Intrinsic value of Kimball International Cl B - KBAL

Previous Close

$16.03

  Intrinsic Value

$46.51

stock screener

  Rating & Target

str. buy

+190%

Previous close

$16.03

 
Intrinsic value

$46.51

 
Up/down potential

+190%

 
Rating

str. buy

We calculate the intrinsic value of KBAL 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  5.51
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
Revenue, $m
  670
  707
  745
  786
  828
  872
  918
  966
  1,017
  1,070
  1,126
  1,184
  1,245
  1,309
  1,376
  1,446
  1,520
  1,598
  1,679
  1,764
  1,854
  1,947
  2,046
  2,149
  2,257
  2,371
  2,491
  2,616
  2,748
  2,886
  3,031
Variable operating expenses, $m
 
  237
  250
  264
  278
  293
  308
  325
  342
  359
  378
  397
  418
  439
  462
  485
  510
  536
  563
  592
  622
  653
  686
  721
  758
  796
  836
  878
  922
  968
  1,017
Fixed operating expenses, $m
 
  407
  416
  425
  434
  444
  454
  463
  474
  484
  495
  506
  517
  528
  540
  552
  564
  576
  589
  602
  615
  629
  642
  657
  671
  686
  701
  716
  732
  748
  765
Total operating expenses, $m
  613
  644
  666
  689
  712
  737
  762
  788
  816
  843
  873
  903
  935
  967
  1,002
  1,037
  1,074
  1,112
  1,152
  1,194
  1,237
  1,282
  1,328
  1,378
  1,429
  1,482
  1,537
  1,594
  1,654
  1,716
  1,782
Operating income, $m
  57
  63
  79
  97
  116
  135
  156
  178
  202
  227
  253
  281
  310
  342
  375
  409
  446
  485
  527
  570
  617
  665
  717
  771
  829
  890
  954
  1,022
  1,094
  1,169
  1,249
EBITDA, $m
  73
  72
  89
  107
  127
  147
  168
  191
  215
  241
  268
  296
  327
  359
  392
  428
  466
  506
  548
  593
  640
  690
  743
  799
  858
  920
  986
  1,056
  1,129
  1,206
  1,288
Interest expense (income), $m
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  25
Earnings before tax, $m
  58
  62
  79
  96
  114
  133
  154
  175
  198
  223
  248
  276
  305
  335
  367
  401
  438
  476
  516
  559
  604
  652
  703
  756
  812
  872
  935
  1,002
  1,072
  1,146
  1,224
Tax expense, $m
  20
  17
  21
  26
  31
  36
  42
  47
  54
  60
  67
  74
  82
  90
  99
  108
  118
  128
  139
  151
  163
  176
  190
  204
  219
  235
  252
  270
  289
  309
  331
Net income, $m
  38
  46
  57
  70
  83
  97
  112
  128
  145
  162
  181
  201
  222
  245
  268
  293
  319
  347
  377
  408
  441
  476
  513
  552
  593
  637
  683
  731
  782
  837
  894

