Research report: Ostrell Industries
This is a learning exercise on a fictional company. It gives no advice to buy or sell any security.
1. Company and industry summary
Ostrell Industries, Industrials. A fictional maker of pumps, valves and flow controls for water utilities and industrial plants. It is mature and steady, and it has raised its dividend every year.
- Demand follows water infrastructure budgets and plant maintenance, so it is steadier than most industrial markets.
- Replacement parts and service give recurring revenue from equipment already installed.
- Utilities buy on reliability and certification, which limits new entrants, but large buyers press on price.
- Steel and energy are the main input costs; contracts pass on only part of a rise.
- Latest EPS
- $2.61
- Latest dividend per share
- $2.05
- Book value per share
- $15.41
- Return on equity
- 17.0%
- Share price
- $44.50
Not written yet.
2. Key assumptions
Base scenario. Growth holds near its five-year pace and margins stay where they are.
| Assumption | In this case | Company's figure | Reason |
|---|---|---|---|
| Scenario | Base | Base | Unchanged. |
| Required return | 8% | 8% | Unchanged. |
| Terminal growth | 3.5% | 3.5% | Unchanged. |
| Growth adjustment | 0% | 0% | Unchanged. |
| Margin adjustment | 0% | 0% | Unchanged. |
| Fade years | 0 years | 0 years | Unchanged. |
3. Valuation summary
| Model | This scenario | Across scenarios |
|---|---|---|
| FCFE | $47.33 | $34.43 to $57.42 |
| Dividend model, all FCFE paid out | $47.33 | $34.43 to $57.42 |
| Residual income | $47.33 | $34.43 to $57.42 |
| FCFF, WACC year by year | $47.33 | $34.43 to $57.42 |
| FCFF, one constant WACC | $47.87 | $33.11 to $59.99 |
| Gordon on the actual dividend | $47.15 | $47.15 to $47.15 |
- Low value
- Not set
- Central value
- Not set
- High value
- Not set
Not written yet.
4. Key risks
Not written yet.
5. Conclusion
Finish your range to compare it with the price.
Not written yet.