Intrinsic value of Strattec Security - STRT

Previous Close

$33.21

  Intrinsic Value

$12.99

stock screener

  Rating & Target

str. sell

-61%

Previous close

$33.21

 
Intrinsic value

$12.99

 
Up/down potential

-61%

 
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, %
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
Revenue, $m
  444
  473
  502
  533
  565
  598
  632
  669
  706
  746
  787
  830
  875
  922
  971
  1,023
  1,077
  1,133
  1,193
  1,255
  1,320
  1,388
  1,459
  1,534
  1,613
  1,695
  1,782
  1,872
  1,967
  2,067
Variable operating expenses, $m
  421
  448
  475
  504
  535
  566
  599
  633
  669
  706
  745
  786
  829
  873
  920
  969
  1,020
  1,073
  1,129
  1,188
  1,250
  1,314
  1,382
  1,453
  1,527
  1,605
  1,687
  1,773
  1,863
  1,957
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
  421
  448
  475
  504
  535
  566
  599
  633
  669
  706
  745
  786
  829
  873
  920
  969
  1,020
  1,073
  1,129
  1,188
  1,250
  1,314
  1,382
  1,453
  1,527
  1,605
  1,687
  1,773
  1,863
  1,957
Operating income, $m
  24
  25
  27
  28
  30
  32
  34
  35
  37
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  74
  77
  81
  85
  90
  94
  99
  104
  110
EBITDA, $m
  36
  38
  40
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  87
  91
  96
  101
  106
  112
  117
  123
  130
  136
  143
  151
  158
  166
Interest expense (income), $m
  0
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  21
  22
Earnings before tax, $m
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
  52
  55
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
Tax expense, $m
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
Net income, $m
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64

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
  292
  310
  330
  350
  371
  392
  415
  439
  464
  490
  517
  545
  575
  605
  638
  672
  707
  744
  783
  824
  867
  911
  958
  1,007
  1,059
  1,113
  1,170
  1,229
  1,292
  1,357
Adjusted assets (=assets-cash), $m
  292
  310
  330
  350
  371
  392
  415
  439
  464
  490
  517
  545
  575
  605
  638
  672
  707
  744
  783
  824
  867
  911
  958
  1,007
  1,059
  1,113
  1,170
  1,229
  1,292
  1,357
Revenue / Adjusted assets
  1.521
  1.526
  1.521
  1.523
  1.523
  1.526
  1.523
  1.524
  1.522
  1.522
  1.522
  1.523
  1.522
  1.524
  1.522
  1.522
  1.523
  1.523
  1.524
  1.523
  1.522
  1.524
  1.523
  1.523
  1.523
  1.523
  1.523
  1.523
  1.522
  1.523
Average production assets, $m
  105
  112
  118
  126
  133
  141
  149
  158
  167
  176
  186
  196
  206
  218
  229
  241
  254
  267
  281
  296
  311
  328
  344
  362
  381
  400
  420
  442
  464
  488
Working capital, $m
  56
  60
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  110
  116
  122
  129
  136
  143
  150
  158
  166
  175
  184
  193
  203
  214
  224
  236
  248
  260
Total debt, $m
  37
  44
  51
  58
  66
  74
  82
  91
  100
  110
  120
  130
  141
  152
  164
  177
  190
  204
  218
  233
  249
  265
  283
  301
  320
  340
  361
  383
  406
  430
Total liabilities, $m
  108
  115
  122
  129
  137
  145
  153
  162
  171
  181
  191
  201
  212
  223
  235
  248
  261
  275
  289
  304
  320
  336
  354
  372
  391
  411
  432
  454
  477
  501
Total equity, $m
  184
  196
  208
  221
  234
  248
  262
  277
  293
  309
  326
  344
  363
  382
  402
  424
  446
  470
  494
  520
  547
  575
  605
  636
  668
  702
  738
  776
  815
  856
Total liabilities and equity, $m
  292
  311
  330
  350
  371
  393
  415
  439
  464
  490
  517
  545
  575
  605
  637
  672
  707
  745
  783
  824
  867
  911
  959
  1,008
  1,059
  1,113
  1,170
  1,230
  1,292
  1,357
Debt-to-equity ratio
  0.200
  0.220
  0.240
  0.260
  0.280
  0.300
  0.310
  0.330
  0.340
  0.350
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.430
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
  0.470
  0.480
  0.480
  0.490
  0.490
  0.500
  0.500
Adjusted equity ratio
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
Depreciation, amort., depletion, $m
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
Funds from operations, $m
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
Change in working capital, $m
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
Cash from operations, $m
  25
  26
  28
  29
  31
  33
  35
  36
  38
  40
  43
  45
  47
  49
  52
  55
  57
  60
  63
  67
  70
  73
  77
  81
  85
  89
  94
  98
  103
  108
Maintenance CAPEX, $m
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
New CAPEX, $m
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -24
Cash from investing activities, $m
  -18
  -19
  -20
  -21
  -23
  -23
  -24
  -26
  -27
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -49
  -52
  -55
  -58
  -61
  -63
  -67
  -70
  -73
  -78
Free cash flow, $m
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
Issuance/(repayment) of debt, $m
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
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
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
  52
  55
Retained Cash Flow (-), $m
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -39
  -41
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
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
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
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  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

