Discounted Cash Flow Calculation for DB:ZS2 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:ZS2 DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
TimkenSteel's share price is below the future cash flow value, and at a moderate discount (> 20%).
TimkenSteel's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
TimkenSteel's earnings available for a low price, and how does
this compare to other companies in the same industry?
TimkenSteel's earnings are expected to grow significantly at over 20% yearly.
TimkenSteel's revenue is expected to grow by 4% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
TimkenSteel's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
Metals and Mining
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Ward J. Timken, Jr., also known as Tim, has been the Chairman, Chief Executive Officer and President of TimkenSteel Corporation since June 2014. Mr. Timken served as an Executive Vice President and President- Steel Group of Timken Co., from 2004 to 2005. He served as a Corporate Vice President, Office of the Chairman at Timken Co. from 2000 to 2003. He served as Vice President of Latin America, Business Development Manager of Europe, Africa and West Asia. Mr. Timken has demonstrated exceptional leadership in key management roles throughout Timken Co, including major corporate initiatives such as directing the integration of the former Torrington Company. He is a key asset to Timken Co and its shareholders as continue to grow and build an even stronger company around the world. He started with Timken Co, in 1992 as Executive Assistant in Timken Co, Steel Group. His other positions in the Steel Group include Senior Analyst, Principal Strategic Management Analyst and Market Manager of Distribution. In the bearing business, he has served as Marketing Manager of original equipment distribution - Europe, Africa and West Asia and as Vice President - Latin America. He served as the Chairman of The Timken Company at Timken India Ltd. Mr. Timken served as the Chairman of Timken Co. since August 15, 2005 until May 13, 2013 and its Director since 2002 until May 13, 2013. He served as the Chairman of the Board of Team Neo from 2011 to July 2013. He served as Vice Chairman of Timken Co. since April 19, 2005. He serves as Vice Chairman of the American Iron & Steel Institute and served as its Chairman. Mr. Timken serves as Director of Team NEO. He has been a Director of The Timken Company since April 2002 and Pella Corporation since 2008. An active Member of civic and business organizations, he serves on several boards, including the Ohio Steel Council, the Ohio Business Development Council, the Stark Development Board, the Henry & Louise Timken Foundation, the Timken Foundation and the Timken Charitable Trust. He serves on the executive committee of the National Association of Manufacturers and the board of the American Iron and Steel Institute. Mr. Timken holds a Bachelor's degree in Marketing from Georgetown University and an MBA in Marketing from the University of Virginia.
Tim's compensation has been consistent with company performance over the past year.
Tim's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the TimkenSteel management team is about average.
Executive VP & CFO
Executive Vice President of Commercial Operations
Executive Vice President of Manufacturing
Vice President of Technology & Quality
Senior Manager of Investor Relations
Executive Vice President of Strategy and Corporate Development
Elaine M. Reolfi
Executive Vice President of HR & Corporate Relations
Vice President of Audit & Transactional Services
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the TimkenSteel board of directors is about average.
TimkenSteel Corporation manufactures and sells alloy steel, and carbon and micro-alloy steel products worldwide. The company offers carbon, micro-alloy, and alloy steel ingots, bars, tubes, and billets; and precision steel components, as well as supplies machining and thermal treatment services. It also manages raw material recycling programs. The company’s products are used in oil country drill pipes; bits and collars; gears; hubs; axles; crankshafts and connecting rods; bearing races and rolling elements; bushings; fuel injectors; wind energy shafts; anti-friction bearings; and other applications. It sells its products and services to the oil and gas, oil country tubular goods, automotive, industrial equipment, mining, construction, rail, aerospace and defense, heavy truck, agriculture, and power generation sectors. TimkenSteel Corporation was founded in 1899 and is headquartered in Canton, Ohio.
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