Intrinsic value of Mettler-Toledo International, Inc. - MTD

Previous Close

$702.07

  Intrinsic Value

$361.08

stock screener

  Rating & Target

sell

-49%

Previous close

$702.07

 
Intrinsic value

$361.08

 
Up/down potential

-49%

 
Rating

sell

We calculate the intrinsic value of MTD 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 17.4

 

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, %
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  3,086
  3,243
  3,408
  3,580
  3,762
  3,952
  4,152
  4,361
  4,581
  4,812
  5,054
  5,309
  5,576
  5,856
  6,150
  6,459
  6,783
  7,123
  7,480
  7,856
  8,249
  8,663
  9,097
  9,552
  10,031
  10,533
  11,060
  11,614
  12,195
  12,805
Variable operating expenses, $m
  1,915
  2,009
  2,107
  2,211
  2,319
  2,432
  2,551
  2,676
  2,807
  2,945
  3,014
  3,166
  3,325
  3,492
  3,668
  3,852
  4,045
  4,248
  4,461
  4,685
  4,920
  5,166
  5,425
  5,697
  5,982
  6,282
  6,596
  6,926
  7,273
  7,637
Fixed operating expenses, $m
  443
  452
  462
  472
  483
  493
  504
  515
  527
  538
  550
  562
  575
  587
  600
  613
  627
  641
  655
  669
  684
  699
  714
  730
  746
  762
  779
  796
  814
  832
Total operating expenses, $m
  2,358
  2,461
  2,569
  2,683
  2,802
  2,925
  3,055
  3,191
  3,334
  3,483
  3,564
  3,728
  3,900
  4,079
  4,268
  4,465
  4,672
  4,889
  5,116
  5,354
  5,604
  5,865
  6,139
  6,427
  6,728
  7,044
  7,375
  7,722
  8,087
  8,469
Operating income, $m
  728
  781
  838
  898
  960
  1,027
  1,096
  1,170
  1,247
  1,329
  1,490
  1,580
  1,676
  1,776
  1,882
  1,994
  2,111
  2,234
  2,364
  2,501
  2,646
  2,797
  2,957
  3,125
  3,302
  3,489
  3,685
  3,891
  4,108
  4,337
EBITDA, $m
  869
  926
  986
  1,049
  1,116
  1,186
  1,260
  1,338
  1,420
  1,507
  1,598
  1,694
  1,795
  1,901
  2,013
  2,131
  2,256
  2,386
  2,524
  2,669
  2,822
  2,982
  3,151
  3,329
  3,517
  3,714
  3,921
  4,139
  4,369
  4,610
Interest expense (income), $m
  28
  56
  62
  67
  74
  80
  87
  94
  101
  109
  117
  126
  135
  145
  154
  165
  176
  187
  200
  212
  226
  240
  254
  270
  286
  303
  321
  340
  359
  380
  402
Earnings before tax, $m
  672
  720
  771
  824
  880
  940
  1,002
  1,068
  1,138
  1,211
  1,364
  1,445
  1,531
  1,622
  1,717
  1,818
  1,923
  2,035
  2,152
  2,276
  2,406
  2,543
  2,688
  2,840
  3,000
  3,168
  3,345
  3,532
  3,728
  3,935
Tax expense, $m
  181
  194
  208
  222
  238
  254
  271
  288
  307
  327
  368
  390
  413
  438
  464
  491
  519
  549
  581
  614
  650
  687
  726
  767
  810
  855
  903
  954
  1,007
  1,062
Net income, $m
  490
  525
  562
  602
  643
  686
  732
  780
  831
  884
  996
  1,055
  1,118
  1,184
  1,254
  1,327
  1,404
  1,485
  1,571
  1,661
  1,756
  1,857
  1,962
  2,073
  2,190
  2,313
  2,442
  2,578
  2,722
  2,873

