Intrinsic value of Kimball International Cl B - KBAL

Previous Close

$16.41

  Intrinsic Value

$22.77

stock screener

  Rating & Target

buy

+39%

Previous close

$16.41

 
Intrinsic value

$22.77

 
Up/down potential

+39%

 
Rating

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
  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
  670
  683
  699
  717
  737
  760
  784
  811
  840
  871
  904
  940
  978
  1,019
  1,062
  1,108
  1,156
  1,208
  1,262
  1,320
  1,380
  1,444
  1,512
  1,583
  1,658
  1,737
  1,820
  1,907
  1,999
  2,096
  2,198
Variable operating expenses, $m
 
  215
  220
  226
  232
  239
  247
  255
  265
  274
  285
  296
  308
  321
  335
  349
  364
  380
  398
  416
  435
  455
  476
  499
  522
  547
  573
  601
  630
  660
  692
Fixed operating expenses, $m
 
  422
  433
  444
  455
  466
  478
  490
  502
  515
  527
  541
  554
  568
  582
  597
  612
  627
  643
  659
  675
  692
  709
  727
  745
  764
  783
  802
  823
  843
  864
Total operating expenses, $m
  613
  637
  653
  670
  687
  705
  725
  745
  767
  789
  812
  837
  862
  889
  917
  946
  976
  1,007
  1,041
  1,075
  1,110
  1,147
  1,185
  1,226
  1,267
  1,311
  1,356
  1,403
  1,453
  1,503
  1,556
Operating income, $m
  57
  46
  46
  48
  50
  54
  59
  66
  73
  82
  92
  103
  116
  130
  145
  162
  181
  200
  222
  245
  270
  297
  326
  357
  390
  426
  464
  504
  547
  593
  641
EBITDA, $m
  73
  62
  63
  65
  68
  72
  78
  85
  93
  103
  114
  126
  139
  154
  171
  189
  208
  229
  252
  277
  303
  332
  362
  395
  430
  467
  507
  549
  595
  643
  694
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
Earnings before tax, $m
  58
  46
  46
  47
  50
  54
  59
  65
  72
  81
  91
  102
  114
  128
  143
  159
  177
  197
  218
  241
  266
  292
  321
  351
  384
  419
  456
  496
  538
  583
  631
Tax expense, $m
  20
  12
  12
  13
  13
  15
  16
  18
  20
  22
  24
  27
  31
  35
  39
  43
  48
  53
  59
  65
  72
  79
  87
  95
  104
  113
  123
  134
  145
  157
  170
Net income, $m
  38
  33
  34
  35
  36
  39
  43
  47
  53
  59
  66
  74
  83
  93
  104
  116
  130
  144
  159
  176
  194
  213
  234
  256
  280
  306
  333
  362
  393
  426
  461

