Intrinsic value of Strattec Security Corporation - STRT

Previous Close

$29.45

  Intrinsic Value

$10.83

stock screener

  Rating & Target

str. sell

-63%

Previous close

$29.45

 
Intrinsic value

$10.83

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of STRT 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 0.1

 

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, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  480
  523
  568
  615
  663
  714
  766
  820
  877
  936
  997
  1,061
  1,127
  1,196
  1,267
  1,342
  1,420
  1,502
  1,587
  1,676
  1,768
  1,865
  1,967
  2,073
  2,184
  2,300
  2,421
  2,548
  2,682
  2,821
Variable operating expenses, $m
  463
  504
  548
  593
  639
  688
  738
  791
  845
  902
  961
  1,022
  1,086
  1,153
  1,222
  1,294
  1,369
  1,448
  1,530
  1,615
  1,705
  1,798
  1,896
  1,998
  2,105
  2,217
  2,334
  2,457
  2,585
  2,720
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
  463
  504
  548
  593
  639
  688
  738
  791
  845
  902
  961
  1,022
  1,086
  1,153
  1,222
  1,294
  1,369
  1,448
  1,530
  1,615
  1,705
  1,798
  1,896
  1,998
  2,105
  2,217
  2,334
  2,457
  2,585
  2,720
Operating income, $m
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
EBITDA, $m
  33
  36
  39
  43
  46
  49
  53
  57
  61
  65
  69
  74
  78
  83
  88
  93
  98
  104
  110
  116
  123
  129
  136
  144
  151
  159
  168
  177
  186
  196
Interest expense (income), $m
  0
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  43
Earnings before tax, $m
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
Tax expense, $m
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  12
  12
  13
  13
  14
  14
  15
  16
Net income, $m
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  20
  21
  22
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  39
  41
  43

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
  336
  366
  398
  430
  464
  499
  536
  574
  614
  655
  698
  742
  788
  837
  887
  939
  994
  1,051
  1,110
  1,173
  1,237
  1,305
  1,376
  1,450
  1,528
  1,609
  1,694
  1,783
  1,877
  1,974
Adjusted assets (=assets-cash), $m
  336
  366
  398
  430
  464
  499
  536
  574
  614
  655
  698
  742
  788
  837
  887
  939
  994
  1,051
  1,110
  1,173
  1,237
  1,305
  1,376
  1,450
  1,528
  1,609
  1,694
  1,783
  1,877
  1,974
Revenue / Adjusted assets
  1.429
  1.429
  1.427
  1.430
  1.429
  1.431
  1.429
  1.429
  1.428
  1.429
  1.428
  1.430
  1.430
  1.429
  1.428
  1.429
  1.429
  1.429
  1.430
  1.429
  1.429
  1.429
  1.430
  1.430
  1.429
  1.429
  1.429
  1.429
  1.429
  1.429
Average production assets, $m
  125
  136
  148
  160
  172
  186
  199
  213
  228
  243
  259
  276
  293
  311
  330
  349
  369
  390
  413
  436
  460
  485
  511
  539
  568
  598
  629
  663
  697
  734
Working capital, $m
  81
  88
  96
  104
  112
  121
  129
  139
  148
  158
  168
  179
  190
  202
  214
  227
  240
  254
  268
  283
  299
  315
  332
  350
  369
  389
  409
  431
  453
  477
Total debt, $m
  65
  79
  94
  109
  125
  142
  159
  177
  196
  215
  235
  256
  278
  301
  325
  349
  375
  402
  430
  459
  490
  522
  556
  591
  627
  666
  706
  748
  792
  838
Total liabilities, $m
  159
  173
  188
  203
  219
  236
  253
  271
  290
  309
  329
  350
  372
  395
  419
  443
  469
  496
  524
  553
  584
  616
  650
  685
  721
  760
  800
  842
  886
  932
Total equity, $m
  177
  193
  210
  227
  245
  264
  283
  303
  324
  346
  368
  392
  416
  442
  468
  496
  525
  555
  586
  619
  653
  689
  727
  766
  807
  850
  895
  942
  991
  1,042
Total liabilities and equity, $m
  336
  366
  398
  430
  464
  500
  536
  574
  614
  655
  697
  742
  788
  837
  887
  939
  994
  1,051
  1,110
  1,172
  1,237
  1,305
  1,377
  1,451
  1,528
  1,610
  1,695
  1,784
  1,877
  1,974
Debt-to-equity ratio
  0.360
  0.410
  0.450
  0.480
  0.510
  0.540
  0.560
  0.580
  0.600
  0.620
  0.640
  0.650
  0.670
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.760
  0.770
  0.780
  0.780
  0.790
  0.790
  0.800
  0.800
Adjusted equity ratio
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  20
  21
  22
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  39
  41
  43
Depreciation, amort., depletion, $m
  16
  17
  19
  20
  22
  24
  26
  27
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  89
  94
Funds from operations, $m
  27
  29
  31
  33
  35
  38
  40
  43
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  112
  118
  124
  130
  137
Change in working capital, $m
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
Cash from operations, $m
  20
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
  75
  80
  84
  88
  93
  98
  103
  108
  113
Maintenance CAPEX, $m
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -89
New CAPEX, $m
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
Cash from investing activities, $m
  -26
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -42
  -44
  -47
  -50
  -52
  -56
  -59
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -94
  -98
  -103
  -109
  -114
  -120
  -125
Free cash flow, $m
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Issuance/(repayment) of debt, $m
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
Issuance/(repurchase) of shares, $m
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Cash from financing (excl. dividends), $m  
  19
  19
  20
  20
  21
  22
  22
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  39
  42
  44
  45
  48
  50
  52
  55
Total cash flow (excl. dividends), $m
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  42
Retained Cash Flow (-), $m
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
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
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  -3
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.0
  92.5
  89.4
  86.6
  84.1
  81.8
  79.7
  77.8
  76.1
  74.5
  73.0
  71.7
  70.4
  69.2
  68.1
  67.0
  66.0
  65.1
  64.1
  63.3
  62.4
  61.6
  60.8
  60.0
  59.2
  58.5
  57.8
  57.1
  56.4
  55.7

