Intrinsic value of Black Box - BBOX

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$9.95

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$9.95

 
Intrinsic value

$10.25

 
Up/down potential

+3%

 
Rating

hold

 
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 BBOX 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 0.2

 

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, %
  -7.96
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  913
  931
  953
  977
  1,005
  1,035
  1,069
  1,105
  1,144
  1,187
  1,232
  1,281
  1,333
  1,388
  1,447
  1,510
  1,576
  1,646
  1,720
  1,798
  1,881
  1,968
  2,060
  2,157
  2,259
  2,366
  2,480
  2,599
  2,724
  2,856
  2,995
Variable operating expenses, $m
 
  905
  926
  950
  977
  1,006
  1,039
  1,074
  1,112
  1,154
  1,198
  1,245
  1,296
  1,349
  1,407
  1,467
  1,532
  1,600
  1,672
  1,748
  1,828
  1,913
  2,002
  2,096
  2,196
  2,300
  2,410
  2,526
  2,648
  2,776
  2,911
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
  1,100
  905
  926
  950
  977
  1,006
  1,039
  1,074
  1,112
  1,154
  1,198
  1,245
  1,296
  1,349
  1,407
  1,467
  1,532
  1,600
  1,672
  1,748
  1,828
  1,913
  2,002
  2,096
  2,196
  2,300
  2,410
  2,526
  2,648
  2,776
  2,911
Operating income, $m
  -188
  26
  27
  27
  28
  29
  30
  31
  32
  33
  35
  36
  37
  39
  41
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
EBITDA, $m
  -169
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113
  118
Interest expense (income), $m
  6
  6
  6
  6
  7
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
Earnings before tax, $m
  -193
  21
  21
  21
  22
  22
  22
  23
  23
  24
  25
  25
  26
  27
  27
  28
  29
  30
  31
  32
  33
  34
  35
  36
  38
  39
  41
  42
  44
  45
  47
Tax expense, $m
  -22
  6
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
Net income, $m
  -171
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  33
  34

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  24
  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
  476
  461
  472
  484
  497
  512
  529
  547
  566
  587
  610
  634
  660
  687
  716
  747
  780
  815
  851
  890
  931
  974
  1,020
  1,068
  1,118
  1,171
  1,228
  1,287
  1,349
  1,414
  1,483
Adjusted assets (=assets-cash), $m
  452
  461
  472
  484
  497
  512
  529
  547
  566
  587
  610
  634
  660
  687
  716
  747
  780
  815
  851
  890
  931
  974
  1,020
  1,068
  1,118
  1,171
  1,228
  1,287
  1,349
  1,414
  1,483
Revenue / Adjusted assets
  2.020
  2.020
  2.019
  2.019
  2.022
  2.021
  2.021
  2.020
  2.021
  2.022
  2.020
  2.021
  2.020
  2.020
  2.021
  2.021
  2.021
  2.020
  2.021
  2.020
  2.020
  2.021
  2.020
  2.020
  2.021
  2.020
  2.020
  2.019
  2.019
  2.020
  2.020
Average production assets, $m
  117
  119
  122
  125
  129
  132
  137
  141
  146
  152
  158
  164
  171
  178
  185
  193
  202
  211
  220
  230
  241
  252
  264
  276
  289
  303
  317
  333
  349
  366
  383
Working capital, $m
  129
  108
  111
  113
  117
  120
  124
  128
  133
  138
  143
  149
  155
  161
  168
  175
  183
  191
  200
  209
  218
  228
  239
  250
  262
  275
  288
  301
  316
  331
  347
Total debt, $m
  121
  126
  134
  143
  152
  163
  174
  187
  201
  216
  232
  249
  267
  286
  307
  329
  352
  376
  402
  429
  458
  489
  521
  555
  590
  628
  668
  709
  753
  799
  848
Total liabilities, $m
  320
  325
  333
  342
  351
  362
  373
  386
  400
  415
  431
  448
  466
  485
  506
  528
  551
  575
  601
  628
  657
  688
  720
  754
  789
  827
  867
  908
  952
  998
  1,047
Total equity, $m
  156
  136
  139
  142
  146
  151
  156
  161
  167
  173
  179
  186
  194
  202
  211
  220
  229
  240
  250
  262
  274
  286
  300
  314
  329
  344
  361
  378
  396
  416
  436
Total liabilities and equity, $m
  476
  461
  472
  484
  497
  513
  529
  547
  567
  588
  610
  634
  660
  687
  717
  748
  780
  815
  851
  890
  931
  974
  1,020
  1,068
  1,118
  1,171
  1,228
  1,286
  1,348
  1,414
  1,483
Debt-to-equity ratio
  0.776
  0.930
  0.970
  1.000
  1.040
  1.080
  1.120
  1.160
  1.210
  1.250
  1.290
  1.330
  1.380
  1.420
  1.460
  1.500
  1.530
  1.570
  1.610
  1.640
  1.670
  1.710
  1.740
  1.770
  1.800
  1.820
  1.850
  1.880
  1.900
  1.920
  1.940
Adjusted equity ratio
  0.292
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -171
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  33
  34
Depreciation, amort., depletion, $m
  19
  11
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  24
  25
  26
  27
  28
  30
  31
  33
  34
Funds from operations, $m
  44
  26
  26
  27
  27
  28
  29
  29
  30
  31
  32
  33
  34
  35
  37
  38
  39
  41
  42
  44
  46
  47
  49
  51
  53
  56
  58
  60
  63
  66
  69
Change in working capital, $m
  7
  2
  2
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
Cash from operations, $m
  37
  20
  24
  24
  24
  24
  25
  25
  26
  26
  27
  27
  28
  29
  30
  31
  32
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  48
  50
  53
Maintenance CAPEX, $m
  0
  -10
  -11
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
New CAPEX, $m
  -10
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
Cash from investing activities, $m
  -11
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -20
  -20
  -22
  -22
  -24
  -25
  -25
  -27
  -28
  -30
  -32
  -32
  -34
  -36
  -38
  -40
  -41
  -43
  -46
  -48
  -51
Free cash flow, $m
  26
  7
  10
  10
  9
  9
  9
  8
  8
  8
  7
  7
  7
  7
  6
  6
  6
  6
  5
  5
  5
  5
  4
  4
  4
  4
  3
  3
  3
  2
  2
Issuance/(repayment) of debt, $m
  -14
  6
  7
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -21
  6
  7
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
Total cash flow (excl. dividends), $m
  7
  13
  18
  18
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
Retained Cash Flow (-), $m
  181
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
Prev. year cash balance distribution, $m
 
