Intrinsic value of Lydall, Inc. - LDL

Previous Close

$19.37

  Intrinsic Value

$40.15

stock screener

  Rating & Target

str. buy

+107%

Previous close

$19.37

 
Intrinsic value

$40.15

 
Up/down potential

+107%

 
Rating

str. buy

We calculate the intrinsic value of LDL 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 0.3

 

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, %
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
Revenue, $m
  927
  1,081
  1,248
  1,427
  1,619
  1,824
  2,040
  2,268
  2,507
  2,758
  3,020
  3,293
  3,578
  3,874
  4,182
  4,502
  4,835
  5,180
  5,540
  5,913
  6,302
  6,706
  7,126
  7,564
  8,020
  8,495
  8,991
  9,508
  10,047
  10,611
Variable operating expenses, $m
  834
  967
  1,111
  1,266
  1,432
  1,608
  1,795
  1,992
  2,198
  2,415
  2,608
  2,844
  3,089
  3,345
  3,611
  3,887
  4,175
  4,473
  4,784
  5,106
  5,442
  5,790
  6,154
  6,532
  6,925
  7,336
  7,764
  8,210
  8,676
  9,163
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
  834
  967
  1,111
  1,266
  1,432
  1,608
  1,795
  1,992
  2,198
  2,415
  2,608
  2,844
  3,089
  3,345
  3,611
  3,887
  4,175
  4,473
  4,784
  5,106
  5,442
  5,790
  6,154
  6,532
  6,925
  7,336
  7,764
  8,210
  8,676
  9,163
Operating income, $m
  93
  114
  137
  161
  188
  216
  245
  276
  309
  343
  412
  449
  488
  529
  571
  614
  660
  707
  756
  807
  860
  915
  973
  1,032
  1,095
  1,160
  1,227
  1,298
  1,371
  1,448
EBITDA, $m
  155
  181
  209
  239
  271
  305
  341
  379
  419
  461
  505
  551
  599
  648
  700
  753
  809
  867
  927
  989
  1,054
  1,122
  1,192
  1,265
  1,342
  1,421
  1,504
  1,591
  1,681
  1,775
Interest expense (income), $m
  1
  18
  22
  28
  33
  40
  46
  53
  61
  69
  77
  86
  95
  104
  114
  124
  135
  146
  158
  170
  182
  195
  208
  222
  237
  252
  268
  284
  301
  319
  338
Earnings before tax, $m
  76
  92
  109
  128
  148
  169
  192
  215
  240
  266
  326
  355
  384
  415
  446
  480
  514
  550
  587
  625
  665
  707
  750
  796
  843
  892
  943
  996
  1,052
  1,111
Tax expense, $m
  20
  25
  29
  35
  40
  46
  52
  58
  65
  72
  88
  96
  104
  112
  121
  129
  139
  148
  158
  169
  180
  191
  203
  215
  228
  241
  255
  269
  284
  300
Net income, $m
  55
  67
  80
  93
  108
  123
  140
  157
  175
  194
  238
  259
  280
  303
  326
  350
  375
  401
  428
  456
  486
  516
  548
  581
  615
  651
  688
  727
  768
  811

