Intrinsic value of Gibraltar Industries - ROCK

Previous Close

$44.35

  Intrinsic Value

$28.52

stock screener

  Rating & Target

sell

-36%

Previous close

$44.35

 
Intrinsic value

$28.52

 
Up/down potential

-36%

 
Rating

sell

We calculate the intrinsic value of ROCK 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 1.4

 

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, %
  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
  1,007
  1,030
  1,056
  1,086
  1,119
  1,155
  1,194
  1,237
  1,283
  1,332
  1,385
  1,441
  1,501
  1,564
  1,632
  1,703
  1,779
  1,859
  1,944
  2,033
  2,127
  2,227
  2,332
  2,442
  2,558
  2,681
  2,809
  2,945
  3,088
  3,238
Variable operating expenses, $m
  932
  953
  976
  1,003
  1,032
  1,064
  1,098
  1,136
  1,176
  1,220
  1,224
  1,274
  1,326
  1,383
  1,442
  1,505
  1,572
  1,643
  1,718
  1,797
  1,880
  1,968
  2,060
  2,158
  2,261
  2,369
  2,483
  2,603
  2,729
  2,861
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
  932
  953
  976
  1,003
  1,032
  1,064
  1,098
  1,136
  1,176
  1,220
  1,224
  1,274
  1,326
  1,383
  1,442
  1,505
  1,572
  1,643
  1,718
  1,797
  1,880
  1,968
  2,060
  2,158
  2,261
  2,369
  2,483
  2,603
  2,729
  2,861
Operating income, $m
  74
  77
  80
  84
  87
  92
  96
  101
  106
  112
  161
  168
  174
  182
  190
  198
  207
  216
  226
  236
  247
  259
  271
  284
  297
  312
  327
  342
  359
  376
EBITDA, $m
  170
  174
  179
  184
  189
  196
  202
  209
  217
  225
  234
  244
  254
  265
  276
  288
  301
  315
  329
  344
  360
  377
  395
  413
  433
  454
  476
  498
  523
  548
Interest expense (income), $m
  14
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  47
  50
  53
  56
  59
  63
  67
  71
  75
  80
Earnings before tax, $m
  60
  62
  65
  67
  70
  73
  77
  81
  85
  89
  136
  141
  146
  152
  158
  164
  170
  177
  185
  192
  201
  209
  218
  228
  238
  249
  260
  271
  284
  297
Tax expense, $m
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  37
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  62
  64
  67
  70
  73
  77
  80
Net income, $m
  44
  46
  47
  49
  51
  54
  56
  59
  62
  65
  99
  103
  107
  111
  115
  120
  124
  129
  135
  140
  146
  153
  159
  166
  174
  181
  190
  198
  207
  217

