Intrinsic value of Interfor Corporation - IFP

Previous Close

$24.83

  Intrinsic Value

$2.25

stock screener

  Rating & Target

str. sell

-91%

Previous close

$24.83

 
Intrinsic value

$2.25

 
Up/down potential

-91%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of IFP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Interfor Corporation (IFP) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.28
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  1,793
  1,915
  2,042
  2,174
  2,311
  2,454
  2,602
  2,757
  2,919
  3,088
  3,263
  3,447
  3,639
  3,839
  4,049
  4,268
  4,497
  4,737
  4,988
  5,251
  5,526
  5,815
  6,117
  6,434
  6,766
  7,114
  7,478
  7,861
  8,262
  8,683
  9,125
Variable operating expenses, $m
 
  1,954
  2,082
  2,216
  2,355
  2,499
  2,650
  2,807
  2,970
  3,141
  3,319
  3,489
  3,683
  3,886
  4,098
  4,320
  4,552
  4,795
  5,049
  5,315
  5,594
  5,886
  6,192
  6,512
  6,848
  7,201
  7,570
  7,957
  8,363
  8,790
  9,236
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,717
  1,954
  2,082
  2,216
  2,355
  2,499
  2,650
  2,807
  2,970
  3,141
  3,319
  3,489
  3,683
  3,886
  4,098
  4,320
  4,552
  4,795
  5,049
  5,315
  5,594
  5,886
  6,192
  6,512
  6,848
  7,201
  7,570
  7,957
  8,363
  8,790
  9,236
Operating income, $m
  76
  -39
  -41
  -42
  -44
  -46
  -48
  -49
  -51
  -54
  -56
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -112
EBITDA, $m
  187
  77
  82
  88
  93
  99
  105
  111
  118
  125
  132
  139
  147
  155
  163
  172
  182
  191
  201
  212
  223
  235
  247
  260
  273
  287
  302
  317
  334
  350
  368
Interest expense (income), $m
  17
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  81
  85
  90
  95
  101
Earnings before tax, $m
  73
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -74
  -79
  -84
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -182
  -191
  -202
  -212
Tax expense, $m
  7
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  66
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -74
  -79
  -84
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -182
  -191
  -202
  -212

