Intrinsic value of Minerals Technologies Inc. - MTX

Previous Close

$48.31

  Intrinsic Value

$59.16

stock screener

  Rating & Target

buy

+22%

Previous close

$48.31

 
Intrinsic value

$59.16

 
Up/down potential

+22%

 
Rating

buy

We calculate the intrinsic value of MTX 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 1.7

 

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, %
  3.50
  3.65
  3.78
  3.91
  4.02
  4.11
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
Revenue, $m
  1,871
  1,940
  2,013
  2,092
  2,176
  2,265
  2,360
  2,461
  2,569
  2,682
  2,802
  2,929
  3,063
  3,205
  3,354
  3,511
  3,677
  3,852
  4,036
  4,229
  4,433
  4,647
  4,873
  5,110
  5,359
  5,622
  5,897
  6,187
  6,491
  6,811
Variable operating expenses, $m
  1,594
  1,649
  1,707
  1,770
  1,837
  1,908
  1,984
  2,065
  2,150
  2,241
  2,234
  2,335
  2,442
  2,555
  2,674
  2,799
  2,931
  3,071
  3,217
  3,371
  3,534
  3,705
  3,885
  4,074
  4,272
  4,481
  4,701
  4,932
  5,175
  5,430
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
  1,594
  1,649
  1,707
  1,770
  1,837
  1,908
  1,984
  2,065
  2,150
  2,241
  2,234
  2,335
  2,442
  2,555
  2,674
  2,799
  2,931
  3,071
  3,217
  3,371
  3,534
  3,705
  3,885
  4,074
  4,272
  4,481
  4,701
  4,932
  5,175
  5,430
Operating income, $m
  277
  291
  306
  321
  339
  357
  376
  396
  418
  441
  568
  594
  621
  650
  680
  712
  746
  781
  818
  858
  899
  942
  988
  1,036
  1,087
  1,140
  1,196
  1,255
  1,316
  1,381
EBITDA, $m
  454
  470
  488
  507
  527
  549
  572
  597
  623
  650
  679
  710
  742
  777
  813
  851
  891
  934
  978
  1,025
  1,075
  1,126
  1,181
  1,239
  1,299
  1,363
  1,429
  1,500
  1,573
  1,651
Interest expense (income), $m
  57
  55
  58
  62
  66
  70
  74
  79
  84
  89
  94
  100
  106
  113
  120
  127
  135
  143
  152
  161
  170
  180
  191
  202
  214
  226
  239
  252
  267
  282
  297
Earnings before tax, $m
  222
  232
  244
  256
  269
  283
  297
  313
  329
  347
  468
  488
  508
  530
  553
  577
  603
  629
  658
  687
  719
  752
  786
  823
  861
  901
  944
  988
  1,035
  1,084
Tax expense, $m
  60
  63
  66
  69
  73
  76
  80
  85
  89
  94
  126
  132
  137
  143
  149
  156
  163
  170
  178
  186
  194
  203
  212
  222
  232
  243
  255
  267
  279
  293
Net income, $m
  162
  170
  178
  187
  196
  206
  217
  228
  241
  253
  342
  356
  371
  387
  404
  421
  440
  459
  480
  502
  525
  549
  574
  601
  629
  658
  689
  721
  755
  791

