Intrinsic value of John B. Sanfilippo&Son - JBSS

Previous Close

$62.48

  Intrinsic Value

$21.78

stock screener

  Rating & Target

str. sell

-65%

Previous close

$62.48

 
Intrinsic value

$21.78

 
Up/down potential

-65%

 
Rating

str. sell

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 2017), $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
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -11.03
  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
  847
  864
  884
  907
  932
  960
  991
  1,025
  1,062
  1,101
  1,143
  1,188
  1,237
  1,288
  1,343
  1,400
  1,462
  1,527
  1,596
  1,668
  1,745
  1,826
  1,911
  2,001
  2,096
  2,195
  2,300
  2,411
  2,527
  2,650
  2,778
Variable operating expenses, $m
 
  818
  837
  858
  883
  909
  939
  971
  1,005
  1,043
  1,083
  1,125
  1,171
  1,220
  1,271
  1,326
  1,384
  1,446
  1,511
  1,580
  1,652
  1,729
  1,810
  1,895
  1,984
  2,079
  2,178
  2,283
  2,393
  2,509
  2,631
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
  788
  818
  837
  858
  883
  909
  939
  971
  1,005
  1,043
  1,083
  1,125
  1,171
  1,220
  1,271
  1,326
  1,384
  1,446
  1,511
  1,580
  1,652
  1,729
  1,810
  1,895
  1,984
  2,079
  2,178
  2,283
  2,393
  2,509
  2,631
Operating income, $m
  58
  46
  47
  48
  49
  51
  53
  54
  56
  58
  61
  63
  66
  68
  71
  74
  77
  81
  85
  88
  92
  97
  101
  106
  111
  116
  122
  128
  134
  140
  147
EBITDA, $m
  74
  62
  64
  65
  67
  69
  71
  74
  76
  79
  82
  86
  89
  93
  97
  101
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  166
  174
  182
  191
  200
Interest expense (income), $m
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
Earnings before tax, $m
  54
  42
  43
  44
  45
  47
  48
  49
  51
  53
  54
  56
  58
  61
  63
  65
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  108
  113
  119
  124
Tax expense, $m
  18
  11
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
Net income, $m
  36
  31
  32
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  72
  76
  79
  83
  87
  91

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
  398
  404
  413
  424
  436
  449
  463
  479
  496
  515
  534
  556
  578
  602
  628
  655
  683
  714
  746
  780
  816
  854
  893
  935
  980
  1,026
  1,075
  1,127
  1,182
  1,239
  1,299
Adjusted assets (=assets-cash), $m
  396
  404
  413
  424
  436
  449
  463
  479
  496
  515
  534
  556
  578
  602
  628
  655
  683
  714
  746
  780
  816
  854
  893
  935
  980
  1,026
  1,075
  1,127
  1,182
  1,239
  1,299
Revenue / Adjusted assets
  2.139
  2.139
  2.140
  2.139
  2.138
  2.138
  2.140
  2.140
  2.141
  2.138
  2.140
  2.137
  2.140
  2.140
  2.139
  2.137
  2.141
  2.139
  2.139
  2.138
  2.138
  2.138
  2.140
  2.140
  2.139
  2.139
  2.140
  2.139
  2.138
  2.139
  2.139
Average production assets, $m
  129
  131
  134
  138
  142
  146
  151
  156
  161
  167
  174
  181
  188
  196
  204
  213
  222
  232
  243
  254
  265
  277
  290
  304
  319
  334
  350
  366
  384
  403
  422
Working capital, $m
  143
  177
  181
  186
  191
  197
  203
  210
  218
  226
  234
  244
  254
  264
  275
  287
  300
  313
  327
  342
  358
  374
  392
  410
  430
  450
  472
  494
  518
  543
  570
Total debt, $m
  59
  60
  64
  68
  73
  79
  85
  91
  98
  105
  114
  122
  131
  141
  151
  162
  174
  187
  200
  213
  228
  243
  260
  277
  295
  314
  334
  355
  377
  400
  425
Total liabilities, $m
  163
  164
  168
  172
  177
  183
  189
  195
  202
  209
  218
  226
  235
  245
  255
  266
  278
  291
  304
  317
  332
  347
  364
  381
  399
  418
  438
  459
  481
  504
  529
Total equity, $m
  235
  240
  245
  251
  258
  266
  275
  284
  294
  305
  317
  329
  343
  357
  372
  388
  405
  423
  442
  462
  484
  506
  530
  555
  581
  609
  638
  668
  701
  735
  770
Total liabilities and equity, $m
  398
  404
  413
  423
  435
  449
  464
  479
  496
  514
  535
  555
  578
  602
  627
  654
  683
  714
  746
  779
  816
  853
  894
  936
  980
  1,027
  1,076
  1,127
  1,182
  1,239
  1,299
Debt-to-equity ratio
  0.251
  0.250
  0.260
  0.270
  0.280
  0.300
  0.310
  0.320
  0.330
  0.350
  0.360
  0.370
  0.380
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.550
Adjusted equity ratio
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  36
  31
  32
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  72
  76
  79
  83
  87
  91
Depreciation, amort., depletion, $m
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  23
  23
  24
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
Funds from operations, $m
  51
  47
  48
  50
  51
  52
  54
  56
  57
  59
  61
  64
  66
  69
  71
  74
  77
  81
  84
  88
  92
  96
  100
  104
  109
  114
  119
  125
  131
  137
  143
Change in working capital, $m
  -2
  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
  22
  23
  24
  25
  26
Cash from operations, $m
  53
  44
  44
  45
  46
  47
  47
  49
  50
  51
  53
  54
  56
  58
  60
  63
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  102
  107
  112
  117
Maintenance CAPEX, $m
  0
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
New CAPEX, $m
  -11
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
Cash from investing activities, $m
  -11
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -35
  -36
  -38
  -39
  -41
  -44
  -45
  -48
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
Free cash flow, $m
  42
  25
  25
  25
  25
  24
  25
  25
  25
  25
  25
  26
  26
  27
  28
  28
  29
  30
  31
  32
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
Issuance/(repayment) of debt, $m
  14
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
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  
  14
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  56
  28
  29
  29
  29
  30
  30
  31
  32
  33
  34
  34
  36
  37
  38
  39
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  68
  72
Retained Cash Flow (-), $m
  16
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
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
 
