Intrinsic value of Innophos Holdings - IPHS

Previous Close

$43.48

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$43.48

 
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 IPHS 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 0.8

 

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, %
  -8.11
  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
  725
  805
  823
  844
  868
  895
  923
  955
  989
  1,026
  1,065
  1,107
  1,152
  1,200
  1,251
  1,305
  1,362
  1,422
  1,486
  1,554
  1,625
  1,701
  1,780
  1,864
  1,952
  2,045
  2,143
  2,246
  2,354
  2,468
  2,588
Variable operating expenses, $m
 
  702
  718
  736
  756
  779
  804
  831
  860
  892
  926
  954
  992
  1,033
  1,077
  1,124
  1,173
  1,225
  1,280
  1,338
  1,400
  1,465
  1,533
  1,605
  1,681
  1,761
  1,846
  1,934
  2,028
  2,126
  2,229
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
  646
  702
  718
  736
  756
  779
  804
  831
  860
  892
  926
  954
  992
  1,033
  1,077
  1,124
  1,173
  1,225
  1,280
  1,338
  1,400
  1,465
  1,533
  1,605
  1,681
  1,761
  1,846
  1,934
  2,028
  2,126
  2,229
Operating income, $m
  79
  103
  106
  109
  112
  116
  120
  124
  129
  134
  139
  153
  160
  166
  173
  181
  189
  197
  206
  215
  225
  236
  247
  258
  271
  284
  297
  311
  326
  342
  359
EBITDA, $m
  116
  138
  142
  145
  149
  154
  159
  164
  170
  176
  183
  190
  198
  206
  215
  224
  234
  245
  256
  267
  279
  292
  306
  320
  336
  352
  368
  386
  405
  424
  445
Interest expense (income), $m
  0
  7
  8
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
Earnings before tax, $m
  70
  96
  98
  101
  104
  107
  111
  115
  119
  124
  128
  142
  148
  154
  160
  167
  174
  181
  189
  198
  207
  216
  226
  236
  247
  259
  271
  284
  298
  312
  327
Tax expense, $m
  22
  26
  27
  27
  28
  29
  30
  31
  32
  33
  35
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
Net income, $m
  48
  70
  72
  74
  76
  78
  81
  84
  87
  90
  94
  104
  108
  112
  117
  122
  127
  132
  138
  144
  151
  158
  165
  173
  181
  189
  198
  207
  217
  228
  238

