Intrinsic value of Myers Industries, Inc. - MYE

Previous Close

$15.59

  Intrinsic Value

$19.99

stock screener

  Rating & Target

buy

+28%

Previous close

$15.59

 
Intrinsic value

$19.99

 
Up/down potential

+28%

 
Rating

buy

We calculate the intrinsic value of MYE 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 0.6

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  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
Revenue, $m
  578
  592
  607
  624
  643
  664
  686
  711
  737
  765
  796
  828
  862
  899
  938
  979
  1,022
  1,068
  1,117
  1,168
  1,222
  1,279
  1,339
  1,403
  1,470
  1,540
  1,614
  1,692
  1,774
  1,860
Variable operating expenses, $m
  143
  146
  149
  153
  158
  162
  168
  173
  179
  186
  184
  191
  199
  208
  217
  226
  236
  247
  258
  270
  283
  296
  310
  324
  340
  356
  373
  391
  410
  430
Fixed operating expenses, $m
  405
  414
  423
  432
  442
  451
  461
  471
  482
  492
  503
  514
  525
  537
  549
  561
  573
  586
  599
  612
  625
  639
  653
  668
  682
  697
  713
  728
  744
  761
Total operating expenses, $m
  548
  560
  572
  585
  600
  613
  629
  644
  661
  678
  687
  705
  724
  745
  766
  787
  809
  833
  857
  882
  908
  935
  963
  992
  1,022
  1,053
  1,086
  1,119
  1,154
  1,191
Operating income, $m
  31
  32
  35
  39
  44
  50
  57
  66
  76
  87
  108
  122
  137
  154
  172
  191
  212
  235
  260
  286
  314
  344
  376
  411
  447
  486
  528
  572
  619
  669
EBITDA, $m
  59
  61
  64
  68
  74
  81
  89
  98
  109
  121
  135
  150
  166
  184
  203
  224
  246
  270
  297
  325
  354
  386
  421
  457
  496
  537
  581
  628
  678
  731
Interest expense (income), $m
  9
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
Earnings before tax, $m
  27
  28
  30
  34
  39
  44
  51
  60
  69
  80
  101
  114
  128
  144
  162
  180
  201
  223
  246
  272
  299
  328
  359
  392
  428
  466
  506
  549
  594
  643
Tax expense, $m
  7
  8
  8
  9
  10
  12
  14
  16
  19
  22
  27
  31
  35
  39
  44
  49
  54
  60
  66
  73
  81
  89
  97
  106
  116
  126
  137
  148
  160
  173
Net income, $m
  20
  20
  22
  25
  28
  32
  38
  44
  50
  58
  73
  83
  94
  105
  118
  132
  146
  163
  180
  198
  218
  239
  262
  286
  312
  340
  369
  401
  434
  469

