Intrinsic value of John B. Sanfilippo&Son - JBSS

Previous Close

$63.42

  Intrinsic Value

$32.91

stock screener

  Rating & Target

sell

-48%

  Value-price divergence*

+72%

Previous close

$63.42

 
Intrinsic value

$32.91

 
Up/down potential

-48%

 
Rating

sell

 
Value-price divergence*

+72%

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

We calculate the intrinsic value of JBSS 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 0.7

 

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, %
  7.33
  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
  952
  971
  993
  1,019
  1,048
  1,079
  1,114
  1,152
  1,193
  1,237
  1,285
  1,336
  1,390
  1,448
  1,509
  1,574
  1,643
  1,716
  1,793
  1,875
  1,961
  2,052
  2,148
  2,249
  2,355
  2,467
  2,586
  2,710
  2,841
  2,978
  3,123
Variable operating expenses, $m
 
  914
  935
  959
  986
  1,016
  1,048
  1,084
  1,123
  1,164
  1,209
  1,257
  1,308
  1,362
  1,420
  1,481
  1,546
  1,615
  1,688
  1,764
  1,845
  1,931
  2,021
  2,116
  2,216
  2,322
  2,433
  2,550
  2,673
  2,802
  2,939
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
  901
  914
  935
  959
  986
  1,016
  1,048
  1,084
  1,123
  1,164
  1,209
  1,257
  1,308
  1,362
  1,420
  1,481
  1,546
  1,615
  1,688
  1,764
  1,845
  1,931
  2,021
  2,116
  2,216
  2,322
  2,433
  2,550
  2,673
  2,802
  2,939
Operating income, $m
  51
  57
  59
  60
  62
  64
  66
  68
  70
  73
  76
  79
  82
  85
  89
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
  146
  153
  160
  168
  176
  184
EBITDA, $m
  68
  71
  72
  74
  76
  79
  81
  84
  87
  90
  94
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  198
  207
  217
  228
Interest expense (income), $m
  3
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
Earnings before tax, $m
  46
  55
  57
  58
  60
  61
  63
  65
  67
  70
  72
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  155
  162
  170
Tax expense, $m
  16
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
Net income, $m
  30
  41
  41
  42
  43
  45
  46
  48
  49
  51
  53
  55
  57
  59
  61
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  119
  124

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  391
  397
  406
  416
  428
  441
  455
  471
  488
  506
  525
  546
  568
  592
  617
  643
  671
  701
  733
  766
  801
  839
  878
  919
  963
  1,008
  1,057
  1,107
  1,161
  1,217
  1,276
Adjusted assets (=assets-cash), $m
  389
  397
  406
  416
  428
  441
  455
  471
  488
  506
  525
  546
  568
  592
  617
  643
  671
  701
  733
  766
  801
  839
  878
  919
  963
  1,008
  1,057
  1,107
  1,161
  1,217
  1,276
Revenue / Adjusted assets
  2.447
  2.446
  2.446
  2.450
  2.449
  2.447
  2.448
  2.446
  2.445
  2.445
  2.448
  2.447
  2.447
  2.446
  2.446
  2.448
  2.449
  2.448
  2.446
  2.448
  2.448
  2.446
  2.446
  2.447
  2.445
  2.447
  2.447
  2.448
  2.447
  2.447
  2.447
Average production assets, $m
  133
  135
  138
  142
  146
  150
  155
  160
  166
  172
  179
  186
  193
  201
  210
  219
  228
  239
  249
  261
  273
  285
  299
  313
  327
  343
  359
  377
  395
  414
  434
Working capital, $m
  159
  177
  181
  185
  191
  196
  203
  210
  217
  225
  234
  243
  253
  263
  275
  286
  299
  312
  326
  341
  357
  373
  391
  409
  429
  449
  471
  493
  517
  542
  568
Total debt, $m
  45
  46
  49
  53
  57
  62
  67
  72
  78
  85
  91
  99
  107
  115
  124
  133
  143
  154
  165
  177
  190
  203
  217
  231
  247
  263
  280
  298
  317
  337
  358
Total liabilities, $m
  140
  141
  144
  148
  152
  157
  162
  167
  173
  180
  186
  194
  202
  210
  219
  228
  238
  249
  260
  272
  285
  298
  312
  326
  342
  358
  375
  393
  412
  432
  453
Total equity, $m
  251
  256
  262
  269
  276
  284
  294
  304
  315
  326
  339
  352
  366
  382
  398
  415
  433
  452
  473
  494
  517
  541
  566
  593
  621
  650
  682
  714
  749
  785
  823
Total liabilities and equity, $m
  391
  397
  406
  417
  428
  441
  456
  471
  488
  506
  525
  546
  568
  592
  617
  643
  671
  701
  733
  766
  802
  839
  878
  919
  963
  1,008
  1,057
  1,107
  1,161
  1,217
  1,276
Debt-to-equity ratio
  0.179
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.280
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.350
  0.360
  0.370
  0.370
  0.380
  0.390
  0.400
  0.400
  0.410
  0.420
  0.420
  0.430
  0.430
Adjusted equity ratio
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  30
  41
  41
  42
  43
  45
  46
  48
  49
  51
  53
  55
  57
  59
  61
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  119
  124
Depreciation, amort., depletion, $m
  17
  13
  14
  14
  15
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
Funds from operations, $m
  127
  54
  55
  57
  58
  60
  62
  64
  66
  68
  71
  73
  76
  79
  82
  86
  90
  93
  97
  102
  106
  111
  116
  121
  127
  133
  139
  146
  153
  160
  168
Change in working capital, $m
  38
  3
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
  25
  26
Cash from operations, $m
  89
  51
  51
  52
  53
  54
  55
  57
  58
  60
  62
  64
  66
  69
  71
  74
  77
  80
  83
  87
  91
  95
  99
  103
  108
  113
  118
  123
  129
  135
  141
Maintenance CAPEX, $m
  0
  -13
  -13
  -14
  -14
  -15
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -39
  -41
New CAPEX, $m
  -15
  -2
  -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
Cash from investing activities, $m
  -15
  -15
  -16
  -18
  -18
  -19
  -20
  -20
  -22
  -23
  -24
  -25
  -27
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -50
  -53
  -56
  -58
  -61
Free cash flow, $m
  74
  35
  35
  35
  35
  35
  35
  36
  37
  37
  38
  39
  40
  41
  43
  44
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  80
Issuance/(repayment) of debt, $m
  -53
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
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  
  -52
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
Total cash flow (excl. dividends), $m
  22
  38
  38
  38
  39
  40
  40
  41
  43
  44
  45
  46
  48
  50
  52
  53
  56
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
Retained Cash Flow (-), $m
  -10
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
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
 
