Intrinsic value of Gibraltar Industries - ROCK

Previous Close

$38.50

  Intrinsic Value

$32.44

stock screener

  Rating & Target

hold

-16%

Previous close

$38.50

 
Intrinsic value

$32.44

 
Up/down potential

-16%

 
Rating

hold

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 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 1.2

 

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, %
  7.40
  7.16
  6.94
  6.75
  6.57
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
Revenue, $m
  1,060
  1,136
  1,215
  1,297
  1,382
  1,471
  1,563
  1,659
  1,759
  1,863
  1,972
  2,086
  2,204
  2,328
  2,457
  2,592
  2,733
  2,881
  3,035
  3,197
  3,366
  3,543
  3,728
  3,923
  4,126
  4,340
  4,564
  4,798
  5,044
  5,302
Variable operating expenses, $m
  979
  1,046
  1,116
  1,189
  1,264
  1,342
  1,424
  1,509
  1,597
  1,689
  1,743
  1,843
  1,948
  2,057
  2,171
  2,291
  2,415
  2,546
  2,682
  2,825
  2,974
  3,131
  3,295
  3,467
  3,647
  3,835
  4,033
  4,240
  4,458
  4,686
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
  979
  1,046
  1,116
  1,189
  1,264
  1,342
  1,424
  1,509
  1,597
  1,689
  1,743
  1,843
  1,948
  2,057
  2,171
  2,291
  2,415
  2,546
  2,682
  2,825
  2,974
  3,131
  3,295
  3,467
  3,647
  3,835
  4,033
  4,240
  4,458
  4,686
Operating income, $m
  81
  89
  99
  108
  118
  128
  139
  150
  162
  174
  229
  242
  256
  271
  286
  301
  318
  335
  353
  372
  391
  412
  433
  456
  480
  504
  531
  558
  586
  616
EBITDA, $m
  137
  147
  157
  168
  179
  190
  202
  215
  228
  241
  255
  270
  285
  301
  318
  335
  354
  373
  393
  414
  436
  458
  482
  508
  534
  562
  591
  621
  653
  686
Interest expense (income), $m
  14
  14
  16
  19
  21
  24
  26
  29
  32
  35
  38
  41
  45
  48
  52
  56
  60
  64
  69
  73
  78
  83
  88
  94
  100
  106
  112
  119
  126
  133
  141
Earnings before tax, $m
  66
  73
  80
  87
  94
  102
  110
  118
  127
  136
  188
  198
  208
  219
  230
  241
  254
  266
  280
  294
  308
  324
  340
  356
  374
  392
  412
  432
  453
  476
Tax expense, $m
  18
  20
  22
  23
  25
  28
  30
  32
  34
  37
  51
  53
  56
  59
  62
  65
  68
  72
  76
  79
  83
  87
  92
  96
  101
  106
  111
  117
  122
  128
Net income, $m
  49
  53
  58
  63
  69
  74
  80
  86
  93
  99
  137
  144
  152
  160
  168
  176
  185
  194
  204
  214
  225
  236
  248
  260
  273
  286
  301
  315
  331
  347

