Intrinsic value of Stoneridge - SRI

Previous Close

$22.78

  Intrinsic Value

$106.11

stock screener

  Rating & Target

str. buy

+366%

Previous close

$22.78

 
Intrinsic value

$106.11

 
Up/down potential

+366%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SRI 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Stoneridge (SRI) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.91
  17.20
  15.98
  14.88
  13.89
  13.00
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
Revenue, $m
  696
  816
  946
  1,087
  1,238
  1,399
  1,570
  1,750
  1,939
  2,138
  2,346
  2,563
  2,790
  3,025
  3,270
  3,525
  3,790
  4,065
  4,351
  4,648
  4,957
  5,279
  5,613
  5,961
  6,324
  6,701
  7,095
  7,506
  7,934
  8,382
  8,849
Variable operating expenses, $m
 
  560
  650
  747
  850
  961
  1,078
  1,202
  1,332
  1,469
  1,612
  1,761
  1,916
  2,078
  2,247
  2,422
  2,604
  2,793
  2,989
  3,193
  3,406
  3,626
  3,856
  4,095
  4,344
  4,604
  4,874
  5,156
  5,451
  5,758
  6,079
Fixed operating expenses, $m
 
  182
  187
  192
  196
  201
  206
  212
  217
  222
  228
  234
  239
  245
  252
  258
  264
  271
  278
  285
  292
  299
  306
  314
  322
  330
  338
  347
  355
  364
  373
Total operating expenses, $m
  652
  742
  837
  939
  1,046
  1,162
  1,284
  1,414
  1,549
  1,691
  1,840
  1,995
  2,155
  2,323
  2,499
  2,680
  2,868
  3,064
  3,267
  3,478
  3,698
  3,925
  4,162
  4,409
  4,666
  4,934
  5,212
  5,503
  5,806
  6,122
  6,452
Operating income, $m
  44
  73
  109
  148
  191
  236
  285
  336
  390
  447
  506
  569
  634
  702
  772
  846
  922
  1,002
  1,084
  1,170
  1,260
  1,353
  1,450
  1,552
  1,657
  1,768
  1,883
  2,003
  2,128
  2,259
  2,396
EBITDA, $m
  68
  101
  142
  186
  234
  285
  339
  396
  457
  521
  587
  657
  730
  806
  885
  967
  1,052
  1,141
  1,234
  1,330
  1,430
  1,535
  1,644
  1,757
  1,875
  1,998
  2,127
  2,261
  2,401
  2,548
  2,701
Interest expense (income), $m
  6
  4
  7
  9
  11
  14
  17
  20
  23
  26
  30
  34
  37
  41
  46
  50
  54
  59
  64
  69
  74
  80
  85
  91
  97
  104
  110
  117
  125
  132
  140
Earnings before tax, $m
  39
  68
  103
  140
  180
  222
  268
  316
  367
  421
  477
  535
  596
  660
  727
  796
  868
  943
  1,020
  1,101
  1,186
  1,274
  1,365
  1,461
  1,560
  1,664
  1,772
  1,885
  2,004
  2,127
  2,256
Tax expense, $m
  -37
  18
  28
  38
  49
  60
  72
  85
  99
  114
  129
  145
  161
  178
  196
  215
  234
  254
  276
  297
  320
  344
  369
  394
  421
  449
  478
  509
  541
  574
  609
Net income, $m
  77
  50
  75
  102
  131
  162
  196
  231
  268
  307
  348
  391
  435
  482
  530
  581
  633
  688
  745
  804
  866
  930
  997
  1,066
  1,139
  1,215
  1,294
  1,376
  1,463
  1,553
  1,647

