A Look At The Fair Value Of Kaiser Aluminum Corporation (NASDAQ:KALU)
A Look At The Fair Value Of Kaiser Aluminum Corporation (NASDAQ:KALU)
Key Insights
- Using the 2 Stage Free Cash Flow to Equity, Kaiser Aluminum fair value estimate is US$89.69
- Current share price of US$72.20 suggests Kaiser Aluminum is potentially trading close to its fair value
Today we will run through one way of estimating the intrinsic value of Kaiser Aluminum Corporation (NASDAQ:KALU) by estimating the company's future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.
The Calculation
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
10-year free cash flow (FCF) forecast
2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | |
Levered FCF ($, Millions) | US$107.0m | US$105.8m | US$105.7m | US$106.5m | US$107.8m | US$109.6m | US$111.6m | US$114.0m | US$116.5m | US$119.1m |
Growth Rate Estimate Source | Analyst x2 | Est @ -1.14% | Est @ -0.05% | Est @ 0.72% | Est @ 1.25% | Est @ 1.63% | Est @ 1.89% | Est @ 2.07% | Est @ 2.20% | Est @ 2.29% |
Present Value ($, Millions) Discounted @ 9.3% | US$97.9 | US$88.5 | US$81.0 | US$74.6 | US$69.1 | US$64.3 | US$59.9 | US$55.9 | US$52.3 | US$48.9 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$692m
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.5%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 9.3%.
Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$119m× (1 + 2.5%) ÷ (9.3%– 2.5%) = US$1.8b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$1.8b÷ ( 1 + 9.3%)10= US$737m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$1.4b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of US$72.2, the company appears about fair value at a 20% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Important Assumptions
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Kaiser Aluminum as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9.3%, which is based on a levered beta of 1.652. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Kaiser Aluminum
- Earnings growth over the past year exceeded the industry.
- Debt is well covered by cash flow.
- Balance sheet summary for KALU.
- Interest payments on debt are not well covered.
- Dividend is low compared to the top 25% of dividend payers in the Metals and Mining market.
- Annual earnings are forecast to grow faster than the American market.
- Good value based on P/E ratio and estimated fair value.
- Significant insider buying over the past 3 months.
- Dividends are not covered by earnings.
- See KALU's dividend history.
Moving On:
Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Kaiser Aluminum, there are three important aspects you should consider:
- Risks: Be aware that Kaiser Aluminum is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for KALU's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
主要見解
- 使用2階段自由現金流對凱撒鋁業進行公允價值估算,估值爲89.69美元。
- 當前股價爲72.20美元,表明凱撒鋁業的交易接近其公允價值。
今天我們將通過一種方法來估算凱撒鋁業公司(NASDAQ:KALU)的內在價值,即估算公司未來的現金流,並將其折現到現值。折現現金流(DCF)模型是我們將應用的工具。在您認爲您無法理解它之前,請繼續閱讀!實際上,這比您想象的要簡單得多。
我們通常認爲,一家公司的價值是其未來所有現金流的現值之和。然而,DCF僅是衆多估值指標之一,它並非沒有缺陷。對於那些熱衷於股權分析的學習者來說,在這裏,Simply Wall St分析模型可能值得一提。
計算方法
我們正在使用2階段增長模型,這意味着我們考慮公司2個增長階段。在初始階段,公司可能具有較高的增長率,第二階段通常被認爲具有穩定的增長率。在第一階段,我們需要估計未來10年內的業務現金流。在可能的情況下,我們使用分析師的預測,但當這些不可得時,我們會推斷出上一個自由現金流(FCF)的近似值。我們假設自由現金流縮減的公司將會減緩縮減速度,自由現金流增長的公司將會看到它們的增長率在此期間減緩。我們這樣做是爲了反映早期年份的增長速度比後期年份要慢。
DCF的核心概念是未來的每一美元都比現在的每一美元更不值錢,因此我們將這些未來的現金流貼現到當今的價值:
10年自由現金流(FCF)預測
2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | |
槓桿自由現金流 ($, 百萬) | 1.07億美元 | 1.058億美元 | US$52.3 | 1.065億美元。 | 1.078億美元 | 美元109.6m | 1.116億美元 | 1724329251608 | Important Assumptions | 1.191億美元 |
增長率估計來源 | 分析師x2 | 以-1.14%的速度估計 | 估計 @ -0.05% | 預計上漲0.72% | 預計 @ 1.25% | 估計爲1.63% | Est @ 1.89% | 預計@ 2.07% | 以2.20%的速度爲估算值 | 以2.29%的速度爲估算值 |
以9.3%的折現率折現的現值(以百萬美元爲單位) | 97.9美元 | 8100萬美元 | 7460萬美元。 | 599萬美元 | 93.8美元 | 5230 | 48.9美元 |
("Est" = Simply Wall St 估計的自由現金流增長率)
重要假設
- 過去一年的收益增長超過了行業板塊。
- 債務由現金流很好覆蓋。
- 債務利息支付能力不太好。
- 與金屬和礦業市場前25%的股息支付者相比,股息較低。
- 預計年度盈利增長將快於美國市場。
- 基於市盈率和預估公平價值,出現良好的價值。
- 過去3個月內有重要內部人士買進。
- 比起收益,股息不受支持。
接下來:
- 其他優秀企業:低負債,高股本回報率和良好的過去業績是構建強大企業基礎的基礎。爲什麼不探索我們交互式的股票列表,其中包括具有堅實業務基礎的其他公司?