Strattec Security Corporation designs, develops, manufactures and markets automotive access control products. The Company offers access control products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power lift gate systems, power deck lid systems, door handles and related products for North American automotive customers. The Company supplies its products under the VAST brand name. The Company's products are shipped to customer locations in the United States, Canada, Mexico, Europe, South America, Korea and China, and it also provides full service and aftermarket support. The Company provides its customers with engineered access control products, including locksets, fobs, push button ignition systems, steering column lock housings, seatback and secondary power liftgate systems, power decklids, door handles, and trim and other access products.

FINANCIAL RATIOS  of  Strattec Security Corporation (STRT)

Valuation Ratios
P/E Ratio 15.1
Price to Sales 0.3
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 4.6
Price to Free Cash Flow -7.6
Growth Rates
Sales Growth Rate 4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 54.2%
Cap. Spend. - 3 Yr. Gr. Rate 23.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 19.9%
Total Debt to Equity 19.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. 5.3%
Return On Total Capital 4.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 4.8%
Return On Equity - 3 Yr. Avg. 9%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 14.4%
Gross Margin - 3 Yr. Avg. 16.1%
EBITDA Margin 6.5%
EBITDA Margin - 3 Yr. Avg. 8.1%
Operating Margin 3.1%
Oper. Margin - 3 Yr. Avg. 5.2%
Pre-Tax Margin 3.8%
Pre-Tax Margin - 3 Yr. Avg. 5.6%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 3%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 25.9%
Payout Ratio 28.6%

STRT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STRT stock intrinsic value calculation we used $439 million for the last fiscal year's total revenue generated by Strattec Security Corporation. The default revenue input number comes from 0001 income statement of Strattec Security Corporation. 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 STRT stock valuation model: a) initial revenue growth rate of 9.4% 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 5.8%, whose default value for STRT is calculated based on our internal credit rating of Strattec Security Corporation, 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 Strattec Security Corporation.
    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 STRT stock the variable cost ratio is equal to 96.4%.

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 STRT 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 Strattec Security Corporation.

Corporate tax rate of 27% is the nominal tax rate for Strattec Security Corporation. 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 STRT 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 STRT are equal to 26%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Strattec Security Corporation 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 STRT is equal to 16.9%. 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 - $162.158 million for Strattec Security Corporation - 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 3.742 million for Strattec Security Corporation 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 Strattec Security Corporation at the current share price and the inputted number of shares is $0.1 billion.

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