Intrinsic value of MSA Safety Incorporporated - MSA

Previous Close

$102.06

  Intrinsic Value

$115.33

stock screener

  Rating & Target

hold

+13%

Previous close

$102.06

 
Intrinsic value

$115.33

 
Up/down potential

+13%

 
Rating

hold

We calculate the intrinsic value of MSA 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 3.9

 

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, %
  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
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  1,419
  1,484
  1,552
  1,624
  1,700
  1,780
  1,864
  1,953
  2,046
  2,144
  2,248
  2,357
  2,471
  2,592
  2,718
  2,851
  2,991
  3,138
  3,293
  3,455
  3,626
  3,805
  3,994
  4,192
  4,400
  4,618
  4,847
  5,088
  5,341
  5,607
Variable operating expenses, $m
  270
  279
  290
  300
  312
  324
  336
  349
  363
  378
  335
  351
  368
  386
  405
  425
  446
  468
  491
  515
  541
  567
  595
  625
  656
  688
  723
  759
  796
  836
Fixed operating expenses, $m
  963
  984
  1,006
  1,028
  1,050
  1,073
  1,097
  1,121
  1,146
  1,171
  1,197
  1,223
  1,250
  1,278
  1,306
  1,334
  1,364
  1,394
  1,424
  1,456
  1,488
  1,520
  1,554
  1,588
  1,623
  1,659
  1,695
  1,733
  1,771
  1,810
Total operating expenses, $m
  1,233
  1,263
  1,296
  1,328
  1,362
  1,397
  1,433
  1,470
  1,509
  1,549
  1,532
  1,574
  1,618
  1,664
  1,711
  1,759
  1,810
  1,862
  1,915
  1,971
  2,029
  2,087
  2,149
  2,213
  2,279
  2,347
  2,418
  2,492
  2,567
  2,646
Operating income, $m
  187
  220
  257
  296
  338
  383
  431
  482
  537
  595
  716
  782
  853
  928
  1,007
  1,092
  1,182
  1,277
  1,378
  1,485
  1,598
  1,718
  1,845
  1,979
  2,121
  2,271
  2,430
  2,597
  2,775
  2,962
EBITDA, $m
  269
  304
  341
  381
  425
  471
  520
  573
  630
  690
  754
  822
  894
  971
  1,053
  1,140
  1,232
  1,330
  1,433
  1,543
  1,659
  1,782
  1,912
  2,049
  2,195
  2,349
  2,511
  2,683
  2,864
  3,056
Interest expense (income), $m
  0
  20
  22
  24
  27
  30
  33
  36
  39
  43
  46
  50
  54
  58
  63
  67
  72
  77
  83
  88
  94
  101
  107
  114
  122
  129
  137
  146
  155
  164
  174
Earnings before tax, $m
  167
  198
  232
  269
  308
  350
  395
  443
  494
  549
  666
  728
  795
  865
  940
  1,020
  1,104
  1,194
  1,289
  1,390
  1,497
  1,610
  1,730
  1,857
  1,991
  2,134
  2,284
  2,443
  2,611
  2,788
Tax expense, $m
  45
  54
  63
  73
  83
  94
  107
  120
  133
  148
  180
  197
  215
  234
  254
  275
  298
  322
  348
  375
  404
  435
  467
  501
  538
  576
  617
  660
  705
  753
Net income, $m
  122
  145
  170
  196
  225
  255
  288
  323
  361
  401
  486
  532
  580
  632
  686
  744
  806
  872
  941
  1,015
  1,093
  1,176
  1,263
  1,356
  1,454
  1,557
  1,667
  1,783
  1,906
  2,035

