Intrinsic value of Motorcar Parts of America - MPAA

Previous Close

$24.75

  Intrinsic Value

$56.21

stock screener

  Rating & Target

str. buy

+127%

Previous close

$24.75

 
Intrinsic value

$56.21

 
Up/down potential

+127%

 
Rating

str. buy

We calculate the intrinsic value of MPAA 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 2017), $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 0.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.20
  13.28
  12.45
  11.71
  11.04
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
Revenue, $m
  481
  545
  612
  684
  760
  839
  922
  1,009
  1,099
  1,193
  1,291
  1,393
  1,499
  1,609
  1,723
  1,842
  1,965
  2,093
  2,227
  2,366
  2,511
  2,662
  2,819
  2,983
  3,154
  3,332
  3,519
  3,714
  3,917
  4,130
Variable operating expenses, $m
  208
  235
  264
  295
  328
  362
  397
  435
  474
  514
  556
  599
  645
  692
  741
  793
  846
  901
  958
  1,018
  1,081
  1,145
  1,213
  1,284
  1,357
  1,434
  1,514
  1,598
  1,686
  1,777
Fixed operating expenses, $m
  180
  184
  188
  192
  196
  201
  205
  209
  214
  219
  224
  229
  234
  239
  244
  249
  255
  260
  266
  272
  278
  284
  290
  297
  303
  310
  317
  324
  331
  338
Total operating expenses, $m
  388
  419
  452
  487
  524
  563
  602
  644
  688
  733
  780
  828
  879
  931
  985
  1,042
  1,101
  1,161
  1,224
  1,290
  1,359
  1,429
  1,503
  1,581
  1,660
  1,744
  1,831
  1,922
  2,017
  2,115
Operating income, $m
  93
  126
  160
  197
  236
  277
  319
  364
  411
  460
  512
  565
  620
  678
  737
  800
  865
  932
  1,003
  1,076
  1,152
  1,232
  1,315
  1,402
  1,493
  1,588
  1,688
  1,792
  1,901
  2,015
EBITDA, $m
  97
  130
  165
  202
  241
  282
  325
  371
  418
  468
  519
  573
  629
  687
  747
  810
  876
  944
  1,015
  1,089
  1,167
  1,247
  1,332
  1,419
  1,511
  1,607
  1,708
  1,813
  1,923
  2,038
Interest expense (income), $m
  12
  13
  25
  37
  50
  64
  78
  93
  109
  126
  143
  161
  180
  199
  219
  240
  262
  285
  308
  333
  358
  385
  412
  441
  471
  503
  535
  569
  605
  642
  681
Earnings before tax, $m
  80
  101
  123
  147
  172
  199
  226
  255
  286
  317
  351
  385
  421
  458
  497
  538
  580
  624
  670
  718
  768
  820
  874
  931
  991
  1,053
  1,118
  1,187
  1,258
  1,334
Tax expense, $m
  22
  27
  33
  40
  46
  54
  61
  69
  77
  86
  95
  104
  114
  124
  134
  145
  157
  168
  181
  194
  207
  221
  236
  251
  268
  284
  302
  320
  340
  360
Net income, $m
  58
  74
  90
  107
  126
  145
  165
  186
  208
  232
  256
  281
  307
  335
  363
  393
  423
  455
  489
  524
  560
  598
  638
  680
  723
  769
  816
  866
  919
  973

