Intrinsic value of Premium Brands Holdings Corporation - PBH

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$86.66

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$86.66

 
Intrinsic value

$198.88

 
Up/down potential

+129%

 
Rating

str. buy

 
Value-price divergence* premium content

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

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 2.6

 

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, %
  25.39
  38.40
  35.06
  32.05
  29.35
  26.91
  24.72
  22.75
  20.98
  19.38
  17.94
  16.65
  15.48
  14.43
  13.49
  12.64
  11.88
  11.19
  10.57
  10.01
  9.51
  9.06
  8.65
  8.29
  7.96
  7.66
  7.40
  7.16
  6.94
  6.75
  6.57
Revenue, $m
  1,862
  2,577
  3,481
  4,596
  5,945
  7,545
  9,410
  11,551
  13,974
  16,682
  19,675
  22,950
  26,503
  30,328
  34,419
  38,770
  43,375
  48,228
  53,326
  58,665
  64,245
  70,066
  76,130
  82,441
  89,003
  95,825
  102,914
  110,280
  117,936
  125,894
  134,170
Variable operating expenses, $m
 
  2,292
  3,084
  4,062
  5,245
  6,648
  8,283
  10,160
  12,285
  14,659
  17,283
  20,123
  23,238
  26,592
  30,179
  33,994
  38,031
  42,287
  46,757
  51,438
  56,331
  61,435
  66,752
  72,285
  78,039
  84,021
  90,236
  96,695
  103,408
  110,386
  117,642
Fixed operating expenses, $m
 
  109
  111
  114
  117
  120
  123
  126
  129
  132
  136
  139
  143
  146
  150
  154
  157
  161
  165
  169
  174
  178
  182
  187
  192
  197
  201
  206
  212
  217
  222
Total operating expenses, $m
  1,767
  2,401
  3,195
  4,176
  5,362
  6,768
  8,406
  10,286
  12,414
  14,791
  17,419
  20,262
  23,381
  26,738
  30,329
  34,148
  38,188
  42,448
  46,922
  51,607
  56,505
  61,613
  66,934
  72,472
  78,231
  84,218
  90,437
  96,901
  103,620
  110,603
  117,864
Operating income, $m
  95
  177
  285
  420
  583
  778
  1,004
  1,265
  1,560
  1,891
  2,256
  2,688
  3,122
  3,590
  4,090
  4,622
  5,186
  5,780
  6,404
  7,057
  7,740
  8,453
  9,196
  9,969
  10,772
  11,608
  12,476
  13,378
  14,316
  15,291
  16,305
EBITDA, $m
  130
  236
  355
  501
  679
  891
  1,137
  1,421
  1,742
  2,102
  2,499
  2,934
  3,407
  3,915
  4,460
  5,039
  5,651
  6,297
  6,976
  7,687
  8,430
  9,205
  10,013
  10,853
  11,728
  12,636
  13,581
  14,562
  15,582
  16,643
  17,746
Interest expense (income), $m
  15
  16
  26
  39
  55
  74
  96
  123
  153
  187
  226
  268
  314
  364
  419
  476
  538
  603
  672
  744
  819
  898
  981
  1,066
  1,156
  1,249
  1,345
  1,445
  1,550
  1,658
  1,770
Earnings before tax, $m
  95
  161
  259
  381
  529
  704
  908
  1,142
  1,407
  1,703
  2,030
  2,420
  2,808
  3,225
  3,672
  4,146
  4,648
  5,177
  5,732
  6,313
  6,921
  7,555
  8,215
  8,902
  9,616
  10,359
  11,131
  11,933
  12,767
  13,634
  14,535
Tax expense, $m
  26
  43
  70
  103
  143
  190
  245
  308
  380
  460
  548
  653
  758
  871
  991
  1,119
  1,255
  1,398
  1,548
  1,705
  1,869
  2,040
  2,218
  2,404
  2,596
  2,797
  3,005
  3,222
  3,447
  3,681
  3,924
Net income, $m
  69
  117
  189
  278
  386
  514
  663
  834
  1,027
  1,243
  1,482
  1,767
  2,050
  2,355
  2,680
  3,027
  3,393
  3,779
  4,184
  4,609
  5,052
  5,515
  5,997
  6,498
  7,020
  7,562
  8,126
  8,711
  9,320
  9,953
  10,611

