Intrinsic value of Gentherm Inc - THRM

Previous Close

$38.60

  Intrinsic Value

$26.22

stock screener

  Rating & Target

sell

-32%

Previous close

$38.60

 
Intrinsic value

$26.22

 
Up/down potential

-32%

 
Rating

sell

We calculate the intrinsic value of THRM 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 1.3

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,059
  1,083
  1,111
  1,142
  1,177
  1,215
  1,256
  1,301
  1,349
  1,401
  1,456
  1,516
  1,578
  1,645
  1,716
  1,792
  1,871
  1,955
  2,044
  2,138
  2,237
  2,342
  2,452
  2,568
  2,690
  2,819
  2,955
  3,097
  3,247
  3,405
Variable operating expenses, $m
  955
  976
  1,001
  1,029
  1,059
  1,093
  1,129
  1,169
  1,212
  1,258
  1,290
  1,342
  1,398
  1,457
  1,520
  1,586
  1,657
  1,731
  1,810
  1,893
  1,981
  2,074
  2,171
  2,274
  2,382
  2,496
  2,616
  2,743
  2,875
  3,015
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
  955
  976
  1,001
  1,029
  1,059
  1,093
  1,129
  1,169
  1,212
  1,258
  1,290
  1,342
  1,398
  1,457
  1,520
  1,586
  1,657
  1,731
  1,810
  1,893
  1,981
  2,074
  2,171
  2,274
  2,382
  2,496
  2,616
  2,743
  2,875
  3,015
Operating income, $m
  104
  107
  110
  114
  118
  122
  127
  132
  137
  143
  167
  173
  181
  188
  196
  205
  214
  224
  234
  245
  256
  268
  281
  294
  308
  323
  338
  355
  372
  390
EBITDA, $m
  162
  166
  170
  175
  180
  186
  192
  199
  206
  214
  223
  232
  242
  252
  263
  274
  286
  299
  313
  327
  342
  358
  375
  393
  412
  431
  452
  474
  497
  521
Interest expense (income), $m
  3
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  38
  40
  42
  45
Earnings before tax, $m
  97
  99
  102
  105
  108
  112
  116
  121
  125
  130
  153
  159
  165
  172
  179
  186
  194
  202
  211
  220
  230
  240
  251
  263
  275
  287
  301
  315
  329
  345
Tax expense, $m
  26
  27
  27
  28
  29
  30
  31
  33
  34
  35
  41
  43
  45
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
Net income, $m
  70
  72
  74
  77
  79
  82
  85
  88
  92
  95
  112
  116
  121
  125
  130
  136
  142
  148
  154
  161
  168
  175
  183
  192
  201
  210
  219
  230
  241
  252