  23
  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
 
  34
  15
  15
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  25
  25
  26
  27
  28
  29
  30
Discount rate, %
 
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
 
  32
  13
  12
  11
  11
  10
  9
  8
  7
  7
  6
  5
  5
  4
  3
  3
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
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

Black Box Corporation provides technology solutions that assist its customers to design, build, manage, and secure their IT infrastructure. It offers IT infrastructure, specialty networking, multimedia, and keyboard/video/mouse switching products. The company also provides communications lifecycle, unified communications, structured cabling, video/AV, in-building wireless, and data center services. It distributes its products primarily through value-added resellers, direct marketing manufacturers, mass merchandisers, Web retailers, and others; and services through value-added resellers, manufacturers, large system integrators, and other technical services companies. It serves government, healthcare, business services, manufacturing, retail, technology, banking, and other industries worldwide. Black Box Corporation was founded in 1976 and is headquartered in Lawrence, Pennsylvania.

FINANCIAL RATIOS  of  Black Box (BBOX)

Valuation Ratios
P/E Ratio -0.9
Price to Sales 0.2
Price to Book 1
Price to Tangible Book
Price to Cash Flow 4
Price to Free Cash Flow 5.5
Growth Rates
Sales Growth Rate -8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.1%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 24
Current Ratio 0.6
LT Debt to Equity 76.9%
Total Debt to Equity 77.6%
Interest Coverage -31
Management Effectiveness
Return On Assets -28.5%
Ret/ On Assets - 3 Yr. Avg. -13.2%
Return On Total Capital -45.5%
Ret/ On T. Cap. - 3 Yr. Avg. -20.7%
Return On Equity -69.4%
Return On Equity - 3 Yr. Avg. -31%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 29.6%
Gross Margin - 3 Yr. Avg. 30.4%
EBITDA Margin -18.4%
EBITDA Margin - 3 Yr. Avg. -7.6%
Operating Margin -20.5%
Oper. Margin - 3 Yr. Avg. -9.6%
Pre-Tax Margin -21.1%
Pre-Tax Margin - 3 Yr. Avg. -10.1%
Net Profit Margin -18.7%
Net Profit Margin - 3 Yr. Avg. -9.7%
Effective Tax Rate 11.4%
Eff/ Tax Rate - 3 Yr. Avg. 15.7%
Payout Ratio -4.1%

BBOX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BBOX stock intrinsic value calculation we used $913 million for the last fiscal year's total revenue generated by Black Box. The default revenue input number comes from 2016 income statement of Black Box. 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 BBOX stock valuation model: a) initial revenue growth rate of 2% 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 6.1%, whose default value for BBOX is calculated based on our internal credit rating of Black Box, 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 Black Box.
    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 BBOX stock the variable cost ratio is equal to 97.2%.

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 BBOX 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 4.6% for Black Box.

Corporate tax rate of 27% is the nominal tax rate for Black Box. 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 BBOX 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 BBOX are equal to 12.8%.

Life of production assets of 11.2 years is the average useful life of capital assets used in Black Box 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 BBOX is equal to 11.6%. 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 - $156 million for Black Box - 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 15.32 million for Black Box 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 Black Box at the current share price and the inputted number of shares is $0.2 billion.


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COMPANY NEWS

▶ ETFs with exposure to Black Box Corp. : April 11, 2017   [Apr-11-17 02:14PM  Capital Cube]
▶ ETFs with exposure to Black Box Corp. : March 30, 2017   [Mar-29-17 08:28PM  Capital Cube]
▶ Black Box posts 3Q profit   [04:29PM  Associated Press]
▶ Is Black Box Corporation (BBOX) A Good Stock To Buy?   [Dec-13-16 07:15PM  at Insider Monkey]
▶ Black Box Corporation Declares Its Quarterly Cash Dividend   [Nov-16-16 09:04AM  Business Wire]
▶ Black Box reports 2Q loss   [Nov-01-16 04:25PM  AP]
▶ Black Box Board Elects New Director   [Oct-31-16 04:04PM  Business Wire]
▶ Black Box reports 1Q loss   [04:36PM  AP]
▶ Black Box Appoints E.C. Sykes as President and CEO   [Feb-09-16 09:08AM  Business Wire]
▶ Black Box Launches New U.S. Website   [Feb-02-16 09:04AM  Business Wire]
▶ McAndrew to resign as CEO of Black Box   [Dec-23  09:30AM  at bizjournals.com]
▶ Is Magnachip Semiconductor Corp (MX) A Good Stock To Buy?   [Dec-02  01:03PM  at Insider Monkey]
▶ Investors Are Losing Confidence In Black Box Corporation (BBOX)   [Nov-27  11:29PM  at Insider Monkey]
▶ Black Box reports 2Q loss   [Oct-27  04:41PM  AP]
Stock chart of BBOX Financial statements of BBOX
Valuation of Stocks

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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