TRW  Trw Automotive Holdings Corpor...

Exchange

NYSE

Sector

Capital Goods

Industry

Auto Parts:O.E.M.

Market Cap.

12.23B

Vuru Grade

45.56/100

Current Price

$105.00
+0 (+0%)

Growth Price

$49.88
Overvalued by 52.49%

Stability Price

$134.60
Undervalued by 28.19%

Company Metrics

  • P/E 26.58
  • P/S 0.71
  • P/B 2.98
  • EPS 4
  • Cash ROIC 8.74%
  • Cash Ratio 0.24
  • Dividend 0 / N/A %
  • Avg. Vol. 1.03M
  • Shares 116.48M
  • Market Cap. 12.23B

Company Description

TRW Automotive Holdings Corp., together with its subsidiaries, designs, manufactures, and sells automotive systems, modules, and components for automotive original equipment manufacturers and related after-markets. It operates in four segments: Chassis Systems, Occupant Safety Systems, Electronics, and Automotive Components. The Chassis Systems segment offers product lines relating to steering gea... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

ZF completes $12.4 billion acquisition of TRW
Automotive News - May 15, 2015
German auto supplier ZF Friedrichshafen AG said today that it has completed its $12.4 billion acquisition of safety systems supplier TRW Automotive Holdings Corp. TRW will operate as a division under ZF called active and passive safety technology.
ZF Friedrichshafen Announces Completion of TRW Automotive Holdings (TRW ... - StreetInsider.com
TRW Sold to ZF Friedrichshafen, Creating Huge Auto-Parts Supplier
New York Times - Sep 15, 2014
Updated, 11:31 a.m. | LONDON - TRW Automotive, one of the largest safety parts makers, said on Monday that it agreed to be acquired by the German auto parts maker ZF Friedrichshafen in a deal that valued the company at $13.5 billion. The transaction is ...
Bosch benefits as new ZF-TRW combo enters driverless car fray - Automotive News
TRW Automotive Agrees to $11.7 Billion Sale - Wall Street Journal (India)
ZF Wins US Approval for TRW Purchase With Divestitures
Bloomberg - May 5, 2015
ZF Friedrichshafen AG won approval from the U.S. Federal Trade Commission to buy TRW Automotive Holdings Corp. on the condition it sells TRW's linkage and suspension business in North America and Europe.
TRW says Q1 revenue up 7%, profits rise - Automotive News (subscription) (blog)
UPDATE 1-US allows merger of ZF Friedrichshafen, TRW with divestitures - Reuters
ZF TRW sells fasteners unit for $450 million
Crain's Detroit Business - Jan 25, 2016
CHICAGO - Illinois Tool Works said Monday that it agreed to pay $450 million for the engineered fasteners and components business of German automotive supplier ZF TRW. The deal is expected to close by the end of June. "We are fortunate to be selling ...
Illinois Tool Works (ITW) to Acquire ZF TRW's EF&C Business in ~$450M Deal - StreetInsider.com
ZF weighs more deals, asset sales following TRW acquisition
Automotive News - Jun 2, 2016
FRANKFURT -- ZF Friedrichshafen AG is considering more acquisitions as well as selling assets after catapulting into the ranks of the world's biggest car-parts manufacturers via last year's $12.9 billion takeover of TRW Automotive Holdings Corp. ZF is ...
ZF TRW leases Arboretum Office Park building for global electronics business
Crain's Detroit Business - Jan 27, 2016
ZF TRW will open its new global electronics headquarters in the Arboretum Office Park in Farmington Hills by the end of the second quarter following a lease of a 171,000-square-foot building.
ZF TRW signs office lease for global electronics business - Automotive News
ZF-TRW combination could spark more supplier deals
Automotive News - Jul 11, 2014
FRANKFURT/BERLIN (Reuters) -- German supplier ZF Friedrichshafen's takeover offer for rival TRW Automotive Holdings Corp. looks unlikely to draw rival bids for the U.S. company, but could trigger further deals down the line, bankers and analysts said ...
TRW Said to Get Takeover Approach From ZF Friedrichshafen - Bloomberg
Auto supplier ZF in talks to acquire TRW - Plastics News
FTC Approves Sale, ZF-TRW Merger Moves Ahead
Transport Topics Online - Sep 1, 2015
The Federal Trade Commission approved an application from ZF Friedrichshafen AG and TRW Automotive Holdings Corp. to sell TRW's North American and European linkage and suspension business for heavy and light vehicles to the Tokyo-based global ...
Germany's ZF in advanced talks to buy TRW for near $12 billion: sources
Reuters - Jul 30, 2014
... ZF Friedrichshafen AG is in advanced talks to acquire U.S.-based TRW Automotive Holdings Corp for nearly $12 billion, in a deal that would create an automotive supply powerhouse, according to people familiar with the matter.
ZF CEO tells TRW staffers that jobs are safe
Automotive News (blog) - Jan 12, 2015
DETROIT -- The $12.4 billion acquisition of TRW Automotive Holdings Corp. by Germany's ZF Friedrichshafen AG has many in metro Detroit afraid.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for TRW to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate TRW's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$105.00 Current Price

$49.88 Growth Price (DCF)

