Intrinsic value of Culp Inc. - CFI

Previous Close

$33.40

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$33.40

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of CFI 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 0.4

 

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, %
  0.97
  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
  313
  319
  327
  335
  344
  355
  366
  379
  392
  407
  422
  439
  457
  476
  496
  518
  540
  564
  590
  616
  645
  675
  706
  739
  774
  811
  850
  891
  934
  979
  1,027
Variable operating expenses, $m
 
  296
  303
  310
  319
  329
  339
  351
  363
  377
  391
  406
  422
  440
  458
  478
  499
  521
  544
  569
  595
  623
  652
  683
  715
  749
  785
  823
  862
  904
  948
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
  285
  296
  303
  310
  319
  329
  339
  351
  363
  377
  391
  406
  422
  440
  458
  478
  499
  521
  544
  569
  595
  623
  652
  683
  715
  749
  785
  823
  862
  904
  948
Operating income, $m
  28
  23
  24
  25
  25
  26
  27
  28
  29
  30
  31
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  79
EBITDA, $m
  35
  29
  30
  30
  31
  32
  33
  34
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  81
  85
  89
  93
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
Earnings before tax, $m
  28
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  72
  75
Tax expense, $m
  11
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
Net income, $m
  17
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  52
  55

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  42
  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
  175
  136
  139
  142
  146
  151
  156
  161
  167
  173
  180
  187
  194
  202
  211
  220
  230
  240
  251
  262
  274
  287
  300
  314
  329
  345
  361
  379
  397
  416
  436
Adjusted assets (=assets-cash), $m
  133
  136
  139
  142
  146
  151
  156
  161
  167
  173
  180
  187
  194
  202
  211
  220
  230
  240
  251
  262
  274
  287
  300
  314
  329
  345
  361
  379
  397
  416
  436
Revenue / Adjusted assets
  2.353
  2.346
  2.353
  2.359
  2.356
  2.351
  2.346
  2.354
  2.347
  2.353
  2.344
  2.348
  2.356
  2.356
  2.351
  2.355
  2.348
  2.350
  2.351
  2.351
  2.354
  2.352
  2.353
  2.354
  2.353
  2.351
  2.355
  2.351
  2.353
  2.353
  2.356
Average production assets, $m
  22
  22
  23
  23
  24
  25
  26
  27
  27
  28
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  62
  65
  69
  72
Working capital, $m
  79
  38
  39
  40
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  116
  121
Total debt, $m
  0
  1
  2
  3
  5
  6
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  37
  41
  45
  49
  53
  58
  63
  68
  73
  79
  85
  91
  98
  105
Total liabilities, $m
  46
  47
  48
  49
  51
  52
  54
  56
  58
  60
  62
  65
  67
  70
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  151
Total equity, $m
  129
  89
  91
  93
  96
  99
  102
  105
  109
  113
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  188
  196
  206
  215
  225
  236
  248
  260
  272
  285
Total liabilities and equity, $m
  175
  136
  139
  142
  147
  151
  156
  161
  167
  173
  179
  187
  194
  202
  211
  220
  229
  240
  251
  262
  274
  287
  300
  315
  329
  344
  361
  379
  397
  416
  436
Debt-to-equity ratio
  0.000
  0.010
  0.020
  0.040
  0.050
  0.060
  0.080
  0.090
  0.110
  0.120
  0.140
  0.150
  0.170
  0.180
  0.200
  0.210
  0.220
  0.240
  0.250
  0.260
  0.270
  0.280
  0.290
  0.310
  0.320
  0.330
  0.330
  0.340
  0.350
  0.360
  0.370
Adjusted equity ratio
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  17
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  52
  55
Depreciation, amort., depletion, $m
  7
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Funds from operations, $m
  24
  23
  23
  24
  24
  25
  26
  27
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  58
  60
  63
  66
  69
Change in working capital, $m
  -3
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
Cash from operations, $m
  27
  42
  22
  23
  23
  24
  24
  25
  26
  27
  28
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  48
  51
  53
  55
  58
  61
  64
Maintenance CAPEX, $m
  0
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
New CAPEX, $m
  -11
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
Cash from investing activities, $m
  -7
  -4
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -15
  -16
  -17
Free cash flow, $m
  20
  37
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  23
  24
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  44
  47
Issuance/(repayment) of debt, $m
  -2
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
Issuance/(repurchase) of shares, $m
  -2
  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  
  -4
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
Total cash flow (excl. dividends), $m
  16
  38
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
Retained Cash Flow (-), $m
  -10
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
Prev. year cash balance distribution, $m
 