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  99
  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
  314
  331
  349
  368
  388
  408
  430
  453
  476
  501
  527
  555
  583
  613
  645
  678
  712
  748
  786
  826
  868
  912
  958
  1,007
  1,057
  1,111
  1,167
  1,225
  1,287
  1,352
  1,419
Adjusted assets (=assets-cash), $m
  215
  331
  349
  368
  388
  408
  430
  453
  476
  501
  527
  555
  583
  613
  645
  678
  712
  748
  786
  826
  868
  912
  958
  1,007
  1,057
  1,111
  1,167
  1,225
  1,287
  1,352
  1,419
Revenue / Adjusted assets
  3.116
  2.136
  2.135
  2.136
  2.134
  2.137
  2.135
  2.132
  2.137
  2.136
  2.137
  2.133
  2.136
  2.135
  2.133
  2.133
  2.135
  2.136
  2.136
  2.136
  2.136
  2.135
  2.136
  2.134
  2.135
  2.134
  2.135
  2.136
  2.135
  2.135
  2.136
Average production assets, $m
  87
  91
  96
  101
  107
  112
  118
  125
  131
  138
  145
  153
  161
  169
  178
  187
  196
  206
  217
  228
  239
  251
  264
  277
  291
  306
  321
  337
  354
  372
  391
Working capital, $m
  83
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
Total debt, $m
  4
  11
  19
  27
  36
  45
  55
  64
  75
  86
  97
  109
  122
  135
  149
  163
  178
  194
  211
  228
  246
  266
  286
  307
  329
  353
  377
  403
  430
  458
  488
Total liabilities, $m
  138
  145
  153
  161
  170
  179
  188
  198
  209
  220
  231
  243
  255
  269
  282
  297
  312
  328
  344
  362
  380
  400
  420
  441
  463
  486
  511
  537
  564
  592
  622
Total equity, $m
  176
  186
  196
  207
  218
  230
  242
  254
  268
  282
  296
  312
  328
  345
  362
  381
  400
  421
  442
  464
  488
  513
  539
  566
  594
  624
  656
  689
  723
  760
  798
Total liabilities and equity, $m
  314
  331
  349
  368
  388
  409
  430
  452
  477
  502
  527
  555
  583
  614
  644
  678
  712
  749
  786
  826
  868
  913
  959
  1,007
  1,057
  1,110
  1,167
  1,226
  1,287
  1,352
  1,420
Debt-to-equity ratio
  0.023
  0.060
  0.100
  0.130
  0.170
  0.200
  0.230
  0.250
  0.280
  0.300
  0.330
  0.350
  0.370
  0.390
  0.410
  0.430
  0.450
  0.460
  0.480
  0.490
  0.510
  0.520
  0.530
  0.540
  0.550
  0.570
  0.580
  0.590
  0.590
  0.600
  0.610
Adjusted equity ratio
  0.358
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  38
  46
  57
  70
  83
  97
  112
  128
  145
  162
  181
  201
  222
  245
  268
  293
  319
  347
  377
  408
  441
  476
  513
  552
  593
  637
  683
  731
  782
  837
  894
Depreciation, amort., depletion, $m
  16
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  35
  37
  39
Funds from operations, $m
  75
  55
  67
  80
  94
  109
  124
  141
  158
  177
  196
  217
  238
  261
  286
  312
  339
  368
  399
  431
  465
  501
  539
  580
  622
  667
  715
  765
  818
  874
  933
Change in working capital, $m
  10
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  65
  55
  68
  81
  95
  109
  125
  141
  159
  177
  197
  217
  239
  262
  287
  312
  340
  369
  399
  432
  466
  502
  540
  581
  623
  668
  716
  766
  819
  875
  934
Maintenance CAPEX, $m
  0
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
New CAPEX, $m
  -13
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -36
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -19
  -20
  -21
  -23
  -23
  -24
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -36
  -38
  -39
  -42
  -44
  -46
  -48
  -51
  -53
  -56
Free cash flow, $m
  29
  42
  54
  66
  79
  93
  108
  123
  140
  157
  176
  195
  216
  238
  261
  286
  312
  339
  368
  399
  432
  466
  502
  541
  582
  625
  670
  718
  769
  822
  878
Issuance/(repayment) of debt, $m
  0
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Issuance/(repurchase) of shares, $m
  -8
  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
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Total cash flow (excl. dividends), $m
  24
  49
  62
  74
  88
  102
  117
  133
  150
  168
  187
  207
  228
  251
  275
  300
  327
  355
  385
  417
  450
  485
  523
  562
  604
  648
  694
  744
  795
  850
  908
Retained Cash Flow (-), $m
  -26
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -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
 
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
  22
  24
  25
  26
Cash available for distribution, $m
 
  39
  51
  64
  77
  90
  105
  120
  137
  154
  172
  192
  212
  234
  257
  282
  307
  335
  364
  394
  426
  461
  497
  535
  575
  618
  663
  711
  761
  814
  870
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
 
  38
  47
  55
  63
  70
  76
  81
  85
  89
  90
  91
  91
  89
  86
  83
  78
  73
  67
  61
  54
  48
  41
  35
  29
  24
  19
  15
  12
  9
  7
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Kimball International, Inc. creates design driven furnishings. The Company sells a portfolio of furniture products and services under three brands, which include Kimball Office, National Office Furniture, and Kimball Hospitality. The Company's portfolio offers solutions for the workplace, learning, healing, and hospitality environments. The Company, through its brands, offers various products, which include modern and classic desks, credenzas, seating, tables, collaborative workstations, panel systems, filing and storage units, accessories/accents, headboards, desks, tables, dressers, entertainment centers, chests, wall panels, upholstered seating, task seating, cabinets, and vanities with a mix of wood, metal, stone, laminate, finish, and fabric options. The Company also offers several products designed specifically for the healthcare market, such as patient room and lounge seating and casegoods.