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
  1,679
  1,756
  1,837
  1,922
  2,011
  2,106
  2,206
  2,311
  2,421
  2,538
  2,660
  2,789
  2,925
  3,067
  3,217
  3,374
  3,540
  3,714
  3,897
  4,089
  4,291
  4,503
  4,726
  4,961
  5,207
  5,465
  5,737
  6,022
  6,321
  6,636
Adjusted assets (=assets-cash), $m
  1,679
  1,756
  1,837
  1,922
  2,011
  2,106
  2,206
  2,311
  2,421
  2,538
  2,660
  2,789
  2,925
  3,067
  3,217
  3,374
  3,540
  3,714
  3,897
  4,089
  4,291
  4,503
  4,726
  4,961
  5,207
  5,465
  5,737
  6,022
  6,321
  6,636
Revenue / Adjusted assets
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
  0.845
Average production assets, $m
  475
  497
  520
  544
  569
  596
  624
  654
  685
  718
  753
  790
  828
  868
  911
  955
  1,002
  1,051
  1,103
  1,158
  1,215
  1,275
  1,338
  1,404
  1,474
  1,547
  1,624
  1,705
  1,789
  1,878
Working capital, $m
  204
  214
  223
  234
  245
  256
  268
  281
  295
  309
  324
  339
  356
  373
  391
  411
  431
  452
  474
  498
  522
  548
  575
  604
  634
  665
  698
  733
  769
  807
Total debt, $m
  405
  451
  500
  552
  606
  664
  724
  788
  855
  925
  999
  1,077
  1,160
  1,246
  1,337
  1,432
  1,532
  1,638
  1,749
  1,865
  1,988
  2,116
  2,251
  2,393
  2,542
  2,699
  2,864
  3,036
  3,218
  3,409
Total liabilities, $m
  1,018
  1,064
  1,113
  1,165
  1,219
  1,276
  1,337
  1,400
  1,467
  1,538
  1,612
  1,690
  1,772
  1,859
  1,949
  2,045
  2,145
  2,251
  2,362
  2,478
  2,600
  2,729
  2,864
  3,006
  3,155
  3,312
  3,476
  3,649
  3,831
  4,021
Total equity, $m
  662
  692
  724
  757
  793
  830
  869
  910
  954
  1,000
  1,048
  1,099
  1,152
  1,208
  1,267
  1,330
  1,395
  1,463
  1,535
  1,611
  1,691
  1,774
  1,862
  1,954
  2,051
  2,153
  2,260
  2,373
  2,491
  2,614
Total liabilities and equity, $m
  1,680
  1,756
  1,837
  1,922
  2,012
  2,106
  2,206
  2,310
  2,421
  2,538
  2,660
  2,789
  2,924
  3,067
  3,216
  3,375
  3,540
  3,714
  3,897
  4,089
  4,291
  4,503
  4,726
  4,960
  5,206
  5,465
  5,736
  6,022
  6,322
  6,635
Debt-to-equity ratio
  0.610
  0.650
  0.690
  0.730
  0.760
  0.800
  0.830
  0.870
  0.900
  0.930
  0.950
  0.980
  1.010
  1.030
  1.050
  1.080
  1.100
  1.120
  1.140
  1.160
  1.180
  1.190
  1.210
  1.220
  1.240
  1.250
  1.270
  1.280
  1.290
  1.300
Adjusted equity ratio
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  122
  145
  170
  196
  225
  255
  288
  323
  361
  401
  486
  532
  580
  632
  686
  744
  806
  872
  941
  1,015
  1,093
  1,176
  1,263
  1,356
  1,454
  1,557
  1,667
  1,783
  1,906
  2,035
Depreciation, amort., depletion, $m
  82
  83
  84
  86
  87
  88
  90
  91
  93
  94
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  94
Funds from operations, $m
  204
  228
  254
  282
  312
  344
  378
  415
  454
  495
  524
  571
  622
  675
  732
  792
  857
  925
  997
  1,073
  1,154
  1,240
  1,330
  1,426
  1,528
  1,635
  1,749
  1,869
  1,996
  2,130
Change in working capital, $m
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
Cash from operations, $m
  195
  219
  244
  271
  301
  332
  366
  402
  440
  481
  509
  556
  605
  658
  714
  773
  836
  903
  974
  1,050
  1,129
  1,214
  1,303
  1,398
  1,498
  1,604
  1,716
  1,834
  1,959
  2,091
Maintenance CAPEX, $m
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -90
New CAPEX, $m
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
Cash from investing activities, $m
  -44
  -46
  -48
  -50
  -52
  -56
  -58
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -91
  -95
  -99
  -105
  -109
  -115
  -121
  -127
  -133
  -141
  -147
  -155
  -163
  -171
  -179
Free cash flow, $m
  152
  173
  196
  221
  248
  277
  308
  341
  376
  414
  438
  481
  527
  576
  628
  683
  742
  804
  870
  940
  1,014
  1,093
  1,176
  1,264
  1,358
  1,457
  1,561
  1,672
  1,789
  1,912
Issuance/(repayment) of debt, $m
  44
  46
  49
  52
  54
  57
  60
  64
  67
  71
  74
  78
  82
  86
  91
  95
  100
  105
  111
  116
  122
  129
  135
  142
  149
  157
  165
  173
  182
  191
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  
  44
  46
  49
  52
  54
  57
  60
  64
  67
  71
  74
  78
  82
  86
  91
  95
  100
  105
  111
  116
  122
  129
  135
  142
  149
  157
  165
  173
  182
  191
Total cash flow (excl. dividends), $m
  195
  220
  245
  273
  302
  334
  368
  404
  443
  484
  513
  559
  609
  662
  719
  778
  842
  909
  981
  1,056
  1,136
  1,221
  1,311
  1,406
  1,507
  1,613
  1,726
  1,845
  1,970
  2,103
Retained Cash Flow (-), $m
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -118
  -124
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
  167
  190
  213
  239
  267
  297
  329
  363
  399
  438
  464
  509
  556
  606
  660
  716
  777
  841
  909
  980
  1,057
  1,138
  1,223
  1,314
  1,410
  1,511
  1,619
  1,732
  1,852
  1,979
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  161
  173
  186
  197
  207
  215
  222
  227
  229
  230
  221
  217
  211
  203
  194
  182
  169
  155
  140
  125
  109
  94
  80
  67
  55
  44
  35
  27
  20
  15
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

