Intrinsic value of Marine Products - MPX

Previous Close

$14.77

  Intrinsic Value

$8.53

stock screener

  Rating & Target

sell

-42%

  Value-price divergence*

-129%

Previous close

$14.77

 
Intrinsic value

$8.53

 
Up/down potential

-42%

 
Rating

sell

 
Value-price divergence*

-129%

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

We calculate the intrinsic value of MPX 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 0.5

 

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, %
  16.43
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
Revenue, $m
  241
  267
  295
  324
  354
  385
  418
  452
  487
  524
  562
  602
  643
  686
  730
  777
  825
  875
  928
  982
  1,039
  1,099
  1,161
  1,225
  1,293
  1,364
  1,438
  1,515
  1,596
  1,681
  1,770
Variable operating expenses, $m
 
  242
  267
  293
  320
  348
  378
  409
  441
  474
  508
  544
  581
  620
  660
  702
  746
  791
  838
  888
  939
  993
  1,049
  1,107
  1,169
  1,233
  1,299
  1,369
  1,443
  1,519
  1,599
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
  218
  242
  267
  293
  320
  348
  378
  409
  441
  474
  508
  544
  581
  620
  660
  702
  746
  791
  838
  888
  939
  993
  1,049
  1,107
  1,169
  1,233
  1,299
  1,369
  1,443
  1,519
  1,599
Operating income, $m
  23
  25
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  70
  75
  79
  84
  89
  95
  100
  106
  112
  118
  124
  131
  138
  146
  154
  162
  170
EBITDA, $m
  24
  26
  29
  32
  35
  38
  41
  45
  48
  52
  56
  60
  64
  68
  72
  77
  82
  87
  92
  97
  103
  109
  115
  121
  128
  135
  142
  150
  158
  166
  175
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
Earnings before tax, $m
  23
  25
  28
  31
  33
  36
  39
  42
  46
  49
  53
  57
  60
  64
  68
  73
  77
  82
  87
  92
  97
  102
  108
  114
  120
  127
  134
  141
  148
  156
  164
Tax expense, $m
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
Net income, $m
  17
  19
  20
  22
  24
  27
  29
  31
  33
  36
  38
  41
  44
  47
  50
  53
  56
  60
  63
  67
  71
  75
  79
  83
  88
  93
  98
  103
  108
  114
  120

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  18
  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
  120
  113
  125
  137
  150
  163
  177
  191
  206
  222
  238
  255
  272
  290
  309
  329
  349
  370
  393
  416
  440
  465
  491
  519
  547
  577
  608
  641
  675
  711
  749
Adjusted assets (=assets-cash), $m
  102
  113
  125
  137
  150
  163
  177
  191
  206
  222
  238
  255
  272
  290
  309
  329
  349
  370
  393
  416
  440
  465
  491
  519
  547
  577
  608
  641
  675
  711
  749
Revenue / Adjusted assets
  2.363
  2.363
  2.360
  2.365
  2.360
  2.362
  2.362
  2.366
  2.364
  2.360
  2.361
  2.361
  2.364
  2.366
  2.362
  2.362
  2.364
  2.365
  2.361
  2.361
  2.361
  2.363
  2.365
  2.360
  2.364
  2.364
  2.365
  2.363
  2.364
  2.364
  2.363
Average production assets, $m
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
Working capital, $m
  36
  20
  22
  24
  27
  29
  31
  34
  37
  39
  42
  45
  48
  51
  55
  58
  62
  66
  70
  74
  78
  82
  87
  92
  97
  102
  108
  114
  120
  126
  133
Total debt, $m
  0
  3
  6
  10
  13
  17
  21
  25
  29
  33
  37
  42
  47
  52
  57
  62
  68
  74
  80
  86
  93
  100
  107
  115
  122
  131
  139
  148
  158
  168
  178
Total liabilities, $m
  27
  31
  34
  38
  41
  45
  49
  53
  57
  61
  65
  70
  75
  80
  85
  90
  96
  102
  108
  114
  121
  128
  135
  143
  150
  159
  167
  176
  186
  196
  206
Total equity, $m
  92
  82
  90
  99
  109
  118
  128
  139
  149
  161
  172
  185
  197
  210
  224
  238
  253
  269
  285
  301
  319
  337
  356
  376
  397
  418
  441
  465
  490
  516
  543
Total liabilities and equity, $m
  119
  113
  124
  137
  150
  163
  177
  192
  206
  222
  237
  255
  272
  290
  309
  328
  349
  371
  393
  415
  440
  465
  491
  519
  547
  577
  608
  641
  676
  712
  749
Debt-to-equity ratio
  0.000
  0.040
  0.070
  0.100
  0.120
  0.140
  0.160
  0.180
  0.190
  0.210
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
  0.320
  0.320
  0.320
  0.330
  0.330
Adjusted equity ratio
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  17
  19
  20
  22
  24
  27
  29
  31
  33
  36
  38
  41
  44
  47
  50
  53
  56
  60
  63
  67
  71
  75
  79
  83
  88
  93
  98
  103
  108
  114
  120
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
Funds from operations, $m
  11
  20
  22
  24
  26
  28
  30
  33
  35
  38
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  91
  96
  102
  107
  113
  119
  125
Change in working capital, $m
  -5
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
Cash from operations, $m
  16
  18
  19
  21
  23
  25
  28
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  58
  62
  66
  69
  73
  77
  82
  86
  91
  96
  101
  107
  112
  118
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
New CAPEX, $m
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  23
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
Free cash flow, $m
  39
  16
  18
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  86
  90
  95
  100
  106
  111
Issuance/(repayment) of debt, $m
  0
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
Issuance/(repurchase) of shares, $m
  -35
  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  
  -35
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  4
  19
  21
  23
  25
  27
  30
  32
  34
  37
  39
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  110
  116
  122
Retained Cash Flow (-), $m
  -2
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Prev. year cash balance distribution, $m
 