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
  819
  838
  859
  883
  910
  940
  972
  1,006
  1,043
  1,084
  1,126
  1,172
  1,221
  1,272
  1,327
  1,386
  1,447
  1,512
  1,581
  1,654
  1,730
  1,811
  1,896
  1,986
  2,081
  2,180
  2,285
  2,395
  2,511
  2,633
Adjusted assets (=assets-cash), $m
  819
  838
  859
  883
  910
  940
  972
  1,006
  1,043
  1,084
  1,126
  1,172
  1,221
  1,272
  1,327
  1,386
  1,447
  1,512
  1,581
  1,654
  1,730
  1,811
  1,896
  1,986
  2,081
  2,180
  2,285
  2,395
  2,511
  2,633
Revenue / Adjusted assets
  1.293
  1.292
  1.293
  1.293
  1.293
  1.293
  1.292
  1.293
  1.293
  1.292
  1.293
  1.294
  1.292
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
  1.293
Average production assets, $m
  257
  263
  270
  278
  286
  295
  305
  316
  328
  340
  354
  368
  384
  400
  417
  435
  455
  475
  497
  520
  544
  569
  596
  624
  654
  685
  718
  753
  789
  827
Working capital, $m
  236
  242
  248
  255
  262
  271
  280
  290
  301
  312
  325
  338
  352
  367
  383
  400
  417
  436
  456
  477
  499
  522
  547
  573
  600
  629
  659
  691
  724
  759
Total debt, $m
  147
  154
  163
  173
  183
  195
  208
  222
  237
  253
  270
  289
  309
  329
  351
  375
  400
  426
  454
  483
  514
  546
  581
  617
  655
  695
  737
  782
  829
  878
Total liabilities, $m
  330
  338
  346
  356
  367
  379
  392
  405
  421
  437
  454
  472
  492
  513
  535
  558
  583
  609
  637
  666
  697
  730
  764
  800
  839
  879
  921
  965
  1,012
  1,061
Total equity, $m
  489
  500
  513
  527
  543
  561
  580
  601
  623
  647
  672
  700
  729
  760
  792
  827
  864
  903
  944
  987
  1,033
  1,081
  1,132
  1,186
  1,242
  1,302
  1,364
  1,430
  1,499
  1,572
Total liabilities and equity, $m
  819
  838
  859
  883
  910
  940
  972
  1,006
  1,044
  1,084
  1,126
  1,172
  1,221
  1,273
  1,327
  1,385
  1,447
  1,512
  1,581
  1,653
  1,730
  1,811
  1,896
  1,986
  2,081
  2,181
  2,285
  2,395
  2,511
  2,633
Debt-to-equity ratio
  0.300
  0.310
  0.320
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.550
  0.560
Adjusted equity ratio
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  70
  72
  74
  77
  79
  82
  85
  88
  92
  95
  112
  116
  121
  125
  130
  136
  142
  148
  154
  161
  168
  175
  183
  192
  201
  210
  219
  230
  241
  252
Depreciation, amort., depletion, $m
  58
  59
  60
  61
  62
  64
  66
  67
  69
  71
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  114
  119
  125
  131
Funds from operations, $m
  128
  131
  134
  138
  142
  146
  150
  155
  161
  166
  168
  174
  181
  189
  197
  205
  214
  223
  233
  243
  254
  266
  278
  291
  304
  318
  333
  349
  366
  383
Change in working capital, $m
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
  35
Cash from operations, $m
  124
  126
  128
  131
  134
  137
  141
  145
  150
  155
  156
  161
  167
  174
  181
  188
  196
  204
  213
  222
  232
  242
  253
  265
  277
  290
  303
  317
  332
  348
Maintenance CAPEX, $m
  -40
  -41
  -42
  -43
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -114
  -119
  -125
New CAPEX, $m
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
Cash from investing activities, $m
  -45
  -47
  -49
  -51
  -52
  -54
  -57
  -59
  -62
  -65
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -102
  -106
  -111
  -117
  -123
  -129
  -135
  -142
  -149
  -155
  -163
Free cash flow, $m
  79
  79
  79
  80
  81
  83
  84
  86
  88
  90
  88
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  131
  136
  142
  148
  155
  162
  169
  176
  184
Issuance/(repayment) of debt, $m
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
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
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
Total cash flow (excl. dividends), $m
  85
  87
  88
  90
  92
  95
  97
  100
  103
  106
  105
  109
  113
  118
  122
  127
  132
  138
  144
  150
  156
  163
  171
  178
  186
  195
  204
  213
  223
  234
Retained Cash Flow (-), $m
  -9
  -11
  -13
  -14
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -56
  -59
  -63
  -66
  -69
  -73
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
  76
  75
  75
  76
  76
  77
  78
  79
  81
  82
  80
  82
  84
  87
  89
  92
  96
  99
  103
  107
  111
  115
  120
  125
  130
  135
  141
  147
  154
  161
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
  73
  69
  66
  62
  59
  56
  53
  50
  46
  43
  38
  35
  32
  29
  26
  23
  21
  18
  16
  14
  11
  10
  8
  6
  5
  4
  3
  2
  2
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Gentherm Incorporated (Gentherm) is a global technology company engaged in the design, development, and manufacturing of thermal management technologies. The Company has two segments: Automotive and Industrial. Its products provide solutions for automotive passenger comfort and convenience, battery thermal management, remote power generation, patient temperature management, environmental product testing and other consumer and industrial temperature control needs. Its automotive products can be found on the vehicles of all major automotive manufacturers operating in North America, Europe and Asia. The Automotive segment comprises the results from its global automotive businesses and individual convenience products. The Industrial segment represents the combined results from its remote power generation systems business, patient temperature management systems business, environmental testing equipment and services business, and advanced research and product development division.

FINANCIAL RATIOS  of  Gentherm Inc (THRM)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 1.5
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 13.1
Price to Free Cash Flow 33.6
Growth Rates
Sales Growth Rate 7.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate 12.9%
Financial Strength
Quick Ratio 89
Current Ratio 0
LT Debt to Equity 37%
Total Debt to Equity 37.4%
Interest Coverage 38
Management Effectiveness
Return On Assets 10.6%
Ret/ On Assets - 3 Yr. Avg. 13.6%
Return On Total Capital 13.8%
Ret/ On T. Cap. - 3 Yr. Avg. 18.6%
Return On Equity 18.2%
Return On Equity - 3 Yr. Avg. 24.3%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 32.1%
Gross Margin - 3 Yr. Avg. 31.4%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 11.7%
Oper. Margin - 3 Yr. Avg. 13%
Pre-Tax Margin 12.1%
Pre-Tax Margin - 3 Yr. Avg. 12.9%
Net Profit Margin 8.4%
Net Profit Margin - 3 Yr. Avg. 9.4%
Effective Tax Rate 30.6%
Eff/ Tax Rate - 3 Yr. Avg. 27.5%
Payout Ratio 0%

THRM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the THRM stock intrinsic value calculation we used $1038 million for the last fiscal year's total revenue generated by Gentherm Inc. The default revenue input number comes from 0001 income statement of Gentherm 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 THRM stock valuation model: a) initial revenue growth rate of 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 THRM is calculated based on our internal credit rating of Gentherm 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 Gentherm 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 THRM stock the variable cost ratio is equal to 90.2%.

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 THRM 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 Gentherm Inc.

Corporate tax rate of 27% is the nominal tax rate for Gentherm 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 THRM 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 THRM are equal to 24.3%.

Life of production assets of 6.3 years is the average useful life of capital assets used in Gentherm 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 THRM is equal to 22.3%. 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 - $479.699 million for Gentherm 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 33.693 million for Gentherm 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 Gentherm Inc at the current share price and the inputted number of shares is $1.3 billion.

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