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  53
  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
  643
  665
  680
  698
  718
  739
  763
  789
  817
  848
  880
  915
  952
  992
  1,034
  1,078
  1,125
  1,175
  1,228
  1,284
  1,343
  1,405
  1,471
  1,540
  1,613
  1,690
  1,771
  1,856
  1,946
  2,040
  2,139
Adjusted assets (=assets-cash), $m
  590
  665
  680
  698
  718
  739
  763
  789
  817
  848
  880
  915
  952
  992
  1,034
  1,078
  1,125
  1,175
  1,228
  1,284
  1,343
  1,405
  1,471
  1,540
  1,613
  1,690
  1,771
  1,856
  1,946
  2,040
  2,139
Revenue / Adjusted assets
  1.229
  1.211
  1.210
  1.209
  1.209
  1.211
  1.210
  1.210
  1.211
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.211
  1.211
  1.210
  1.210
  1.210
  1.210
  1.211
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
Average production assets, $m
  252
  179
  184
  188
  194
  199
  206
  213
  221
  229
  237
  247
  257
  268
  279
  291
  304
  317
  331
  347
  362
  379
  397
  416
  435
  456
  478
  501
  525
  550
  577
Working capital, $m
  188
  179
  184
  188
  194
  199
  206
  213
  221
  229
  237
  247
  257
  268
  279
  291
  304
  317
  331
  347
  362
  379
  397
  416
  435
  456
  478
  501
  525
  550
  577
Total debt, $m
  185
  216
  224
  233
  243
  254
  266
  279
  294
  309
  326
  344
  362
  383
  404
  427
  451
  477
  504
  532
  562
  594
  628
  663
  700
  740
  781
  824
  870
  918
  969
Total liabilities, $m
  296
  340
  348
  357
  367
  378
  390
  403
  418
  433
  450
  468
  486
  507
  528
  551
  575
  601
  628
  656
  686
  718
  752
  787
  824
  864
  905
  948
  994
  1,042
  1,093
Total equity, $m
  347
  325
  333
  341
  351
  362
  373
  386
  400
  414
  430
  447
  466
  485
  505
  527
  550
  575
  601
  628
  657
  687
  719
  753
  789
  826
  866
  908
  951
  997
  1,046
Total liabilities and equity, $m
  643
  665
  681
  698
  718
  740
  763
  789
  818
  847
  880
  915
  952
  992
  1,033
  1,078
  1,125
  1,176
  1,229
  1,284
  1,343
  1,405
  1,471
  1,540
  1,613
  1,690
  1,771
  1,856
  1,945
  2,039
  2,139
Debt-to-equity ratio
  0.533
  0.660
  0.670
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
  0.860
  0.870
  0.880
  0.890
  0.890
  0.900
  0.910
  0.910
  0.920
  0.930
Adjusted equity ratio
  0.498
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  48
  70
  72
  74
  76
  78
  81
  84
  87
  90
  94
  104
  108
  112
  117
  122
  127
  132
  138
  144
  151
  158
  165
  173
  181
  189
  198
  207
  217
  228
  238
Depreciation, amort., depletion, $m
  37
  35
  36
  37
  37
  38
  39
  40
  41
  43
  44
  37
  38
  40
  42
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
  86
Funds from operations, $m
  180
  105
  107
  110
  113
  116
  120
  124
  128
  133
  138
  141
  146
  152
  158
  165
  172
  180
  188
  196
  205
  214
  224
  235
  246
  257
  269
  282
  296
  310
  325
Change in working capital, $m
  41
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
Cash from operations, $m
  139
  18
  103
  105
  108
  111
  114
  117
  121
  125
  129
  131
  136
  141
  147
  153
  159
  166
  173
  181
  189
  198
  207
  216
  226
  236
  247
  259
  271
  284
  298
Maintenance CAPEX, $m
  0
  -26
  -27
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
New CAPEX, $m
  -37
  -3
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
Cash from investing activities, $m
  -37
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -44
  -47
  -49
  -51
  -54
  -56
  -58
  -61
  -64
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -103
  -109
Free cash flow, $m
  102
  -12
  72
  73
  74
  76
  77
  79
  81
  83
  86
  86
  89
  92
  96
  99
  103
  107
  112
  116
  121
  127
  132
  138
  144
  151
  158
  165
  172
  181
  189
Issuance/(repayment) of debt, $m
  -28
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  43
  46
  48
  51
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  
  -30
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  43
  46
  48
  51
Total cash flow (excl. dividends), $m
  73
  -5
  80
  82
  84
  87
  90
  92
  96
  99
  103
  104
  108
  113
  117
  122
  127
  133
  139
  145
  152
  158
  166
  173
  181
  190
  199
  208
  218
  229
  240
Retained Cash Flow (-), $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
  -48
Prev. year cash balance distribution, $m
 
  14
  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
 
  3
  73
  74
  75
  76
  78
  80
  82
  84
  87
  87
  90
  93
  97
  100
  104
  109
  113
  118
  123
  128
  134
  140
  146
  152
  159
  167
  174
  183
  191
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  2
  63
  59
  55
  51
  47
  43
  39
  35
  31
  27
  23
  20
  17
  14
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  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