  18
  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
 
  29
  13
  14
  16
  18
  20
  21
  23
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  58
  61
  65
  68
  72
  76
  80
  85
  90
  94
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
 
  28
  12
  12
  13
  14
  14
  14
  15
  15
  15
  14
  14
  13
  12
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
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
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Marine Products Corporation designs, manufactures, and sells recreational fiberglass powerboats for the sportboat, deckboat, cruiser, sport yacht, jet boat, and sport fishing markets worldwide. It provides Chaparral sterndrive pleasure boats, including SSi and SSX sportboats, Sunesta sportdecks, Signature cruisers, SunCoast sportdeck outboards, Vortex Jet Boats, and Robalo outboard sport fishing boats, as well as H2O Sport, and Fish and Ski boats. The company sells its products to a network of 147 domestic and 85 international independent authorized dealers. Marine Products Corporation was founded in 1965 and is based in Atlanta, Georgia.

FINANCIAL RATIOS  of  Marine Products (MPX)

Valuation Ratios
P/E Ratio 30.3
Price to Sales 2.1
Price to Book 5.6
Price to Tangible Book
Price to Cash Flow 32.2
Price to Free Cash Flow 36.8
Growth Rates
Sales Growth Rate 16.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 14.7%
Ret/ On Assets - 3 Yr. Avg. 12.1%
Return On Total Capital 18.7%
Ret/ On T. Cap. - 3 Yr. Avg. 15.3%
Return On Equity 18.7%
Return On Equity - 3 Yr. Avg. 15.3%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 20.7%
Gross Margin - 3 Yr. Avg. 20.4%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 9.5%
Oper. Margin - 3 Yr. Avg. 8.7%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 9.1%
Net Profit Margin 7.1%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 26.1%
Eff/ Tax Rate - 3 Yr. Avg. 30.1%
Payout Ratio 52.9%

MPX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MPX stock intrinsic value calculation we used $241 million for the last fiscal year's total revenue generated by Marine Products. The default revenue input number comes from 2016 income statement of Marine Products. 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 MPX stock valuation model: a) initial revenue growth rate of 10.9% 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 MPX is calculated based on our internal credit rating of Marine Products, 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 Marine Products.
    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 MPX stock the variable cost ratio is equal to 90.5%.

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 MPX 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 Marine Products.

Corporate tax rate of 27% is the nominal tax rate for Marine Products. 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 MPX 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 MPX are equal to 2.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Marine Products 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 MPX is equal to 7.5%. 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 - $92 million for Marine Products - 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 34.117 million for Marine Products 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 Marine Products at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
MBUU Malibu Boats C 25.28 49.77  str.buy
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WMAR West Marine 12.93 3.15  str.sell
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COMPANY NEWS

▶ Marine Products posts 2Q profit   [Jul-26-17 08:55PM  Associated Press]
▶ What you need to know about Modi's India?   [Jun-28-17 05:21PM  Zacks]
▶ Marine Products posts 1Q profit   [Apr-26-17 07:48AM  Associated Press]
▶ Rising Revenue Tide is Lifting Marine Retailers   [Feb-27-17 04:21PM  Investopedia]
▶ Rising Revenue Tide is Lifting Marine Retailers   [04:21PM  at Investopedia]
▶ Marine Products posts 4Q profit   [07:03AM  Associated Press]
Stock chart of MPX Financial statements of MPX
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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