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
  3,193
  3,310
  3,435
  3,569
  3,713
  3,865
  4,028
  4,200
  4,383
  4,577
  4,782
  4,998
  5,227
  5,469
  5,723
  5,992
  6,275
  6,573
  6,887
  7,217
  7,565
  7,930
  8,315
  8,720
  9,146
  9,593
  10,063
  10,558
  11,077
  11,623
Adjusted assets (=assets-cash), $m
  3,193
  3,310
  3,435
  3,569
  3,713
  3,865
  4,028
  4,200
  4,383
  4,577
  4,782
  4,998
  5,227
  5,469
  5,723
  5,992
  6,275
  6,573
  6,887
  7,217
  7,565
  7,930
  8,315
  8,720
  9,146
  9,593
  10,063
  10,558
  11,077
  11,623
Revenue / Adjusted assets
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
  0.586
Average production assets, $m
  1,637
  1,697
  1,761
  1,830
  1,904
  1,982
  2,065
  2,154
  2,248
  2,347
  2,452
  2,563
  2,680
  2,804
  2,935
  3,072
  3,217
  3,370
  3,531
  3,701
  3,879
  4,066
  4,264
  4,471
  4,689
  4,919
  5,160
  5,413
  5,680
  5,960
Working capital, $m
  404
  419
  435
  452
  470
  489
  510
  532
  555
  579
  605
  633
  662
  692
  724
  758
  794
  832
  872
  913
  958
  1,004
  1,053
  1,104
  1,158
  1,214
  1,274
  1,336
  1,402
  1,471
Total debt, $m
  1,077
  1,143
  1,213
  1,289
  1,369
  1,455
  1,546
  1,643
  1,746
  1,855
  1,970
  2,092
  2,220
  2,356
  2,499
  2,650
  2,809
  2,977
  3,153
  3,339
  3,534
  3,740
  3,956
  4,183
  4,423
  4,674
  4,938
  5,216
  5,508
  5,815
Total liabilities, $m
  1,795
  1,860
  1,931
  2,006
  2,087
  2,172
  2,264
  2,361
  2,463
  2,572
  2,687
  2,809
  2,938
  3,073
  3,216
  3,367
  3,526
  3,694
  3,870
  4,056
  4,251
  4,457
  4,673
  4,901
  5,140
  5,391
  5,656
  5,933
  6,225
  6,532
Total equity, $m
  1,399
  1,450
  1,505
  1,563
  1,626
  1,693
  1,764
  1,840
  1,920
  2,005
  2,094
  2,189
  2,290
  2,395
  2,507
  2,624
  2,748
  2,879
  3,016
  3,161
  3,313
  3,474
  3,642
  3,819
  4,006
  4,202
  4,408
  4,624
  4,852
  5,091
Total liabilities and equity, $m
  3,194
  3,310
  3,436
  3,569
  3,713
  3,865
  4,028
  4,201
  4,383
  4,577
  4,781
  4,998
  5,228
  5,468
  5,723
  5,991
  6,274
  6,573
  6,886
  7,217
  7,564
  7,931
  8,315
  8,720
  9,146
  9,593
  10,064
  10,557
  11,077
  11,623
Debt-to-equity ratio
  0.770
  0.790
  0.810
  0.820
  0.840
  0.860
  0.880
  0.890
  0.910
  0.930
  0.940
  0.960
  0.970
  0.980
  1.000
  1.010
  1.020
  1.030
  1.050
  1.060
  1.070
  1.080
  1.090
  1.100
  1.100
  1.110
  1.120
  1.130
  1.140
  1.140
Adjusted equity ratio
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  162
  170
  178
  187
  196
  206
  217
  228
  241
  253
  342
  356
  371
  387
  404
  421
  440
  459
  480
  502
  525
  549
  574
  601
  629
  658
  689
  721
  755
  791
Depreciation, amort., depletion, $m
  177
  179
  182
  186
  189
  192
  196
  200
  204
  209
  111
  116
  121
  127
  133
  139
  146
  152
  160
  167
  176
  184
  193
  202
  212
  223
  233
  245
  257
  270
Funds from operations, $m
  339
  349
  360
  372
  385
  399
  413
  429
  445
  462
  453
  472
  492
  514
  536
  560
  585
  612
  640
  669
  700
  733
  767
  803
  841
  880
  922
  966
  1,012
  1,061
Change in working capital, $m
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
Cash from operations, $m
  325
  334
  345
  355
  367
  379
  393
  407
  422
  438
  427
  445
  463
  483
  504
  526
  550
  574
  600
  627
  656
  686
  718
  752
  787
  824
  863
  904
  947
  992
Maintenance CAPEX, $m
  -72
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -97
  -102
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -146
  -152
  -160
  -167
  -176
  -184
  -193
  -202
  -212
  -223
  -233
  -245
  -257
New CAPEX, $m
  -55
  -60
  -64
  -69
  -73
  -78
  -83
  -88
  -94
  -99
  -105
  -111
  -117
  -124
  -131
  -138
  -145
  -153
  -161
  -169
  -178
  -188
  -197
  -208
  -218
  -229
  -241
  -253
  -266
  -280
Cash from investing activities, $m
  -127
  -134
  -141
  -149
  -156
  -164
  -173
  -181
  -191
  -201
  -211
  -222
  -233
  -245
  -258
  -271
  -284
  -299
  -313
  -329
  -345
  -364
  -381
  -401
  -420
  -441
  -464
  -486
  -511
  -537
Free cash flow, $m
  199
  201
  204
  207
  211
  215
  220
  225
  231
  237
  215
  223
  230
  238
  247
  256
  266
  276
  287
  298
  310
  323
  337
  351
  366
  382
  399
  417
  435
  455
Issuance/(repayment) of debt, $m
  61
  66
  70
  75
  81
  86
  91
  97
  103
  109
  115
  122
  129
  136
  143
  151
  159
  167
  176
  186
  195
  206
  216
  227
  239
  251
  264
  278
  292
  307
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  
  61
  66
  70
  75
  81
  86
  91
  97
  103
  109
  115
  122
  129
  136
  143
  151
  159
  167
  176
  186
  195
  206
  216
  227
  239
  251
  264
  278
  292
  307
Total cash flow (excl. dividends), $m
  260
  266
  274
  282
  291
  301
  311
  322
  333
  345
  331
  344
  359
  374
  390
  407
  425
  443
  463
  484
  506
  529
  553
  579
  605
  634
  663
  695
  727
  762
Retained Cash Flow (-), $m
  -45
  -51
  -55
  -59
  -63
  -67
  -71
  -76
  -80
  -85
  -90
  -95
  -100
  -106
  -112
  -118
  -124
  -131
  -137
  -145
  -152
  -160
  -169
  -177
  -186
  -196
  -206
  -217
  -228
  -239
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
  215
  215
  219
  224
  228
  234
  240
  246
  253
  261
  241
  249
  258
  268
  278
  289
  301
  313
  326
  339
  354
  369
  385
  401
  419
  438
  457
  478
  500
  523
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  202
  190
  180
  170
  160
  149
  138
  127
  116
  106
  85
  76
  67
  58
  50
  43
  36
  30
  24
  19
  15
  12
  9
  7
  5
  3
  2
  2
  1
  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