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
  1,121
  1,525
  2,059
  2,720
  3,518
  4,465
  5,568
  6,835
  8,269
  9,871
  11,642
  13,580
  15,682
  17,946
  20,366
  22,941
  25,665
  28,537
  31,554
  34,713
  38,015
  41,459
  45,048
  48,782
  52,665
  56,701
  60,896
  65,255
  69,785
  74,494
  79,390
Adjusted assets (=assets-cash), $m
  1,102
  1,525
  2,059
  2,720
  3,518
  4,465
  5,568
  6,835
  8,269
  9,871
  11,642
  13,580
  15,682
  17,946
  20,366
  22,941
  25,665
  28,537
  31,554
  34,713
  38,015
  41,459
  45,048
  48,782
  52,665
  56,701
  60,896
  65,255
  69,785
  74,494
  79,390
Revenue / Adjusted assets
  1.690
  1.690
  1.691
  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
  1.690
  1.690
  1.690
Average production assets, $m
  355
  490
  661
  873
  1,130
  1,434
  1,788
  2,195
  2,655
  3,170
  3,738
  4,360
  5,036
  5,762
  6,540
  7,366
  8,241
  9,163
  10,132
  11,146
  12,207
  13,313
  14,465
  15,664
  16,911
  18,207
  19,554
  20,953
  22,408
  23,920
  25,492
Working capital, $m
  190
  265
  358
  473
  612
  777
  969
  1,190
  1,439
  1,718
  2,027
  2,364
  2,730
  3,124
  3,545
  3,993
  4,468
  4,967
  5,493
  6,043
  6,617
  7,217
  7,841
  8,491
  9,167
  9,870
  10,600
  11,359
  12,147
  12,967
  13,819
Total debt, $m
  427
  667
  994
  1,399
  1,888
  2,469
  3,145
  3,922
  4,801
  5,783
  6,868
  8,056
  9,345
  10,733
  12,217
  13,795
  15,465
  17,225
  19,074
  21,011
  23,035
  25,147
  27,346
  29,635
  32,015
  34,490
  37,061
  39,733
  42,510
  45,397
  48,398
Total liabilities, $m
  695
  935
  1,262
  1,667
  2,156
  2,737
  3,413
  4,190
  5,069
  6,051
  7,136
  8,324
  9,613
  11,001
  12,485
  14,063
  15,733
  17,493
  19,342
  21,279
  23,303
  25,415
  27,614
  29,903
  32,283
  34,758
  37,329
  40,001
  42,778
  45,665
  48,666
Total equity, $m
  426
  590
  797
  1,052
  1,361
  1,728
  2,155
  2,645
  3,200
  3,820
  4,505
  5,255
  6,069
  6,945
  7,882
  8,878
  9,933
  11,044
  12,211
  13,434
  14,712
  16,045
  17,433
  18,878
  20,381
  21,943
  23,567
  25,254
  27,007
  28,829
  30,724
Total liabilities and equity, $m
  1,121
  1,525
  2,059
  2,719
  3,517
  4,465
  5,568
  6,835
  8,269
  9,871
  11,641
  13,579
  15,682
  17,946
  20,367
  22,941
  25,666
  28,537
  31,553
  34,713
  38,015
  41,460
  45,047
  48,781
  52,664
  56,701
  60,896
  65,255
  69,785
  74,494
  79,390
Debt-to-equity ratio
  1.002
  1.130
  1.250
  1.330
  1.390
  1.430
  1.460
  1.480
  1.500
  1.510
  1.520
  1.530
  1.540
  1.550
  1.550
  1.550
  1.560
  1.560
  1.560
  1.560
  1.570
  1.570
  1.570
  1.570
  1.570
  1.570
  1.570
  1.570
  1.570
  1.570
  1.580
Adjusted equity ratio
  0.381
  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
  69
  117
  189
  278
  386
  514
  663
  834
  1,027
  1,243
  1,482
  1,767
  2,050
  2,355
  2,680
  3,027
  3,393
  3,779
  4,184
  4,609
  5,052
  5,515
  5,997
  6,498
  7,020
  7,562
  8,126
  8,711
  9,320
  9,953
  10,611
Depreciation, amort., depletion, $m
  35
  60
  69
  81
  96
  113
  133
  156
  182
  211
  243
  246
  284
  326
  369
  416
  466
  518
  572
  630
  690
  752
  817
  885
  955
  1,029
  1,105
  1,184
  1,266
  1,351
  1,440
Funds from operations, $m
  171
  177
  259
  360
  482
  627
  796
  990
  1,209
  1,455
  1,725
  2,013
  2,334
  2,680
  3,050
  3,443
  3,858
  4,297
  4,757
  5,238
  5,742
  6,267
  6,814
  7,383
  7,975
  8,591
  9,230
  9,895
  10,586
  11,304
  12,051
Change in working capital, $m
  21
  74
  93
  115
  139
  165
  192
  221
  250
  279
  308
  337
  366
  394
  421
  448
  474
  500
  525
  550
  575
  600
  625
  650
  676
  703
  730
  759
  789
  820
  852
Cash from operations, $m
  150
  151
  166
  245
  343
  462
  604
  769
  960
  1,176
  1,417
  1,676
  1,968
  2,286
  2,628
  2,995
  3,384
  3,797
  4,232
  4,689
  5,167
  5,668
  6,190
  6,733
  7,299
  7,888
  8,500
  9,136
  9,797
  10,484
  11,198
Maintenance CAPEX, $m
  0
  -20
  -28
  -37
  -49
  -64
  -81
  -101
  -124
  -150
  -179
  -211
  -246
  -284
  -326
  -369
  -416
  -466
  -518
  -572
  -630
  -690
  -752
  -817
  -885
  -955
  -1,029
  -1,105
  -1,184
  -1,266
  -1,351
New CAPEX, $m
  -43
  -135
  -172
  -212
  -256
  -304
  -354
  -407
  -460
  -514
  -569
  -622
  -675
  -727
  -777
  -827
  -875
  -922
  -969
  -1,015
  -1,060
  -1,106
  -1,152
  -1,199
  -1,247
  -1,296
  -1,347
  -1,400
  -1,455
  -1,512
  -1,572
Cash from investing activities, $m
  -237
  -155
  -200
  -249
  -305
  -368
  -435
  -508
  -584
  -664
  -748
  -833
  -921
  -1,011
  -1,103
  -1,196
  -1,291
  -1,388
  -1,487
  -1,587
  -1,690
  -1,796
  -1,904
  -2,016
  -2,132
  -2,251
  -2,376
  -2,505
  -2,639
  -2,778
  -2,923
Free cash flow, $m
  -87
  -4
  -34
  -5
  37
  94
  168
  262
  375
  511
  669
  842
  1,047
  1,275
  1,525
  1,798
  2,093
  2,409
  2,745
  3,102
  3,477
  3,872
  4,285
  4,717
  5,168
  5,637
  6,125
  6,632
  7,159
  7,706
  8,275
Issuance/(repayment) of debt, $m
  138
  259
  328
  405
  489
  580
  677
  777
  879
  982
  1,086
  1,188
  1,289
  1,387
  1,484
  1,578
  1,670
  1,760
  1,849
  1,937
  2,024
  2,111
  2,200
  2,289
  2,380
  2,474
  2,571
  2,672
  2,777
  2,887
  3,002
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  
  138
  259
  328
  405
  489
  580
  677
  777
  879
  982
  1,086
  1,188
  1,289
  1,387
  1,484
  1,578
  1,670
  1,760
  1,849
  1,937
  2,024
  2,111
  2,200
  2,289
  2,380
  2,474
  2,571
  2,672
  2,777
  2,887
  3,002
Total cash flow (excl. dividends), $m
  51
  255
  294
  400
  527
  675
  845
  1,038
  1,254
  1,493
  1,755
  2,030
  2,336
  2,662
  3,009
  3,377
  3,763
  4,169
  4,594
  5,038
  5,501
  5,983
  6,485
  7,006
  7,548
  8,111
  8,696
  9,304
  9,936
  10,593
  11,276
Retained Cash Flow (-), $m
  -106
  -164
  -207
  -255
  -309
  -366
  -427
  -490
  -555
  -620
  -685
  -750
  -814
  -876
  -937
  -996
  -1,054
  -1,111
  -1,167
  -1,223
  -1,278
  -1,333
  -1,389
  -1,445
  -1,503
  -1,562
  -1,623
  -1,687
  -1,753
  -1,822
  -1,895
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
 