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
  219
  224
  230
  237
  244
  252
  260
  269
  279
  290
  302
  314
  327
  341
  356
  371
  388
  405
  423
  443
  463
  485
  508
  532
  557
  584
  612
  642
  673
  705
Adjusted assets (=assets-cash), $m
  215
  219
  224
  230
  237
  244
  252
  260
  269
  279
  290
  302
  314
  327
  341
  356
  371
  388
  405
  423
  443
  463
  485
  508
  532
  557
  584
  612
  642
  673
  705
Revenue / Adjusted assets
  3.116
  3.119
  3.121
  3.117
  3.110
  3.115
  3.111
  3.119
  3.123
  3.122
  3.117
  3.113
  3.115
  3.116
  3.114
  3.112
  3.116
  3.113
  3.116
  3.121
  3.115
  3.119
  3.118
  3.116
  3.117
  3.118
  3.116
  3.116
  3.114
  3.114
  3.118
Average production assets, $m
  87
  88
  90
  93
  95
  98
  101
  105
  108
  112
  117
  121
  126
  131
  137
  143
  149
  156
  163
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
  270
  284
Working capital, $m
  83
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
Total debt, $m
  4
  3
  6
  9
  13
  18
  23
  28
  34
  40
  47
  54
  62
  70
  78
  87
  97
  107
  118
  130
  142
  155
  168
  182
  197
  213
  230
  247
  266
  285
  305
Total liabilities, $m
  138
  137
  140
  143
  147
  152
  157
  162
  168
  174
  181
  188
  196
  204
  212
  221
  231
  241
  252
  264
  276
  289
  302
  316
  331
  347
  364
  381
  400
  419
  439
Total equity, $m
  176
  83
  85
  87
  89
  92
  95
  98
  102
  105
  109
  114
  118
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  191
  201
  210
  220
  231
  242
  254
  266
Total liabilities and equity, $m
  314
  220
  225
  230
  236
  244
  252
  260
  270
  279
  290
  302
  314
  327
  340
  355
  371
  387
  405
  424
  443
  464
  485
  507
  532
  557
  584
  612
  642
  673
  705
Debt-to-equity ratio
  0.023
  0.030
  0.070
  0.110
  0.150
  0.190
  0.240
  0.290
  0.330
  0.380
  0.430
  0.470
  0.520
  0.570
  0.610
  0.650
  0.690
  0.740
  0.770
  0.810
  0.850
  0.890
  0.920
  0.950
  0.980
  1.010
  1.040
  1.070
  1.100
  1.120
  1.150
Adjusted equity ratio
  0.358
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  38
  33
  34
  35
  36
  39
  43
  47
  53
  59
  66
  74
  83
  93
  104
  116
  130
  144
  159
  176
  194
  213
  234
  256
  280
  306
  333
  362
  393
  426
  461
Depreciation, amort., depletion, $m
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  34
  36
  38
  40
  41
  43
  46
  48
  50
  53
Funds from operations, $m
  75
  50
  50
  52
  54
  57
  62
  67
  73
  80
  88
  97
  107
  118
  130
  143
  157
  173
  189
  208
  227
  248
  270
  294
  320
  347
  376
  408
  441
  476
  513
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
  -2
  -2
  -2
  -2
Cash from operations, $m
  65
  50
  51
  52
  54
  58
  62
  67
  73
  80
  88
  97
  107
  118
  130
  144
  158
  174
  190
  209
  228
  249
  271
  296
  321
  349
  378
  409
  442
  478
  515
Maintenance CAPEX, $m
  0
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -40
  -41
  -43
  -46
  -48
  -50
New CAPEX, $m
  -13
  -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
  -12
  -13
Cash from investing activities, $m
  -36
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -27
  -27
  -28
  -30
  -31
  -32
  -35
  -36
  -37
  -40
  -41
  -43
  -45
  -48
  -50
  -52
  -54
  -58
  -60
  -63
Free cash flow, $m
  29
  32
  32
  33
  35
  37
  41
  45
  50
  56
  63
  71
  80
  90
  101
  112
  125
  139
  155
  171
  189
  208
  228
  250
  274
  299
  326
  354
  385
  417
  452
Issuance/(repayment) of debt, $m
  0
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
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
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
Total cash flow (excl. dividends), $m
  24
  35
  35
  37
  39
  42
  46
  50
  56
  63
  70
  78
  88
  98
  109
  122
  135
  150
  165
  182
  201
  221
  242
  264
  289
  315
  342
  372
  403
  437
  472
Retained Cash Flow (-), $m
  -26
  -2
  -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
  -12
Prev. year cash balance distribution, $m
 
  95
  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
 
  128
  33
  34
  36
  39
  43
  47
  53
  59
  66
  74
  83
  93
  104
  116
  129
  143
  159
  176
  194
  213
  234
  256
  280
  305
  332
  361
  392
  425
  460
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
 
  123
  31
  30
  30
  30
  31
  32
  33
  34
  35
  35
  35
  35
  35
  34
  33
  31
  29
  27
  25
  22
  19
  17
  14
  12
  10
  8
  6
  5
  3
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
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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 16.1
Price to Sales 0.9
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 11.8
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 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 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 31.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $412 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 3.5% 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%.

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 5.4 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 -1.8%. 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 - $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 37.368 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 36.30 53.04  buy
KEQU Kewaunee Scien 26.10 51.06  str.buy
FLXS Flexsteel Indu 40.87 25.21  sell
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COMPANY NEWS

▶ 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]
▶ Kimball International to Present at Investor Conferences   [Sep-14-16 01:47PM  GlobeNewswire]
▶ INVESTIndiana announces executive presentation schedule   [Sep-06-16 10:00AM  GlobeNewswire]
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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