Intrinsic value of Horizon Global - HZN

Previous Close

$1.86

  Intrinsic Value

$9.91

stock screener

  Rating & Target

str. buy

+433%

Previous close

$1.86

 
Intrinsic value

$9.91

 
Up/down potential

+433%

 
Rating

str. buy

We calculate the intrinsic value of HZN 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 0.0

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  911
  932
  956
  983
  1,012
  1,045
  1,081
  1,119
  1,161
  1,205
  1,253
  1,304
  1,358
  1,415
  1,477
  1,541
  1,610
  1,682
  1,759
  1,839
  1,925
  2,015
  2,109
  2,209
  2,315
  2,425
  2,542
  2,664
  2,793
  2,929
Variable operating expenses, $m
  805
  823
  843
  866
  892
  920
  951
  984
  1,019
  1,057
  1,076
  1,119
  1,166
  1,215
  1,267
  1,323
  1,382
  1,444
  1,510
  1,579
  1,652
  1,729
  1,811
  1,897
  1,987
  2,082
  2,182
  2,287
  2,398
  2,515
Fixed operating expenses, $m
  74
  75
  77
  79
  80
  82
  84
  86
  88
  90
  91
  93
  96
  98
  100
  102
  104
  107
  109
  111
  114
  116
  119
  121
  124
  127
  130
  132
  135
  138
Total operating expenses, $m
  879
  898
  920
  945
  972
  1,002
  1,035
  1,070
  1,107
  1,147
  1,167
  1,212
  1,262
  1,313
  1,367
  1,425
  1,486
  1,551
  1,619
  1,690
  1,766
  1,845
  1,930
  2,018
  2,111
  2,209
  2,312
  2,419
  2,533
  2,653
Operating income, $m
  33
  34
  36
  38
  40
  43
  46
  50
  54
  58
  86
  91
  97
  103
  109
  116
  124
  132
  140
  149
  159
  169
  180
  191
  204
  217
  230
  245
  260
  276
EBITDA, $m
  72
  74
  76
  79
  82
  86
  89
  94
  99
  104
  109
  116
  122
  129
  137
  145
  154
  163
  173
  184
  195
  207
  219
  233
  247
  262
  278
  295
  313
  331
Interest expense (income), $m
  17
  20
  21
  21
  22
  24
  25
  26
  28
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  63
  67
  71
  75
  79
  84
  89
  94
  99
Earnings before tax, $m
  13
  13
  14
  15
  17
  18
  20
  22
  25
  27
  53
  56
  60
  63
  68
  72
  77
  82
  87
  93
  99
  106
  113
  121
  129
  137
  146
  156
  166
  177
Tax expense, $m
  3
  4
  4
  4
  4
  5
  5
  6
  7
  7
  14
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  48
Net income, $m
  9
  10
  10
  11
  12
  13
  15
  16
  18
  20
  39
  41
  44
  46
  49
  53
  56
  60
  64
  68
  73
  77
  83
  88
  94
  100
  107
  114
  121
  129

