-$9.87
$42.67
bear -$9.87
base $1.07
bull $42.67
margin of safety $8.00
market price* $20.83
Business condition attached to the margin of safety
Two consecutive fiscal years (2026 or later) in which cash from operations, excluding working-capital swings, exceeds capital spending, stock-based compensation and any interest paid in kind by at least $20 million, with total debt not rising above the roughly $1.1 billion level of mid-2026.
Cooper-Standard makes rubber and plastic parts for cars and light trucks. Its Sealing Systems business (door and window seals) had $1.415 billion of 2025 sales, and its Fluid Handling Systems business (fuel, brake and coolant lines) had $1.252 billion. Total sales were $2.74 billion in 2025, about the same as $2.73 billion in 2024 and $2.82 billion in 2023. About 86% of sales go to carmakers. Three customers matter most: Ford took 27% of 2025 sales, General Motors 19% and Stellantis 10%. The business used to be bigger and more profitable. In 2016 and 2017, sales were around $3.5-3.6 billion, and the cash left for owners after the costs of keeping the business running was about $116-129 million a year, or $6-7 a share. The company sold its anti-vibration systems business on April 1, 2019. From 2019 through 2024, that owner cash was negative every year. It lost more than $200 million a year in 2021 and 2022. In 2025 it turned positive for the first time since 2018, at $15.4 million, or $0.86 a share. How we measured it. We start from operating cash flow, which is already after interest. We remove swings in working capital, subtract stock-based pay ($15.2 million in 2025), and subtract the capital spending needed to keep the plants running. In 2023 and 2024 the company paid part of its interest by issuing more notes instead of cash: $58.8 million and $12.4 million. We count that as a real interest cost. We also think the 2024 and 2025 results look better than they really were. Capital spending of $50.5 million and $48.2 million was only about half of depreciation, and it rose to $37.9 million in the first half of 2026 alone, against $25.3 million a year earlier. Our cases assume spending returns to about 2.8% of sales. We start from the median of 2023-2025, which is -$1.62 a share. Those years reflect today's size and today's debt. The earlier, larger business had a very different balance sheet. Debt is the central issue. In January 2023 the company issued $580 million of 13.50% first-lien notes due March 31, 2027 and $357.4 million of third-lien notes due May 15, 2027. It paid $113.9 million of interest in cash in 2025. In the first half of 2026 it replaced those notes with about $1.1 billion of new secured debt and booked a $24.2 million loss on the swap. The annual report does not contain the terms of the new debt. Net interest in the second quarter of 2026 was $27.0 million, against $28.7 million a year earlier, which points to roughly $108 million a year. Shareholders' equity was negative $130.6 million at June 30, 2026. Recent results went backwards. First-half 2026 sales rose 2.5% to $1.408 billion. Operating income fell to $36.9 million from $59.5 million, and restructuring charges rose to $21.7 million from $5.0 million. On our rough estimate, owner cash was about -$18 million, against about +$27 million in the first half of 2025. In 2025 owner cash improved by $43.9 million, but because it went from negative to positive, a growth rate means nothing. Our base case assumes -$35 million for the next year, well below 2025, because the 2026 figures do not support carrying the improvement forward. Base case, $1.07 a share. Sales stay flat, in line with 2023-2025. Next year's owner cash is -$35 million. Restructuring cash then falls back to the 2024-2025 level of about $26 million a year, and cost savings continue modestly: -$15 million, then -$5 million, then about +$5 million a year from year four onward. The company stays a long-standing supplier on its customers' vehicle programs, but almost everything the business earns before interest goes to its lenders. Bull case, $42.67 a share. Factory savings continue at the 2023-2025 pace. Operating income rose from $46.0 million to $86.6 million over those years, and Sealing alone reported $43.4 million of manufacturing and purchasing savings in 2025. On that path, owner cash goes from -$20 million to about +$35 million by year four. The surplus then pays down debt costing roughly 9.4%, which lifts owner cash to about $60 million by year ten, where we hold it. Bear case, -$9.87 a share. Customer volumes keep slipping, as they did in Sealing in 2025. Restructuring stays at 2026 levels and capital spending returns to normal. Owner cash runs at about -$45 million a year, funded by borrowing that adds to interest. Cash of $126.6 million at June 30, 2026 would not cover four years of that, so the debt would have to be restructured and the shareholders' story ends there. In this case the company appears to owe more than it is worth, by roughly $178 million, or about $9.87 a share. A low price alone does not cover the risk here, because the base case is barely above zero. The margin-of-safety price applies only after two straight years of at least $20 million of owner cash with debt not rising. At that level, with no debt paid down at all, the shares would be worth about $18.47 at our 6% rate. Once that condition is met, the margin-of-safety price is $8.00. The large discount reflects heavy debt, dependence on three carmakers and a cyclical industry. What would prove this wrong: margins improving faster than the 2023-2025 record, or new debt terms materially cheaper than our roughly $108 million a year estimate would help. A loss of Ford, GM or Stellantis programs would hurt. The terms and maturity of the 2026 debt could not be confirmed from the annual filings.