Intrinsic value of Intertape Polymer Group Inc. - ITP

Previous Close

$20.72

  Intrinsic Value

$60.62

stock screener

  Rating & Target

str. buy

+193%

Previous close

$20.72

 
Intrinsic value

$60.62

 
Up/down potential

+193%

 
Rating

str. buy

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

We calculate the intrinsic value of ITP 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 Intertape Polymer Group Inc. (ITP) 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, %
  3.50
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
Revenue, $m
  1,093
  1,289
  1,503
  1,735
  1,985
  2,252
  2,536
  2,837
  3,154
  3,486
  3,835
  4,199
  4,579
  4,975
  5,387
  5,815
  6,260
  6,723
  7,204
  7,704
  8,223
  8,763
  9,325
  9,910
  10,518
  11,153
  11,813
  12,503
  13,221
  13,972
  14,755
Variable operating expenses, $m
 
  1,010
  1,177
  1,358
  1,553
  1,761
  1,983
  2,217
  2,465
  2,724
  2,996
  3,276
  3,572
  3,881
  4,203
  4,537
  4,884
  5,245
  5,620
  6,010
  6,415
  6,837
  7,275
  7,731
  8,206
  8,701
  9,216
  9,754
  10,315
  10,900
  11,511
Fixed operating expenses, $m
 
  139
  143
  146
  150
  154
  158
  162
  166
  170
  174
  178
  183
  187
  192
  197
  202
  207
  212
  217
  223
  228
  234
  240
  246
  252
  258
  265
  272
  278
  285
Total operating expenses, $m
  990
  1,149
  1,320
  1,504
  1,703
  1,915
  2,141
  2,379
  2,631
  2,894
  3,170
  3,454
  3,755
  4,068
  4,395
  4,734
  5,086
  5,452
  5,832
  6,227
  6,638
  7,065
  7,509
  7,971
  8,452
  8,953
  9,474
  10,019
  10,587
  11,178
  11,796
Operating income, $m
  102
  140
  183
  231
  282
  337
  396
  458
  523
  592
  665
  745
  824
  906
  992
  1,081
  1,174
  1,271
  1,372
  1,476
  1,585
  1,698
  1,816
  1,939
  2,066
  2,200
  2,339
  2,484
  2,635
  2,793
  2,959
EBITDA, $m
  144
  190
  241
  297
  357
  422
  490
  563
  640
  721
  806
  894
  987
  1,084
  1,184
  1,289
  1,398
  1,511
  1,629
  1,751
  1,878
  2,011
  2,148
  2,292
  2,442
  2,597
  2,760
  2,930
  3,107
  3,292
  3,485
Interest expense (income), $m
  6
  8
  11
  14
  18
  21
  25
  29
  34
  38
  43
  48
  53
  59
  65
  71
  77
  83
  90
  97
  104
  112
  120
  128
  136
  145
  155
  164
  174
  185
  196
Earnings before tax, $m
  96
  132
  172
  217
  265
  316
  371
  429
  490
  554
  622
  697
  770
  847
  927
  1,011
  1,098
  1,188
  1,282
  1,379
  1,481
  1,586
  1,696
  1,811
  1,930
  2,054
  2,184
  2,320
  2,461
  2,609
  2,763
Tax expense, $m
  27
  36
  47
  58
  71
  85
  100
  116
  132
  150
  168
  188
  208
  229
  250
  273
  296
  321
  346
  372
  400
  428
  458
  489
  521
  555
  590
  626
  664
  704
  746
Net income, $m
  69
  96
  126
  158
  193
  231
  271
  313
  358
  405
  454
  509
  562
  619
  677
  738
  801
  867
  936
  1,007
  1,081
  1,158
  1,238
  1,322
  1,409
  1,500
  1,594
  1,693
  1,797
  1,904
  2,017