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
  674
  690
  707
  727
  749
  774
  800
  828
  859
  892
  927
  965
  1,005
  1,048
  1,093
  1,141
  1,192
  1,245
  1,302
  1,362
  1,425
  1,491
  1,561
  1,635
  1,713
  1,795
  1,881
  1,972
  2,068
  2,168
Adjusted assets (=assets-cash), $m
  674
  690
  707
  727
  749
  774
  800
  828
  859
  892
  927
  965
  1,005
  1,048
  1,093
  1,141
  1,192
  1,245
  1,302
  1,362
  1,425
  1,491
  1,561
  1,635
  1,713
  1,795
  1,881
  1,972
  2,068
  2,168
Revenue / Adjusted assets
  1.352
  1.351
  1.352
  1.352
  1.351
  1.350
  1.351
  1.351
  1.352
  1.351
  1.352
  1.351
  1.351
  1.350
  1.351
  1.351
  1.351
  1.351
  1.351
  1.350
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
Average production assets, $m
  217
  222
  227
  234
  241
  249
  257
  266
  276
  287
  298
  310
  323
  337
  351
  367
  383
  400
  419
  438
  458
  479
  502
  526
  551
  577
  605
  634
  665
  697
Working capital, $m
  84
  86
  88
  90
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  169
  177
  185
  194
  203
  213
  223
  234
  245
  257
  269
Total debt, $m
  286
  298
  312
  327
  345
  364
  384
  407
  431
  457
  484
  514
  545
  579
  614
  652
  692
  734
  778
  825
  875
  927
  982
  1,040
  1,101
  1,166
  1,233
  1,305
  1,380
  1,458
Total liabilities, $m
  529
  541
  555
  571
  588
  607
  628
  650
  674
  700
  728
  758
  789
  822
  858
  896
  935
  977
  1,022
  1,069
  1,118
  1,171
  1,226
  1,284
  1,345
  1,409
  1,477
  1,548
  1,623
  1,702
Total equity, $m
  145
  148
  152
  156
  161
  166
  172
  178
  185
  192
  199
  207
  216
  225
  235
  245
  256
  268
  280
  293
  306
  321
  336
  352
  368
  386
  405
  424
  445
  466
Total liabilities and equity, $m
  674
  689
  707
  727
  749
  773
  800
  828
  859
  892
  927
  965
  1,005
  1,047
  1,093
  1,141
  1,191
  1,245
  1,302
  1,362
  1,424
  1,492
  1,562
  1,636
  1,713
  1,795
  1,882
  1,972
  2,068
  2,168
Debt-to-equity ratio
  1.970
  2.010
  2.050
  2.090
  2.140
  2.190
  2.240
  2.280
  2.330
  2.380
  2.430
  2.480
  2.520
  2.570
  2.610
  2.660
  2.700
  2.740
  2.780
  2.820
  2.860
  2.890
  2.930
  2.960
  2.990
  3.020
  3.050
  3.080
  3.100
  3.130
Adjusted equity ratio
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  10
  10
  11
  12
  13
  15
  16
  18
  20
  39
  41
  44
  46
  49
  53
  56
  60
  64
  68
  73
  77
  83
  88
  94
  100
  107
  114
  121
  129
Depreciation, amort., depletion, $m
  40
  40
  41
  41
  42
  42
  43
  44
  45
  45
  23
  24
  25
  27
  28
  29
  30
  32
  33
  34
  36
  38
  40
  41
  43
  45
  48
  50
  52
  55
Funds from operations, $m
  49
  50
  51
  52
  54
  56
  58
  60
  63
  65
  62
  65
  69
  73
  77
  81
  86
  91
  97
  102
  109
  115
  122
  130
  137
  146
  154
  164
  174
  184
Change in working capital, $m
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Cash from operations, $m
  48
  48
  49
  50
  51
  53
  55
  57
  59
  61
  58
  61
  64
  68
  71
  75
  80
  85
  90
  95
  101
  107
  113
  120
  128
  135
  144
  153
  162
  172
Maintenance CAPEX, $m
  -17
  -17
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -40
  -41
  -43
  -45
  -48
  -50
  -52
New CAPEX, $m
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
Cash from investing activities, $m
  -22
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -35
  -37
  -39
  -42
  -43
  -45
  -47
  -50
  -52
  -54
  -57
  -61
  -64
  -66
  -69
  -73
  -77
  -81
  -84
Free cash flow, $m
  26
  26
  26
  26
  26
  26
  26
  27
  28
  29
  24
  25
  27
  28
  30
  32
  35
  37
  40
  43
  46
  49
  53
  57
  61
  66
  71
  76
  81
  87
Issuance/(repayment) of debt, $m
  10
  12
  14
  16
  17
  19
  21
  22
  24
  26
  28
  30
  31
  33
  35
  38
  40
  42
  44
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
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  
  10
  12
  14
  16
  17
  19
  21
  22
  24
  26
  28
  30
  31
  33
  35
  38
  40
  42
  44
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
Total cash flow (excl. dividends), $m
  36
  38
  40
  41
  43
  45
  47
  49
  52
  55
  52
  55
  58
  62
  66
  70
  74
  79
  84
  90
  96
  102
  108
  115
  122
  130
  138
  147
  156
  166
Retained Cash Flow (-), $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
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
  33
  35
  36
  37
  38
  40
  41
  43
  45
  48
  44
  47
  50
  53
  56
  60
  64
  68
  72
  77
  82
  87
  93
  99
  106
  112
  120
  127
  136
  144
Discount rate, %
  9.90
  10.40
  10.91
  11.46
  12.03
  12.64
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.83
  25.02
  26.27
  27.58
  28.96
  30.41
  31.93
  33.52
  35.20
  36.96
  38.81
  40.75
PV of cash for distribution, $m
  30
  29
  26
  24
  22
  19
  17
  15
  13
  11
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  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
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Horizon Global Corporation is a designer, manufacturer and distributor of a range of custom-engineered towing, trailering, cargo management and other products serving the automotive aftermarket, retail and original equipment (OE) channels. The Company operates through three segments: Horizon Americas, Horizon Asia-Pacific, and Horizon Europe-Africa. Its towing product category includes devices and accessories installed on a tow-vehicle for the purpose of attaching a trailer and camper, among others, such as hitches and other towing accessories. Its trailering product category includes control devices and components of the trailer itself, such as brake controls and brake replacement parts. Its cargo management product category includes a range of products used to facilitate the transportation of various forms of cargo, to secure that cargo or to organize items. Its other product category includes a range of items, such as tubular push bars, side steps, and commercial brooms and brushes.