Minerals Technologies Inc. is a resource- and technology-based company that develops, produces and markets a range of specialty mineral, mineral-based and synthetic mineral products and related systems and services around the world. It operates through four segments. The Specialty Minerals segment produces and sells the synthetic mineral product precipitated calcium carbonate (PCC), mines mineral ores, and processes and sells natural mineral products, primarily limestone and talc. The Performance Materials segment is a supplier of bentonite and bentonite-related products to industrial and consumer markets globally. The Refractories segment produces and markets monolithic and shaped refractory materials and specialty products, services and application and measurement equipment. The Energy Services segment offers a range of services to improve the production, costs, compliance and environmental impact of activities performed in the oil and gas industry.

FINANCIAL RATIOS  of  Minerals Technologies Inc. (MTX)

Valuation Ratios
P/E Ratio 12.7
Price to Sales 1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow 10.4
Growth Rates
Sales Growth Rate -8.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -27.9%
Cap. Spend. - 3 Yr. Gr. Rate 7.1%
Financial Strength
Quick Ratio 15
Current Ratio 0
LT Debt to Equity 106.3%
Total Debt to Equity 107.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 6.1%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 6.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.6%
Return On Equity 13.9%
Return On Equity - 3 Yr. Avg. 12.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 28.1%
Gross Margin - 3 Yr. Avg. 26.5%
EBITDA Margin 19.5%
EBITDA Margin - 3 Yr. Avg. 15.6%
Operating Margin 13.5%
Oper. Margin - 3 Yr. Avg. 11.3%
Pre-Tax Margin 10.4%
Pre-Tax Margin - 3 Yr. Avg. 8.3%
Net Profit Margin 8.1%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate 20.6%
Eff/ Tax Rate - 3 Yr. Avg. 21%
Payout Ratio 5.3%

MTX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTX stock intrinsic value calculation we used $1808 million for the last fiscal year's total revenue generated by Minerals Technologies Inc.. The default revenue input number comes from 0001 income statement of Minerals Technologies 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 MTX stock valuation model: a) initial revenue growth rate of 3.5% 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 6.1%, whose default value for MTX is calculated based on our internal credit rating of Minerals Technologies 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 Minerals Technologies 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 MTX stock the variable cost ratio is equal to 85.4%.

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 MTX 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 Minerals Technologies Inc..

Corporate tax rate of 27% is the nominal tax rate for Minerals Technologies 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 MTX 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 MTX are equal to 87.5%.

Life of production assets of 22.1 years is the average useful life of capital assets used in Minerals Technologies 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 MTX is equal to 21.6%. 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 - $1353.5 million for Minerals Technologies 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 35.231 million for Minerals Technologies 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 Minerals Technologies Inc. at the current share price and the inputted number of shares is $1.7 billion.

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