Intrinsic value of Gibraltar Industries, Inc. - ROCK

Previous Close

$39.08

  Intrinsic Value

$20.40

stock screener

  Rating & Target

sell

-48%

Previous close

$39.08

 
Intrinsic value

$20.40

 
Up/down potential

-48%

 
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 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 1.3

 

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
  1,022
  1,046
  1,072
  1,103
  1,136
  1,173
  1,213
  1,256
  1,302
  1,352
  1,406
  1,463
  1,524
  1,588
  1,657
  1,729
  1,806
  1,888
  1,973
  2,064
  2,160
  2,261
  2,367
  2,479
  2,597
  2,721
  2,852
  2,990
  3,135
  3,287
Variable operating expenses, $m
  927
  948
  972
  999
  1,029
  1,062
  1,098
  1,137
  1,178
  1,223
  1,262
  1,313
  1,367
  1,425
  1,487
  1,552
  1,621
  1,694
  1,771
  1,852
  1,938
  2,029
  2,124
  2,225
  2,331
  2,442
  2,560
  2,683
  2,813
  2,950
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
  927
  948
  972
  999
  1,029
  1,062
  1,098
  1,137
  1,178
  1,223
  1,262
  1,313
  1,367
  1,425
  1,487
  1,552
  1,621
  1,694
  1,771
  1,852
  1,938
  2,029
  2,124
  2,225
  2,331
  2,442
  2,560
  2,683
  2,813
  2,950
Operating income, $m
  95
  98
  100
  104
  107
  111
  115
  119
  124
  129
  144
  150
  156
  163
  170
  177
  185
  194
  202
  212
  222
  232
  243
  254
  266
  279
  293
  307
  322
  337
EBITDA, $m
  117
  120
  123
  126
  130
  134
  139
  144
  149
  155
  161
  168
  175
  182
  190
  198
  207
  216
  226
  237
  248
  259
  271
  284
  298
  312
  327
  343
  359
  377
Interest expense (income), $m
  14
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  42
  44
  46
  49
  52
  55
Earnings before tax, $m
  83
  85
  88
  90
  93
  96
  99
  103
  107
  111
  125
  130
  135
  140
  146
  152
  159
  166
  173
  180
  188
  197
  206
  215
  225
  235
  246
  258
  270
  282
Tax expense, $m
  22
  23
  24
  24
  25
  26
  27
  28
  29
  30
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  66
  70
  73
  76
Net income, $m
  61
  62
  64
  66
  68
  70
  73
  75
  78
  81
  91
  95
  99
  103
  107
  111
  116
  121
  126
  132
  137
  144
  150
  157
  164
  172
  180
  188
  197
  206

