Intrinsic value of Luxfer Holdings - LXFR

Previous Close

$25.33

  Intrinsic Value

$11.76

stock screener

  Rating & Target

str. sell

-54%

Previous close

$25.33

 
Intrinsic value

$11.76

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of LXFR 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 0.7

 

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, %
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
Revenue, $m
  470
  499
  530
  561
  595
  629
  665
  703
  743
  784
  827
  872
  919
  968
  1,019
  1,073
  1,130
  1,189
  1,251
  1,316
  1,384
  1,455
  1,530
  1,608
  1,690
  1,777
  1,867
  1,962
  2,062
  2,166
Variable operating expenses, $m
  429
  455
  482
  511
  541
  572
  604
  638
  673
  710
  740
  781
  823
  867
  913
  961
  1,012
  1,065
  1,120
  1,178
  1,239
  1,303
  1,370
  1,440
  1,514
  1,591
  1,672
  1,757
  1,846
  1,940
Fixed operating expenses, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Total operating expenses, $m
  428
  454
  481
  510
  540
  571
  603
  637
  672
  709
  739
  780
  822
  866
  912
  960
  1,011
  1,064
  1,118
  1,176
  1,237
  1,301
  1,368
  1,438
  1,512
  1,589
  1,670
  1,755
  1,844
  1,938
Operating income, $m
  42
  45
  48
  52
  55
  59
  63
  67
  71
  75
  88
  92
  97
  103
  108
  114
  120
  126
  132
  139
  146
  154
  162
  170
  178
  187
  197
  207
  217
  228
EBITDA, $m
  66
  71
  75
  79
  84
  89
  94
  99
  105
  110
  116
  123
  129
  136
  143
  151
  159
  167
  176
  185
  194
  204
  215
  226
  237
  249
  262
  275
  289
  304
Interest expense (income), $m
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  62
Earnings before tax, $m
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
Tax expense, $m
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  19
  20
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
Net income, $m
  25
  27
  29
  30
  32
  34
  36
  38
  40
  42
  50
  53
  55
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122

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
  429
  456
  484
  513
  543
  575
  608
  642
  678
  716
  755
  796
  839
  884
  931
  980
  1,032
  1,086
  1,142
  1,202
  1,264
  1,329
  1,397
  1,469
  1,544
  1,623
  1,705
  1,792
  1,883
  1,978
Adjusted assets (=assets-cash), $m
  429
  456
  484
  513
  543
  575
  608
  642
  678
  716
  755
  796
  839
  884
  931
  980
  1,032
  1,086
  1,142
  1,202
  1,264
  1,329
  1,397
  1,469
  1,544
  1,623
  1,705
  1,792
  1,883
  1,978
Revenue / Adjusted assets
  1.096
  1.094
  1.095
  1.094
  1.096
  1.094
  1.094
  1.095
  1.096
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
  1.095
Average production assets, $m
  178
  189
  201
  213
  225
  239
  252
  267
  281
  297
  313
  330
  348
  367
  386
  407
  428
  451
  474
  499
  524
  551
  580
  610
  641
  673
  708
  744
  781
  821
Working capital, $m
  97
  103
  110
  116
  123
  130
  138
  146
  154
  162
  171
  180
  190
  200
  211
  222
  234
  246
  259
  272
  286
  301
  317
  333
  350
  368
  387
  406
  427
  448
Total debt, $m
  129
  145
  161
  179
  197
  216
  236
  256
  278
  300
  323
  348
  374
  400
  429
  458
  489
  521
  555
  590
  627
  666
  707
  750
  794
  841
  891
  942
  997
  1,054
Total liabilities, $m
  256
  272
  289
  306
  324
  343
  363
  383
  405
  427
  451
  475
  501
  528
  556
  585
  616
  648
  682
  717
  754
  793
  834
  877
  922
  969
  1,018
  1,070
  1,124
  1,181
Total equity, $m
  173
  184
  195
  207
  219
  232
  245
  259
  273
  288
  304
  321
  338
  356
  375
  395
  416
  438
  460
  484
  509
  536
  563
  592
  622
  654
  687
  722
  759
  797
Total liabilities and equity, $m
  429
  456
  484
  513
  543
  575
  608
  642
  678
  715
  755
  796
  839
  884
  931
  980
  1,032
  1,086
  1,142
  1,201
  1,263
  1,329
  1,397
  1,469
  1,544
  1,623
  1,705
  1,792
  1,883
  1,978
Debt-to-equity ratio
  0.740
  0.790
  0.830
  0.870
  0.900
  0.930
  0.960
  0.990
  1.020
  1.040
  1.060
  1.080
  1.100
  1.120
  1.140
  1.160
  1.180
  1.190
  1.200
  1.220
  1.230
  1.240
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.310
  1.320
Adjusted equity ratio
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  27
  29
  30
  32
  34
  36
  38
  40
  42
  50
  53
  55
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
Depreciation, amort., depletion, $m
  24
  26
  27
  28
  29
  30
  31
  33
  34
  35
  29
  30
  32
  34
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
Funds from operations, $m
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  79
  83
  87
  92
  96
  101
  106
  111
  116
  122
  128
  134
  141
  148
  155
  163
  171
  179
  188
  197
Change in working capital, $m
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
Cash from operations, $m
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  70
  74
  78
  81
  85
  90
  94
  99
  104
  109
  114
  120
  126
  132
  138
  145
  152
  159
  167
  175
Maintenance CAPEX, $m
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
New CAPEX, $m
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
Cash from investing activities, $m
  -26
  -27
  -29
  -30
  -33
  -34
  -36
  -37
  -39
  -42
  -43
  -46
  -48
  -51
  -54
  -55
  -58
  -61
  -64
  -68
  -72
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -112
Free cash flow, $m
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
Issuance/(repayment) of debt, $m
  16
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
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  
  16
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
Total cash flow (excl. dividends), $m
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  115
  121
Retained Cash Flow (-), $m
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
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
  23
  24
  25
  27
  28
  29
  31
  32
  33
  35
  34
  36
  38
  40
  41
  43
  45
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  75
  79
  82
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  22
  22
  22
  21
  21
  20
  19
  19
  18
  17
  15
  13
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  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
  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

