Intrinsic value of Synalloy Corporation - SYNL

Previous Close

$15.50

  Intrinsic Value

$16.68

stock screener

  Rating & Target

hold

+8%

Previous close

$15.50

 
Intrinsic value

$16.68

 
Up/down potential

+8%

 
Rating

hold

We calculate the intrinsic value of SYNL 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, %
  42.50
  38.75
  35.38
  32.34
  29.60
  27.14
  24.93
  22.94
  21.14
  19.53
  18.08
  16.77
  15.59
  14.53
  13.58
  12.72
  11.95
  11.25
  10.63
  10.07
  9.56
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
Revenue, $m
  286
  397
  538
  712
  923
  1,173
  1,466
  1,802
  2,183
  2,609
  3,081
  3,597
  4,158
  4,762
  5,409
  6,097
  6,826
  7,594
  8,401
  9,246
  10,130
  11,053
  12,013
  13,013
  14,053
  15,134
  16,258
  17,425
  18,638
  19,899
Variable operating expenses, $m
  236
  327
  442
  584
  756
  961
  1,200
  1,475
  1,786
  2,135
  2,519
  2,941
  3,399
  3,893
  4,422
  4,985
  5,580
  6,208
  6,868
  7,559
  8,282
  9,036
  9,821
  10,639
  11,489
  12,373
  13,291
  14,246
  15,238
  16,269
Fixed operating expenses, $m
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
  55
  56
  57
  59
  60
  61
  63
  64
  65
Total operating expenses, $m
  271
  363
  478
  621
  794
  1,000
  1,240
  1,515
  1,827
  2,177
  2,562
  2,985
  3,444
  3,939
  4,469
  5,033
  5,629
  6,258
  6,919
  7,612
  8,336
  9,091
  9,877
  10,696
  11,548
  12,433
  13,352
  14,309
  15,302
  16,334
Operating income, $m
  16
  35
  60
  91
  129
  174
  226
  287
  355
  432
  519
  612
  714
  823
  940
  1,064
  1,196
  1,335
  1,481
  1,635
  1,795
  1,962
  2,136
  2,317
  2,506
  2,701
  2,905
  3,117
  3,337
  3,565
EBITDA, $m
  27
  50
  79
  116
  160
  213
  275
  346
  427
  518
  618
  728
  847
  976
  1,114
  1,260
  1,416
  1,580
  1,752
  1,932
  2,121
  2,317
  2,522
  2,736
  2,958
  3,188
  3,428
  3,677
  3,936
  4,206
Interest expense (income), $m
  1
  1
  3
  5
  8
  12
  16
  21
  27
  33
  41
  49
  59
  69
  80
  92
  105
  119
  133
  149
  165
  182
  199
  217
  237
  257
  277
  299
  321
  344
  369
Earnings before tax, $m
  14
  32
  55
  83
  117
  158
  205
  260
  322
  391
  469
  553
  644
  743
  848
  959
  1,077
  1,202
  1,333
  1,470
  1,613
  1,763
  1,918
  2,080
  2,249
  2,424
  2,606
  2,796
  2,992
  3,197
Tax expense, $m
  4
  9
  15
  22
  32
  43
  55
  70
  87
  106
  127
  149
  174
  200
  229
  259
  291
  325
  360
  397
  436
  476
  518
  562
  607
  655
  704
  755
  808
  863
Net income, $m
  10
  23
  40
  61
  85
  115
  150
  190
  235
  286
  343
  404
  470
  542
  619
  700
  786
  877
  973
  1,073
  1,178
  1,287
  1,400
  1,519
  1,642
  1,770
  1,903
  2,041
  2,184
  2,334

