Intrinsic value of Milacron Holdings - MCRN

Previous Close

$21.93

  Intrinsic Value

$9.32

stock screener

  Rating & Target

str. sell

-57%

Previous close

$21.93

 
Intrinsic value

$9.32

 
Up/down potential

-57%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MCRN 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Milacron Holdings (MCRN) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.10
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
Revenue, $m
  1,167
  1,259
  1,355
  1,455
  1,558
  1,666
  1,777
  1,894
  2,015
  2,141
  2,272
  2,408
  2,550
  2,699
  2,854
  3,015
  3,184
  3,360
  3,545
  3,737
  3,939
  4,150
  4,370
  4,601
  4,843
  5,097
  5,362
  5,640
  5,932
  6,237
  6,558
Variable operating expenses, $m
 
  1,202
  1,290
  1,381
  1,476
  1,574
  1,676
  1,783
  1,893
  2,008
  2,128
  2,202
  2,332
  2,468
  2,610
  2,757
  2,912
  3,073
  3,242
  3,418
  3,602
  3,795
  3,997
  4,208
  4,429
  4,661
  4,903
  5,158
  5,424
  5,704
  5,997
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
  1,061
  1,202
  1,290
  1,381
  1,476
  1,574
  1,676
  1,783
  1,893
  2,008
  2,128
  2,202
  2,332
  2,468
  2,610
  2,757
  2,912
  3,073
  3,242
  3,418
  3,602
  3,795
  3,997
  4,208
  4,429
  4,661
  4,903
  5,158
  5,424
  5,704
  5,997
Operating income, $m
  106
  57
  65
  74
  82
  92
  101
  111
  122
  132
  143
  206
  218
  231
  244
  258
  272
  287
  303
  320
  337
  355
  374
  394
  414
  436
  459
  482
  507
  533
  561
EBITDA, $m
  166
  142
  153
  164
  176
  188
  201
  214
  227
  242
  256
  272
  288
  305
  322
  340
  359
  379
  400
  422
  445
  468
  493
  519
  547
  575
  605
  637
  670
  704
  740
Interest expense (income), $m
  59
  59
  65
  72
  79
  86
  93
  101
  109
  117
  126
  135
  145
  154
  165
  175
  187
  198
  210
  223
  236
  250
  265
  280
  296
  313
  330
  349
  368
  388
  409
Earnings before tax, $m
  45
  -2
  0
  2
  4
  6
  8
  10
  12
  15
  17
  71
  74
  76
  79
  83
  86
  89
  93
  97
  100
  105
  109
  113
  118
  123
  128
  134
  139
  145
  152
Tax expense, $m
  14
  0
  0
  0
  1
  2
  2
  3
  3
  4
  5
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
Net income, $m
  31
  -2
  0
  1
  3
  4
  6
  7
  9
  11
  13
  52
  54
  56
  58
  60
  63
  65
  68
  70
  73
  76
  79
  83
  86
  90
  94
  98
  102
  106
  111