  24
  23
  23
  22
  22
  22
  22
  22
  22
  22
  22
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  29
  30
  31
  32
  33
  35
  36
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
 
  23
  21
  20
  18
  17
  16
  15
  14
  12
  11
  10
  9
  9
  8
  7
  6
  5
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
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John B. Sanfilippo & Son, Inc. is a processor and distributor of peanuts, pecans, cashews, walnuts, almonds and other nuts. The Company offers nuts under a range of private brands and under the Fisher, Orchard Valley Harvest, Fisher Nut Exactly and Sunshine Country brand names. The Company also markets and distributes a diverse product line of food and snack products, including snack mixes, salad toppings, snacks, snack bites, trail mixes, dried fruit, and chocolate and yogurt coated products under private brands and brand names. The Company's principal products are raw and processed nuts. The Company's nut product line includes black walnuts, English walnuts, macadamia nuts, pistachios, pine nuts, Brazil nuts and filberts. The Company's products are sold through various distribution channels to buyers of nuts, including food retailers, commercial ingredient users, contract packaging customers and international customers.

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

Valuation Ratios
P/E Ratio 19.6
Price to Sales 0.8
Price to Book 3
Price to Tangible Book
Price to Cash Flow 13.3
Price to Free Cash Flow 16.8
Growth Rates
Sales Growth Rate -11%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -26.7%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 11.1%
Total Debt to Equity 25.1%
Interest Coverage 19
Management Effectiveness
Return On Assets 9.6%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital 12.2%
Ret/ On T. Cap. - 3 Yr. Avg. 10.2%
Return On Equity 14.8%
Return On Equity - 3 Yr. Avg. 13.1%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 16.8%
Gross Margin - 3 Yr. Avg. 15.3%
EBITDA Margin 8.6%
EBITDA Margin - 3 Yr. Avg. 7.6%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 6.1%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 5.4%
Net Profit Margin 4.3%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 34.6%
Payout Ratio 155.6%

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 $847 million for the last fiscal year's total revenue generated by John B. Sanfilippo&Son. The default revenue input number comes from 2017 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 94.7%.

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 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 5.8% 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 15.2%.

Life of production assets of 8 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 20.5%. 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 - $235 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 11.297 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 & Son, Inc. to Host Earnings Call   [Oct-31-17 08:20AM  ACCESSWIRE]
▶ John B. Sanfilippo posts 1Q profit   [Oct-30-17 05:19PM  Associated Press]
▶ John B. Sanfilippo posts 4Q profit   [Aug-23-17 09:26PM  Associated Press]
▶ 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]
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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