296
  4,512
  4,739
  4,978
  5,228
  5,492
  5,768
  6,057
  6,362
  6,681
  7,016
  7,369
  7,738
Debt-to-equity ratio
  0.660
  0.740
  0.820
  0.890
  0.960
  1.030
  1.090
  1.150
  1.200
  1.260
  1.310
  1.360
  1.400
  1.450
  1.490
  1.530
  1.560
  1.600
  1.630
  1.660
  1.690
  1.720
  1.750
  1.780
  1.800
  1.830
  1.850
  1.870
  1.890
  1.910
Adjusted equity ratio
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  52
  54
  55
  57
  59
  61
  63
  65
  67
  69
  84
  86
  89
  92
  95
  98
  101
  104
  107
  111
  115
  119
  123
  127
  132
  136
  142
  147
  152
  158
Depreciation, amort., depletion, $m
  56
  58
  60
  62
  65
  67
  69
  72
  75
  78
  63
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  115
  120
  126
  133
  139
  146
  154
  161
Funds from operations, $m
  108
  112
  115
  119
  123
  128
  132
  137
  142
  147
  147
  153
  159
  165
  172
  179
  186
  193
  201
  210
  218
  228
  237
  247
  258
  269
  281
  293
  306
  320
Change in working capital, $m
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  70
  73
  77
Cash from operations, $m
  89
  92
  94
  97
  100
  103
  107
  110
  114
  118
  117
  121
  125
  130
  135
  140
  145
  151
  156
  162
  169
  176
  183
  190
  198
  206
  214
  223
  233
  243
Maintenance CAPEX, $m
  -36
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -55
  -57
  -60
  -63
  -67
  -70
  -74
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -109
  -115
  -120
  -126
  -133
  -139
  -146
  -154
New CAPEX, $m
  -17
  -20
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
Cash from investing activities, $m
  -53
  -58
  -60
  -63
  -67
  -71
  -74
  -78
  -82
  -85
  -90
  -94
  -100
  -104
  -110
  -115
  -121
  -127
  -134
  -140
  -147
  -155
  -162
  -171
  -179
  -188
  -198
  -207
  -217
  -229
Free cash flow, $m
  35
  34
  34
  33
  33
  33
  33
  32
  32
  32
  27
  26
  26
  25
  25
  25
  24
  24
  23
  22
  22
  21
  20
  20
  19
  18
  17
  16
  15
  14
Issuance/(repayment) of debt, $m
  64
  67
  71
  74
  77
  81
  85
  89
  94
  98
  103
  108
  113
  119
  125
  131
  137
  144
  151
  159
  166
  175
  183
  192
  202
  212
  223
  234
  245
  258
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  
  64
  67
  71
  74
  77
  81
  85
  89
  94
  98
  103
  108
  113
  119
  125
  131
  137
  144
  151
  159
  166
  175
  183
  192
  202
  212
  223
  234
  245
  258
Total cash flow (excl. dividends), $m
  99
  101
  104
  107
  111
  114
  118
  122
  126
  130
  129
  134
  139
  144
  150
  155
  161
  167
  174
  181
  188
  196
  204
  212
  221
  230
  240
  250
  261
  272
Retained Cash Flow (-), $m
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
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
  71
  72
  73
  75
  77
  79
  81
  83
  85
  87
  85
  87
  90
  93
  95
  98
  102
  105
  108
  112
  116
  120
  124
  128
  133
  138
  143
  148
  154
  160
Discount rate, %
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
  67
  64
  62
  59
  56
  53
  50
  47
  43
  40
  34
  31
  28
  24
  21
  18
  16
  13
  11
  9
  7
  6
  5
  3
  3
  2
  1
  1
  1
  0
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

Hyster-Yale Materials Handling, Inc. is a lift truck manufacturer. The Company designs, engineers, manufactures, sells and services a line of lift trucks, attachments and aftermarket parts marketed globally under the Hyster and Yale brand names, mainly to independent Hyster and Yale retail dealerships. The Company operates through five segments: the Americas, EMEA, JAPIC, Bolzoni and Nuvera. The Company offers a range of solutions, including attachments and hydrogen fuel cell power products, telematics, automation and fleet management services, as well as an array of other power options for its lift trucks. The Company's segments for the lift truck business include three management units: the Americas, EMEA and JAPIC. Americas includes operations in the United States, Canada, Mexico, Brazil, Latin America and its corporate headquarters. EMEA includes operations in Europe, the Middle East and Africa. JAPIC includes operations in the Asia and Pacific regions including China.

FINANCIAL RATIOS  of  Hyster-Yale Materials Handling, Inc. (HY)

Valuation Ratios
P/E Ratio 23.2
Price to Sales 0.4
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow -20.4
Price to Free Cash Flow -10.9
Growth Rates
Sales Growth Rate -0.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.5%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 17.7%
Total Debt to Equity 45.5%
Interest Coverage 20
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. 14.7%
Return On Equity 9.3%
Return On Equity - 3 Yr. Avg. 16.7%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 16.7%
Gross Margin - 3 Yr. Avg. 16.5%
EBITDA Margin 3.1%
EBITDA Margin - 3 Yr. Avg. 4.9%
Operating Margin 1.4%
Oper. Margin - 3 Yr. Avg. 3.6%
Pre-Tax Margin 1.5%
Pre-Tax Margin - 3 Yr. Avg. 3.7%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 2.9%
Effective Tax Rate -10.5%
Eff/ Tax Rate - 3 Yr. Avg. 14.9%
Payout Ratio 44.2%

HY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HY stock intrinsic value calculation we used $3174 million for the last fiscal year's total revenue generated by Hyster-Yale Materials Handling, Inc.. The default revenue input number comes from 0001 income statement of Hyster-Yale Materials Handling, 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 HY stock valuation model: a) initial revenue growth rate of 5.3% 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 5.3%, whose default value for HY is calculated based on our internal credit rating of Hyster-Yale Materials Handling, 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 Hyster-Yale Materials Handling, 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 HY stock the variable cost ratio is equal to 97.4%.

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 HY 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 Hyster-Yale Materials Handling, Inc..

Corporate tax rate of 27% is the nominal tax rate for Hyster-Yale Materials Handling, 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 HY 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 HY are equal to 11.1%.

Life of production assets of 9.7 years is the average useful life of capital assets used in Hyster-Yale Materials Handling, 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 HY is equal to 11.4%. 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 - $527.4 million for Hyster-Yale Materials Handling, 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 16.553 million for Hyster-Yale Materials Handling, 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 Hyster-Yale Materials Handling, Inc. at the current share price and the inputted number of shares is $1.0 billion.

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