FINANCIAL RATIOS  of  Kimball International Cl B (KBAL)

Valuation Ratios
P/E Ratio 15.7
Price to Sales 0.9
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 11.5
Growth Rates
Sales Growth Rate 5.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.8%
Cap. Spend. - 3 Yr. Gr. Rate -17.5%
Financial Strength
Quick Ratio 25
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 2.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 12.9%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital 23%
Ret/ On T. Cap. - 3 Yr. Avg. 14.8%
Return On Equity 23.3%
Return On Equity - 3 Yr. Avg. 14.8%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 33.3%
Gross Margin - 3 Yr. Avg. 32.3%
EBITDA Margin 11%
EBITDA Margin - 3 Yr. Avg. 8.3%
Operating Margin 8.5%
Oper. Margin - 3 Yr. Avg. 5.5%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 5.6%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 4.1%
Effective Tax Rate 34.5%
Eff/ Tax Rate - 3 Yr. Avg. 36.6%
Payout Ratio 23.7%

KBAL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KBAL stock intrinsic value calculation we used $670 million for the last fiscal year's total revenue generated by Kimball International Cl B. The default revenue input number comes from 2017 income statement of Kimball International Cl B. 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 KBAL stock valuation model: a) initial revenue growth rate of 5.5% 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 KBAL is calculated based on our internal credit rating of Kimball International Cl B, 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 Kimball International Cl B.
    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 KBAL stock the variable cost ratio is equal to 33.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $398 million in the base year in the intrinsic value calculation for KBAL 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 5.4% for Kimball International Cl B.

Corporate tax rate of 27% is the nominal tax rate for Kimball International Cl B. 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 KBAL stock is equal to 0.9%.

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 KBAL are equal to 12.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Kimball International Cl B 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 KBAL is equal to -1%. 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 - $176 million for Kimball International Cl B - 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 37 million for Kimball International Cl B 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 Kimball International Cl B at the current share price and the inputted number of shares is $0.6 billion.

RELATED COMPANIES Price Int.Val. Rating
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HOFT Hooker Furnitu 48.90 341.79  str.buy
KEQU Kewaunee Scien 33.50 26.39  sell
FLXS Flexsteel Indu 37.57 27.24  sell
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COMPANY NEWS

▶ Kimball International to Present to Investors   [Jul-06-18 01:15PM  GlobeNewswire]
▶ Kimball International CEO To Retire   [08:45AM  GlobeNewswire]
▶ Kimball International: Fiscal 3Q Earnings Snapshot   [May-01-18 05:45PM  Associated Press]
▶ Kimball International, Inc. Declares Dividend   [Apr-24-18 04:05PM  GlobeNewswire]
▶ Kimball International, Inc. Declares Dividend   [Feb-13-18 04:05PM  GlobeNewswire]
▶ Kimball International posts 2Q profit   [Jan-31-18 05:25PM  Associated Press]
▶ Kimball International to Present to Investors   [Nov-13-17 02:18PM  GlobeNewswire]
▶ Kimball International posts 1Q profit   [Nov-01-17 06:32PM  Associated Press]
▶ Kimball International, Inc. Declares Dividend   [Aug-29-17 04:05PM  GlobeNewswire]
▶ Kimball International posts 4Q profit   [Aug-04-17 12:11AM  Associated Press]
▶ Kimball International posts 3Q profit   [05:02AM  Associated Press]
▶ Kimball International, Inc. Declares Dividend   [Apr-25-17 04:05PM  GlobeNewswire]
▶ Kimball International, Inc. Declares Dividend   [Feb-07-17 04:05PM  GlobeNewswire]
▶ Kimball International posts 2Q profit   [Feb-01-17 05:54PM  Associated Press]
▶ Is Kimball International Inc (KBAL) A Good Stock to Buy?   [Dec-12-16 06:47PM  at Insider Monkey]
Financial statements of KBAL
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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