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
  1,009
  1,082
  1,157
  1,235
  1,316
  1,401
  1,489
  1,580
  1,675
  1,775
  1,878
  1,986
  2,099
  2,217
  2,340
  2,468
  2,603
  2,743
  2,890
  3,044
  3,205
  3,374
  3,551
  3,736
  3,930
  4,133
  4,346
  4,570
  4,804
  5,049
Adjusted assets (=assets-cash), $m
  1,009
  1,082
  1,157
  1,235
  1,316
  1,401
  1,489
  1,580
  1,675
  1,775
  1,878
  1,986
  2,099
  2,217
  2,340
  2,468
  2,603
  2,743
  2,890
  3,044
  3,205
  3,374
  3,551
  3,736
  3,930
  4,133
  4,346
  4,570
  4,804
  5,049
Revenue / Adjusted assets
  1.051
  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
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
Average production assets, $m
  336
  360
  385
  411
  438
  466
  495
  526
  558
  591
  625
  661
  699
  738
  779
  822
  866
  913
  962
  1,013
  1,067
  1,123
  1,182
  1,243
  1,308
  1,376
  1,447
  1,521
  1,599
  1,681
Working capital, $m
  75
  81
  86
  92
  98
  104
  111
  118
  125
  132
  140
  148
  156
  165
  174
  184
  194
  205
  215
  227
  239
  252
  265
  279
  293
  308
  324
  341
  358
  376
Total debt, $m
  244
  280
  316
  355
  394
  436
  479
  523
  570
  619
  669
  722
  777
  835
  895
  958
  1,024
  1,092
  1,164
  1,239
  1,318
  1,401
  1,487
  1,578
  1,672
  1,772
  1,876
  1,985
  2,100
  2,220
Total liabilities, $m
  494
  529
  566
  604
  644
  685
  728
  773
  819
  868
  918
  971
  1,026
  1,084
  1,144
  1,207
  1,273
  1,342
  1,413
  1,489
  1,567
  1,650
  1,736
  1,827
  1,922
  2,021
  2,125
  2,235
  2,349
  2,469
Total equity, $m
  516
  553
  591
  631
  673
  716
  761
  807
  856
  907
  960
  1,015
  1,073
  1,133
  1,196
  1,261
  1,330
  1,402
  1,477
  1,556
  1,638
  1,724
  1,814
  1,909
  2,008
  2,112
  2,221
  2,335
  2,455
  2,580
Total liabilities and equity, $m
  1,010
  1,082
  1,157
  1,235
  1,317
  1,401
  1,489
  1,580
  1,675
  1,775
  1,878
  1,986
  2,099
  2,217
  2,340
  2,468
  2,603
  2,744
  2,890
  3,045
  3,205
  3,374
  3,550
  3,736
  3,930
  4,133
  4,346
  4,570
  4,804
  5,049
Debt-to-equity ratio
  0.470
  0.510
  0.540
  0.560
  0.590
  0.610
  0.630
  0.650
  0.670
  0.680
  0.700
  0.710
  0.720
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.840
  0.850
  0.860
  0.860
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
  49
  53
  58
  63
  69
  74
  80
  86
  93
  99
  137
  144
  152
  160
  168
  176
  185
  194
  204
  214
  225
  236
  248
  260
  273
  286
  301
  315
  331
  347
Depreciation, amort., depletion, $m
  57
  58
  59
  60
  61
  62
  63
  65
  66
  67
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
  66
  70
Funds from operations, $m
  105
  111
  117
  123
  130
  136
  143
  151
  158
  166
  163
  172
  181
  190
  200
  210
  221
  232
  244
  256
  269
  283
  297
  312
  327
  344
  361
  379
  397
  417
Change in working capital, $m
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
Cash from operations, $m
  100
  106
  111
  117
  124
  130
  137
  144
  151
  159
  155
  164
  172
  181
  191
  201
  211
  222
  233
  245
  257
  270
  284
  298
  313
  328
  345
  362
  380
  399
Maintenance CAPEX, $m
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
New CAPEX, $m
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
Cash from investing activities, $m
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -106
  -111
  -117
  -122
  -128
  -134
  -141
  -148
Free cash flow, $m
  64
  68
  71
  75
  79
  84
  88
  93
  98
  103
  96
  102
  107
  113
  119
  126
  132
  139
  146
  154
  162
  170
  178
  187
  197
  206
  217
  227
  239
  251
Issuance/(repayment) of debt, $m
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  91
  95
  99
  104
  109
  115
  120
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  
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  91
  95
  99
  104
  109
  115
  120
Total cash flow (excl. dividends), $m
  99
  103
  108
  114
  119
  125
  131
  138
  144
  151
  147
  155
  162
  171
  179
  188
  198
  208
  218
  229
  240
  252
  265
  278
  292
  306
  321
  337
  353
  371
Retained Cash Flow (-), $m
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -114
  -120
  -126
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
  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
  114
  66
  70
  74
  78
  82
  86
  91
  96
  100
  94
  99
  105
  111
  117
  123
  129
  136
  143
  150
  158
  166
  174
  183
  192
  202
  212
  223
  234
  245
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
  110
  60
  61
  61
  60
  59
  58
  57
  55
  53
  45
  42
  40
  37
  34
  31
  28
  25
  22
  19
  16
  14
  11
  9
  7
  6
  5
  3
  3
  2
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

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 36.3
Price to Sales 1.2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 10
Price to Free Cash Flow 11
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 $986.918 million for the last fiscal year's total revenue generated by Gibraltar Industries. The default revenue input number comes from 0001 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 7.4% 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%.

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 31.7%.

Life of production assets of 24.1 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 7.1%. 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 - $531.719 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 31.998 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 $1.2 billion.

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BLDR Builders First 12.11 29.48  str.buy
PGTI PGT Innovation 21.78 19.51  sell
NCS NCI Building S 14.11 17.65  hold
FSTR L.B. Foster 17.17 1.64  str.sell

COMPANY NEWS

▶ Why Gibraltar Industries Inc (NASDAQ:ROCK) Could Be A Buy   [Aug-29-18 11:59AM  Simply Wall St.]
▶ 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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