  42
  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
 
  78
  16
  16
  17
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  40
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
 
  75
  15
  14
  14
  13
  12
  12
  11
  11
  10
  9
  8
  8
  7
  6
  6
  5
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
  1
  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

Culp, Inc. manufacturers, sources, markets, and sells mattress fabrics, mattress covers, and cut and sewn kits for use in mattresses, foundations, and other bedding products in North America, the Far East, Asia, and internationally. It operates through two segments, Mattress Fabrics and Upholstery Fabrics. The Mattress Fabrics segment offers woven jacquard, knitted, and converted fabrics for use in the production of bedding products, including mattresses, box springs, foundations, and bed components. The Upholstery Fabrics segment provides jacquard woven fabrics, velvets, microdenier suedes, woven dobbies, knitted fabrics, piece-dyed woven products, and polyurethane fabrics for use in the production of residential and commercial furniture, such as sofas, sofa-beds, chairs, recliners, sectionals, offices, and other institutional settings, as well as for use in fabrics markets. The company was founded in 1972 and is headquartered in High Point, North Carolina.

FINANCIAL RATIOS  of  Culp Inc. (CFI)

Valuation Ratios
P/E Ratio 24.1
Price to Sales 1.3
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 15.2
Price to Free Cash Flow 25.6
Growth Rates
Sales Growth Rate 1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10%
Cap. Spend. - 3 Yr. Gr. Rate 22.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 9.8%
Ret/ On Assets - 3 Yr. Avg. 10%
Return On Total Capital 13.6%
Ret/ On T. Cap. - 3 Yr. Avg. 13.9%
Return On Equity 13.7%
Return On Equity - 3 Yr. Avg. 14.3%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 20.8%
Gross Margin - 3 Yr. Avg. 18.6%
EBITDA Margin 11.2%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 8.9%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin 8.9%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 5.4%
Effective Tax Rate 39.3%
Eff/ Tax Rate - 3 Yr. Avg. 28.2%
Payout Ratio 47.1%

CFI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CFI stock intrinsic value calculation we used $313 million for the last fiscal year's total revenue generated by Culp Inc.. The default revenue input number comes from 2016 income statement of Culp 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 CFI 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 4.3%, whose default value for CFI is calculated based on our internal credit rating of Culp 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 Culp 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 CFI stock the variable cost ratio is equal to 92.7%.

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 CFI 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 Culp Inc..

Corporate tax rate of 27% is the nominal tax rate for Culp 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 CFI 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 CFI are equal to 7%.

Life of production assets of 4.7 years is the average useful life of capital assets used in Culp 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 CFI is equal to 11.8%. 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 - $129 million for Culp 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 12.24 million for Culp 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 Culp Inc. at the current share price and the inputted number of shares is $0.4 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
TPX Tempur Sealy I 50.87 prem.  prem.
CRWS Crown Crafts 6.75 prem.  prem.
SPAN Span-America M 29.99 prem.  prem.
LEG Leggett&Platt 52.66 prem.  prem.
LZB La-Z-Boy 32.35 prem.  prem.
SCSS Select Comfort 31.98 prem.  prem.
FLXS Flexsteel Indu 54.21 prem.  prem.
BSET Bassett Furnit 32.80 prem.  prem.

COMPANY NEWS

▶ Culp, Inc. to Change NYSE Ticker Symbol to CULP   [Jun-27-17 04:15PM  Business Wire]
▶ Culp tops Street 4Q forecasts   [Jun-13-17 04:44PM  Associated Press]
▶ Culp, Inc. Value Analysis (NYSE:CFI) : May 18, 2017   [May-18-17 02:13PM  Capital Cube]
▶ Culp meets 3Q profit forecasts   [05:53PM  Associated Press]
▶ Culp, Inc. Value Analysis (NYSE:CFI) : January 18, 2017   [Jan-18-17 01:29PM  Capital Cube]
▶ ETFs with exposure to Culp, Inc. : January 17, 2017   [Jan-17-17 11:14AM  Capital Cube]
▶ Is Culp, Inc. (CFI) A Good Stock To Buy?   [Dec-13-16 08:14AM  at Insider Monkey]
▶ JPMorgan: The Honeywell Bears Have Got It Wrong   [Sep-09-16 01:27PM  at Barrons.com]
▶ [$$] 4 Small-Cap Picks by an Index-Crushing Manager   [Mar-22-16 05:40PM  at Barrons.com]
Stock chart of CFI Financial statements of CFI Annual reports of CFI
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2017. All rigths reserved.