Luxfer Holdings PLC is a holding company. The Company is a materials technology company specializing in the design, manufacture and supply of materials, components and gas-containment devices for healthcare, environmental, protection and specialty end-markets. It operates through two divisions: Elektron and Gas Cylinders. Its Elektron Division focuses on specialty materials based primarily on magnesium, zirconium and rare earths. It sells its products through two brands, Magnesium Elektron and MEL Chemicals. Its Gas Cylinders Division manufactures and markets specialized products using aluminum, magnesium, carbon composites and steel. It sells its products through two brands, Luxfer Gas Cylinders and Superform. Its customers include both end users of its products and manufacturers that incorporate its products into finished goods. As of December 31, 2016, it had operated 20 manufacturing plants in the United States, the United Kingdom, Canada, France, the Czech Republic and China.

FINANCIAL RATIOS  of  Luxfer Holdings (LXFR)

Valuation Ratios
P/E Ratio 30.1
Price to Sales 1.6
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 22.8
Price to Free Cash Flow 66.2
Growth Rates
Sales Growth Rate -9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.8%
Cap. Spend. - 3 Yr. Gr. Rate -6.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 85.2%
Total Debt to Equity 85.2%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 6.3%
Return On Total Capital 7.8%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 14.1%
Return On Equity - 3 Yr. Avg. 13.1%
Asset Turnover 1
Profitability Ratios
Gross Margin 22.4%
Gross Margin - 3 Yr. Avg. 22.7%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 12%
Operating Margin 8.7%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 6.7%
Pre-Tax Margin - 3 Yr. Avg. 6.6%
Net Profit Margin 5.3%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 21.4%
Eff/ Tax Rate - 3 Yr. Avg. 26.4%
Payout Ratio 59.1%

LXFR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LXFR stock intrinsic value calculation we used $441.3 million for the last fiscal year's total revenue generated by Luxfer Holdings. The default revenue input number comes from 0001 income statement of Luxfer Holdings. 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 LXFR stock valuation model: a) initial revenue growth rate of 6.4% 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 5%, whose default value for LXFR is calculated based on our internal credit rating of Luxfer Holdings, 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 Luxfer Holdings.
    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 LXFR stock the variable cost ratio is equal to 91.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $-1 million in the base year in the intrinsic value calculation for LXFR 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 6.2% for Luxfer Holdings.

Corporate tax rate of 27% is the nominal tax rate for Luxfer Holdings. 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 LXFR 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 LXFR are equal to 37.9%.

Life of production assets of 10.9 years is the average useful life of capital assets used in Luxfer Holdings 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 LXFR is equal to 20.7%. 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 - $162.3 million for Luxfer Holdings - 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 26.609 million for Luxfer Holdings 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 Luxfer Holdings at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
GTLS Chart Industri 66.42 45.82  sell
WOR Worthington In 42.56 79.96  str.buy
HON Honeywell Inte 147.77 242.19  str.buy

COMPANY NEWS

▶ Heres What Luxfer Holdings PLCs (NYSE:LXFR) P/E Is Telling Us   [Nov-14-18 08:46AM  Simply Wall St.]
▶ Luxfer: 3Q Earnings Snapshot   [06:38PM  Associated Press]
▶ Luxfer Declares Quarterly Dividend   [Oct-08-18 04:30PM  Business Wire]
▶ U.S. Manufacturing Logs Best Gain in 14 Years: 5 Top Picks   [Sep-05-18 11:52AM  InvestorPlace]
▶ Luxfer: 2Q Earnings Snapshot   [Aug-01-18 08:59PM  Associated Press]
▶ Luxfer Declares Quarterly Dividend   [Jul-02-18 08:00AM  Business Wire]
▶ Top 6 Stocks With Solid Net Profit Margin   [Jun-20-18 12:15PM  InvestorPlace]
▶ 6 Impressive Stocks With a Significant Net Profit Margin   [Jun-14-18 02:47PM  InvestorPlace]
▶ 5 Best Performing Stocks of May   [Jun-01-18 08:26AM  Zacks]
▶ New Strong Buy Stocks for May 21st   [May-21-18 10:57AM  Zacks]
▶ Luxfer: 1Q Earnings Snapshot   [May-09-18 07:49PM  Associated Press]
▶ Is Luxfer Holdings PLC (NYSE:LXFR) A Good Dividend Stock?   [May-02-18 08:10PM  Simply Wall St.]
▶ Luxfer Declares Quarterly Dividend   [Mar-27-18 04:30PM  Business Wire]
▶ Luxfer reports 4Q loss   [Mar-19-18 05:36PM  Associated Press]
▶ Luxfer Declares Quarterly Dividend   [Jan-04-18 04:30PM  Business Wire]
▶ Is It Time To Buy Luxfer Holdings PLC (LXFR)?   [Dec-01-17 01:30PM  Simply Wall St.]
▶ Heather Harding Named Luxfer Chief Financial Officer   [Nov-16-17 05:00PM  Business Wire]
▶ Luxfer Holdings PLC (LXFR): Time For A Financial Health Check   [Nov-15-17 01:37PM  Simply Wall St.]
▶ Luxfer posts 3Q profit   [Nov-06-17 06:49PM  Associated Press]
▶ Luxfer Declares Quarterly Dividend   [Oct-02-17 05:00PM  Business Wire]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.