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  28
  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
  784
  891
  1,039
  1,200
  1,373
  1,557
  1,754
  1,962
  2,181
  2,411
  2,652
  2,904
  3,167
  3,441
  3,725
  4,022
  4,329
  4,649
  4,982
  5,327
  5,687
  6,060
  6,449
  6,853
  7,274
  7,713
  8,170
  8,646
  9,143
  9,662
  10,204
Adjusted assets (=assets-cash), $m
  756
  891
  1,039
  1,200
  1,373
  1,557
  1,754
  1,962
  2,181
  2,411
  2,652
  2,904
  3,167
  3,441
  3,725
  4,022
  4,329
  4,649
  4,982
  5,327
  5,687
  6,060
  6,449
  6,853
  7,274
  7,713
  8,170
  8,646
  9,143
  9,662
  10,204
Revenue / Adjusted assets
  1.446
  1.447
  1.447
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
  1.446
Average production assets, $m
  324
  381
  445
  514
  587
  667
  751
  840
  933
  1,032
  1,135
  1,243
  1,355
  1,473
  1,595
  1,721
  1,853
  1,990
  2,132
  2,280
  2,434
  2,594
  2,760
  2,933
  3,113
  3,301
  3,497
  3,701
  3,914
  4,136
  4,368
Working capital, $m
  176
  187
  218
  252
  288
  327
  368
  411
  457
  506
  556
  609
  664
  721
  781
  843
  908
  975
  1,045
  1,117
  1,192
  1,271
  1,352
  1,437
  1,525
  1,617
  1,713
  1,813
  1,917
  2,026
  2,140
Total debt, $m
  243
  315
  404
  500
  604
  715
  833
  958
  1,090
  1,228
  1,373
  1,524
  1,682
  1,847
  2,018
  2,196
  2,381
  2,573
  2,773
  2,981
  3,197
  3,421
  3,655
  3,898
  4,151
  4,414
  4,689
  4,975
  5,274
  5,586
  5,912
Total liabilities, $m
  465
  536
  625
  721
  825
  936
  1,054
  1,179
  1,311
  1,449
  1,594
  1,745
  1,903
  2,068
  2,239
  2,417
  2,602
  2,794
  2,994
  3,202
  3,418
  3,642
  3,876
  4,119
  4,372
  4,635
  4,910
  5,196
  5,495
  5,807
  6,133
Total equity, $m
  320
  356
  415
  479
  548
  621
  700
  783
  870
  962
  1,058
  1,159
  1,264
  1,373
  1,486
  1,605
  1,727
  1,855
  1,988
  2,126
  2,269
  2,418
  2,573
  2,734
  2,902
  3,077
  3,260
  3,450
  3,648
  3,855
  4,071
Total liabilities and equity, $m
  785
  892
  1,040
  1,200
  1,373
  1,557
  1,754
  1,962
  2,181
  2,411
  2,652
  2,904
  3,167
  3,441
  3,725
  4,022
  4,329
  4,649
  4,982
  5,328
  5,687
  6,060
  6,449
  6,853
  7,274
  7,712
  8,170
  8,646
  9,143
  9,662
  10,204
Debt-to-equity ratio
  0.759
  0.880
  0.970
  1.040
  1.100
  1.150
  1.190
  1.220
  1.250
  1.280
  1.300
  1.320
  1.330
  1.350
  1.360
  1.370
  1.380
  1.390
  1.400
  1.400
  1.410
  1.410
  1.420
  1.430
  1.430
  1.430
  1.440
  1.440
  1.450
  1.450
  1.450
Adjusted equity ratio
  0.386
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  69
  96
  126
  158
  193
  231
  271
  313
  358
  405
  454
  509
  562
  619
  677
  738
  801
  867
  936
  1,007
  1,081
  1,158
  1,238
  1,322
  1,409
  1,500
  1,594
  1,693
  1,797
  1,904
  2,017
Depreciation, amort., depletion, $m
  42
  50
  58
  66
  75
  85
  95
  105
  117
  129
  141
  150
  163
  177
  192
  207
  223
  240
  257
  275
  293
  313
  333
  353
  375
  398
  421
  446
  472
  498
  526
Funds from operations, $m
  126
  146
  184
  224
  268
  315
  365
  418
  474
  533
  595
  658
  726
  796
  869
  945
  1,024
  1,107
  1,192
  1,281
  1,374
  1,470
  1,571
  1,675
  1,784
  1,897
  2,016
  2,139
  2,268
  2,403
  2,543
Change in working capital, $m
  -21
  28
  31
  34
  36
  39
  41
  44
  46
  48
  51
  53
  55
  57
  60
  62
  65
  67
  70
  72
  75
  78
  81
  85
  88
  92
  96
  100
  104
  109
  114
Cash from operations, $m
  147
  118
  153
  191
  232
  276
  324
  375
  428
  485
  544
  606
  671
  739
  809
  883
  960
  1,040
  1,123
  1,209
  1,299
  1,392
  1,489
  1,590
  1,696
  1,805
  1,920
  2,039
  2,164
  2,294
  2,430
Maintenance CAPEX, $m
  0
  -39
  -46
  -54
  -62
  -71
  -80
  -90
  -101
  -112
  -124
  -137
  -150
  -163
  -177
  -192
  -207
  -223
  -240
  -257
  -275
  -293
  -313
  -333
  -353
  -375
  -398
  -421
  -446
  -472
  -498
New CAPEX, $m
  -68
  -58
  -63
  -69
  -74
  -79
  -84
  -89
  -94
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -132
  -137
  -142
  -148
  -154
  -160
  -166
  -173
  -180
  -188
  -196
  -204
  -213
  -222
  -232
Cash from investing activities, $m
  -124
  -97
  -109
  -123
  -136
  -150
  -164
  -179
  -195
  -211
  -227
  -245
  -262
  -280
  -299
  -319
  -339
  -360
  -382
  -405
  -429
  -453
  -479
  -506
  -533
  -563
  -594
  -625
  -659
  -694
  -730
Free cash flow, $m
  23
  21
  43
  68
  96
  126
  160
  195
  233
  274
  317
  361
  408
  458
  510
  564
  621
  680
  741
  804
  870
  939
  1,010
  1,085
  1,162
  1,243
  1,327
  1,414
  1,505
  1,600
  1,699
Issuance/(repayment) of debt, $m
  34
  82
  89
  96
  104
  111
  118
  125
  132
  138
  145
  151
  158
  165
  171
  178
  185
  192
  200
  208
  216
  224
  234
  243
  253
  264
  275
  286
  299
  312
  326
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  26
  82
  89
  96
  104
  111
  118
  125
  132
  138
  145
  151
  158
  165
  171
  178
  185
  192
  200
  208
  216
  224
  234
  243
  253
  264
  275
  286
  299
  312
  326
Total cash flow (excl. dividends), $m
  47
  102
  132
  165
  200
  238
  278
  320
  365
  412
  462
  512
  566
  623
  681
  742
  806
  872
  940
  1,012
  1,086
  1,163
  1,244
  1,328
  1,415
  1,506
  1,601
  1,700
  1,804
  1,912
  2,025
Retained Cash Flow (-), $m
  -27
  -54
  -59
  -64
  -69
  -74
  -78
  -83
  -87
  -92
  -96
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -138
  -143
  -149
  -155
  -161
  -168
  -175
  -182
  -190
  -198
  -207
  -216
Prev. year cash balance distribution, $m
 
