Intrinsic value of Silgan Holdings Inc. - SLGN

Previous Close

$29.76

  Intrinsic Value

$33.53

stock screener

  Rating & Target

hold

+13%

Previous close

$29.76

 
Intrinsic value

$33.53

 
Up/down potential

+13%

 
Rating

hold

We calculate the intrinsic value of SLGN 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 3.3

 

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, %
  7.50
  7.25
  7.02
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.78
  5.71
  5.64
  5.57
  5.51
  5.46
  5.42
  5.38
  5.34
  5.30
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
Revenue, $m
  4,783
  5,129
  5,490
  5,864
  6,254
  6,659
  7,080
  7,519
  7,976
  8,452
  8,948
  9,466
  10,006
  10,569
  11,158
  11,774
  12,417
  13,090
  13,793
  14,529
  15,300
  16,107
  16,952
  17,837
  18,765
  19,736
  20,755
  21,823
  22,943
  24,117
Variable operating expenses, $m
  4,082
  4,367
  4,663
  4,971
  5,291
  5,624
  5,970
  6,330
  6,706
  7,097
  7,351
  7,777
  8,220
  8,684
  9,167
  9,673
  10,201
  10,754
  11,332
  11,937
  12,570
  13,233
  13,927
  14,654
  15,416
  16,215
  17,052
  17,929
  18,849
  19,814
Fixed operating expenses, $m
  277
  283
  289
  296
  302
  309
  316
  323
  330
  337
  344
  352
  360
  368
  376
  384
  392
  401
  410
  419
  428
  437
  447
  457
  467
  477
  488
  498
  509
  521
Total operating expenses, $m
  4,359
  4,650
  4,952
  5,267
  5,593
  5,933
  6,286
  6,653
  7,036
  7,434
  7,695
  8,129
  8,580
  9,052
  9,543
  10,057
  10,593
  11,155
  11,742
  12,356
  12,998
  13,670
  14,374
  15,111
  15,883
  16,692
  17,540
  18,427
  19,358
  20,335
Operating income, $m
  423
  479
  537
  598
  661
  726
  795
  866
  940
  1,018
  1,252
  1,337
  1,426
  1,518
  1,615
  1,717
  1,823
  1,935
  2,051
  2,174
  2,302
  2,437
  2,578
  2,726
  2,881
  3,044
  3,216
  3,396
  3,584
  3,783
EBITDA, $m
  730
  797
  866
  939
  1,014
  1,093
  1,175
  1,260
  1,349
  1,442
  1,539
  1,641
  1,747
  1,857
  1,973
  2,094
  2,221
  2,354
  2,494
  2,640
  2,793
  2,953
  3,121
  3,298
  3,483
  3,677
  3,881
  4,095
  4,320
  4,556
Interest expense (income), $m
  65
  124
  139
  155
  171
  188
  205
  224
  243
  262
  283
  304
  326
  350
  374
  399
  426
  453
  482
  512
  544
  577
  612
  648
  686
  725
  767
  811
  856
  904
  955
Earnings before tax, $m
  299
  340
  382
  426
  473
  521
  571
  623
  678
  735
  948
  1,011
  1,076
  1,145
  1,216
  1,291
  1,370
  1,453
  1,539
  1,630
  1,725
  1,825
  1,930
  2,040
  2,156
  2,277
  2,405
  2,539
  2,680
  2,828
Tax expense, $m
  81
  92
  103
  115
  128
  141
  154
  168
  183
  199
  256
  273
  291
  309
  328
  349
  370
  392
  416
  440
  466
  493
  521
  551
  582
  615
  649
  686
  724
  764
Net income, $m
  218
  248
  279
  311
  345
  380
  417
  455
  495
  537
  692
  738
  786
  836
  888
  943
  1,000
  1,060
  1,124
  1,190
  1,259
  1,332
  1,409
  1,489
  1,574
  1,663
  1,756
  1,854
  1,956
  2,064