PS. Simply Wall St每天都會更新其對每隻美國股票的折現現金流計算,因此,如果你想找到其他股票的內在價值,只需在此搜索即可。
對本文有任何反饋?對內容有任何疑慮?請直接與我們聯繫。或者,發送電子郵件至editorial-team@simplywallst.com。
這篇文章是Simply Wall St的一般性文章。我們根據歷史數據和分析師預測提供評論,只使用公正的方法論,我們的文章並不意味着提供任何金融建議。文章不構成買賣任何股票的建議,也不考慮您的目標或您的財務狀況。我們的目標是帶給您基本數據驅動的長期關注分析。請注意,我們的分析可能不考慮最新的價格敏感公司公告或定性材料。Simply Wall St沒有任何股票頭寸。
moomoo是Moomoo Technologies Inc.公司提供的金融資訊和交易應用程式。
在美國,moomoo上的投資產品和服務由Moomoo Financial Inc.提供,一家受美國證券交易委員會(SEC)監管的持牌主體。 Moomoo Financial Inc.是金融業監管局(FINRA)和證券投資者保護公司(SIPC)的成員。
在新加坡,moomoo上的投資產品和服務是通過Moomoo Financial Singapore Pte. Ltd.提供,該公司受新加坡金融管理局(MAS)監管(牌照號碼︰CMS101000) ,持有資本市場服務牌照 (CMS) ,持有財務顧問豁免(Exempt Financial Adviser)資質。本內容未經新加坡金融管理局的審查。
在澳大利亞,moomoo上的金融產品和服務是通過Moomoo Securities Australia Limited提供,該公司是受澳大利亞證券和投資委員會(ASIC)監管的澳大利亞金融服務許可機構(AFSL No. 224663)。請閱讀並理解我們的《金融服務指南》、《條款與條件》、《隱私政策》和其他披露文件,這些文件可在我們的網站 https://www.moomoo.com/au中獲取。
在加拿大,透過moomoo應用程式提供的僅限訂單執行的券商服務由Moomoo Financial Canada Inc.提供,並受加拿大投資監管機構(CIRO)監管。
在馬來西亞,moomoo上的投資產品和服務是透過Moomoo Securities Malaysia Sdn. Bhd. 提供,該公司受馬來西亞證券監督委員會(SC)監管(牌照號碼︰eCMSL/A0397/2024) ,持有資本市場服務牌照 (CMSL) 。本內容未經馬來西亞證券監督委員會的審查。
Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd.,Moomoo Securities Australia Limited, Moomoo Financial Canada Inc和Moomoo Securities Malaysia Sdn. Bhd., 是關聯公司。
風險及免責聲明
moomoo是Moomoo Technologies Inc.公司提供的金融資訊和交易應用程式。
在美國,moomoo上的投資產品和服務由Moomoo Financial Inc.提供,一家受美國證券交易委員會(SEC)監管的持牌主體。 Moomoo Financial Inc.是金融業監管局(FINRA)和證券投資者保護公司(SIPC)的成員。
在新加坡,moomoo上的投資產品和服務是通過Moomoo Financial Singapore Pte. Ltd.提供,該公司受新加坡金融管理局(MAS)監管(牌照號碼︰CMS101000) ,持有資本市場服務牌照 (CMS) ,持有財務顧問豁免(Exempt Financial Adviser)資質。本內容未經新加坡金融管理局的審查。
在澳大利亞,moomoo上的金融產品和服務是通過Moomoo Securities Australia Limited提供,該公司是受澳大利亞證券和投資委員會(ASIC)監管的澳大利亞金融服務許可機構(AFSL No. 224663)。請閱讀並理解我們的《金融服務指南》、《條款與條件》、《隱私政策》和其他披露文件,這些文件可在我們的網站 https://www.moomoo.com/au中獲取。
在加拿大,透過moomoo應用程式提供的僅限訂單執行的券商服務由Moomoo Financial Canada Inc.提供,並受加拿大投資監管機構(CIRO)監管。
在馬來西亞,moomoo上的投資產品和服務是透過Moomoo Securities Malaysia Sdn. Bhd. 提供,該公司受馬來西亞證券監督委員會(SC)監管(牌照號碼︰eCMSL/A0397/2024) ,持有資本市場服務牌照 (CMSL) 。本內容未經馬來西亞證券監督委員會的審查。
Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd.,Moomoo Securities Australia Limited, Moomoo Financial Canada Inc和Moomoo Securities Malaysia Sdn. Bhd., 是關聯公司。
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