Overvalued by 52.49%


Growth Rate Assumed by Market: 38.86%


Future Free Cash Flow Growth Rate: 4.1%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$134.60 Stability Price (EPV)

Undervalued by 28.19%


Discount Rate: 15.0%

$68.46 Book Price

Overvalued by 34.80%


Poor Cash Return on Invested Capital over the past 5 years

TRW has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

TRW has only created $8.74 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20102011201220132014
Free Cash Flow 758.00M 549.00M 333.00M 391.00M 260.00M
divided by
Invested Capital 4.69B 5.18B 5.75B 5.77B 5.92B
Cash ROIC 16.16% 10.60% 5.79% 6.78% 4.39%

Excellent Return on Equity over the past 5 years

Over the past 5 years, TRW has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

TRW has generated $28.32 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20102011201220132014
Net Income 834.00M 1.16B 1.04B 1.01B 334.00M
divided by
Stockholders' Equity 2.06B 2.94B 3.58B 4.19B 3.84B
Return on Equity 40.43% 39.35% 29.09% 24.01% 8.69%

Excellent Business Performance over the past 10 years

TRW has been able to maintain profitability in good times and bad. This could mean TRW has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

TRW has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Free Cash Flow -1.00M 120.00M 224.00M 291.00M 254.00M 758.00M 549.00M 333.00M 391.00M 260.00M

Weak Balance Sheet

TRW's financial position is not ideal. The key is to check whether TRW is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Cash 676.00M 589.00M 899.00M 766.00M 788.00M 1.08B 1.24B 1.22B 1.73B 1.03B
Current Assets 3.60B 3.68B 4.33B 3.24B 3.59B 4.14B 4.63B 4.73B 5.63B 5.10B
Total Assets 10.23B 11.13B 12.29B 9.27B 8.73B 9.29B 10.26B 10.86B 12.25B 11.29B
Current Liabilities 3.59B 3.68B 3.72B 3.16B 3.31B 3.52B 3.84B 3.88B 4.76B 4.34B
Total Liabilities 9.02B 8.74B 9.10B 8.14B 7.57B 7.23B 7.32B 7.28B 8.06B 7.45B
Stockholder' Equity 1.21B 2.40B 3.19B 1.13B 1.16B 2.06B 2.94B 3.58B 4.19B 3.84B
Current Ratio 1.00 1.00 1.16 1.02 1.09 1.18 1.20 1.22 1.18 1.17
TL-to-TA 0.88 0.78 0.74 0.88 0.87 0.78 0.71 0.67 0.66 0.66

Consistent Reinvestment of Profits over the past 10 years

TRW has consistently retained profits. This may put TRW in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, TRW can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Retained Earnings 132.00M 308.00M 398.00M -378.00M -323.00M 511.00M 1.67B 2.41B 2.86B 2.75B
Retained Earnings Growth - 133.33% 29.22% -194.97% 14.55% 258.20% 226.42% 44.36% 18.69% -3.74%

Highly Competitive Industry over the past 10 years

It's likely that TRW is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely TRW invests heavily in R&D and Sales, General & Administrative expenses.

Only $2.58 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Net Income 204.00M 176.00M 90.00M -779.00M 55.00M 834.00M 1.16B 1.04B 1.01B 334.00M
divided by
Revenue 12.64B 13.14B 14.70B 15.00B 11.61B 14.38B 16.24B 16.44B 17.44B 17.54B
Net Profit Margin 1.61% 1.34% 0.61% -5.20% 0.47% 5.80% 7.12% 6.33% 5.78% 1.90%

Weak Pricing Power over the past 10 years

TRW is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that TRW has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $18.87 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Gross Profit 1.39B 1.20B 1.21B 1.02B 906.00M 1.72B 16.24B 1.79B 1.93B 2.07B
divided by
Revenue 12.64B 13.14B 14.70B 15.00B 11.61B 14.38B 16.24B 16.44B 17.44B 17.54B
Gross Margin 11.03% 9.14% 8.22% 6.79% 7.80% 11.97% 100.00% 10.88% 11.07% 11.78%

High Capital Intensity over the past 10 years

TRW spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

211.98% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Capital Expenditure 503.00M 529.00M 513.00M 482.00M 201.00M 294.00M 571.00M 623.00M 735.00M 694.00M
divided by
Net Income 204.00M 176.00M 90.00M -779.00M 55.00M 834.00M 1.16B 1.04B 1.01B 334.00M
Capital Expenditure Ratio 246.57% 300.57% 570.00% -61.87% 365.45% 35.25% 49.35% 59.85% 72.99% 207.78%

No Dividend History over the past 10 years

TRW has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 102.30M 103.10M 102.80M 101.10M 108.70M 131.30M 133.00M 129.70M 124.60M 118.00M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 26.35 25.87 21.02 3.40 22.90 52.59 32.60 52.00 73.93 102.82
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

TRW has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Shares Outstanding 102.30M 103.10M 102.80M 101.10M 108.70M 131.30M 133.00M 129.70M 124.60M 118.00M
Stock Bought Back - -0.78% 0.29% 1.68% -6.99% -17.21% -1.28% 2.54% 4.09% 5.59%
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