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  50
  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
  395
  404
  469
  539
  614
  694
  778
  868
  962
  1,060
  1,163
  1,271
  1,383
  1,500
  1,621
  1,748
  1,879
  2,015
  2,157
  2,305
  2,458
  2,617
  2,783
  2,955
  3,135
  3,322
  3,518
  3,721
  3,934
  4,156
  4,387
Adjusted assets (=assets-cash), $m
  345
  404
  469
  539
  614
  694
  778
  868
  962
  1,060
  1,163
  1,271
  1,383
  1,500
  1,621
  1,748
  1,879
  2,015
  2,157
  2,305
  2,458
  2,617
  2,783
  2,955
  3,135
  3,322
  3,518
  3,721
  3,934
  4,156
  4,387
Revenue / Adjusted assets
  2.017
  2.020
  2.017
  2.017
  2.016
  2.016
  2.018
  2.016
  2.016
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.016
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
  2.017
Average production assets, $m
  120
  140
  163
  187
  213
  241
  270
  301
  334
  368
  404
  441
  480
  520
  562
  606
  652
  699
  748
  799
  853
  908
  965
  1,025
  1,088
  1,153
  1,220
  1,291
  1,365
  1,442
  1,522
Working capital, $m
  128
  102
  118
  136
  155
  175
  196
  219
  242
  267
  293
  320
  349
  378
  409
  441
  474
  508
  544
  581
  620
  660
  702
  745
  790
  838
  887
  938
  992
  1,048
  1,106
Total debt, $m
  84
  111
  150
  192
  237
  285
  336
  390
  447
  506
  568
  633
  701
  771
  845
  921
  1,000
  1,082
  1,168
  1,257
  1,349
  1,445
  1,545
  1,649
  1,757
  1,870
  1,988
  2,111
  2,239
  2,373
  2,512
Total liabilities, $m
  216
  244
  283
  325
  370
  418
  469
  523
  580
  639
  701
  766
  834
  904
  978
  1,054
  1,133
  1,215
  1,301
  1,390
  1,482
  1,578
  1,678
  1,782
  1,890
  2,003
  2,121
  2,244
  2,372
  2,506
  2,645
Total equity, $m
  178
  161
  186
  214
  244
  275
  309
  344
  382
  421
  462
  505
  549
  595
  644
  694
  746
  800
  856
  915
  976
  1,039
  1,105
  1,173
  1,245
  1,319
  1,396
  1,477
  1,562
  1,650
  1,742
Total liabilities and equity, $m
  394
  405
  469
  539
  614
  693
  778
  867
  962
  1,060
  1,163
  1,271
  1,383
  1,499
  1,622
  1,748
  1,879
  2,015
  2,157
  2,305
  2,458
  2,617
  2,783
  2,955
  3,135
  3,322
  3,517
  3,721
  3,934
  4,156
  4,387
Debt-to-equity ratio
  0.472
  0.690
  0.800
  0.900
  0.970
  1.040
  1.090
  1.130
  1.170
  1.200
  1.230
  1.260
  1.280
  1.300
  1.310
  1.330
  1.340
  1.350
  1.360
  1.370
  1.380
  1.390
  1.400
  1.410
  1.410
  1.420
  1.420
  1.430
  1.430
  1.440
  1.440
Adjusted equity ratio
  0.371
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  77
  50
  75
  102
  131
  162
  196
  231
  268
  307
  348
  391
  435
  482
  530
  581
  633
  688
  745
  804
  866
  930
  997
  1,066
  1,139
  1,215
  1,294
  1,376
  1,463
  1,553
  1,647
Depreciation, amort., depletion, $m
  24
  28
  33
  37
  43
  48
  54
  60
  67
  74
  81
  88
  96
  104
  112
  121
  130
  140
  150
  160
  171
  182
  193
  205
  218
  231
  244
  258
  273
  288
  304
Funds from operations, $m
  66
  78
  107
  139
  174
  211
  250
  291
  335
  381
  429
  479
  531
  586
  643
  702
  764
  828
  895
  964
  1,036
  1,111
  1,190
  1,271
  1,356
  1,445
  1,538
  1,634
  1,736
  1,841
  1,952
Change in working capital, $m
  1
  15
  16
  18
  19
  20
  21
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  54
  56
  58
Cash from operations, $m
  65
  63
  91
  122
  155
  190
  228
  269
  311
  356
  403
  452
  503
  557
  612
  670
  731
  793
  859
  927
  998
  1,071
  1,148
  1,228
  1,311
  1,398
  1,489
  1,583
  1,682
  1,785
  1,893
Maintenance CAPEX, $m
  0
  -24
  -28
  -33
  -37
  -43
  -48
  -54
  -60
  -67
  -74
  -81
  -88
  -96
  -104
  -112
  -121
  -130
  -140
  -150
  -160
  -171
  -182
  -193
  -205
  -218
  -231
  -244
  -258
  -273
  -288
New CAPEX, $m
  -24
  -20
  -22
  -24
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -80
Cash from investing activities, $m
  -24
  -44
  -50
  -57
  -63
  -71
  -77
  -85
  -93
  -101
  -110
  -118
  -127
  -137
  -146
  -156
  -167
  -177
  -189
  -201
  -213
  -226
  -240
  -253
  -267
  -283
  -299
  -315
  -332
  -350
  -368
Free cash flow, $m
  41
  19
  41
  65
  91
  120
  151
  184
  218
  255
  293
  334
  376
  420
  466
  514
  564
  616
  670
  726
  784
  845
  909
  975
  1,044
  1,115
  1,190
  1,268
  1,350
  1,435
  1,524
Issuance/(repayment) of debt, $m
  -43
  36
  39
  42
  45
  48
  51
  54
  57
  59
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
Issuance/(repurchase) of shares, $m
  -1
  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  
  -43
  36
  39
  42
  45
  48
  51
  54
  57
  59
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
Total cash flow (excl. dividends), $m
  -4
  55
  80
  107
  137
  168
  202
  237
  275
  314
  356
  399
  444
  490
  539
  590
  643
  698
  755
  815
  877
  941
  1,009
  1,079
  1,152
  1,228
  1,308
  1,391
  1,478
  1,569
  1,664
Retained Cash Flow (-), $m
  -85
  -24
  -26
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -63
  -66
  -69
  -71
  -74
  -78
  -81
  -84
  -88
  -92
Prev. year cash balance distribution, $m
 