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
  2,753
  2,893
  3,040
  3,194
  3,356
  3,526
  3,704
  3,891
  4,087
  4,293
  4,509
  4,736
  4,974
  5,224
  5,486
  5,762
  6,051
  6,354
  6,673
  7,008
  7,359
  7,728
  8,115
  8,521
  8,948
  9,396
  9,866
  10,360
  10,879
  11,423
Adjusted assets (=assets-cash), $m
  2,753
  2,893
  3,040
  3,194
  3,356
  3,526
  3,704
  3,891
  4,087
  4,293
  4,509
  4,736
  4,974
  5,224
  5,486
  5,762
  6,051
  6,354
  6,673
  7,008
  7,359
  7,728
  8,115
  8,521
  8,948
  9,396
  9,866
  10,360
  10,879
  11,423
Revenue / Adjusted assets
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
Average production assets, $m
  1,126
  1,184
  1,244
  1,307
  1,373
  1,443
  1,515
  1,592
  1,672
  1,756
  1,845
  1,938
  2,035
  2,137
  2,245
  2,357
  2,476
  2,600
  2,730
  2,867
  3,011
  3,162
  3,320
  3,487
  3,661
  3,844
  4,037
  4,239
  4,451
  4,674
Working capital, $m
  191
  201
  211
  222
  233
  245
  257
  270
  284
  298
  313
  329
  346
  363
  381
  400
  421
  442
  464
  487
  511
  537
  564
  592
  622
  653
  686
  720
  756
  794
Total debt, $m
  1,139
  1,248
  1,362
  1,481
  1,607
  1,738
  1,876
  2,021
  2,173
  2,333
  2,500
  2,676
  2,861
  3,054
  3,258
  3,471
  3,695
  3,931
  4,178
  4,437
  4,709
  4,995
  5,295
  5,610
  5,941
  6,288
  6,652
  7,035
  7,437
  7,859
Total liabilities, $m
  2,133
  2,242
  2,356
  2,475
  2,601
  2,732
  2,870
  3,015
  3,167
  3,327
  3,494
  3,670
  3,855
  4,048
  4,252
  4,465
  4,689
  4,925
  5,172
  5,431
  5,703
  5,989
  6,289
  6,604
  6,935
  7,282
  7,646
  8,029
  8,431
  8,853
Total equity, $m
  619
  651
  684
  719
  755
  793
  833
  875
  920
  966
  1,015
  1,066
  1,119
  1,175
  1,234
  1,296
  1,361
  1,430
  1,501
  1,577
  1,656
  1,739
  1,826
  1,917
  2,013
  2,114
  2,220
  2,331
  2,448
  2,570
Total liabilities and equity, $m
  2,752
  2,893
  3,040
  3,194
  3,356
  3,525
  3,703
  3,890
  4,087
  4,293
  4,509
  4,736
  4,974
  5,223
  5,486
  5,761
  6,050
  6,355
  6,673
  7,008
  7,359
  7,728
  8,115
  8,521
  8,948
  9,396
  9,866
  10,360
  10,879
  11,423
Debt-to-equity ratio
  1.840
  1.920
  1.990
  2.060
  2.130
  2.190
  2.250
  2.310
  2.360
  2.420
  2.460
  2.510
  2.560
  2.600
  2.640
  2.680
  2.710
  2.750
  2.780
  2.810
  2.840
  2.870
  2.900
  2.930
  2.950
  2.970
  3.000
  3.020
  3.040
  3.060
Adjusted equity ratio
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  490
  525
  562
  602
  643
  686
  732
  780
  831
  884
  996
  1,055
  1,118
  1,184
  1,254
  1,327
  1,404
  1,485
  1,571
  1,661
  1,756
  1,857
  1,962
  2,073
  2,190
  2,313
  2,442
  2,578
  2,722
  2,873
Depreciation, amort., depletion, $m
  141
  144
  148
  152
  155
  160
  164
  168
  173
  178
  108
  113
  119
  125
  131
  138
  145
  152
  160
  168
  176
  185
  194
  204
  214
  225
  236
  248
  260
  273
Funds from operations, $m
  632
  670
  710
  753
  798
  846
  896
  948
  1,004
  1,062
  1,104
  1,169
  1,237
  1,309
  1,385
  1,465
  1,549
  1,637
  1,731
  1,829
  1,933
  2,041
  2,156
  2,277
  2,404
  2,537
  2,678
  2,826
  2,982
  3,146
Change in working capital, $m
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
  36
  38
Cash from operations, $m
  622
  660
  700
  742
  787
  834
  883
  935
  990
  1,048
  1,089
  1,153
  1,220
  1,292
  1,367
  1,446
  1,529
  1,616
  1,709
  1,806
  1,908
  2,016
  2,129
  2,248
  2,374
  2,506
  2,645
  2,792
  2,946
  3,108
Maintenance CAPEX, $m
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -108
  -113
  -119
  -125
  -131
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -194
  -204
  -214
  -225
  -236
  -248
  -260
New CAPEX, $m
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -113
  -118
  -124
  -130
  -137
  -144
  -151
  -158
  -166
  -175
  -183
  -192
  -202
  -212
  -223
Cash from investing activities, $m
  -117
  -123
  -129
  -136
  -142
  -149
  -157
  -165
  -173
  -182
  -191
  -201
  -210
  -221
  -232
  -244
  -256
  -269
  -282
  -297
  -312
  -327
  -343
  -360
  -379
  -397
  -417
  -438
  -460
  -483
Free cash flow, $m
  506
  537
  571
  607
  644
  684
  726
  770
  817
  866
  897
  952
  1,010
  1,070
  1,134
  1,202
  1,273
  1,347
  1,426
  1,509
  1,597
  1,689
  1,786
  1,888
  1,996
  2,109
  2,228
  2,354
  2,486
  2,625
Issuance/(repayment) of debt, $m
  105
  109
  114
  120
  125
  132
  138
  145
  152
  160
  168
  176
  185
  194
  203
  213
  224
  235
  247
  259
  272
  286
  300
  315
  331
  347
  365
  383
  402
  422
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  
  105
  109
  114
  120
  125
  132
  138
  145
  152
  160
  168
  176
  185
  194
  203
  213
  224
  235
  247
  259
  272
  286
  300
  315
  331
  347
  365
  383
  402
  422
Total cash flow (excl. dividends), $m
  610
  646
  685
  726
  770
  816
  864
  915
  969
  1,026
  1,065
  1,128
  1,194
  1,264
  1,338
  1,415
  1,497
  1,583
  1,673
  1,769
  1,869
  1,975
  2,086
  2,203
  2,326
  2,456
  2,593
  2,736
  2,888
  3,047
Retained Cash Flow (-), $m
  -29
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -117
  -123
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
  581
  614
  652
  691
  733
  777
  824
  873
  925
  979
  1,016
  1,077
  1,141
  1,208
  1,279
  1,353
  1,432
  1,514
  1,601
  1,693
  1,790
  1,892
  1,999
  2,112
  2,230
  2,355
  2,487
  2,625
  2,771
  2,924
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  554
  555
  557
  554
  549
  540
  528
  512
  493
  471
  437
  410
  381
  350
  319
  287
  254
  223
  193
  164
  137
  113
  92
  73
  57
  44
  33
  24
  17
  12
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