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
  498
  564
  634
  708
  786
  868
  954
  1,044
  1,138
  1,235
  1,336
  1,442
  1,551
  1,665
  1,783
  1,906
  2,034
  2,167
  2,305
  2,449
  2,599
  2,755
  2,918
  3,088
  3,265
  3,450
  3,643
  3,844
  4,055
  4,275
Adjusted assets (=assets-cash), $m
  498
  564
  634
  708
  786
  868
  954
  1,044
  1,138
  1,235
  1,336
  1,442
  1,551
  1,665
  1,783
  1,906
  2,034
  2,167
  2,305
  2,449
  2,599
  2,755
  2,918
  3,088
  3,265
  3,450
  3,643
  3,844
  4,055
  4,275
Revenue / Adjusted assets
  0.966
  0.966
  0.965
  0.966
  0.967
  0.967
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
Average production assets, $m
  27
  31
  35
  39
  43
  48
  53
  57
  63
  68
  74
  79
  85
  92
  98
  105
  112
  119
  127
  135
  143
  152
  161
  170
  180
  190
  201
  212
  223
  235
Working capital, $m
  240
  272
  306
  342
  380
  419
  461
  504
  549
  596
  645
  696
  749
  804
  861
  921
  983
  1,047
  1,114
  1,183
  1,255
  1,331
  1,409
  1,491
  1,577
  1,666
  1,759
  1,857
  1,959
  2,065
Total debt, $m
  58
  86
  116
  148
  182
  217
  254
  293
  333
  375
  418
  464
  511
  560
  611
  664
  719
  776
  835
  897
  962
  1,029
  1,099
  1,172
  1,248
  1,327
  1,410
  1,497
  1,587
  1,682
Total liabilities, $m
  214
  242
  273
  305
  338
  373
  410
  449
  489
  531
  575
  620
  667
  716
  767
  820
  875
  932
  991
  1,053
  1,118
  1,185
  1,255
  1,328
  1,404
  1,483
  1,566
  1,653
  1,744
  1,838
Total equity, $m
  284
  321
  361
  404
  448
  495
  544
  595
  648
  704
  762
  822
  884
  949
  1,017
  1,087
  1,160
  1,235
  1,314
  1,396
  1,482
  1,571
  1,663
  1,760
  1,861
  1,966
  2,076
  2,191
  2,311
  2,437
Total liabilities and equity, $m
  498
  563
  634
  709
  786
  868
  954
  1,044
  1,137
  1,235
  1,337
  1,442
  1,551
  1,665
  1,784
  1,907
  2,035
  2,167
  2,305
  2,449
  2,600
  2,756
  2,918
  3,088
  3,265
  3,449
  3,642
  3,844
  4,055
  4,275
Debt-to-equity ratio
  0.200
  0.270
  0.320
  0.370
  0.410
  0.440
  0.470
  0.490
  0.510
  0.530
  0.550
  0.560
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.640
  0.650
  0.650
  0.660
  0.670
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
Adjusted equity ratio
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  74
  90
  107
  126
  145
  165
  186
  208
  232
  256
  281
  307
  335
  363
  393
  423
  455
  489
  524
  560
  598
  638
  680
  723
  769
  816
  866
  919
  973
Depreciation, amort., depletion, $m
  3
  4
  4
  5
  5
  5
  6
  6
  7
  8
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
Funds from operations, $m
  62
  77
  94
  112
  131
  150
  171
  193
  215
  239
  264
  289
  316
  344
  373
  403
  435
  467
  502
  537
  575
  614
  654
  697
  741
  788
  836
  888
  941
  997
Change in working capital, $m
  30
  32
  34
  36
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  72
  75
  79
  82
  86
  89
  93
  97
  102
  106
Cash from operations, $m
  32
  46
  60
  76
  93
  111
  130
  149
  170
  192
  215
  238
  263
  289
  316
  344
  373
  403
  435
  468
  502
  538
  576
  615
  656
  699
  743
  790
  839
  891
Maintenance CAPEX, $m
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
New CAPEX, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from investing activities, $m
  -6
  -7
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -11
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -20
  -21
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
Free cash flow, $m
  26
  39
  53
  69
  85
  102
  120
  139
  159
  180
  202
  225
  249
  274
  300
  327
  355
  385
  415
  447
  480
  515
  551
  589
  629
  670
  714
  759
  806
  856
Issuance/(repayment) of debt, $m
  27
  28
  30
  32
  34
  35
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
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  
  27
  28
  30
  32
  34
  35
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
Total cash flow (excl. dividends), $m
  53
  68
  84
  100
  118
  137
  157
  178
  200
  222
  246
  270
  296
  323
  351
  380
  410
  442
  475
  509
  545
  582
  621
  662
  705
  750
  797
  846
  897
  951
Retained Cash Flow (-), $m
  -35
  -38
  -40
  -42
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -115
  -120
  -126
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
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
Cash available for distribution, $m
  18
  30
  43
  58
  74
  90
  108
  127
  146
  167
  188
  210
  234
  258
  283
  310
  337
  366
  396
  427
  459
  493
  529
  566
  604
  644
  687
  731
  777
  825
Discount rate, %
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
  17
  26
  36
  44
  52
  58
  63
  66
  68
  68
  67
  65
  62
  58
  53
  47
  42
  36
  31
  25
  21
  16
  13
  10
  7
  5
  4
  3
  2
  1
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