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
  4,920
  5,277
  5,648
  6,033
  6,434
  6,851
  7,284
  7,735
  8,205
  8,695
  9,206
  9,738
  10,294
  10,874
  11,480
  12,113
  12,775
  13,467
  14,191
  14,948
  15,741
  16,571
  17,440
  18,351
  19,305
  20,305
  21,353
  22,452
  23,604
  24,812
Adjusted assets (=assets-cash), $m
  4,920
  5,277
  5,648
  6,033
  6,434
  6,851
  7,284
  7,735
  8,205
  8,695
  9,206
  9,738
  10,294
  10,874
  11,480
  12,113
  12,775
  13,467
  14,191
  14,948
  15,741
  16,571
  17,440
  18,351
  19,305
  20,305
  21,353
  22,452
  23,604
  24,812
Revenue / Adjusted assets
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
Average production assets, $m
  2,454
  2,631
  2,816
  3,008
  3,208
  3,416
  3,632
  3,857
  4,091
  4,336
  4,590
  4,856
  5,133
  5,422
  5,724
  6,040
  6,370
  6,715
  7,076
  7,454
  7,849
  8,263
  8,696
  9,150
  9,626
  10,125
  10,647
  11,195
  11,770
  12,372
Working capital, $m
  330
  354
  379
  405
  432
  459
  489
  519
  550
  583
  617
  653
  690
  729
  770
  812
  857
  903
  952
  1,003
  1,056
  1,111
  1,170
  1,231
  1,295
  1,362
  1,432
  1,506
  1,583
  1,664
Total debt, $m
  2,582
  2,871
  3,170
  3,481
  3,805
  4,142
  4,492
  4,857
  5,237
  5,632
  6,045
  6,475
  6,924
  7,393
  7,882
  8,394
  8,929
  9,488
  10,073
  10,685
  11,325
  11,996
  12,698
  13,434
  14,205
  15,013
  15,860
  16,748
  17,678
  18,654
Total liabilities, $m
  3,976
  4,264
  4,564
  4,875
  5,199
  5,535
  5,886
  6,250
  6,630
  7,026
  7,438
  7,868
  8,317
  8,786
  9,276
  9,787
  10,322
  10,881
  11,466
  12,078
  12,719
  13,389
  14,092
  14,828
  15,598
  16,406
  17,253
  18,141
  19,072
  20,048
Total equity, $m
  945
  1,013
  1,084
  1,158
  1,235
  1,315
  1,399
  1,485
  1,575
  1,669
  1,767
  1,870
  1,976
  2,088
  2,204
  2,326
  2,453
  2,586
  2,725
  2,870
  3,022
  3,182
  3,349
  3,523
  3,707
  3,899
  4,100
  4,311
  4,532
  4,764
Total liabilities and equity, $m
  4,921
  5,277
  5,648
  6,033
  6,434
  6,850
  7,285
  7,735
  8,205
  8,695
  9,205
  9,738
  10,293
  10,874
  11,480
  12,113
  12,775
  13,467
  14,191
  14,948
  15,741
  16,571
  17,441
  18,351
  19,305
  20,305
  21,353
  22,452
  23,604
  24,812
Debt-to-equity ratio
  2.730
  2.830
  2.920
  3.010
  3.080
  3.150
  3.210
  3.270
  3.320
  3.370
  3.420
  3.460
  3.500
  3.540
  3.580
  3.610
  3.640
  3.670
  3.700
  3.720
  3.750
  3.770
  3.790
  3.810
  3.830
  3.850
  3.870
  3.890
  3.900
  3.920
Adjusted equity ratio
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  218
  248
  279
  311
  345
  380
  417
  455
  495
  537
  692
  738
  786
  836
  888
  943
  1,000
  1,060
  1,124
  1,190
  1,259
  1,332
  1,409
  1,489
  1,574
  1,663
  1,756
  1,854
  1,956
  2,064
Depreciation, amort., depletion, $m
  307
  318
  329
  341
  354
  367
  380
  394
  409
  424
  287
  303
  321
  339
  358
  377
  398
  420
  442
  466
  491
  516
  544
  572
  602
  633
  665
  700
  736
  773
Funds from operations, $m
  525
  566
  608
  652
  699
  747
  797
  849
  904
  961
  979
  1,041
  1,106
  1,174
  1,246
  1,320
  1,398
  1,480
  1,566
  1,656
  1,750
  1,849
  1,952
  2,061
  2,175
  2,295
  2,421
  2,553
  2,692
  2,838
Change in working capital, $m
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
Cash from operations, $m
  502
  542
  583
  627
  672
  719
  768
  819
  872
  928
  945
  1,006
  1,069
  1,135
  1,205
  1,278
  1,354
  1,434
  1,517
  1,605
  1,697
  1,793
  1,894
  2,000
  2,111
  2,228
  2,351
  2,480
  2,615
  2,757
Maintenance CAPEX, $m
  -143
  -153
  -164
  -176
  -188
  -201
  -213
  -227
  -241
  -256
  -271
  -287
  -303
  -321
  -339
  -358
  -377
  -398
  -420
  -442
  -466
  -491
  -516
  -544
  -572
  -602
  -633
  -665
  -700
  -736
New CAPEX, $m
  -170
  -178
  -185
  -192
  -200
  -208
  -216
  -225
  -234
  -244
  -255
  -266
  -277
  -289
  -302
  -316
  -330
  -345
  -361
  -378
  -395
  -414
  -433
  -454
  -476
  -499
  -523
  -548
  -574
  -602
Cash from investing activities, $m
  -313
  -331
  -349
  -368
  -388
  -409
  -429
  -452
  -475
  -500
  -526
  -553
  -580
  -610
  -641
  -674
  -707
  -743
  -781
  -820
  -861
  -905
  -949
  -998
  -1,048
  -1,101
  -1,156
  -1,213
  -1,274
  -1,338
Free cash flow, $m
  189
  210
  234
  258
  284
  311
  338
  367
  397
  428
  419
  453
  489
  525
  564
  604
  646
  690
  737
  785
  836
  889
  944
  1,003
  1,064
  1,128
  1,195
  1,266
  1,341
  1,419
Issuance/(repayment) of debt, $m
  278
  288
  300
  311
  324
  337
  350
  365
  380
  396
  413
  430
  449
  469
  490
  512
  535
  559
  585
  612
  641
  671
  702
  736
  771
  808
  847
  888
  931
  976
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  
  278
  288
  300
  311
  324
  337
  350
  365
  380
  396
  413
  430
  449
  469
  490
  512
  535
  559
  585
  612
  641
  671
  702
  736
  771
  808
  847
  888
  931
  976
Total cash flow (excl. dividends), $m
  467
  499
  533
  570
  608
  647
  689
  732
  777
  824
  832
  883
  937
  994
  1,054
  1,116
  1,181
  1,250
  1,321
  1,397
  1,476
  1,559
  1,647
  1,738
  1,835
  1,936
  2,042
  2,154
  2,271
  2,395
Retained Cash Flow (-), $m
  -63
  -68
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -107
  -111
  -116
  -122
  -127
  -133
  -139
  -145
  -152
  -159
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -232
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
  403
  430
  462
  496
  531
  567
  605
  645
  686
  730
  734
  781
  831
  883
  937
  994
  1,054
  1,117
  1,183
  1,251
  1,324
  1,400
  1,480
  1,564
  1,652
  1,744
  1,841
  1,943
  2,050
  2,163
Discount rate, %
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
  369
  357
  345
  329
  311
  289
  266
  241
  215
  190
  155
  133
  112
  92
  74
  59
  46
  34
  25
  18
  13
  9
  6
  4
  2
  1
  1
  0
  0
  0
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