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  130
  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
  1,722
  1,718
  1,849
  1,984
  2,126
  2,272
  2,425
  2,583
  2,748
  2,920
  3,099
  3,285
  3,480
  3,682
  3,893
  4,114
  4,344
  4,585
  4,836
  5,099
  5,374
  5,661
  5,962
  6,277
  6,607
  6,953
  7,315
  7,695
  8,092
  8,509
  8,946
Adjusted assets (=assets-cash), $m
  1,592
  1,718
  1,849
  1,984
  2,126
  2,272
  2,425
  2,583
  2,748
  2,920
  3,099
  3,285
  3,480
  3,682
  3,893
  4,114
  4,344
  4,585
  4,836
  5,099
  5,374
  5,661
  5,962
  6,277
  6,607
  6,953
  7,315
  7,695
  8,092
  8,509
  8,946
Revenue / Adjusted assets
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
Average production assets, $m
  594
  641
  690
  740
  793
  848
  905
  964
  1,025
  1,090
  1,156
  1,226
  1,298
  1,374
  1,453
  1,535
  1,621
  1,710
  1,804
  1,902
  2,005
  2,112
  2,225
  2,342
  2,465
  2,594
  2,729
  2,871
  3,019
  3,175
  3,338
Working capital, $m
  355
  251
  270
  289
  310
  331
  354
  377
  401
  426
  452
  479
  508
  537
  568
  600
  634
  669
  705
  744
  784
  826
  870
  916
  964
  1,014
  1,067
  1,122
  1,180
  1,241
  1,305
Total debt, $m
  941
  1,035
  1,140
  1,249
  1,363
  1,481
  1,604
  1,731
  1,864
  2,002
  2,146
  2,295
  2,452
  2,614
  2,784
  2,961
  3,147
  3,340
  3,542
  3,753
  3,974
  4,206
  4,448
  4,701
  4,966
  5,244
  5,535
  5,841
  6,160
  6,496
  6,847
Total liabilities, $m
  1,287
  1,381
  1,486
  1,595
  1,709
  1,827
  1,950
  2,077
  2,210
  2,348
  2,492
  2,641
  2,798
  2,960
  3,130
  3,307
  3,493
  3,686
  3,888
  4,099
  4,320
  4,552
  4,794
  5,047
  5,312
  5,590
  5,881
  6,187
  6,506
  6,842
  7,193
Total equity, $m
  435
  337
  362
  389
  417
  445
  475
  506
  539
  572
  607
  644
  682
  722
  763
  806
  851
  899
  948
  999
  1,053
  1,110
  1,169
  1,230
  1,295
  1,363
  1,434
  1,508
  1,586
  1,668
  1,754
Total liabilities and equity, $m
  1,722
  1,718
  1,848
  1,984
  2,126
  2,272
  2,425
  2,583
  2,749
  2,920
  3,099
  3,285
  3,480
  3,682
  3,893
  4,113
  4,344
  4,585
  4,836
  5,098
  5,373
  5,662
  5,963
  6,277
  6,607
  6,953
  7,315
  7,695
  8,092
  8,510
  8,947
Debt-to-equity ratio
  2.163
  3.070
  3.150
  3.210
  3.270
  3.330
  3.370
  3.420
  3.460
  3.500
  3.530
  3.560
  3.590
  3.620
  3.650
  3.670
  3.700
  3.720
  3.740
  3.760
  3.770
  3.790
  3.810
  3.820
  3.830
  3.850
  3.860
  3.870
  3.880
  3.890
  3.900
Adjusted equity ratio
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  31
  -2
  0
  1
  3
  4
  6
  7
  9
  11
  13
  52
  54
  56
  58
  60
  63
  65
  68
  70
  73
  76
  79
  83
  86
  90
  94
  98
  102
  106
  111
Depreciation, amort., depletion, $m
  60
  85
  88
  91
  93
  96
  99
  103
  106
  109
  113
  66
  70
  74
  78
  83
  87
  92
  97
  102
  108
  114
  120
  126
  133
  139
  147
  154
  162
  171
  179
Funds from operations, $m
  141
  83
  88
  92
  96
  101
  105
  110
  115
  120
  126
  118
  123
  130
  136
  143
  150
  157
  165
  173
  181
  190
  199
  209
  219
  229
  240
  252
  264
  277
  290
Change in working capital, $m
  25
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
Cash from operations, $m
  116
  65
  69
  72
  76
  79
  83
  87
  91
  95
  100
  90
  95
  100
  105
  111
  116
  122
  128
  134
  141
  148
  155
  163
  171
  179
  188
  197
  206
  216
  226
Maintenance CAPEX, $m
  0
  -32
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -59
  -62
  -66
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -139
  -147
  -154
  -162
  -171
New CAPEX, $m
  -57
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -142
  -148
  -156
  -163
Cash from investing activities, $m
  -56
  -79
  -83
  -88
  -93
  -98
  -103
  -108
  -114
  -119
  -126
  -132
  -138
  -146
  -153
  -160
  -169
  -177
  -186
  -195
  -205
  -215
  -226
  -238
  -249
  -262
  -274
  -289
  -302
  -318
  -334
Free cash flow, $m
  60
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -26
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -107
Issuance/(repayment) of debt, $m
  -1
  101
  105
  109
  114
  118
  123
  128
  133
  138
  144
  150
  156
  163
  170
  177
  185
  193
  202
  211
  221
  231
  242
  253
  265
  278
  291
  305
  320
  335
  351
Issuance/(repurchase) of shares, $m
  7
  27
  26
  25
  25
  25
  24
  24
  23
  23
  22
  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  
  6
  128
  131
  134
  139
  143
  147
  152
  156
  161
  166
  150
  156
  163
  170
  177
  185
  193
  202
  211
  221
  231
  242
  253
  265
  278
  291
  305
  320
  335
  351
Total cash flow (excl. dividends), $m
  63
  114
  116
  119
  122
  124
  127
  130
  133
  137
  140
  109
  113
  118
  122
  127
  133
  138
  144
  151
  157
  164
  171
  179
  187
  195
  204
  213
  223
  233
  244
Retained Cash Flow (-), $m
  6
  -27
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
Prev. year cash balance distribution, $m
 