Innophos Holdings, Inc., through its subsidiaries, produces performance-critical and nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care, and industrial end markets. It operates through Specialty Phosphates US & Canada, Specialty Phosphates Mexico, and GTSP & Other segments. The company’s specialty ingredients include specialty phosphate salts, specialty phosphoric acids, and other mineral and botanical based specialty ingredients that are used as flavor enhancers in beverages; electrolytes in sports drinks; texture additives in cheeses; leavening agents in baked goods; mineral and botanical sources for nutritional supplements; pharmaceutical excipients; and cleaning agents in toothpaste, as well as in industrial applications, such as asphalt modification and petrochemical catalysis. It also provides food and technical grade purified phosphoric acid (PPA) used in the production of fertilizer, and specialty phosphate salts and acids, as well as in beverage and water treatment applications; technical grade sodium tripolyphosphate (STPP), a specialty phosphate, which is used as an ingredient in cleaning products, such as industrial and institutional cleaners, automatic dishwashing detergents, and consumer laundry detergents, as well as in water treatment, clay processing, and copper ore processing activities; and detergent grade PPA that is primarily used in the production of STPP. In addition, the company offers granular triple super-phosphate (GTSP), a fertilizer product line used for enhancing crop yields in various agricultural sectors. It serves primarily consumer goods manufacturers, distributors, and specialty chemical manufacturers in the United States, Canada, Mexico, and internationally. Innophos Holdings, Inc. was founded in 2004 and is headquartered in Cranbury, New Jersey.

FINANCIAL RATIOS  of  Innophos Holdings (IPHS)

Valuation Ratios
P/E Ratio 17.6
Price to Sales 1.2
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 6.1
Price to Free Cash Flow 8.3
Growth Rates
Sales Growth Rate -8.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15.6%
Cap. Spend. - 3 Yr. Gr. Rate 2.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 53.3%
Total Debt to Equity 53.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 6.8%
Return On Total Capital 8.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 14.1%
Return On Equity - 3 Yr. Avg. 11.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 20.7%
Gross Margin - 3 Yr. Avg. 20.4%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 13.8%
Operating Margin 10.9%
Oper. Margin - 3 Yr. Avg. 10%
Pre-Tax Margin 9.7%
Pre-Tax Margin - 3 Yr. Avg. 8.8%
Net Profit Margin 6.6%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 31.4%
Eff/ Tax Rate - 3 Yr. Avg. 33.5%
Payout Ratio 77.1%

IPHS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IPHS stock intrinsic value calculation we used $789 million for the last fiscal year's total revenue generated by Innophos Holdings. The default revenue input number comes from 2016 income statement of Innophos Holdings. 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 IPHS 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 7%, whose default value for IPHS is calculated based on our internal credit rating of Innophos Holdings, 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 Innophos Holdings.
    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 IPHS stock the variable cost ratio is equal to 87.2%.

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 IPHS 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 Innophos Holdings.

Corporate tax rate of 27% is the nominal tax rate for Innophos Holdings. 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 IPHS 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 IPHS are equal to 22.3%.

Life of production assets of 6.7 years is the average useful life of capital assets used in Innophos Holdings 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 IPHS is equal to 22.3%. 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 - $333 million for Innophos Holdings - 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 19.466 million for Innophos Holdings 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 Innophos Holdings at the current share price and the inputted number of shares is $0.8 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
POT Potash of Sask 16.45 prem.  prem.
BCPC Balchem 77.00 prem.  prem.
ACET Aceto 14.91 prem.  prem.
SCL Stepan 85.94 prem.  prem.
IFF International 135.37 prem.  prem.

COMPANY NEWS

▶ Innophos Holdings, Inc. Declares Quarterly Dividend   [May-02-17 02:15PM  PR Newswire]
▶ Innophos posts 1Q profit   [May-01-17 04:20PM  Associated Press]
▶ Innophos 2017 Investor Day Rescheduled For April 5th   [Mar-17-17 01:00PM  PR Newswire]
▶ Innophos Holdings, Inc. Announces Annual Meeting   [Feb-17-17 03:00PM  PR Newswire]
▶ Is Innophos Holdings, Inc. (IPHS) A Good Stock To Buy?   [Dec-06-16 10:01AM  at Insider Monkey]
Stock chart of IPHS Financial statements of IPHS Annual reports of IPHS
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.