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
  959
  981
  1,006
  1,034
  1,066
  1,100
  1,138
  1,178
  1,222
  1,269
  1,319
  1,372
  1,429
  1,490
  1,554
  1,622
  1,694
  1,771
  1,851
  1,936
  2,026
  2,121
  2,221
  2,326
  2,436
  2,553
  2,676
  2,805
  2,941
  3,083
Adjusted assets (=assets-cash), $m
  959
  981
  1,006
  1,034
  1,066
  1,100
  1,138
  1,178
  1,222
  1,269
  1,319
  1,372
  1,429
  1,490
  1,554
  1,622
  1,694
  1,771
  1,851
  1,936
  2,026
  2,121
  2,221
  2,326
  2,436
  2,553
  2,676
  2,805
  2,941
  3,083
Revenue / Adjusted assets
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.049
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
Average production assets, $m
  534
  546
  560
  576
  593
  612
  633
  656
  680
  706
  734
  764
  795
  829
  865
  903
  943
  985
  1,030
  1,078
  1,128
  1,180
  1,236
  1,294
  1,356
  1,421
  1,489
  1,561
  1,636
  1,716
Working capital, $m
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
Total debt, $m
  219
  230
  243
  256
  272
  289
  307
  327
  348
  371
  396
  422
  450
  479
  511
  544
  579
  617
  656
  698
  741
  788
  836
  888
  942
  999
  1,059
  1,122
  1,189
  1,258
Total liabilities, $m
  469
  480
  492
  506
  521
  538
  556
  576
  597
  620
  645
  671
  699
  729
  760
  793
  829
  866
  905
  947
  991
  1,037
  1,086
  1,137
  1,191
  1,248
  1,308
  1,372
  1,438
  1,508
Total equity, $m
  490
  501
  514
  529
  545
  562
  581
  602
  624
  648
  674
  701
  730
  761
  794
  829
  866
  905
  946
  989
  1,035
  1,084
  1,135
  1,188
  1,245
  1,305
  1,367
  1,433
  1,503
  1,576
Total liabilities and equity, $m
  959
  981
  1,006
  1,035
  1,066
  1,100
  1,137
  1,178
  1,221
  1,268
  1,319
  1,372
  1,429
  1,490
  1,554
  1,622
  1,695
  1,771
  1,851
  1,936
  2,026
  2,121
  2,221
  2,325
  2,436
  2,553
  2,675
  2,805
  2,941
  3,084
Debt-to-equity ratio
  0.450
  0.460
  0.470
  0.490
  0.500
  0.510
  0.530
  0.540
  0.560
  0.570
  0.590
  0.600
  0.620
  0.630
  0.640
  0.660
  0.670
  0.680
  0.690
  0.700
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.770
  0.780
  0.790
  0.800
Adjusted equity ratio
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  44
  46
  47
  49
  51
  54
  56
  59
  62
  65
  99
  103
  107
  111
  115
  120
  124
  129
  135
  140
  146
  153
  159
  166
  174
  181
  190
  198
  207
  217
Depreciation, amort., depletion, $m
  96
  97
  99
  100
  102
  104
  106
  108
  111
  113
  73
  76
  80
  83
  86
  90
  94
  99
  103
  108
  113
  118
  124
  129
  136
  142
  149
  156
  164
  172
Funds from operations, $m
  140
  143
  146
  149
  153
  157
  162
  167
  172
  178
  173
  179
  186
  194
  202
  210
  219
  228
  238
  248
  259
  271
  283
  296
  309
  324
  338
  354
  371
  388
Change in working capital, $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
  1
  1
  1
  1
Cash from operations, $m
  140
  143
  146
  149
  153
  157
  162
  167
  172
  178
  173
  179
  186
  193
  201
  210
  218
  228
  238
  248
  259
  270
  283
  295
  309
  323
  338
  354
  370
  388
Maintenance CAPEX, $m
  -52
  -53
  -55
  -56
  -58
  -59
  -61
  -63
  -66
  -68
  -71
  -73
  -76
  -80
  -83
  -86
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -124
  -129
  -136
  -142
  -149
  -156
  -164
New CAPEX, $m
  -10
  -12
  -14
  -16
  -17
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -80
Cash from investing activities, $m
  -62
  -65
  -69
  -72
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -103
  -108
  -114
  -119
  -124
  -130
  -136
  -144
  -150
  -158
  -166
  -174
  -183
  -191
  -201
  -210
  -221
  -232
  -244
Free cash flow, $m
  78
  77
  77
  78
  78
  79
  80
  81
  82
  84
  74
  76
  78
  80
  83
  85
  88
  91
  94
  98
  101
  105
  109
  113
  118
  123
  128
  133
  139
  144
Issuance/(repayment) of debt, $m
  10
  11
  12
  14
  15
  17
  18
  20
  21
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
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  
  10
  11
  12
  14
  15
  17
  18
  20
  21
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
Total cash flow (excl. dividends), $m
  87
  88
  90
  91
  93
  96
  98
  101
  104
  107
  99
  102
  106
  110
  114
  119
  123
  128
  134
  139
  145
  151
  158
  165
  172
  180
  188
  196
  205
  214
Retained Cash Flow (-), $m
  -9
  -11
  -13
  -14
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
Prev. year cash balance distribution, $m
  51
  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
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
Cash available for distribution, $m
  130
  77
  77
  77
  77
  78
  79
  80
  81
  83
  73
  75
  77
  79
  81
  84
  86
  89
  92
  96
  99
  103
  107
  111
  115
  120
  125
  130
  136
  141
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
  124
  70
  67
  63
  60
  57
  53
  50
  47
  43
  35
  32
  29
  26
  24
  21
  19
  16
  14
  12
  10
  9
  7
  6
  4
  4
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Current shareholders' claim on cash, %
  100.0
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  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
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  100.0

Gibraltar Industries, Inc. is a manufacturer and distributor of building products for industrial, transportation infrastructure, residential housing, renewable energy and resource conservation markets. The Company's segments include Residential Products; Industrial and Infrastructure Products, and Renewable Energy and Conservation. The Residential Products segment services residential housing construction and residential repair and remodeling activity with products including roof and foundation ventilation products, rain dispersion products and roof ventilation accessories. The Industrial and Infrastructure Products segment focuses on a range of markets, including industrial and commercial construction, automotive, airports and energy and power generation markets with products. The Renewable Energy and Conservation segment focuses on the design, engineering, manufacturing and installation of solar racking systems and commercial, institutional and retail greenhouse structures.