MSA Safety Incorporated develops, manufactures, and supplies safety products that protect people and facility infrastructures in North America, Europe, and internationally. Its safety products include electronics, mechanical systems, and advanced materials to protect users against hazardous or life threatening situations. The company offers fixed gas and flame detection instruments, including multi-point permanently installed gas detection systems, and flame detectors and open-path infrared gas detectors used in oil, gas, and petrochemical facilities, as well as in general industrial production facilities to detect the presence or absence of various gases in the air. Its breathing apparatus products comprise self-contained breathing apparatus, face masks, and respirators used by first responders and petrochemical plant workers, as well as anyone entering an environment deemed dangerous to life and health. The company’s portable gas detection instruments used to detect the presence or absence of various gases in the air by oil, gas, and petrochemical workers; general industry workers; miners; and first responders or anyone working in a confined space environment. It also provides head protection products for oil, gas, and petrochemical workers; steel and construction workers; miners; and industrial workers. In addition, the company provides fall protection equipment, including confined space equipment, harnesses, fall arrest equipment, lanyards, and lifelines for workers in the construction industry; oil, gas, and petrochemical market; utilities industry, and general industrial applications; and anyone working at height. Further, it offers fire and rescue helmets used by firefighters; and respirators, eye and face protection products, thermal imaging cameras, ballistic helmets, and gas masks. MSA Safety Incorporated was founded in 1914 and is based in Cranberry Township, Pennsylvania.

FINANCIAL RATIOS  of  MSA Safety Incorporporated (MSA)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MSA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MSA stock intrinsic value calculation we used $1358 million for the last fiscal year's total revenue generated by MSA Safety Incorporporated. The default revenue input number comes from 0001 income statement of MSA Safety Incorporporated. 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 MSA stock valuation model: a) initial revenue growth rate of 4.5% 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 4.3%, whose default value for MSA is calculated based on our internal credit rating of MSA Safety Incorporporated, 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 MSA Safety Incorporporated.
    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 MSA stock the variable cost ratio is equal to 19.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $942 million in the base year in the intrinsic value calculation for MSA 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 MSA Safety Incorporporated.

Corporate tax rate of 27% is the nominal tax rate for MSA Safety Incorporporated. 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 MSA 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 MSA are equal to 33.5%.

Life of production assets of 19.9 years is the average useful life of capital assets used in MSA Safety Incorporporated 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 MSA is equal to 14.4%. 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 - $633.882 million for MSA Safety Incorporporated - 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 38.522 million for MSA Safety Incorporporated 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 MSA Safety Incorporporated at the current share price and the inputted number of shares is $3.9 billion.

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