Intrinsic value of Premium Brands Holdings Corporation - PBH

Previous Close

$111.57

  Intrinsic Value

$59.96

stock screener

  Rating & Target

sell

-46%

Previous close

$111.57

 
Intrinsic value

$59.96

 
Up/down potential

-46%

 
Rating

sell

We calculate the intrinsic value of PBH 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.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  16.00
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
Revenue, $m
  2,160
  2,482
  2,827
  3,195
  3,585
  3,997
  4,431
  4,886
  5,361
  5,858
  6,375
  6,914
  7,475
  8,058
  8,663
  9,293
  9,947
  10,626
  11,333
  12,068
  12,833
  13,629
  14,458
  15,322
  16,223
  17,162
  18,142
  19,165
  20,234
  21,350
Variable operating expenses, $m
  1,926
  2,208
  2,511
  2,833
  3,176
  3,537
  3,917
  4,316
  4,733
  5,168
  5,590
  6,063
  6,554
  7,065
  7,596
  8,148
  8,721
  9,317
  9,937
  10,582
  11,252
  11,950
  12,677
  13,435
  14,224
  15,048
  15,907
  16,804
  17,741
  18,720
Fixed operating expenses, $m
  108
  111
  113
  116
  118
  121
  123
  126
  129
  132
  135
  138
  141
  144
  147
  150
  153
  157
  160
  164
  167
  171
  175
  179
  183
  187
  191
  195
  199
  204
Total operating expenses, $m
  2,034
  2,319
  2,624
  2,949
  3,294
  3,658
  4,040
  4,442
  4,862
  5,300
  5,725
  6,201
  6,695
  7,209
  7,743
  8,298
  8,874
  9,474
  10,097
  10,746
  11,419
  12,121
  12,852
  13,614
  14,407
  15,235
  16,098
  16,999
  17,940
  18,924
Operating income, $m
  126
  163
  203
  246
  291
  340
  390
  444
  500
  558
  651
  714
  780
  849
  920
  995
  1,072
  1,152
  1,236
  1,323
  1,413
  1,508
  1,606
  1,709
  1,816
  1,927
  2,044
  2,166
  2,293
  2,426
EBITDA, $m
  181
  222
  265
  312
  362
  415
  470
  528
  589
  653
  719
  788
  860
  935
  1,013
  1,094
  1,179
  1,266
  1,357
  1,452
  1,551
  1,654
  1,761
  1,873
  1,990
  2,112
  2,239
  2,372
  2,510
  2,656
Interest expense (income), $m
  15
  16
  20
  25
  30
  35
  40
  46
  52
  59
  65
  72
  80
  87
  95
  104
  112
  121
  130
  140
  150
  160
  171
  182
  194
  206
  219
  232
  246
  261
  276
Earnings before tax, $m
  110
  143
  178
  216
  257
  299
  344
  391
  441
  492
  578
  634
  693
  754
  817
  882
  951
  1,022
  1,096
  1,173
  1,253
  1,337
  1,424
  1,515
  1,609
  1,708
  1,812
  1,920
  2,033
  2,151
Tax expense, $m
  30
  39
  48
  58
  69
  81
  93
  106
  119
  133
  156
  171
  187
  203
  221
  238
  257
  276
  296
  317
  338
  361
  384
  409
  435
  461
  489
  518
  549
  581
Net income, $m
  80
  104
  130
  158
  187
  219
  251
  286
  322
  359
  422
  463
  506
  550
  596
  644
  694
  746
  800
  856
  915
  976
  1,039
  1,106
  1,175
  1,247
  1,323
  1,401
  1,484
  1,570