FINANCIAL RATIOS  of  Horizon Global (HZN)

Valuation Ratios
P/E Ratio -3.2
Price to Sales 0.1
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 1.1
Price to Free Cash Flow 1.9
Growth Rates
Sales Growth Rate 12.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 87.5%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 1021.9%
Total Debt to Equity 1093.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital -4.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.6%
Return On Equity -70.6%
Return On Equity - 3 Yr. Avg. -18.1%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 24.7%
Gross Margin - 3 Yr. Avg. 24.6%
EBITDA Margin 2.9%
EBITDA Margin - 3 Yr. Avg. 5.1%
Operating Margin 0.9%
Oper. Margin - 3 Yr. Avg. 2.8%
Pre-Tax Margin -2.5%
Pre-Tax Margin - 3 Yr. Avg. 0.7%
Net Profit Margin -1.8%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate 18.8%
Eff/ Tax Rate - 3 Yr. Avg. 11%
Payout Ratio 0%

HZN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HZN stock intrinsic value calculation we used $892.98 million for the last fiscal year's total revenue generated by Horizon Global. The default revenue input number comes from 0001 income statement of Horizon Global. 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 HZN stock valuation model: a) initial revenue growth rate of 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 9.9%, whose default value for HZN is calculated based on our internal credit rating of Horizon Global, 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 Horizon Global.
    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 HZN stock the variable cost ratio is equal to 88.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $72 million in the base year in the intrinsic value calculation for HZN 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 7.2% for Horizon Global.

Corporate tax rate of 27% is the nominal tax rate for Horizon Global. 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 HZN 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 HZN are equal to 23.8%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Horizon Global 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 HZN is equal to 9.2%. 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 - $141.89 million for Horizon Global - 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 25.096 million for Horizon Global 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 Horizon Global at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Horizon Global: 3Q Earnings Snapshot   [06:52AM  Associated Press]
▶ Horizon Global Remains in Turnaround Mode   [Aug-09-18 09:03AM  Motley Fool]
▶ Horizon Global: 2Q Earnings Snapshot   [06:43AM  Associated Press]
▶ When Should You Buy Horizon Global Corporation (NYSE:HZN)?   [Jun-26-18 09:45AM  Simply Wall St.]
▶ [$$] Big equity funds accused of breaching EU disclosure rules   [Jun-03-18 11:00PM  Financial Times]
▶ Horizon Global's Troubles Continue   [May-09-18 10:23AM  Motley Fool]
▶ Should You Buy Horizon Global Corporation (NYSE:HZN) At $5.92?   [May-08-18 02:51PM  Simply Wall St.]
▶ Horizon Global: 1Q Earnings Snapshot   [May-03-18 06:49AM  Associated Press]
▶ Horizon Global Corporation (NYSE:HZN): Is Breakeven Near?   [Mar-12-18 05:02PM  Simply Wall St.]
▶ Horizon Global Announces Corporate Governance Changes   [Mar-02-18 01:15PM  Business Wire]
▶ Horizon Global reports 4Q loss   [06:59AM  Associated Press]
▶ Is It Too Late To Buy Horizon Global Corporation (HZN)?   [Nov-28-17 10:06AM  Simply Wall St.]
▶ Horizon Global Appoints Jay Goldbaum as General Counsel   [Nov-13-17 04:01PM  Business Wire]
▶ Horizon Global Tops Expectations   [Nov-01-17 01:18PM  Motley Fool]
▶ Horizon Global tops Street 3Q forecasts   [Oct-31-17 06:40AM  Associated Press]
▶ Pres Trump set to unveil new tax plan   [Sep-27-17 09:11AM  Yahoo Finance]
▶ Yahoo Finance Live: Market Movers - Sep 27th, 2017   [07:20AM  Yahoo Finance Video]
▶ Is Horizon Global Corporation (HZN) Undervalued?   [Sep-13-17 05:55PM  Simply Wall St.]
▶ Horizon Global to Present at J.P. Morgan Auto Conference   [Aug-02-17 04:01PM  Business Wire]
▶ Horizon Global tops Street 2Q forecasts   [Aug-01-17 10:56PM  Associated Press]

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