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
  1,029
  1,199
  1,385
  1,584
  1,797
  2,024
  2,264
  2,517
  2,783
  3,061
  3,352
  3,655
  3,971
  4,299
  4,641
  4,997
  5,366
  5,750
  6,148
  6,563
  6,994
  7,443
  7,909
  8,395
  8,901
  9,429
  9,979
  10,553
  11,151
  11,777
Adjusted assets (=assets-cash), $m
  1,029
  1,199
  1,385
  1,584
  1,797
  2,024
  2,264
  2,517
  2,783
  3,061
  3,352
  3,655
  3,971
  4,299
  4,641
  4,997
  5,366
  5,750
  6,148
  6,563
  6,994
  7,443
  7,909
  8,395
  8,901
  9,429
  9,979
  10,553
  11,151
  11,777
Revenue / Adjusted assets
  0.901
  0.902
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
Average production assets, $m
  357
  416
  480
  549
  623
  702
  785
  873
  965
  1,062
  1,163
  1,268
  1,377
  1,491
  1,610
  1,733
  1,861
  1,994
  2,133
  2,277
  2,426
  2,582
  2,744
  2,912
  3,088
  3,271
  3,461
  3,661
  3,868
  4,085
Working capital, $m
  184
  215
  248
  284
  322
  363
  406
  451
  499
  549
  601
  655
  712
  771
  832
  896
  962
  1,031
  1,102
  1,177
  1,254
  1,334
  1,418
  1,505
  1,596
  1,691
  1,789
  1,892
  1,999
  2,112
Total debt, $m
  415
  513
  620
  735
  858
  989
  1,128
  1,274
  1,427
  1,588
  1,755
  1,930
  2,113
  2,302
  2,499
  2,704
  2,918
  3,139
  3,369
  3,608
  3,857
  4,116
  4,385
  4,665
  4,957
  5,262
  5,579
  5,910
  6,256
  6,617
Total liabilities, $m
  593
  692
  799
  914
  1,037
  1,168
  1,306
  1,452
  1,606
  1,766
  1,934
  2,109
  2,291
  2,481
  2,678
  2,883
  3,096
  3,318
  3,548
  3,787
  4,036
  4,294
  4,564
  4,844
  5,136
  5,440
  5,758
  6,089
  6,434
  6,795
Total equity, $m
  435
  507
  586
  670
  760
  856
  958
  1,065
  1,177
  1,295
  1,418
  1,546
  1,680
  1,819
  1,963
  2,114
  2,270
  2,432
  2,601
  2,776
  2,959
  3,148
  3,346
  3,551
  3,765
  3,988
  4,221
  4,464
  4,717
  4,982
Total liabilities and equity, $m
  1,028
  1,199
  1,385
  1,584
  1,797
  2,024
  2,264
  2,517
  2,783
  3,061
  3,352
  3,655
  3,971
  4,300
  4,641
  4,997
  5,366
  5,750
  6,149
  6,563
  6,995
  7,442
  7,910
  8,395
  8,901
  9,428
  9,979
  10,553
  11,151
  11,777
Debt-to-equity ratio
  0.950
  1.010
  1.060
  1.100
  1.130
  1.160
  1.180
  1.200
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.320
  1.320
  1.320
  1.320
  1.330
  1.330
Adjusted equity ratio
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  55
  67
  80
  93
  108
  123
  140
  157
  175
  194
  238
  259
  280
  303
  326
  350
  375
  401
  428
  456
  486
  516
  548
  581
  615
  651
  688
  727
  768
  811
Depreciation, amort., depletion, $m
  62
  67
  72
  77
  83
  90
  96
  103
  111
  118
  93
  101
  110
  119
  129
  139
  149
  160
  171
  182
  194
  207
  219
  233
  247
  262
  277
  293
  309
  327
Funds from operations, $m
  117
  134
  152
  171
  191
  213
  236
  260
  286
  312
  331
  360
  391
  422
  455
  489
  524
  561
  599
  639
  680
  723
  767
  814
  862
  913
  965
  1,020
  1,078
  1,137
Change in working capital, $m
  28
  31
  33
  36
  38
  41
  43
  45
  48
  50
  52
  54
  57
  59
  61
  64
  66
  69
  72
  74
  77
  80
  84
  87
  91
  95
  99
  103
  107
  112
Cash from operations, $m
  89
  103
  118
  135
  153
  172
  193
  215
  238
  263
  279
  306
  334
  363
  393
  425
  458
  492
  527
  564
  602
  642
  684
  727
  771
  818
  867
  917
  970
  1,025
Maintenance CAPEX, $m
  -24
  -29
  -33
  -38
  -44
  -50
  -56
  -63
  -70
  -77
  -85
  -93
  -101
  -110
  -119
  -129
  -139
  -149
  -160
  -171
  -182
  -194
  -207
  -219
  -233
  -247
  -262
  -277
  -293
  -309
New CAPEX, $m
  -54
  -59
  -64
  -69
  -74
  -79
  -83
  -88
  -92
  -97
  -101
  -105
  -110
  -114
  -119
  -123
  -128
  -133
  -138
  -144
  -150
  -156
  -162
  -169
  -176
  -183
  -191
  -199
  -208
  -217
Cash from investing activities, $m
  -78
  -88
  -97
  -107
  -118
  -129
  -139
  -151
  -162
  -174
  -186
  -198
  -211
  -224
  -238
  -252
  -267
  -282
  -298
  -315
  -332
  -350
  -369
  -388
  -409
  -430
  -453
  -476
  -501
  -526
Free cash flow, $m
  11
  15
  21
  27
  35
  44
  54
  64
  76
  89
  93
  108
  123
  139
  156
  173
  191
  210
  229
  250
  271
  293
  315
  339
  363
  388
  414
  441
  470
  499
Issuance/(repayment) of debt, $m
  90
  99
  107
  115
  123
  131
  138
  146
  153
  161
  168
  175
  182
  190
  197
  205
  213
  221
  230
  239
  249
  259
  269
  280
  292
  304
  317
  331
  346
  361
Issuance/(repurchase) of shares, $m
  11
  5
  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  
  101
  104
  107
  115
  123
  131
  138
  146
  153
  161
  168
  175
  182
  190
  197
  205
  213
  221
  230
  239
  249
  259
  269
  280
  292
  304
  317
  331
  346
  361
Total cash flow (excl. dividends), $m
  111
  119
  128
  142
  158
  175
  192
  210
  229
  249
  261
  283
  305
  329
  353
  378
  404
  431
  460
  489
  520
  551
  584
  619
  655
  692
  732
  773
  815
  860
Retained Cash Flow (-), $m
  -66
  -72
  -78
  -84
  -90
  -96
  -102
  -107
  -112
  -118
  -123
  -128
  -134
  -139
  -145
  -150
  -156
  -162
  -169
  -175
  -182
  -190
  -197
  -206
  -214
  -223
  -233
  -243
  -253
  -265
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
  46
  47
  49
  58
  68
  79
  91
  103
  117
  132
  138
  154
  172
  189
  208
  228
  248
  269
  291
  314
  337
  362
  387
  413
  441
  469
  499
  530
  562
  595
Discount rate, %
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
  43
  40
  39
  42
  45
  46
  48
  48
  47
  46
  41
  38
  35
  32
  28
  24
  21
  17
  14
  11
  9
  6
  5
  3
  2
  2
  1
  1
  0
  0
Current shareholders' claim on cash, %
  97.0
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7