  18
  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
 
  67
  73
  101
  131
  164
  199
  237
  278
  320
  366
  412
  461
  513
  568
  624
  683
  744
  808
  874
  943
  1,014
  1,089
  1,166
  1,247
  1,331
  1,419
  1,510
  1,606
  1,705
  1,809
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
 
  64
  67
  88
  108
  127
  145
  160
  174
  184
  192
  196
  197
  195
  191
  183
  174
  162
  149
  135
  120
  105
  90
  76
  64
  52
  41
  32
  25
  19
  14
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Intertape Polymer Group Inc. operates in the specialty packaging industry. The Company develops, manufactures and sells a range of paper and film-based pressure sensitive and water activated tapes, polyethylene and specialized polyolefin packaging films, woven coated fabrics and complementary packaging systems for industrial and retail use. It operates in the United States, Canada and other countries. The Company's products primarily consist of carton sealing tapes, including pressure sensitive and water-activated tapes; industrial and performance specialty tapes, including masking, duct, electrical and reinforced filament tapes; shrink film; stretch wrap; lumberwrap, structure fabrics and geomembrane fabrics, and non-manufactured flexible intermediate bulk containers. Its subsidiaries include Intertape Polymer Corp., IPG (US) Holdings Inc., IPG (US) Inc., Intertape Polymer Inc., FIBOPE Portuguesa-Filmes Biorientados, S.A. and Intertape Polymer Europe GmbH.

FINANCIAL RATIOS  of  Intertape Polymer Group Inc. (ITP)

Valuation Ratios
P/E Ratio 17.7
Price to Sales 1.1
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 15.5
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 44.7%
Cap. Spend. - 3 Yr. Gr. Rate 1.2%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 72.8%
Total Debt to Equity 75.9%
Interest Coverage 17
Management Effectiveness
Return On Assets 10.2%
Ret/ On Assets - 3 Yr. Avg. 10.3%
Return On Total Capital 13%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 22.5%
Return On Equity - 3 Yr. Avg. 21.2%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 23.7%
Gross Margin - 3 Yr. Avg. 21.8%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 12.4%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 8.8%
Pre-Tax Margin 8.8%
Pre-Tax Margin - 3 Yr. Avg. 8.2%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 6%
Effective Tax Rate 28.1%
Eff/ Tax Rate - 3 Yr. Avg. 27.6%
Payout Ratio 60.9%

ITP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ITP stock intrinsic value calculation we used $1093 million for the last fiscal year's total revenue generated by Intertape Polymer Group Inc.. The default revenue input number comes from 2016 income statement of Intertape Polymer Group Inc.. 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 ITP stock valuation model: a) initial revenue growth rate of 17.9% 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 ITP is calculated based on our internal credit rating of Intertape Polymer Group Inc., 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 Intertape Polymer Group Inc..
    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 ITP stock the variable cost ratio is equal to 78.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $136 million in the base year in the intrinsic value calculation for ITP 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 3.5% for Intertape Polymer Group Inc..

Corporate tax rate of 27% is the nominal tax rate for Intertape Polymer Group Inc.. 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 ITP 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 ITP are equal to 29.6%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Intertape Polymer Group Inc. 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 ITP is equal to 14.5%. 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 - $320 million for Intertape Polymer Group Inc. - 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 58.632 million for Intertape Polymer Group Inc. 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 Intertape Polymer Group Inc. at the current share price and the inputted number of shares is $1.2 billion.

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Financial statements of ITP
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