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,278
  1,468
  1,673
  1,891
  2,122
  2,365
  2,622
  2,891
  3,172
  3,466
  3,772
  4,091
  4,423
  4,768
  5,126
  5,499
  5,886
  6,288
  6,706
  7,141
  7,594
  8,065
  8,555
  9,066
  9,599
  10,155
  10,735
  11,340
  11,973
  12,633
Adjusted assets (=assets-cash), $m
  1,278
  1,468
  1,673
  1,891
  2,122
  2,365
  2,622
  2,891
  3,172
  3,466
  3,772
  4,091
  4,423
  4,768
  5,126
  5,499
  5,886
  6,288
  6,706
  7,141
  7,594
  8,065
  8,555
  9,066
  9,599
  10,155
  10,735
  11,340
  11,973
  12,633
Revenue / Adjusted assets
  1.690
  1.691
  1.690
  1.690
  1.689
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
  1.690
Average production assets, $m
  410
  472
  537
  607
  681
  760
  842
  928
  1,019
  1,113
  1,211
  1,314
  1,420
  1,531
  1,646
  1,766
  1,890
  2,019
  2,153
  2,293
  2,438
  2,590
  2,747
  2,911
  3,082
  3,261
  3,447
  3,641
  3,844
  4,057
Working capital, $m
  222
  256
  291
  329
  369
  412
  456
  503
  552
  603
  657
  712
  770
  830
  892
  957
  1,025
  1,095
  1,167
  1,243
  1,322
  1,404
  1,489
  1,578
  1,671
  1,768
  1,869
  1,974
  2,084
  2,199
Total debt, $m
  515
  632
  757
  891
  1,032
  1,182
  1,339
  1,504
  1,677
  1,857
  2,045
  2,240
  2,443
  2,655
  2,874
  3,103
  3,340
  3,586
  3,843
  4,109
  4,387
  4,676
  4,976
  5,290
  5,616
  5,957
  6,313
  6,684
  7,071
  7,476
Total liabilities, $m
  783
  900
  1,025
  1,159
  1,300
  1,450
  1,607
  1,772
  1,945
  2,125
  2,313
  2,508
  2,711
  2,923
  3,142
  3,371
  3,608
  3,854
  4,111
  4,377
  4,655
  4,944
  5,244
  5,558
  5,884
  6,225
  6,581
  6,952
  7,339
  7,744
Total equity, $m
  495
  568
  647
  732
  821
  915
  1,015
  1,119
  1,228
  1,341
  1,460
  1,583
  1,712
  1,845
  1,984
  2,128
  2,278
  2,433
  2,595
  2,764
  2,939
  3,121
  3,311
  3,509
  3,715
  3,930
  4,154
  4,389
  4,633
  4,889
Total liabilities and equity, $m
  1,278
  1,468
  1,672
  1,891
  2,121
  2,365
  2,622
  2,891
  3,173
  3,466
  3,773
  4,091
  4,423
  4,768
  5,126
  5,499
  5,886
  6,287
  6,706
  7,141
  7,594
  8,065
  8,555
  9,067
  9,599
  10,155
  10,735
  11,341
  11,972
  12,633
Debt-to-equity ratio
  1.040
  1.110
  1.170
  1.220
  1.260
  1.290
  1.320
  1.340
  1.370
  1.380
  1.400
  1.410
  1.430
  1.440
  1.450
  1.460
  1.470
  1.470
  1.480
  1.490
  1.490
  1.500
  1.500
  1.510
  1.510
  1.520
  1.520
  1.520
  1.530
  1.530
Adjusted equity ratio
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  80
  104
  130
  158
  187
  219
  251
  286
  322
  359
  422
  463
  506
  550
  596
  644
  694
  746
  800
  856
  915
  976
  1,039
  1,106
  1,175
  1,247
  1,323
  1,401
  1,484
  1,570
Depreciation, amort., depletion, $m
  55
  59
  62
  66
  70
  75
  80
  84
  90
  95
  68
  74
  80
  86
  93
  100
  107
  114
  122
  130
  138
  146
  155
  164
  174
  184
  195
  206
  217
  229
Funds from operations, $m
  135
  163
  193
  224
  258
  293
  331
  370
  411
  454
  491
  537
  586
  637
  689
  744
  801
  860
  922
  986
  1,053
  1,122
  1,195
  1,270
  1,349
  1,431
  1,517
  1,607
  1,701
  1,799
Change in working capital, $m
  31
  33
  36
  38
  40
  42
  45
  47
  49
  51
  53
  56
  58
  60
  62
  65
  67
  70
  73
  76
  79
  82
  85
  89
  93
  97
  101
  105
  110
  115
Cash from operations, $m
  105
  130
  157
  186
  218
  251
  286
  323
  362
  403
  437
  482
  528
  577
  627
  679
  734
  790
  849
  910
  974
  1,040
  1,109
  1,181
  1,256
  1,335
  1,416
  1,502
  1,591
  1,684
Maintenance CAPEX, $m
  -20
  -23
  -27
  -30
  -34
  -38
  -43
  -48
  -52
  -58
  -63
  -68
  -74
  -80
  -86
  -93
  -100
  -107
  -114
  -122
  -130
  -138
  -146
  -155
  -164
  -174
  -184
  -195
  -206
  -217
New CAPEX, $m
  -56
  -61
  -66
  -70
  -74
  -78
  -82
  -86
  -90
  -94
  -98
  -102
  -106
  -111
  -115
  -120
  -124
  -129
  -134
  -140
  -145
  -151
  -158
  -164
  -171
  -178
  -186
  -194
  -203
  -212
Cash from investing activities, $m
  -76
  -84
  -93
  -100
  -108
  -116
  -125
  -134
  -142
  -152
  -161
  -170
  -180
  -191
  -201
  -213
  -224
  -236
  -248
  -262
  -275
  -289
  -304
  -319
  -335
  -352
  -370
  -389
  -409
  -429
Free cash flow, $m
  29
  45
  65
  86
  109
  134
  161
  189
  220
  251
  276
  311
  348
  386
  425
  467
  509
  554
  601
  649
  699
  751
  805
  862
  921
  982
  1,046
  1,113
  1,182
  1,255
Issuance/(repayment) of debt, $m
  107
  117
  125
  133
  142
  149
  157
  165
  173
  180
  188
  195
  203
  211
  220
  228
  237
  247
  256
  267
  277
  289
  301
  313
  327
  341
  355
  371
  388
  405
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
Cash from financing (excl. dividends), $m  
  107
  117
  125
  133
  142
  149
  157
  165
  173
  180
  188
  195
  203
  211
  220
  228
  237
  247
  256
  267
  277
  289
  301
  313
  327
  341
  355
  371
  388
  405
Total cash flow (excl. dividends), $m
  136
  162
  190
  220
  251
  284
  318
  354
  392
  431
  464
  506
  551
  597
  645
  695
  747
  801
  857
  915
  976
  1,040
  1,106
  1,175
  1,247
  1,323
  1,401
  1,484
  1,570
  1,660
Retained Cash Flow (-), $m
  -69
  -74
  -79
  -84
  -89
  -94
  -99
  -104
  -109
  -114
  -119
  -123
  -128
  -133
  -139
  -144
  -150
  -156
  -162
  -168
  -175
  -182
  -190
  -198
  -206
  -215
  -224
  -234
  -245
  -256
Prev. year cash balance distribution, $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 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
  68
  89
  111
  135
  161
  189
  219
  250
  283
  318
  345
  383
  422
  464
  506
  551
  597
  645
  695
  747
  801
  858
  916
  977
  1,041
  1,108
  1,177
  1,249
  1,325
  1,404
Discount rate, %
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
  63
  77
  89
  99
  108
  114
  118
  119
  118
  115
  107
  100
  93
  84
  74
  64
  55
  46
  38
  30
  23
  18
  13
  10
  7
  5
  3
  2
  1
  1
Current shareholders' claim on cash, %
  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

