Genuine Parts Co: $GPC cash flow valuation

Current Price: ~ $55/share
Projected Yield: ~ 3.25%

Genuine Parts Corporation is a distributor of automotive (50% of sales) and industrial replacement parts (31%), electrical/electronic products (15%), and office products (4%). The company has around 2,000 locations in the United States, Mexico, and Canada. In the automotive segment, the company operates under the NAPA brand. This segment consists of nearly 60 distribution centers that supply more than 400,000 parts to roughly 5,000 stores, 1,000 of which are company-owned.

I estimated the firm's WACC today at 9.47% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and growth rates:

Year	FCF $Millions
2001	291
2002	208
2003	328
2004	483
2005	355
2006	307
2007	526
2008	425
2009	703
2010	593
TTM	502

Average Annual Growth FCF: ~ 15%

CAGR FCF: ~ 8%

Consensus Forecast Industry 5-Year Growth: ~ 17% per year

Consensus Forecast Company 5-Year Growth: ~ 11% per year

Average FCF over the past three years is $574 million.  Starting at $574 million FCF, assuming the company achieves a 5-year growth rate in FCF of 11% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:

Discounted Cash Flow Valuation

Year	FCF $Millions
0	574
1	637
2	707
3	785
4	871
5	967
Terminal Value	11340

The firm's future cash flows, discounted at a WACC of 9.47%, give a present value for the entire firm (Debt + Equity) of $10,207 million. If the firm's fair value of debt is estimated at $524 million, then the fair value of the firm's equity could be $9683 million.  $9683 million / 157 million outstanding shares is approximately $62 per share and a 20% margin of safety is $49/share.

Sources

Morningstar.com

Yahoo! Finance

Genpt.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

J.M. Smucker Co: $SJM cash flow valuation

Current Price: ~ $76/share
Projected Yield: ~ 2.31%

Smucker is a market leader in coffee, fruit spreads, peanut butter, shortening and oils, ice cream toppings, and health and natural foods and beverages in North America with such brands as Folgers, Smucker's, Jif, Pillsbury, Hungry Jack, and Crisco. The company's brands also include Martha White baking mixes in the United States, as well as Robin Hood flour and baking mixes and Bick's pickles in Canada. International sales account for about 10% of the consolidated total.

I estimated the firm's WACC today at 7.97% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and growth rates:

Year	FCF $Millions
2002	44
2003	116
2004	26
2005	107
2006	135
2007	216
2008	115
2009	336
2010	576
2011	211

Average Annual Growth FCF: ~ 71%

CAGR FCF: ~ 19%

Consensus Forecast Industry 5-Year Growth: ~ 13% per year

Consensus Forecast Company 5-Year Growth: ~ 7% per year

Scenario 1

Average FCF over the past three years is $374 million.  Starting at $374 million FCF, assuming the company achieves a 5-year growth rate in FCF of 7% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:

Discounted Cash Flow Valuation

Year	FCF $Millions
0	374
1	400
2	428
3	458
4	490
5	525
Terminal Value	7042

The firm's future cash flows, discounted at a WACC of 7.97%, give a present value for the entire firm (Debt + Equity) of $6619 million. If the firm's fair value of debt is estimated at $1649 million, then the fair value of the firm's equity could be $4970 million.  $4970 million / 114 million outstanding shares is approximately $44 per share and a 20% margin of safety is $35/share.

Scenario 2

Starting at $374 million FCF, assuming the company achieves a 5-year growth rate in FCF of 7% per year, and then a growth rate in FCF of 3.5% per year forever:

Discounted Cash Flow Valuation

Year	FCF $Millions
0	374
1	400
2	428
3	458
4	490
5	525
Terminal Value	12554

The firm's future cash flows, discounted at a WACC of 7.97%, give a present value for the entire firm (Debt + Equity) of $10,376 million. If the firm's fair value of debt is estimated at $1649 million, then the fair value of the firm's equity could be $8727 million.  $8727 million / 114 million outstanding shares is approximately $77 per share and a 20% margin of safety is $61/share.

Sources

Morningstar.com

Yahoo! Finance

Smuckers.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Xilinx Inc: $XLNX cash flow valuation

Current Price: ~ $36/share
Projected Yield: ~ 2.05%

Founded in 1984, Xilinx is the top designer of programmable logic devices by market share. Its chips are critical in the performance of various devices in the communications, data processing, industrial, consumer, and automobile markets. Xilinx designs and sells chips, but it outsources manufacturing to third-party chip foundries like United Microelectronics.

I estimated the firm's WACC today at 10.28% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and growth rates:

Year	FCF $Millions
2002	186
2003	299
2004	391
2005	214
2006	422
2007	441
2008	535
2009	403
2010	526
2011	659

Average Annual Growth FCF: ~ 22%

CAGR FCF: ~ 15%

Consensus Forecast Industry 5-Year Growth: ~ 16% per year

Consensus Forecast Company 5-Year Growth: ~ 12% per year

Scenario 1

Starting at $659 million FCF, assuming the company achieves a 5-year growth rate in FCF of 12% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:

Discounted Cash Flow Valuation

Year	FCF $Millions
0	659
1	738
2	827
3	926
4	1037
5	1161
Terminal Value	12650

The firm's future cash flows, discounted at a WACC of 10.28%, give a present value for the entire firm (Debt + Equity) of $11,206 million. If the firm's fair value of debt is estimated at $1300 million, then the fair value of the firm's equity could be $9906 million.  $9906 million / 266 million outstanding shares is approximately $37 per share and a 20% margin of safety is $30/share.

Scenario 2

Starting at $659 million FCF, assuming the company achieves a 5-year growth rate in FCF of 12% per year, and then a growth rate in FCF of 2% per year forever:

Discounted Cash Flow Valuation

Year	FCF $Millions
0	659
1	738
2	827
3	926
4	1037
5	1161
Terminal Value	15704

The firm's future cash flows, discounted at a WACC of 10.28%, give a present value for the entire firm (Debt + Equity) of $13,079 million. If the firm's fair value of debt is estimated at $1300 million, then the fair value of the firm's equity could be $11,779 million.  $11,779 million / 266 million outstanding shares is approximately $44 per share and a 20% margin of safety is $35/share.

Sources

Morningstar.com

Yahoo! Finance

Xilinx.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.