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  19
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,302
  1,370
  1,460
  1,555
  1,653
  1,755
  1,861
  1,972
  2,088
  2,209
  2,334
  2,466
  2,603
  2,746
  2,896
  3,053
  3,217
  3,388
  3,568
  3,756
  3,953
  4,159
  4,375
  4,602
  4,839
  5,088
  5,349
  5,623
  5,910
  6,211
  6,527
Adjusted assets (=assets-cash), $m
  1,283
  1,370
  1,460
  1,555
  1,653
  1,755
  1,861
  1,972
  2,088
  2,209
  2,334
  2,466
  2,603
  2,746
  2,896
  3,053
  3,217
  3,388
  3,568
  3,756
  3,953
  4,159
  4,375
  4,602
  4,839
  5,088
  5,349
  5,623
  5,910
  6,211
  6,527
Revenue / Adjusted assets
  1.398
  1.398
  1.399
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
  1.398
Average production assets, $m
  867
  927
  988
  1,052
  1,118
  1,188
  1,260
  1,335
  1,413
  1,494
  1,579
  1,668
  1,761
  1,858
  1,960
  2,066
  2,177
  2,293
  2,414
  2,541
  2,675
  2,814
  2,961
  3,114
  3,275
  3,443
  3,620
  3,805
  3,999
  4,203
  4,416
Working capital, $m
  136
  124
  133
  141
  150
  159
  169
  179
  190
  201
  212
  224
  237
  250
  263
  277
  292
  308
  324
  341
  359
  378
  398
  418
  440
  462
  486
  511
  537
  564
  593
Total debt, $m
  309
  343
  380
  417
  457
  498
  540
  585
  631
  680
  730
  783
  838
  895
  955
  1,018
  1,084
  1,153
  1,225
  1,300
  1,379
  1,462
  1,549
  1,639
  1,735
  1,834
  1,939
  2,049
  2,164
  2,285
  2,411
Total liabilities, $m
  515
  549
  586
  623
  663
  704
  746
  791
  837
  886
  936
  989
  1,044
  1,101
  1,161
  1,224
  1,290
  1,359
  1,431
  1,506
  1,585
  1,668
  1,755
  1,845
  1,941
  2,040
  2,145
  2,255
  2,370
  2,491
  2,617
Total equity, $m
  787
  820
  875
  931
  990
  1,051
  1,115
  1,181
  1,251
  1,323
  1,398
  1,477
  1,559
  1,645
  1,735
  1,829
  1,927
  2,030
  2,137
  2,250
  2,368
  2,491
  2,621
  2,757
  2,899
  3,048
  3,204
  3,368
  3,540
  3,720
  3,910
Total liabilities and equity, $m
  1,302
  1,369
  1,461
  1,554
  1,653
  1,755
  1,861
  1,972
  2,088
  2,209
  2,334
  2,466
  2,603
  2,746
  2,896
  3,053
  3,217
  3,389
  3,568
  3,756
  3,953
  4,159
  4,376
  4,602
  4,840
  5,088
  5,349
  5,623
  5,910
  6,211
  6,527
Debt-to-equity ratio
  0.393
  0.420
  0.430
  0.450
  0.460
  0.470
  0.480
  0.500
  0.500
  0.510
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.610
  0.610
  0.620
Adjusted equity ratio
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  66
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -74
  -79
  -84
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -182
  -191
  -202
  -212
Depreciation, amort., depletion, $m
  111
  116
  123
  130
  137
  145
  153
  161
  169
  178
  187
  181
  191
  202
  213
  225
  237
  249
  262
  276
  291
  306
  322
  338
  356
  374
  393
  414
  435
  457
  480
Funds from operations, $m
  213
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  107
  112
  118
  124
  130
  137
  144
  151
  158
  166
  174
  183
  192
  201
  211
  221
  232
  243
  255
  268
Change in working capital, $m
  14
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
Cash from operations, $m
  199
  56
  59
  62
  66
  70
  73
  77
  82
  86
  90
  95
  100
  105
  110
  116
  122
  128
  134
  141
  148
  155
  163
  171
  179
  188
  197
  207
  217
  228
  239
Maintenance CAPEX, $m
  0
  -94
  -101
  -107
  -114
  -122
  -129
  -137
  -145
  -154
  -162
  -172
  -181
  -191
  -202
  -213
  -225
  -237
  -249
  -262
  -276
  -291
  -306
  -322
  -338
  -356
  -374
  -393
  -414
  -435
  -457
New CAPEX, $m
  -77
  -60
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -97
  -101
  -106
  -111
  -116
  -122
  -127
  -133
  -140
  -146
  -153
  -161
  -168
  -177
  -185
  -194
  -204
  -214
Cash from investing activities, $m
  -36
  -154
  -162
  -171
  -180
  -191
  -201
  -212
  -223
  -236
  -247
  -261
  -274
  -288
  -303
  -319
  -336
  -353
  -371
  -389
  -409
  -431
  -452
  -475
  -499
  -524
  -551
  -578
  -608
  -639
  -671
Free cash flow, $m
  163
  -98
  -103
  -109
  -115
  -121
  -128
  -134
  -142
  -149
  -157
  -165
  -174
  -183
  -193
  -203
  -214
  -225
  -236
  -249
  -262
  -275
  -289
  -304
  -320
  -336
  -353
  -371
  -391
  -410
  -431
Issuance/(repayment) of debt, $m
  -132
  34
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  57
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
  127
Issuance/(repurchase) of shares, $m
  0
  105
  110
  116
  121
  127
  133
  140
  146
  154
  161
  153
  161
  170
  179
  188
  198
  208
  219
  231
  243
  255
  269
  283
  297
  313
  329
  346
  363
  382
  401
Cash from financing (excl. dividends), $m  
  -162
  139
  146
  154
  160
  168
  176
  184
  192
  202
  211
  206
  216
  227
  239
  251
  264
  277
  291
  306
  322
  338
  356
  374
  392
  413
  434
  456
  478
  503
  528
Total cash flow (excl. dividends), $m
  3
  41
  43
  45
  46
  47
  48
  50
  51
  53
  54
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
Retained Cash Flow (-), $m
  -62
  -105
  -110
  -116
  -121
  -127
  -133
  -140
  -146
  -154
  -161
  -153
  -161
  -170
  -179
  -188
  -198
  -208
  -219
  -231
  -243
  -255
  -269
  -283
  -297
  -313
  -329
  -346
  -363
  -382
  -401
Prev. year cash balance distribution, $m
 