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
  356
  364
  373
  384
  395
  408
  422
  437
  453
  471
  489
  509
  530
  553
  577
  602
  629
  657
  687
  718
  752
  787
  824
  863
  904
  947
  993
  1,040
  1,091
  1,144
Adjusted assets (=assets-cash), $m
  356
  364
  373
  384
  395
  408
  422
  437
  453
  471
  489
  509
  530
  553
  577
  602
  629
  657
  687
  718
  752
  787
  824
  863
  904
  947
  993
  1,040
  1,091
  1,144
Revenue / Adjusted assets
  1.624
  1.626
  1.627
  1.625
  1.628
  1.627
  1.626
  1.627
  1.627
  1.624
  1.628
  1.627
  1.626
  1.626
  1.626
  1.626
  1.625
  1.626
  1.626
  1.627
  1.625
  1.625
  1.625
  1.626
  1.626
  1.626
  1.625
  1.627
  1.626
  1.626
Average production assets, $m
  124
  127
  130
  134
  138
  143
  148
  153
  158
  165
  171
  178
  185
  193
  202
  210
  220
  230
  240
  251
  263
  275
  288
  302
  316
  331
  347
  364
  381
  400
Working capital, $m
  27
  28
  29
  29
  30
  31
  32
  33
  35
  36
  37
  39
  41
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  76
  80
  83
  87
Total debt, $m
  81
  85
  90
  96
  103
  110
  117
  126
  135
  144
  155
  166
  178
  190
  203
  217
  232
  248
  265
  282
  301
  320
  341
  362
  385
  409
  435
  461
  489
  519
Total liabilities, $m
  198
  202
  208
  213
  220
  227
  235
  243
  252
  262
  272
  283
  295
  307
  321
  335
  349
  365
  382
  399
  418
  437
  458
  480
  503
  527
  552
  579
  607
  636
Total equity, $m
  158
  162
  166
  170
  176
  181
  187
  194
  201
  209
  217
  226
  235
  245
  256
  267
  279
  292
  305
  319
  334
  349
  366
  383
  401
  420
  441
  462
  484
  508
Total liabilities and equity, $m
  356
  364
  374
  383
  396
  408
  422
  437
  453
  471
  489
  509
  530
  552
  577
  602
  628
  657
  687
  718
  752
  786
  824
  863
  904
  947
  993
  1,041
  1,091
  1,144
Debt-to-equity ratio
  0.510
  0.530
  0.540
  0.560
  0.580
  0.610
  0.630
  0.650
  0.670
  0.690
  0.710
  0.730
  0.750
  0.770
  0.790
  0.810
  0.830
  0.850
  0.870
  0.880
  0.900
  0.920
  0.930
  0.950
  0.960
  0.970
  0.990
  1.000
  1.010
  1.020
Adjusted equity ratio
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  20
  22
  25
  28
  32
  38
  44
  50
  58
  73
  83
  94
  105
  118
  132
  146
  163
  180
  198
  218
  239
  262
  286
  312
  340
  369
  401
  434
  469
Depreciation, amort., depletion, $m
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  26
  27
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  59
  62
Funds from operations, $m
  48
  49
  51
  54
  58
  63
  69
  76
  84
  92
  100
  110
  122
  135
  149
  164
  180
  198
  217
  237
  259
  282
  306
  333
  361
  391
  423
  457
  492
  531
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
Cash from operations, $m
  47
  48
  50
  53
  57
  62
  68
  75
  83
  91
  98
  109
  121
  133
  147
  162
  178
  196
  214
  234
  256
  279
  304
  330
  358
  388
  419
  453
  489
  527
Maintenance CAPEX, $m
  -19
  -19
  -20
  -20
  -21
  -21
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -59
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -22
  -22
  -23
  -24
  -25
  -25
  -27
  -28
  -30
  -30
  -32
  -33
  -34
  -37
  -38
  -40
  -41
  -44
  -45
  -48
  -51
  -52
  -55
  -58
  -60
  -64
  -67
  -70
  -74
  -78
Free cash flow, $m
  26
  26
  28
  30
  33
  37
  41
  47
  53
  61
  67
  76
  86
  97
  109
  122
  137
  152
  169
  187
  206
  226
  248
  272
  297
  324
  352
  383
  415
  449
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
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  
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
Total cash flow (excl. dividends), $m
  30
  31
  33
  36
  39
  44
  49
  55
  62
  70
  77
  87
  98
  109
  122
  136
  151
  168
  185
  204
  224
  246
  269
  294
  320
  348
  378
  409
  443
  479
Retained Cash Flow (-), $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
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
  26
  27
  29
  31
  34
  38
  43
  49
  55
  63
  69
  78
  88
  99
  112
  125
  140
  155
  172
  190
  209
  230
  252
  276
  302
  329
  357
  388
  421
  455
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
  25
  25
  25
  25
  26
  28
  29
  30
  32
  33
  33
  33
  34
  33
  33
  32
  30
  29
  26
  24
  22
  19
  17
  14
  12
  10
  8
  6
  5
  3
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

Myers Industries, Inc. is an international manufacturing and distribution company. The Company operates through two segments: Material Handling and Distribution. As of December 31, 2016, the Company operated 15 manufacturing facilities, 20 sales offices, four distribution centers and three distribution branches located throughout North, Central and South America. As of December 31, 2016, the Company had approximately 15,000 manufactured products and over 13,500 distributed products. The Material Handling segment designs, manufactures and markets a range of plastic and metal products. The Distribution Segment is engaged in the distribution of tools, equipment and supplies used for tire, wheel and under vehicle service on passenger, heavy truck and off-road vehicles, and the manufacturing of tire repair materials and custom rubber products. The product line includes categories, such as tire valves and accessories, and lifts and alignment equipment.

FINANCIAL RATIOS  of  Myers Industries, Inc. (MYE)

Valuation Ratios
P/E Ratio 468
Price to Sales 0.8
Price to Book 5
Price to Tangible Book
Price to Cash Flow 13.8
Price to Free Cash Flow 22.3
Growth Rates
Sales Growth Rate -7.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -45.8%
Cap. Spend. - 3 Yr. Gr. Rate -9.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 204.3%
Total Debt to Equity 204.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 1.5%
Return On Total Capital 0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1%
Return On Equity 1%
Return On Equity - 3 Yr. Avg. 3.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 29.6%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 9.3%
EBITDA Margin - 3 Yr. Avg. 9.5%
Operating Margin 2.9%
Oper. Margin - 3 Yr. Avg. 3.9%
Pre-Tax Margin 1.4%
Pre-Tax Margin - 3 Yr. Avg. 2.4%
Net Profit Margin 0.2%
Net Profit Margin - 3 Yr. Avg. 0.6%
Effective Tax Rate 75%
Eff/ Tax Rate - 3 Yr. Avg. 49%
Payout Ratio 1600%

MYE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MYE stock intrinsic value calculation we used $567 million for the last fiscal year's total revenue generated by Myers Industries, Inc.. The default revenue input number comes from 0001 income statement of Myers Industries, 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 MYE stock valuation model: a) initial revenue growth rate of 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 4.3%, whose default value for MYE is calculated based on our internal credit rating of Myers Industries, 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 Myers Industries, 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 MYE stock the variable cost ratio is equal to 24.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $396 million in the base year in the intrinsic value calculation for MYE 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 Myers Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for Myers Industries, 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 MYE 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 MYE are equal to 21.5%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Myers Industries, 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 MYE is equal to 4.7%. 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 - $154.638 million for Myers Industries, 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 35.376 million for Myers Industries, 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 Myers Industries, Inc. at the current share price and the inputted number of shares is $0.6 billion.

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