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
  228
  316
  428
  566
  734
  933
  1,166
  1,433
  1,737
  2,076
  2,451
  2,862
  3,308
  3,789
  4,303
  4,851
  5,430
  6,041
  6,683
  7,356
  8,059
  8,793
  9,557
  10,353
  11,180
  12,040
  12,934
  13,862
  14,828
  15,831
Adjusted assets (=assets-cash), $m
  228
  316
  428
  566
  734
  933
  1,166
  1,433
  1,737
  2,076
  2,451
  2,862
  3,308
  3,789
  4,303
  4,851
  5,430
  6,041
  6,683
  7,356
  8,059
  8,793
  9,557
  10,353
  11,180
  12,040
  12,934
  13,862
  14,828
  15,831
Revenue / Adjusted assets
  1.254
  1.256
  1.257
  1.258
  1.257
  1.257
  1.257
  1.258
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
  1.257
Average production assets, $m
  55
  77
  104
  137
  178
  226
  283
  348
  421
  504
  595
  694
  803
  919
  1,044
  1,177
  1,317
  1,466
  1,621
  1,785
  1,955
  2,133
  2,319
  2,512
  2,712
  2,921
  3,138
  3,363
  3,597
  3,841
Working capital, $m
  106
  147
  199
  263
  341
  434
  542
  667
  808
  965
  1,140
  1,331
  1,538
  1,762
  2,001
  2,256
  2,525
  2,810
  3,108
  3,421
  3,748
  4,089
  4,445
  4,815
  5,200
  5,600
  6,015
  6,447
  6,896
  7,363
Total debt, $m
  56
  95
  144
  204
  278
  365
  468
  585
  718
  867
  1,032
  1,212
  1,408
  1,619
  1,845
  2,085
  2,340
  2,608
  2,890
  3,185
  3,494
  3,816
  4,151
  4,501
  4,864
  5,241
  5,634
  6,041
  6,465
  6,905
Total liabilities, $m
  100
  139
  188
  249
  322
  410
  512
  629
  762
  911
  1,076
  1,256
  1,452
  1,663
  1,889
  2,129
  2,384
  2,652
  2,934
  3,229
  3,538
  3,860
  4,196
  4,545
  4,908
  5,286
  5,678
  6,086
  6,509
  6,950
Total equity, $m
  128
  177
  240
  318
  412
  524
  654
  804
  974
  1,164
  1,375
  1,605
  1,856
  2,125
  2,414
  2,721
  3,046
  3,389
  3,749
  4,127
  4,521
  4,933
  5,362
  5,808
  6,272
  6,754
  7,256
  7,777
  8,318
  8,881
Total liabilities and equity, $m
  228
  316
  428
  567
  734
  934
  1,166
  1,433
  1,736
  2,075
  2,451
  2,861
  3,308
  3,788
  4,303
  4,850
  5,430
  6,041
  6,683
  7,356
  8,059
  8,793
  9,558
  10,353
  11,180
  12,040
  12,934
  13,863
  14,827
  15,831
Debt-to-equity ratio
  0.440
  0.530
  0.600
  0.640
  0.680
  0.700
  0.710
  0.730
  0.740
  0.740
  0.750
  0.750
  0.760
  0.760
  0.760
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
Adjusted equity ratio
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10
  23
  40
  61
  85
  115
  150
  190
  235
  286
  343
  404
  470
  542
  619
  700
  786
  877
  973
  1,073
  1,178
  1,287
  1,400
  1,519
  1,642
  1,770
  1,903
  2,041
  2,184
  2,334
Depreciation, amort., depletion, $m
  11
  14
  19
  25
  31
  39
  49
  60
  72
  86
  99
  116
  134
  153
  174
  196
  220
  244
  270
  297
  326
  356
  386
  419
  452
  487
  523
  561
  600
  640
Funds from operations, $m
  21
  38
  59
  85
  117
  155
  199
  249
  307
  371
  442
  520
  604
  695
  793
  896
  1,006
  1,122
  1,243
  1,370
  1,503
  1,642
  1,787
  1,937
  2,094
  2,257
  2,426
  2,601
  2,784
  2,974
Change in working capital, $m
  32
  41
  52
  64
  78
  93
  108
  124
  141
  158
  174
  191
  208
  224
  239
  255
  270
  284
  299
  313
  327
  341
  355
  370
  385
  400
  416
  432
  449
  467
Cash from operations, $m
  -10
  -3
  7
  21
  39
  62
  90
  125
  166
  213
  267
  329
  397
  472
  553
  642
  736
  837
  945
  1,058
  1,176
  1,301
  1,431
  1,567
  1,709
  1,857
  2,010
  2,169
  2,335
  2,507
Maintenance CAPEX, $m
  -6
  -9
  -13
  -17
  -23
  -30
  -38
  -47
  -58
  -70
  -84
  -99
  -116
  -134
  -153
  -174
  -196
  -220
  -244
  -270
  -297
  -326
  -356
  -386
  -419
  -452
  -487
  -523
  -561
  -600
New CAPEX, $m
  -16
  -21
  -27
  -34
  -41
  -48
  -56
  -65
  -74
  -82
  -91
  -100
  -108
  -117
  -125
  -133
  -141
  -148
  -156
  -163
  -171
  -178
  -185
  -193
  -201
  -209
  -217
  -225
  -234
  -243
Cash from investing activities, $m
  -22
  -30
  -40
  -51
  -64
  -78
  -94
  -112
  -132
  -152
  -175
  -199
  -224
  -251
  -278
  -307
  -337
  -368
  -400
  -433
  -468
  -504
  -541
  -579
  -620
  -661
  -704
  -748
  -795
  -843
Free cash flow, $m
  -33
  -34
  -33
  -30
  -25
  -16
  -4
  13
  34
  61
  92
  130
  173
  221
  275
  335
  400
  470
  544
  624
  708
  797
  890
  988
  1,090
  1,196
  1,306
  1,421
  1,540
  1,664
Issuance/(repayment) of debt, $m
  30
  39
  49
  61
  74
  87
  102
  117
  133
  149
  165
  180
  196
  211
  226
  240
  254
  268
  282
  295
  309
  322
  336
  349
  363
  378
  392
  408
  424
  440
Issuance/(repurchase) of shares, $m
  28
  26
  23
  17
  9
  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  
  58
  65
  72
  78
  83
  87
  102
  117
  133
  149
  165
  180
  196
  211
  226
  240
  254
  268
  282
  295
  309
  322
  336
  349
  363
  378
  392
  408
  424
  440
Total cash flow (excl. dividends), $m
  24
  31
  39
  48
  57
  71
  98
  130
  167
  210
  257
  310
  369
  432
  501
  575
  654
  738
  826
  919
  1,017
  1,119
  1,226
  1,337
  1,453
  1,573
  1,699
  1,829
  1,964
  2,105
Retained Cash Flow (-), $m
  -38
  -50
  -63
  -78
  -94
  -112
  -131
  -150
  -170
  -190
  -210
  -231
  -250
  -270
  -289
  -307
  -325
  -343
  -360
  -377
  -394
  -412
  -429
  -446
  -464
  -482
  -501
  -521
  -541
  -563
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
  -14
  -18
  -24
  -30
  -37
  -40
  -32
  -20
  -3
  20
  47
  80
  118
  163
  213
  268
  329
  395
  466
  542
  623
  708
  797
  891
  989
  1,091
  1,197
  1,308
  1,423
  1,542
Discount rate, %
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
  -13
  -16
  -19
  -22
  -25
  -25
  -18
  -10
  -1
  7
  15
  22
  28
  32
  35
  35
  34
  32
  29
  26
  22
  18
  15
  11
  8
  6
  4
  3
  2
  1
Current shareholders' claim on cash, %
  83.3
  73.6
  68.0
  65.0
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8
  63.8

