Esterline Technologies (ESL:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Esterline Technologies(ESL:NYS)

Industrials:Aerospace & Defense

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$117.48 (USD) 21/11/2018

Weighted Valuation
$107.46 (USD)

Overall Rating
Overvalued by 8.5%

Valuation Models Analyst Consensus: $114.50 (USD)
(in order of importance) Discounted Cash Flow: $103.00 (USD)
Adjusted Book Value: $95.25 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (ESL:NYS USD)

Price 117.48
Range 117.11 – 117.50
52 week 68.45 – 117.77
Open 117.40
Vol / Avg. 433053/574089
Mkt cap 3.46B
P/E 63.16
Div/yield 0.00/0.00
EPS 2.34
Shares 29.5M
Beta 0.66

Company Description

Esterline Technologies Corp is a specialized manufacturing company serving aerospace and defense markets. It designs, produces, and markets engineered products and systems. The company operates in three technology segments: Avionics & Controls, Sensors & Systems, and Advanced Materials. Its products have been implemented into military and commercial aircraft and land-based platforms. Additional sales result from aftermarket repairs and spare parts for existing systems. Esterline has worldwide sales and distribution channels and will try to strengthen customer relationships by targeting specific segments. Approximately half of its revenue is derived from the United States. The remainder of sales come from Canada, France, United Kingdom, and other smaller regions.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ESL:NYS

Using a discounted cash flow model we generated an intrinsic value of $103.00 (USD) for ESL:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ESL:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $103.00 1% 5% 1% 5%
WACC (or Ke) 7.21 $136.75 $80.50
Terminal Growth Rate 2.20 $82.44 $133.81
Tax Rate 0.28 $113.64 $92.35
Cash Flow 371,580,840 $94.56 $111.43
Capital Expenditures -45,086,600 $102.01 $103.98
Long Term Debt 875,093,000 $104.48 $101.51

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $80.70 (USD) for ESL:NYS. We also generated a valuation of $151.53 (USD) using other metrics and comparables.
The comparable companies were AAR (AIR:NYS), Aerojet Rocketdyne Hldgs (AJRD:NYS), Astronics (ATRO:NAS), AeroVironment (AVAV:NAS) and National Presto Indus (NPK:NYS).

Company ESL:NYS End Date Value
Earnings/Share $2.34 (USD)
Book Value/Share $59.92 (USD)
Sales/Share $67.97 (USD)
Cash Flow/Share $5.82 (USD)
EBITDA/Share $9.79 (USD)
Price Based on Comps Adjustment Factor (%)
$85.93 (USD) -36.2
$231.09 (USD) -74.6
$176.79 (USD) -9.1
$114.81 (USD) -84.9
$162.26 (USD) -22.3
ESL:NYS Ratios Used Average Values AIR:NYS AJRD:NYS ATRO:NAS AVAV:NAS NPK:NYS
63.10 PE Ratio 36.72 20.42 45.87 53.23 45.21 18.89
1.96 PB Ratio 3.86 1.79 6.98 3.08 4.93 2.50
1.73 PS Ratio 2.60 0.91 1.34 1.35 6.86 2.55
20.15 PCF Ratio 23.59 28.56 9.35 23.21 44.10 12.75
13.83 EV to EBITDA 16.57 14.06 9.87 17.28 30.92 10.70

Multiples

Using a multiples approach we generated a valuation of  $81.78 (USD) for ESL:NYS

Company ESL:NYS End Date Value
Earnings/Share $2.34 (USD)
Book Value/Share $59.92 (USD)
Sales/Share $67.97 (USD)
Cash Flow/Share $5.82 (USD)
EBITDA/Share $9.79 (USD)
Price Based on Comps Adjustment Factor
$45.89 (USD) 0
$93.32 (USD) 0
$86.39 (USD) 0
$82.49 (USD) 0
$100.81 (USD) 0
Ratios Ratio Average
PE Ratio 19.61
PB Ratio 1.56
PS Ratio 1.27
PCF Ratio 14.16
EV to EBITDA 10.29

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ESL:NYS for the last 10 years was  1.53

We ran the Adjusted Book Value for  ESL:NYS and generated a book value of  $62.20 (USD)
By multiplying these we get an adjusted valuation of  $95.25 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for ESL:NYS. The 4 analysts have a concensus valuation for ESL:NYS for 2019 of $114.50 (USD).

ESL:NYS Esterline Technologies

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 4 0 3.0000 Hold 2018-11-21

Current Price: 117.48 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 4.52 5.05
# EPS Analysts 4 2
Mean Revenue 2,071.90 2,131.20
# Revenue Analysts 4 2
Mean Target Price 114.50
Mean Cash Flow 7.61 7.48
Mean EBITDA 313.40 333.40
Mean Net Income 132.90 146.40
Mean Debt Outstanding 279.60 50.30
Mean Tax Rate 25.33 25.00
Mean Growth Rate -2.10
Mean Capital Expenditure 65.70 70.30

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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