  33
  32
  32
  31
  31
  31
  31
  32
  32
  33
  33
  34
  35
  35
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
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
 
  31
  29
  27
  26
  24
  23
  21
  20
  18
  17
  16
  14
  13
  12
  11
  9
  8
  7
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  1
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Current shareholders' claim on cash, %
  100
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John B. Sanfilippo & Son, Inc., together with its subsidiaries, processes and distributes peanuts and tree nut products in the United States. The company offers raw and processed nuts, including almonds, pecans, peanuts, black walnuts, English walnuts, cashews, macadamia nuts, pistachios, pine nuts, Brazil nuts, and filberts. It provides nut products in various styles and seasonings comprising non-blanched, blanched, oil roasted, dry roasted, salted, unsalted, honey roasted, flavored, spicy, chocolate and yogurt coated, butter toffee, praline, and cinnamon toasted. The company also offers peanut butter in various sizes and varieties; food and snack products, such as snack mixes, salad toppings, snacks, snack bites, trail mixes, dried fruit, and chocolate and yogurt coated products; baking ingredients; bulk food products; sunflower kernels, pepitas, almond butter, cashew butter, candy and confections, dried fruit, corn snacks, sesame sticks, and other sesame snack products; and various toppings for ice cream and yogurt. In addition, it operates a retail store. The company provides its products under various private brands; and under the Fisher, Orchard Valley Harvest, Fisher Nut Exactly, and Sunshine Country brand names. It serves retailers and wholesalers, and commercial ingredient and contract packaging customers, as well as international customers in the retail and commercial ingredient markets through a network of independent brokers, distributors, and suppliers; and through consumer, commercial ingredient, contract packaging, and export distribution channels. John B. Sanfilippo & Son, Inc. was founded in 1959 and is headquartered in Elgin, Illinois.

FINANCIAL RATIOS  of  John B. Sanfilippo&Son (JBSS)

Valuation Ratios
P/E Ratio 23.7
Price to Sales 0.7
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 8
Price to Free Cash Flow 9.6
Growth Rates
Sales Growth Rate 7.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.1%
Cap. Spend. - 3 Yr. Gr. Rate 16.5%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 11.6%
Total Debt to Equity 17.9%
Interest Coverage 16
Management Effectiveness
Return On Assets 7.8%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 9.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9%
Return On Equity 12.2%
Return On Equity - 3 Yr. Avg. 12.1%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 14.4%
Gross Margin - 3 Yr. Avg. 15%
EBITDA Margin 6.9%
EBITDA Margin - 3 Yr. Avg. 7.3%
Operating Margin 5.4%
Oper. Margin - 3 Yr. Avg. 5.8%
Pre-Tax Margin 4.8%
Pre-Tax Margin - 3 Yr. Avg. 5%
Net Profit Margin 3.2%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 34.8%
Eff/ Tax Rate - 3 Yr. Avg. 35.1%
Payout Ratio 73.3%

JBSS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JBSS stock intrinsic value calculation we used $952 million for the last fiscal year's total revenue generated by John B. Sanfilippo&Son. The default revenue input number comes from 2016 income statement of John B. Sanfilippo&Son. 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 JBSS 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 JBSS is calculated based on our internal credit rating of John B. Sanfilippo&Son, 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 John B. Sanfilippo&Son.
    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 JBSS stock the variable cost ratio is equal to 94.1%.

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 JBSS 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 4.2% for John B. Sanfilippo&Son.

Corporate tax rate of 27% is the nominal tax rate for John B. Sanfilippo&Son. 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 JBSS 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 JBSS are equal to 13.9%.

Life of production assets of 10 years is the average useful life of capital assets used in John B. Sanfilippo&Son 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 JBSS is equal to 18.2%. 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 - $251 million for John B. Sanfilippo&Son - 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 10.98 million for John B. Sanfilippo&Son 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 John B. Sanfilippo&Son at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ John B. Sanfilippo posts 3Q profit   [May-03-17 07:49PM  Associated Press]
▶ Five Small-Caps For The Long-Term Investor   [Apr-12-17 11:13AM  Forbes]
▶ John B. Sanfilippo posts 2Q profit   [Feb-01-17 05:42PM  Associated Press]
Stock chart of JBSS Financial statements of JBSS
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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