Synalloy Corporation is a chemical manufacturing company. The Company operates through two segments: the Metals Segment and the Specialty Chemicals Segment. The Company's Metals Segment comprises three subsidiaries: Synalloy Metals, Inc., which owns Bristol Metals, LLC (BRISMET), located in Bristol, Tennessee; Palmer of Texas Tanks, Inc. (Palmer), located in Andrews, Texas; and Specialty Pipe & Tube, Inc. (Specialty), located in Mineral Ridge, Ohio and Houston, Texas. The Company's Metals Segment manufactures stainless steel, other alloy pipe, storage solutions and separation equipment. The Company's Specialty Chemicals segment consists of the Company's subsidiary, Manufacturers Soap and Chemical Company (MS&C). The Specialty Chemicals Segment manufactures lubricants, surfactants, reaction intermediaries, sulfated fats and oils, and chemical tolling manufacturing resources.

FINANCIAL RATIOS  of  Synalloy Corporation (SYNL)

Valuation Ratios
P/E Ratio -19.2
Price to Sales 1
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 134.4
Price to Free Cash Flow -67.2
Growth Rates
Sales Growth Rate -20.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -72.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 10.1%
Total Debt to Equity 10.1%
Interest Coverage -8
Management Effectiveness
Return On Assets -4.3%
Ret/ On Assets - 3 Yr. Avg. -2.5%
Return On Total Capital -6.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity -7.6%
Return On Equity - 3 Yr. Avg. -4.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 12.2%
Gross Margin - 3 Yr. Avg. 14.3%
EBITDA Margin -1.4%
EBITDA Margin - 3 Yr. Avg. 3.3%
Operating Margin -5.8%
Oper. Margin - 3 Yr. Avg. -0.3%
Pre-Tax Margin -6.5%
Pre-Tax Margin - 3 Yr. Avg. -0.7%
Net Profit Margin -5%
Net Profit Margin - 3 Yr. Avg. -3.1%
Effective Tax Rate 22.2%
Eff/ Tax Rate - 3 Yr. Avg. 8.3%
Payout Ratio 0%

SYNL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SYNL stock intrinsic value calculation we used $201 million for the last fiscal year's total revenue generated by Synalloy Corporation. The default revenue input number comes from 0001 income statement of Synalloy 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 SYNL stock valuation model: a) initial revenue growth rate of 42.5% 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 6.5%, whose default value for SYNL is calculated based on our internal credit rating of Synalloy 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 Synalloy 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 SYNL stock the variable cost ratio is equal to 82.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $34 million in the base year in the intrinsic value calculation for SYNL 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 Synalloy Corporation.

Corporate tax rate of 27% is the nominal tax rate for Synalloy 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 SYNL 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 SYNL are equal to 19.3%.

Life of production assets of 6 years is the average useful life of capital assets used in Synalloy 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 SYNL is equal to 37%. 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 - $89.700426 million for Synalloy 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 8.931 million for Synalloy 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 Synalloy Corporation at the current share price and the inputted number of shares is $0.1 billion.

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