  41
  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
 
  72
  54
  79
  107
  137
  168
  202
  238
  275
  315
  356
  399
  444
  491
  540
  591
  644
  699
  756
  816
  878
  943
  1,010
  1,081
  1,154
  1,230
  1,310
  1,394
  1,481
  1,572
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
 
  69
  49
  69
  88
  106
  122
  136
  148
  158
  165
  169
  170
  169
  165
  159
  150
  140
  129
  116
  104
  91
  78
  66
  55
  45
  36
  28
  22
  16
  12
Current shareholders' claim on cash, %
  100
  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

Stoneridge, Inc. is a designer and manufacturer of engineered electrical and electronic components, modules and systems for the automotive, commercial, motorcycle, off-highway and agricultural vehicle markets. The Company operates through three segments: Control Devices, Electronics and PST. The Company's Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle and includes product lines, such as sensors, switches, valves, and actuators. The Company's Electronics segment designs and manufactures electronic instrument clusters, electronic control units and driver information systems. The PST segment is engaged in the design, manufacture and sale of in-vehicle audio and video devices, electronic vehicle security alarms, convenience accessories, vehicle tracking devices and monitoring services primarily for the automotive and motorcycle industry. It operated in 25 locations in 12 countries, as of December 31, 2016.

FINANCIAL RATIOS  of  Stoneridge (SRI)

Valuation Ratios
P/E Ratio 8.2
Price to Sales 0.9
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 15.5
Growth Rates
Sales Growth Rate 7.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.2%
Cap. Spend. - 3 Yr. Gr. Rate -0.8%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 42.1%
Total Debt to Equity 47.2%
Interest Coverage 8
Management Effectiveness
Return On Assets 23.4%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 32.6%
Ret/ On T. Cap. - 3 Yr. Avg. 8.9%
Return On Equity 56.8%
Return On Equity - 3 Yr. Avg. 14.2%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 28.2%
Gross Margin - 3 Yr. Avg. 28.2%
EBITDA Margin 9.9%
EBITDA Margin - 3 Yr. Avg. 5.7%
Operating Margin 6.3%
Oper. Margin - 3 Yr. Avg. 1.7%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 0.2%
Net Profit Margin 11.1%
Net Profit Margin - 3 Yr. Avg. 2.5%
Effective Tax Rate -94.9%
Eff/ Tax Rate - 3 Yr. Avg. -32%
Payout Ratio 0%

SRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SRI stock intrinsic value calculation we used $696 million for the last fiscal year's total revenue generated by Stoneridge. The default revenue input number comes from 2016 income statement of Stoneridge. 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 SRI stock valuation model: a) initial revenue growth rate of 17.2% 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 SRI is calculated based on our internal credit rating of Stoneridge, 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 Stoneridge.
    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 SRI stock the variable cost ratio is equal to 68.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $178 million in the base year in the intrinsic value calculation for SRI 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 5.9% for Stoneridge.

Corporate tax rate of 27% is the nominal tax rate for Stoneridge. 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 SRI 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 SRI are equal to 17.2%.

Life of production assets of 5 years is the average useful life of capital assets used in Stoneridge 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 SRI is equal to 12.5%. 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 - $178 million for Stoneridge - 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 28.8 million for Stoneridge 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 Stoneridge at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ Is Stoneridge Inc (NYSE:SRI) A Financially Sound Company?   [Jan-04-18 06:10PM  Simply Wall St.]
▶ New Strong Buy Stocks for December 29th   [Dec-29-17 09:20AM  Zacks]
▶ ETFs with exposure to Stoneridge, Inc. : December 8, 2017   [Dec-08-17 01:29PM  Capital Cube]
▶ Stoneridge tops Street 3Q forecasts   [Nov-02-17 05:50AM  Associated Press]
▶ Stoneridge Reports Strong Third-Quarter 2017 Results   [Nov-01-17 05:52PM  PR Newswire]
▶ 5 Cheap Breakout Stocks Offering Strong Returns   [Aug-08-17 08:40AM  Zacks]
▶ Stoneridge beats Street 2Q forecasts   [Aug-03-17 10:24AM  Associated Press]
▶ ETFs with exposure to Stoneridge, Inc. : June 26, 2017   [Jun-26-17 04:57PM  Capital Cube]
▶ /C O R R E C T I O N -- Stoneridge, Inc./   [May-25-17 03:45PM  PR Newswire]
▶ Stoneridge beats 1Q profit forecasts   [May-04-17 05:03AM  Associated Press]
▶ Stoneridge beats 4Q profit forecasts   [07:47AM  Associated Press]
Financial statements of SRI
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