  19
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -45
  -67
  -71
  -75
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119
  -126
  -133
  -140
  -148
  -156
  -164
  -173
  -183
  -192
  -203
  -213
  -225
  -236
  -249
  -262
  -275
  -290
  -305
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -43
  -61
  -62
  -62
  -62
  -62
  -61
  -60
  -58
  -56
  -54
  -51
  -48
  -45
  -41
  -38
  -34
  -30
  -27
  -23
  -20
  -17
  -14
  -11
  -9
  -7
  -6
  -4
  -3
  -2
Current shareholders' claim on cash, %
  100
  94.2
  88.8
  83.8
  79.1
  74.8
  70.7
  66.9
  63.4
  60.0
  56.9
  54.2
  51.7
  49.3
  46.9
  44.8
  42.7
  40.7
  38.8
  37.0
  35.2
  33.6
  32.0
  30.6
  29.1
  27.8
  26.5
  25.3
  24.1
  23.0
  21.9

Interfor Corporation is a Canada-based lumber provider. The Company and its subsidiaries produce wood products in British Columbia, the United States Northwest and the United States South for sale to markets around the world. The Company operates through solid wood segment. The Company offers a range of products, including Clear Cedar Finger Joint Bevel Siding, Clear Cedar Solid Bevel Siding, Clear Cedar V-Joint Paneling, Dimension Lumber, Elite Cedar 5/4 Radius Edge Decking, Elite Cedar V-Joint Paneling, Elite Knotty Cedar Decking, Fineline Paneling, Japan Zairai-Beams, Japan Zairai-Ground Sill, Japan Zairai-Posts, Japan Zairai-Roof Structure, Japan Zairai-Small Structural, Reserve Boards, Reserve End-Matched Paneling, Reserve Lodgepole Pine Paneling, Reserve V-Joint Decking, Special Appearance Grade Cedar Timbers, Reserve Ponderosa Pine Paneling and Studs. The Company has approximately 20 mills across North America with annual capacity of over three billion board feet.

FINANCIAL RATIOS  of  Interfor Corporation (IFP)

Valuation Ratios
P/E Ratio 26.3
Price to Sales 1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 8.7
Price to Free Cash Flow 14.3
Growth Rates
Sales Growth Rate 6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.4%
Cap. Spend. - 3 Yr. Gr. Rate 2.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 39.3%
Total Debt to Equity 39.3%
Interest Coverage 5
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 5.8%
Ret/ On T. Cap. - 3 Yr. Avg. 2.7%
Return On Equity 8.7%
Return On Equity - 3 Yr. Avg. 3.8%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 13.5%
Gross Margin - 3 Yr. Avg. 11.7%
EBITDA Margin 11.2%
EBITDA Margin - 3 Yr. Avg. 7.8%
Operating Margin 4.2%
Oper. Margin - 3 Yr. Avg. 1.5%
Pre-Tax Margin 4.1%
Pre-Tax Margin - 3 Yr. Avg. 0.8%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 1.6%
Effective Tax Rate 9.6%
Eff/ Tax Rate - 3 Yr. Avg. -5.6%
Payout Ratio 0%

IFP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IFP stock intrinsic value calculation we used $1793 million for the last fiscal year's total revenue generated by Interfor Corporation. The default revenue input number comes from 2016 income statement of Interfor Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IFP stock valuation model: a) initial revenue growth rate of 6.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for IFP is calculated based on our internal credit rating of Interfor Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Interfor Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IFP stock the variable cost ratio is equal to 102.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for IFP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.4% for Interfor Corporation.

Corporate tax rate of 27% is the nominal tax rate for Interfor Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IFP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IFP are equal to 48.4%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Interfor Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IFP is equal to 6.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $787 million for Interfor Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 70.076 million for Interfor Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Interfor Corporation at the current share price and the inputted number of shares is $1.7 billion.

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Financial statements of IFP
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