  123
  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
 
  210
  91
  92
  94
  96
  97
  99
  101
  103
  105
  72
  75
  78
  81
  84
  88
  91
  95
  99
  103
  108
  112
  117
  122
  128
  133
  139
  145
  152
  158
Discount rate, %
 
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
 
  192
  75
  68
  62
  55
  49
  43
  37
  31
  26
  15
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  97.6
  95.5
  93.7
  92.0
  90.5
  89.1
  87.8
  86.7
  85.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7
  84.7

Milacron Holdings Corp. is engaged in the manufacture, distribution, and service of engineered and customized systems used in the plastic technology and processing industry. The Company operates through three segments: Advanced Plastic Processing Technologies (APPT), Melt Delivery and Control Systems (MDCS), and Fluid Technologies. The Company has a product portfolio that includes hot runner systems, injection molding, blow molding and extrusion equipment. It produces process control systems, mold bases and components, and maintenance, repair and operating (MRO) supplies and fluid technology. As of December 31, 2016, the Company's products were sold in over 100 countries across six continents. Its customers include original equipment manufacturers (OEMs), molders and mold-makers. Its customer base covers a range of end-market applications, including packaging, automotive, medical, construction, consumer goods and electronics.

FINANCIAL RATIOS  of  Milacron Holdings (MCRN)

Valuation Ratios
P/E Ratio 48.4
Price to Sales 1.3
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 12.9
Price to Free Cash Flow 25.4
Growth Rates
Sales Growth Rate -1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.5%
Cap. Spend. - 3 Yr. Gr. Rate 13.7%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity 214.7%
Total Debt to Equity 216.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. -0.5%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. -2%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 33.9%
Gross Margin - 3 Yr. Avg. 34.3%
EBITDA Margin 14.1%
EBITDA Margin - 3 Yr. Avg. 12%
Operating Margin 9.1%
Oper. Margin - 3 Yr. Avg. 6.7%
Pre-Tax Margin 3.9%
Pre-Tax Margin - 3 Yr. Avg. 1%
Net Profit Margin 2.7%
Net Profit Margin - 3 Yr. Avg. -0.6%
Effective Tax Rate 31.1%
Eff/ Tax Rate - 3 Yr. Avg. 76.2%
Payout Ratio 0%

MCRN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MCRN stock intrinsic value calculation we used $1167 million for the last fiscal year's total revenue generated by Milacron Holdings. The default revenue input number comes from 2016 income statement of Milacron 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 MCRN stock valuation model: a) initial revenue growth rate of 7.9% 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 9.6%, whose default value for MCRN is calculated based on our internal credit rating of Milacron 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 Milacron 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 MCRN stock the variable cost ratio is equal to 95.8%.

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 MCRN 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 6.3% for Milacron Holdings.

Corporate tax rate of 27% is the nominal tax rate for Milacron 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 MCRN 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 MCRN are equal to 50.9%.

Life of production assets of 18.6 years is the average useful life of capital assets used in Milacron 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 MCRN 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 - $435 million for Milacron 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 69.488 million for Milacron 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 Milacron Holdings at the current share price and the inputted number of shares is $1.5 billion.

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COMPANY NEWS

▶ Milacron Holdings beats Street 4Q forecasts   [07:44AM  Associated Press]
▶ Milacron Holdings beats Street 3Q forecasts   [07:48AM  Associated Press]
▶ Is There Now An Opportunity In Milacron Holdings Corp (MCRN)?   [Sep-06-17 05:44PM  Simply Wall St.]
▶ Weekly CEO Buys Highlights   [Aug-28-17 12:26PM  GuruFocus.com]
▶ Milacron Holdings tops Street 2Q forecasts   [Jul-27-17 11:38PM  Associated Press]
▶ Milacron Files for Secondary Offering   [May-01-17 10:25AM  24/7 Wall St.]
▶ Milacron Holdings reports 1Q loss   [Apr-27-17 08:36AM  Associated Press]
▶ Milacron Holdings Corp. To Host Investor Meeting   [Apr-21-17 04:20PM  Business Wire]
▶ Milacron Files for IPO   [Apr-18-17 10:20AM  24/7 Wall St.]
▶ Who Will Win the March Madness of Trump Stocks?   [Mar-23-17 05:12PM  Zacks]
Financial statements of MCRN
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