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
  968
  990
  1,016
  1,044
  1,076
  1,111
  1,148
  1,189
  1,233
  1,281
  1,331
  1,385
  1,443
  1,504
  1,569
  1,638
  1,710
  1,787
  1,869
  1,955
  2,045
  2,141
  2,241
  2,348
  2,459
  2,577
  2,701
  2,831
  2,968
  3,113
Adjusted assets (=assets-cash), $m
  968
  990
  1,016
  1,044
  1,076
  1,111
  1,148
  1,189
  1,233
  1,281
  1,331
  1,385
  1,443
  1,504
  1,569
  1,638
  1,710
  1,787
  1,869
  1,955
  2,045
  2,141
  2,241
  2,348
  2,459
  2,577
  2,701
  2,831
  2,968
  3,113
Revenue / Adjusted assets
  1.056
  1.057
  1.055
  1.057
  1.056
  1.056
  1.057
  1.056
  1.056
  1.055
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.057
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
  1.056
Average production assets, $m
  315
  322
  330
  340
  350
  361
  373
  387
  401
  417
  433
  451
  469
  489
  510
  533
  556
  581
  608
  636
  665
  696
  729
  764
  800
  838
  878
  921
  965
  1,012
Working capital, $m
  64
  66
  68
  69
  72
  74
  76
  79
  82
  85
  89
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  149
  156
  164
  171
  180
  188
  197
  207
Total debt, $m
  217
  226
  235
  246
  258
  270
  284
  300
  316
  334
  352
  372
  394
  416
  440
  466
  493
  522
  552
  584
  617
  653
  690
  729
  771
  814
  860
  909
  960
  1,013
Total liabilities, $m
  359
  367
  377
  387
  399
  412
  426
  441
  458
  475
  494
  514
  535
  558
  582
  608
  635
  663
  693
  725
  759
  794
  832
  871
  912
  956
  1,002
  1,050
  1,101
  1,155
Total equity, $m
  609
  623
  639
  657
  677
  699
  722
  748
  776
  806
  837
  871
  908
  946
  987
  1,030
  1,076
  1,124
  1,175
  1,229
  1,286
  1,347
  1,410
  1,477
  1,547
  1,621
  1,699
  1,781
  1,867
  1,958
Total liabilities and equity, $m
  968
  990
  1,016
  1,044
  1,076
  1,111
  1,148
  1,189
  1,234
  1,281
  1,331
  1,385
  1,443
  1,504
  1,569
  1,638
  1,711
  1,787
  1,868
  1,954
  2,045
  2,141
  2,242
  2,348
  2,459
  2,577
  2,701
  2,831
  2,968
  3,113
Debt-to-equity ratio
  0.360
  0.360
  0.370
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.410
  0.420
  0.430
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
  0.480
  0.490
  0.490
  0.500
  0.500
  0.510
  0.510
  0.510
  0.520
Adjusted equity ratio
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  61
  62
  64
  66
  68
  70
  73
  75
  78
  81
  91
  95
  99
  103
  107
  111
  116
  121
  126
  132
  137
  144
  150
  157
  164
  172
  180
  188
  197
  206
Depreciation, amort., depletion, $m
  22
  22
  23
  23
  23
  24
  24
  25
  25
  26
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  40
Funds from operations, $m
  83
  84
  86
  89
  91
  94
  97
  100
  103
  107
  108
  113
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  187
  195
  205
  214
  224
  235
  246
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Cash from operations, $m
  81
  83
  85
  87
  89
  92
  94
  97
  100
  104
  105
  109
  113
  118
  122
  127
  133
  139
  145
  151
  158
  165
  172
  180
  188
  197
  206
  216
  226
  236
Maintenance CAPEX, $m
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
New CAPEX, $m
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -45
  -47
Cash from investing activities, $m
  -19
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -35
  -37
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -64
  -66
  -69
  -73
  -76
  -81
  -85
Free cash flow, $m
  63
  63
  64
  65
  65
  67
  68
  69
  71
  73
  72
  74
  77
  79
  82
  85
  88
  92
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  145
  152
Issuance/(repayment) of debt, $m
  7
  8
  9
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  44
  46
  48
  51
  54
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  
  7
  8
  9
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  44
  46
  48
  51
  54
Total cash flow (excl. dividends), $m
  70
  72
  73
  75
  77
  79
  82
  84
  87
  90
  91
  94
  98
  102
  106
  111
  115
  120
  125
  131
  137
  143
  149
  156
  163
  171
  179
  187
  196
  205
Retained Cash Flow (-), $m
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -91
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
  58
  58
  57
  57
  57
  58
  58
  59
  60
  61
  59
  60
  62
  64
  65
  67
  70
  72
  74
  77
  80
  83
  86
  89
  93
  97
  101
  105
  110
  114
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
  55
  53
  50
  47
  44
  42
  39
  37
  34
  32
  28
  26
  24
  21
  19
  17
  15
  13
  11
  10
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
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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, Inc. (ROCK)

Valuation Ratios
P/E Ratio 36.9
Price to Sales 1.2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow 11.2
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 $1002 million for the last fiscal year's total revenue generated by Gibraltar Industries, Inc.. The default revenue input number comes from 0001 income statement of Gibraltar 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 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, 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 Gibraltar 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 ROCK stock the variable cost ratio is equal to 90.7%.

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 5.7% for Gibraltar Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for Gibraltar 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 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 30.8%.

Life of production assets of 25.5 years is the average useful life of capital assets used in Gibraltar 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 ROCK is equal to 6.3%. 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 - $596.693 million for Gibraltar 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 32.209 million for Gibraltar 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 Gibraltar Industries, Inc. at the current share price and the inputted number of shares is $1.3 billion.

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