FINANCIAL RATIOS  of  Gibraltar Industries (ROCK)

Valuation Ratios
P/E Ratio 41.9
Price to Sales 1.4
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 11.6
Price to Free Cash Flow 12.7
Growth Rates
Sales Growth Rate -3.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.3%
Cap. Spend. - 3 Yr. Gr. Rate -6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 45.6%
Total Debt to Equity 45.6%
Interest Coverage 5
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital 5.3%
Ret/ On T. Cap. - 3 Yr. Avg. -1.2%
Return On Equity 7.8%
Return On Equity - 3 Yr. Avg. -1.8%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 25.3%
Gross Margin - 3 Yr. Avg. 20.2%
EBITDA Margin 8.7%
EBITDA Margin - 3 Yr. Avg. 3.8%
Operating Margin 7.2%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin 5%
Pre-Tax Margin - 3 Yr. Avg. -0.4%
Net Profit Margin 3.4%
Net Profit Margin - 3 Yr. Avg. -1.3%
Effective Tax Rate 32%
Eff/ Tax Rate - 3 Yr. Avg. 24.5%
Payout Ratio 0%

ROCK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ROCK stock intrinsic value calculation we used $987 million for the last fiscal year's total revenue generated by Gibraltar Industries. The default revenue input number comes from 2017 income statement of Gibraltar Industries. 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 ROCK 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 ROCK is calculated based on our internal credit rating of Gibraltar Industries, 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 Gibraltar Industries.
    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 ROCK stock the variable cost ratio is equal to 92.7%.

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 ROCK 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 6.7% for Gibraltar Industries.

Corporate tax rate of 27% is the nominal tax rate for Gibraltar Industries. 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 ROCK stock is equal to 0.7%.

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 ROCK are equal to 53%.

Life of production assets of 10 years is the average useful life of capital assets used in Gibraltar Industries 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 ROCK is equal to 0.4%. 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 - $532 million for Gibraltar Industries - 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 32 million for Gibraltar Industries 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 Gibraltar Industries at the current share price and the inputted number of shares is $1.4 billion.

RELATED COMPANIES Price Int.Val. Rating
VMI Valmont Indust 138.10 140.81  hold
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AWI Armstrong Worl 70.10 21.89  str.sell
BLDR Builders First 16.86 20.20  hold
PGEM Ply Gem Holdin 21.65 16.19  sell
PGTI PGT Innovation 24.50 12.04  sell
NCS NCI Building S 14.60 11.97  sell
FSTR L.B. Foster 23.80 1.73  str.sell

COMPANY NEWS

▶ Gibraltar Industries: 2Q Earnings Snapshot   [Jul-26-18 10:57AM  Associated Press]
▶ Gibraltar Industries: 1Q Earnings Snapshot   [07:45AM  Associated Press]
▶ Gibraltar Industries posts 4Q profit   [Feb-22-18 08:41AM  Associated Press]
▶ 5 Top Stocks with Solid Net Profit Margin   [Dec-27-17 08:59AM  Zacks]
▶ IIROC Trading Resumption - ROCK   [Dec-13-17 04:14PM  CNW Group]
▶ IIROC Trading Halt - ROCK   [Dec-11-17 08:09AM  PR Newswire]
▶ IIROC Trading Halt - ROCK   [08:09AM  CNW Group]
▶ Gibraltar Industries posts 3Q profit   [Nov-03-17 07:41AM  Associated Press]
▶ New Strong Sell Stocks for August 25th   [Aug-25-17 06:20AM  Zacks]
▶ New Strong Sell Stocks for July 31st   [Jul-31-17 10:04AM  Zacks]
▶ Gibraltar Industries posts 2Q profit   [Jul-27-17 03:45PM  Associated Press]
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