Motorcar Parts of America, Inc. is a manufacturer, remanufacturer and distributor of automotive aftermarket parts, including alternators, starters, wheel hub assembly, brake master cylinders, brake power boosters and turbochargers utilized in imported and domestic passenger vehicles, light trucks and heavy-duty applications. The Company sells its products in North America to auto parts retail and traditional warehouse chains and to automobile manufacturers for both their aftermarket programs and their warranty replacement programs (OES). It recycles materials, including metal from the used cores and corrugated packaging. The Company carries over 13,000 stock keeping units (SKUs) for automotive parts that are sold under its customers' recognized private label brand names and its Quality-Built, Pure Energy, Xtreme, Reliance and other brand names. It sells its products to automotive retail outlets and the professional repair market throughout the United States and Canada.

FINANCIAL RATIOS  of  Motorcar Parts of America (MPAA)

Valuation Ratios
P/E Ratio 12.1
Price to Sales 1.1
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow -92.3
Price to Free Cash Flow -46.2
Growth Rates
Sales Growth Rate 14.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 25%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 6.8%
Total Debt to Equity 12.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 10.9%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 14.6%
Ret/ On T. Cap. - 3 Yr. Avg. 7.8%
Return On Equity 16.5%
Return On Equity - 3 Yr. Avg. 9.8%
Asset Turnover 1
Profitability Ratios
Gross Margin 27.3%
Gross Margin - 3 Yr. Avg. 27.3%
EBITDA Margin 16.9%
EBITDA Margin - 3 Yr. Avg. 12.6%
Operating Margin 16.2%
Oper. Margin - 3 Yr. Avg. 12.6%
Pre-Tax Margin 13.1%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 9%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 30.9%
Eff/ Tax Rate - 3 Yr. Avg. 42.8%
Payout Ratio 0%

MPAA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MPAA stock intrinsic value calculation we used $421 million for the last fiscal year's total revenue generated by Motorcar Parts of America. The default revenue input number comes from 2017 income statement of Motorcar Parts of America. 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 MPAA stock valuation model: a) initial revenue growth rate of 14.2% 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 6%, whose default value for MPAA is calculated based on our internal credit rating of Motorcar Parts of America, 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 Motorcar Parts of America.
    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 MPAA stock the variable cost ratio is equal to 43.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $176 million in the base year in the intrinsic value calculation for MPAA 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 42.9% for Motorcar Parts of America.

Corporate tax rate of 27% is the nominal tax rate for Motorcar Parts of America. 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 MPAA stock is equal to 0.8%.

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 MPAA are equal to 5.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Motorcar Parts of America 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 MPAA is equal to 50%. 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 - $249 million for Motorcar Parts of America - 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 19 million for Motorcar Parts of America 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 Motorcar Parts of America at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Motorcar Parts of America, Inc. to Host Earnings Call   [Aug-09-18 11:00AM  ACCESSWIRE]
▶ Motorcar Parts: Fiscal 1Q Earnings Snapshot   [08:22AM  Associated Press]
▶ Motorcar Parts: Fiscal 4Q Earnings Snapshot   [08:48AM  Associated Press]
▶ Gabelli & Companys Annual Automotive Aftermarket Symposium   [May-23-18 07:30AM  Business Wire]
▶ New Strong Sell Stocks for February 16th   [Feb-16-18 06:35AM  Zacks]
▶ Motorcar Parts reports 3Q loss   [Feb-09-18 08:15AM  Associated Press]
▶ Motorcar Parts of America, Inc. to Host Earnings Call   [Nov-09-17 10:00AM  ACCESSWIRE]
▶ Motorcar Parts misses Street 2Q forecasts   [09:05AM  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]
▶ Motorcar Parts posts 1Q profit   [Aug-09-17 11:00PM  Associated Press]
▶ New Strong Sell Stocks for June 30th   [Jun-30-17 09:26AM  Zacks]
▶ Motorcar Parts posts 4Q profit   [08:32AM  Associated Press]
▶ The One Auto Stock to Buy This Spring   [Mar-21-17 10:16AM  TheStreet.com]
▶ Motorcar Parts beats Street 3Q forecasts   [Feb-09-17 08:35AM  Associated Press]
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