Mettler-Toledo International Inc. is a supplier of precision instruments and services. The Company operates through five segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company is also a provider of analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development, and process analytics instruments used for in-line measurement in production processes. In addition, the Company is also a supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. The Company serves food and beverage producers; food retailers; chemical, specialty chemicals and cosmetics companies, and the transportation and logistics industry, among others.

FINANCIAL RATIOS  of  Mettler-Toledo International, Inc. (MTD)

Valuation Ratios
P/E Ratio 47.6
Price to Sales 7.3
Price to Book 42
Price to Tangible Book
Price to Cash Flow 41.2
Price to Free Cash Flow 57.3
Growth Rates
Sales Growth Rate 4.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 49.4%
Cap. Spend. - 3 Yr. Gr. Rate 8.6%
Financial Strength
Quick Ratio 8
Current Ratio 0
LT Debt to Equity 201.1%
Total Debt to Equity 205.5%
Interest Coverage 19
Management Effectiveness
Return On Assets 19.6%
Ret/ On Assets - 3 Yr. Avg. 18.5%
Return On Total Capital 30.7%
Ret/ On T. Cap. - 3 Yr. Avg. 29.2%
Return On Equity 75.7%
Return On Equity - 3 Yr. Avg. 56.9%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 57.3%
Gross Margin - 3 Yr. Avg. 56.1%
EBITDA Margin 24%
EBITDA Margin - 3 Yr. Avg. 22.8%
Operating Margin 20.1%
Oper. Margin - 3 Yr. Avg. 19.1%
Pre-Tax Margin 20.1%
Pre-Tax Margin - 3 Yr. Avg. 19.1%
Net Profit Margin 15.3%
Net Profit Margin - 3 Yr. Avg. 14.5%
Effective Tax Rate 23.8%
Eff/ Tax Rate - 3 Yr. Avg. 23.9%
Payout Ratio 0%

MTD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTD stock intrinsic value calculation we used $2936 million for the last fiscal year's total revenue generated by Mettler-Toledo International, Inc.. The default revenue input number comes from 0001 income statement of Mettler-Toledo International, 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 MTD stock valuation model: a) initial revenue growth rate of 5.1% 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 4.9%, whose default value for MTD is calculated based on our internal credit rating of Mettler-Toledo International, 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 Mettler-Toledo International, 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 MTD stock the variable cost ratio is equal to 62.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $433 million in the base year in the intrinsic value calculation for MTD 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 Mettler-Toledo International, Inc..

Corporate tax rate of 27% is the nominal tax rate for Mettler-Toledo International, 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 MTD 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 MTD are equal to 36.5%.

Life of production assets of 17.1 years is the average useful life of capital assets used in Mettler-Toledo International, 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 MTD is equal to 6.2%. 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 - $590.063 million for Mettler-Toledo International, 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 24.796 million for Mettler-Toledo International, 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 Mettler-Toledo International, Inc. at the current share price and the inputted number of shares is $17.4 billion.

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