  90
  87
  145
  218
  308
  418
  548
  699
  873
  1,070
  1,280
  1,522
  1,786
  2,073
  2,380
  2,709
  3,058
  3,427
  3,816
  4,223
  4,650
  5,096
  5,561
  6,045
  6,549
  7,073
  7,617
  8,183
  8,770
  9,381
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
 
  85
  76
  116
  160
  206
  252
  295
  333
  365
  387
  397
  399
  391
  374
  349
  317
  282
  244
  206
  170
  136
  106
  81
  60
  43
  30
  20
  13
  8
  5
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

Premium Brands Holdings Corporation manufactures and distributes food products in North America. It operates through two segments, Specialty Foods and Premium Food Distribution. The company provides premium processed meat products, sandwiches, meat snacks, baked goods, pasta and sauces, seafood, and fully cooked grilled meat products. It is also involved in the distribution of food products under various third party brands, including protein products, seafood, slush drinks, ice cream equipment, coffee, and popcorn peppers. The company offers its products under the brand names of Grimm’s, Harvest, McSweeney’s, Bread Garden Go, Hygaard, Hempler’s, Isernio’s, Quality Fast Foods, Direct Plus, Harlan Fairbanks, Creekside Bakehouse, Stuyver’s Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso’s, Maximum Seafood, Ocean Miracle, SK Food Group, OvenPride, Hub City Fisheries, Audrey’s, Deli Chef, Piller’s, Freybe, Expresco, Made-Rite, SJ Fine Foods, and E1even. It serves chains and large format retailers, independent and specialty retailers, and foodservice operators, as well as indirect foodservice and trading customers. The company primarily operates in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio, and Washington. The company was formerly known as Premium Brands Income Fund and changed its name to Premium Brands Holdings Corporation in July 2009. Premium Brands Holdings Corporation was founded in 1917 and is headquartered in Richmond, Canada.

FINANCIAL RATIOS  of  Premium Brands Holdings Corporation (PBH)

Valuation Ratios
P/E Ratio 37.3
Price to Sales 1.4
Price to Book 6
Price to Tangible Book
Price to Cash Flow 17.2
Price to Free Cash Flow 24.1
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 38.4% 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 29.731 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 $2.6 billion.


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Stock chart of PBH Financial statements of PBH
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The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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