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 (STRT)

Valuation Ratios
P/E Ratio 17.1
Price to Sales 0.3
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 5.2
Price to Free Cash Flow -8.5
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 $417.325 million for the last fiscal year's total revenue generated by Strattec Security. The default revenue input number comes from 0001 income statement of Strattec Security. 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 6.5% 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 4.3%, whose default value for STRT is calculated based on our internal credit rating of Strattec Security, 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.
    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 94.7%.

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 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.

Corporate tax rate of 27% is the nominal tax rate for Strattec Security. 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 23.6%.

Life of production assets of 8.6 years is the average useful life of capital assets used in Strattec Security 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 12.6%. 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 - $172.714 million for Strattec Security - 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 3.704 million for Strattec Security 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 at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Strattec Security: Fiscal 1Q Earnings Snapshot   [Oct-25-18 05:33PM  Associated Press]
▶ STRATTEC SECURITY CORPORATION Declares Quarterly Dividend   [Aug-22-18 04:00PM  GlobeNewswire]
▶ Strattec Security: Fiscal 4Q Earnings Snapshot   [Aug-09-18 04:43PM  Associated Press]
▶ STRATTEC SECURITY CORPORATION Declares Quarterly Dividend   [May-15-18 04:00PM  GlobeNewswire]
▶ Strattec Security: Fiscal 3Q Earnings Snapshot   [Apr-26-18 05:24PM  Associated Press]
▶ STRATTEC SECURITY CORPORATION Declares Quarterly Dividend   [Feb-20-18 04:00PM  GlobeNewswire]
▶ Strattec Security posts 2Q profit   [Jan-25-18 04:31PM  Associated Press]
▶ Strattec Security posts 1Q profit   [Oct-26-17 05:44PM  Associated Press]
▶ STRATTEC SECURITY CORPORATION Declares Quarterly Dividend   [Oct-10-17 04:00PM  GlobeNewswire]
▶ STRATTEC SECURITY CORPORATION Declares Quarterly Dividend   [Aug-23-17 04:00PM  GlobeNewswire]
▶ Strattec Security posts 4Q profit   [Aug-10-17 09:19PM  Associated Press]
▶ STRATTEC SECURITY CORPORATION Declares Quarterly Dividend   [May-16-17 04:00PM  GlobeNewswire]
▶ Strattec Security posts 3Q profit   [Apr-27-17 05:34PM  Associated Press]
▶ Strattec Security posts 2Q profit   [Jan-26-17 07:12PM  Associated Press]
▶ How ArQule, Inc. (ARQL) Stacks Up Against Its Peers   [Dec-20-16 02:02PM  Insider Monkey]
▶ Is Xerium Technologies, Inc. (XRM) A Good Stock To Buy?   [Dec-12-16 05:31PM  at Insider Monkey]

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