Premium Brands Holdings Corp is a Canada-based company that, through its subsidiaries, owns a range of specialty food manufacturing and food distribution businesses. The Company's segments include Specialty Foods and Premium Food Distribution. Its family of brands and businesses include Conte Foods, Larosa Foods, McSweeney’s, Direct Plus, OvenPride and Island City Baking. Its Specialty Foods segment consists of the Company’s specialty food manufacturing businesses and includes Harvest, Grimm’s, Freybe, Hygaard, Quality Fast Foods, Hempler’s, Made-Rite Meat Products, Creekside, Stuyver’s, Duso’s, SK Food Group, Deli Chef, SJ Fine Foods, Piller’s, Isernio’s, Expresco and Belmont Meats. The Premium Food Distribution segment consists of the Company’s differentiated distribution and wholesale businesses and includes Centennial Foodservice, B&C Food Distributors, Harlan Fairbanks, Worldsource, E1even, Wescadia, Maximum Seafood, Ocean Miracle, Leadbetter Foods, C&C Packing and Premier Meats.

FINANCIAL RATIOS  of  Premium Brands Holdings Corporation (PBH)

Valuation Ratios
P/E Ratio 48
Price to Sales 1.8
Price to Book 7.8
Price to Tangible Book
Price to Cash Flow 22.1
Price to Free Cash Flow 31
Growth Rates
Sales Growth Rate 25.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 48.3%
Cap. Spend. - 3 Yr. Gr. Rate 21.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 95.5%
Total Debt to Equity 100.2%
Interest Coverage 7
Management Effectiveness
Return On Assets 8.1%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 9.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 18.5%
Return On Equity - 3 Yr. Avg. 9.5%
Asset Turnover 1.9
Profitability Ratios
Gross Margin 18.9%
Gross Margin - 3 Yr. Avg. 18.9%
EBITDA Margin 7.8%
EBITDA Margin - 3 Yr. Avg. 6.4%
Operating Margin 5.1%
Oper. Margin - 3 Yr. Avg. 3.3%
Pre-Tax Margin 5.1%
Pre-Tax Margin - 3 Yr. Avg. 3.3%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 1.8%
Effective Tax Rate 27.4%
Eff/ Tax Rate - 3 Yr. Avg. 34.5%
Payout Ratio 62.3%

PBH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PBH stock intrinsic value calculation we used $1862 million for the last fiscal year's total revenue generated by Premium Brands Holdings Corporation. The default revenue input number comes from 2016 income statement of Premium Brands Holdings 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 PBH stock valuation model: a) initial revenue growth rate of 16% 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 6.9%, whose default value for PBH is calculated based on our internal credit rating of Premium Brands Holdings 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 Premium Brands Holdings 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 PBH stock the variable cost ratio is equal to 89.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $106 million in the base year in the intrinsic value calculation for PBH 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 3.9% for Premium Brands Holdings Corporation.

Corporate tax rate of 27% is the nominal tax rate for Premium Brands Holdings 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 PBH 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 PBH are equal to 19%.

Life of production assets of 17.7 years is the average useful life of capital assets used in Premium Brands Holdings 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 PBH is equal to 10.3%. 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 - $426 million for Premium Brands Holdings 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 29.953 million for Premium Brands Holdings 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 Premium Brands Holdings Corporation at the current share price and the inputted number of shares is $3.3 billion.

RELATED COMPANIES Price Int.Val. Rating
MFI Maple Leaf Foo 33.25 3.26  str.sell
WN George Weston 105.60 142.62  buy
MRU Metro Inc. 43.95 42.84  hold
SAP Saputo Inc. 43.90 36.68  hold
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.