Silgan Holdings Inc. is a holding company. The Company is a manufacturer of rigid packaging for consumer goods products. The Company operates in three business segments: metal containers, closures and plastic containers. Its metal container segment is engaged in the manufacture and sale of steel and aluminum containers for human and pet food and general line products. Its closures segment manufactures and sells metal, composite and plastic closures for food and beverage products. Its plastic containers segment manufactures and sells custom designed plastic containers and closures for personal care, food, healthcare, pharmaceutical, household and industrial chemical, pet care, agricultural, automotive and marine chemical products. The Company is a manufacturer of metal containers in North America and Europe. As of December 31, 2016, the Company's products were used for a range of end markets and it operated 87 manufacturing plants in North America, Europe, Asia and South America.

FINANCIAL RATIOS  of  Silgan Holdings Inc. (SLGN)

Valuation Ratios
P/E Ratio 21.4
Price to Sales 0.9
Price to Book 7
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate -4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19%
Cap. Spend. - 3 Yr. Gr. Rate 13.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 286.8%
Total Debt to Equity 333%
Interest Coverage 5
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.6%
Return On Equity 27.6%
Return On Equity - 3 Yr. Avg. 26.2%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 14.8%
Gross Margin - 3 Yr. Avg. 14.9%
EBITDA Margin 12.2%
EBITDA Margin - 3 Yr. Avg. 12.4%
Operating Margin 8.3%
Oper. Margin - 3 Yr. Avg. 8.7%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin 4.2%
Net Profit Margin - 3 Yr. Avg. 4.5%
Effective Tax Rate 34.1%
Eff/ Tax Rate - 3 Yr. Avg. 34.1%
Payout Ratio 26.8%

SLGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SLGN stock intrinsic value calculation we used $4449 million for the last fiscal year's total revenue generated by Silgan Holdings Inc.. The default revenue input number comes from 0001 income statement of Silgan Holdings 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 SLGN stock valuation model: a) initial revenue growth rate of 7.5% 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 9.3%, whose default value for SLGN is calculated based on our internal credit rating of Silgan Holdings 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 Silgan Holdings 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 SLGN stock the variable cost ratio is equal to 85.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $271 million in the base year in the intrinsic value calculation for SLGN 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 Silgan Holdings Inc..

Corporate tax rate of 27% is the nominal tax rate for Silgan Holdings 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 SLGN 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 SLGN are equal to 51.3%.

Life of production assets of 16 years is the average useful life of capital assets used in Silgan Holdings 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 SLGN is equal to 6.9%. 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 - $881.265 million for Silgan Holdings 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 110.302 million for Silgan Holdings 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 Silgan Holdings Inc. at the current share price and the inputted number of shares is $3.3 billion.

RELATED COMPANIES Price Int.Val. Rating
CCK Crown Holdings 65.02 244.28  str.buy
BLL Ball Corporati 78.30 35.34  sell
GEF Greif Bros. Co 35.32 62.72  str.buy
BERY Berry Global G 38.77 77.21  buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.