Lydall, Inc. designs and manufactures specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications. The Company's segments are Performance Materials, Technical Nonwovens, Thermal/Acoustical Metals and Thermal/Acoustical Fibers. The Performance Materials segment includes filtration, thermal insulation and life sciences filtration businesses. The Technical Nonwovens segment includes its industrial filtration and advanced materials products. The Thermal/Acoustical Metals segment includes its metal parts and related tooling used in automotive applications. The Thermal/Acoustical Fibers segment includes its fiber parts business and related tooling used in automotive applications. Its Filtration products include LydAir MG (Micro-Glass) Air Filtration Media, LydAir MB (Melt Blown) Air Filtration Media and Arioso Membrane Composite Media.

FINANCIAL RATIOS  of  Lydall, Inc. (LDL)

Valuation Ratios
P/E Ratio 9
Price to Sales 0.6
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow 7.4
Growth Rates
Sales Growth Rate 8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 19%
Cap. Spend. - 3 Yr. Gr. Rate 12.3%
Financial Strength
Quick Ratio 72
Current Ratio 0
LT Debt to Equity 46.9%
Total Debt to Equity 47.3%
Interest Coverage 56
Management Effectiveness
Return On Assets 8.5%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 11.1%
Ret/ On T. Cap. - 3 Yr. Avg. 12.8%
Return On Equity 14.3%
Return On Equity - 3 Yr. Avg. 15%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 24.5%
Gross Margin - 3 Yr. Avg. 23.1%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin 9.7%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 9.7%
Pre-Tax Margin - 3 Yr. Avg. 9.9%
Net Profit Margin 6.5%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate 32.7%
Eff/ Tax Rate - 3 Yr. Avg. 34.4%
Payout Ratio 0%

LDL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LDL stock intrinsic value calculation we used $786 million for the last fiscal year's total revenue generated by Lydall, Inc.. The default revenue input number comes from 0001 income statement of Lydall, 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 LDL stock valuation model: a) initial revenue growth rate of 17.9% 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 7.2%, whose default value for LDL is calculated based on our internal credit rating of Lydall, 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 Lydall, 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 LDL stock the variable cost ratio is equal to 90.6%.

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 LDL 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 Lydall, Inc..

Corporate tax rate of 27% is the nominal tax rate for Lydall, 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 LDL 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 LDL are equal to 38.5%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Lydall, 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 LDL is equal to 19.9%. 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 - $369.275 million for Lydall, 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 17.546 million for Lydall, 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 Lydall, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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