Is Albany International Corp. (NYSE:AIN) Worth US$83.6 Based On Its Intrinsic Value?

Simply Wall St.02:02

Key Insights The projected fair value for Albany International is US$63.39 based on 2 Stage Free Cash Flow to Equity Albany International is estimated to be 32% overvalued based on current share ...

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(NYSE:AIN) Worth US$83.6 Based On Its Intrinsic Value?","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n The projected fair value for Albany International is US$63.39 based on 2 Stage Free Cash Flow to Equity \n Albany International is estimated to be 32% overvalued based on current share ...</p>\n\n<a href=\"https://finance.yahoo.com/news/albany-international-corp-nyse-ain-180244369.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Albany International Corp. (NYSE:AIN) Worth US$83.6 Based On Its Intrinsic Value?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Albany International Corp. (NYSE:AIN) Worth US$83.6 Based On Its Intrinsic Value?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 02:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/albany-international-corp-nyse-ain-180244369.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n The projected fair value for Albany International is US$63.39 based on 2 Stage Free Cash Flow to Equity \n Albany International is estimated to be 32% overvalued based on current share ...</p>\n\n<a href=\"https://finance.yahoo.com/news/albany-international-corp-nyse-ain-180244369.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4100","symbol_name":"有线和卫星","start_time":0,"source_url":"https://finance.yahoo.com/news/albany-international-corp-nyse-ain-180244369.html","article_id":"2485445665","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/9jcUzKYfUwYqkVFuGwhkDQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/4020998fe5d069537fb917fd739e4047"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485445665","pubTimestamp":1732212164,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"The projected fair value for Albany International is US$63.39 based on 2 Stage Free Cash Flow to Equity. Albany International is estimated to be 32% overvalued based on current share price of US$83.56. Analyst price target for AIN is US$85.00, which is 34% above our fair value estimate. Today we will run through one way of estimating the intrinsic value of Albany International Corp.  by taking the expected future cash flows and discounting them to today's value. The Discounted Cash Flow  model is the tool we will apply to do this. Believe it or not, it's not too difficult to follow, as you'll see from our example!Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.Check out our latest analysis for Albany International. Terminal Value = FCF2034 ×  ÷  = US$104m×","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4100":"有线和卫星","NYSE":"纽交所","BK4161":"工业机械","FCF":"第一联邦金融","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","AIN":"奥尔巴尼国际股份有限公司","TV":"墨西哥电视","BK4211":"区域性银行"},"translate_title":"奥尔巴尼国际公司（纽约证券交易所股票代码：AIN）的内在价值是否为83.6美元？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AIN":1,"DCF":1,"FCF":1,"NYSE":1,"TV":1},"content_text":"Key Insights\n\n The projected fair value for Albany International is US$63.39 based on 2 Stage Free Cash Flow to Equity \n Albany International is estimated to be 32% overvalued based on current share price of US$83.56 \n  Analyst price target for AIN is US$85.00, which is 34% above our fair value estimate \n\n Today we will run through one way of estimating the intrinsic value of Albany International Corp. (NYSE:AIN) by taking the expected future cash flows and discounting them to today's value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Believe it or not, it's not too difficult to follow, as you'll see from our example! \n Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. \n Check out our latest analysis for Albany International \n Step By Step Through The Calculation \n We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: \n 10-year free cash flow (FCF) estimate \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF ($, Millions) \nUS$131.5m\nUS$116.0m\nUS$107.5m\nUS$102.9m\nUS$100.6m\nUS$99.8m\nUS$100.0m\nUS$101.0m\nUS$102.5m\nUS$104.3m\n\n\nGrowth Rate Estimate Source\nAnalyst x2\nAnalyst x1\nEst @ -7.30%\nEst @ -4.32%\nEst @ -2.24%\nEst @ -0.78%\nEst @ 0.24%\nEst @ 0.95%\nEst @ 1.45%\nEst @ 1.80%\n\n\n Present Value ($, Millions) Discounted @ 7.0% \nUS$123\nUS$101\nUS$87.7\nUS$78.4\nUS$71.6\nUS$66.4\nUS$62.1\nUS$58.6\nUS$55.5\nUS$52.8\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$757m\n The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.6%. We discount the terminal cash flows to today's value at a cost of equity of 7.0%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$104m× (1 + 2.6%) ÷ (7.0%– 2.6%) = US$2.4b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$2.4b÷ ( 1 + 7.0%)10= US$1.2b\n The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$2.0b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$83.6, the company appears potentially overvalued at the time of writing. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. \n\n\n\n  NYSE:AIN Discounted Cash Flow November 21st 2024\n \n\n The Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual 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 Albany International 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 7.0%, which is based on a levered beta of 1.073. 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. \nSWOT Analysis for Albany International\n\n\nStrength\n\nEarnings growth over the past year exceeded its 5-year average.\n\n\nDebt is not viewed as a risk.\n\n\nDividends are covered by earnings and cash flows.\n\n\nDividend information for AIN.\n\n\n\nWeakness\n\nEarnings growth over the past year underperformed the Machinery industry.\n\n\nDividend is low compared to the top 25% of dividend payers in the Machinery market.\n\n\nExpensive based on P/E ratio and estimated fair value.\n\n\n\nOpportunity\n\nAnnual earnings are forecast to grow faster than the American market.\n\n\n Significant insider buying over the past 3 months.\n\n\n\nThreat\n\nAnnual revenue is forecast to grow slower than the American market.\n\n\nWhat else are analysts forecasting for AIN?\n\n\n\n Next Steps: \n Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price exceeding the intrinsic value? For Albany International, we've compiled three further factors you should explore: \n\nFinancial Health: Does AIN have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.\n Future Earnings: How does AIN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. \n Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! \n\n PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here.\nHave 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. 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