Intrinsic value of Marine Products - MPX

Previous Close

$15.19

  Intrinsic Value

$9.41

stock screener

  Rating & Target

sell

-38%

Previous close

$15.19

 
Intrinsic value

$9.41

 
Up/down potential

-38%

 
Rating

sell

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
  16.40
  15.26
  14.23
  13.31
  12.48
  11.73
  11.06
  10.45
  9.91
  9.42
  8.97
  8.58
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
Revenue, $m
  241
  281
  323
  369
  419
  471
  526
  584
  645
  709
  776
  846
  918
  994
  1,072
  1,154
  1,238
  1,326
  1,418
  1,513
  1,612
  1,715
  1,822
  1,934
  2,050
  2,171
  2,297
  2,429
  2,567
  2,710
  2,860
Variable operating expenses, $m
 
  254
  293
  334
  379
  426
  476
  528
  583
  641
  702
  764
  830
  898
  969
  1,043
  1,119
  1,199
  1,281
  1,367
  1,457
  1,550
  1,647
  1,748
  1,853
  1,962
  2,076
  2,195
  2,320
  2,449
  2,585
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
  254
  293
  334
  379
  426
  476
  528
  583
  641
  702
  764
  830
  898
  969
  1,043
  1,119
  1,199
  1,281
  1,367
  1,457
  1,550
  1,647
  1,748
  1,853
  1,962
  2,076
  2,195
  2,320
  2,449
  2,585
Operating income, $m
  23
  27
  31
  35
  40
  45
  50
  56
  62
  68
  74
  81
  88
  96
  103
  111
  119
  128
  136
  146
  155
  165
  175
  186
  197
  209
  221
  234
  247
  261
  275
EBITDA, $m
  24
  28
  32
  37
  42
  47
  52
  58
  64
  71
  77
  84
  91
  99
  107
  115
  123
  132
  141
  151
  161
  171
  182
  193
  204
  216
  229
  242
  256
  270
  285
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
Earnings before tax, $m
  23
  27
  31
  35
  40
  44
  50
  55
  61
  67
  73
  80
  86
  93
  101
  108
  116
  124
  133
  142
  151
  160
  170
  181
  191
  203
  214
  227
  239
  253
  267
Tax expense, $m
  6
  7
  8
  9
  11
  12
  13
  15
  16
  18
  20
  21
  23
  25
  27
  29
  31
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
Net income, $m
  17
  19
  22
  26
  29
  32
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  124
  132
  140
  148
  156
  165
  175
  184
  195

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7
  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
  89
  95
  110
  126
  142
  160
  179
  199
  220
  241
  264
  288
  312
  338
  365
  392
  421
  451
  482
  515
  548
  584
  620
  658
  697
  739
  782
  827
  873
  922
  973
Adjusted assets (=assets-cash), $m
  82
  95
  110
  126
  142
  160
  179
  199
  220
  241
  264
  288
  312
  338
  365
  392
  421
  451
  482
  515
  548
  584
  620
  658
  697
  739
  782
  827
  873
  922
  973
Revenue / Adjusted assets
  2.939
  2.958
  2.936
  2.929
  2.951
  2.944
  2.939
  2.935
  2.932
  2.942
  2.939
  2.938
  2.942
  2.941
  2.937
  2.944
  2.941
  2.940
  2.942
  2.938
  2.942
  2.937
  2.939
  2.939
  2.941
  2.938
  2.937
  2.937
  2.940
  2.939
  2.939
Average production assets, $m
  14
  16
  18
  21
  23
  26
  29
  33
  36
  40
  43
  47
  51
  56
  60
  65
  69
  74
  79
  85
  90
  96
  102
  108
  115
  122
  129
  136
  144
  152
  160
Working capital, $m
  35
  33
  38
  43
  49
  55
  61
  68
  75
  82
  90
  98
  106
  115
  124
  134
  144
  154
  164
  176
  187
  199
  211
  224
  238
  252
  266
  282
  298
  314
  332
Total debt, $m
  0
  4
  8
  13
  18
  23
  28
  34
  40
  47
  53
  60
  68
  75
  83
  91
  99
  108
  117
  127
  137
  147
  158
  169
  180
  192
  205
  218
  232
  246
  261
Total liabilities, $m
  23
  28
  32
  37
  42
  47
  52
  58
  64
  71
  77
  84
  92
  99
  107
  115
  123
  132
  141
  151
  161
  171
  182
  193
  204
  216
  229
  242
  256
  270
  285
Total equity, $m
  65
  67
  78
  89
  101
  113
  127
  141
  155
  171
  187
  203
  221
  239
  258
  277
  298
  319
  341
  364
  388
  413
  438
  465
  493
  522
  553
  584
  617
  652
  688
Total liabilities and equity, $m
  88
  95
  110
  126
  143
  160
  179
  199
  219
  242
  264
  287
  313
  338
  365
  392
  421
  451
  482
  515
  549
  584
  620
  658
  697
  738
  782
  826
  873
  922
  973
Debt-to-equity ratio
  0.000
  0.060
  0.110
  0.140
  0.180
  0.200
  0.220
  0.240
  0.260
  0.270
  0.290
  0.300
  0.310
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.380
  0.380
  0.380
Adjusted equity ratio
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  17
  19
  22
  26
  29
  32
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  124
  132
  140
  148
  156
  165
  175
  184
  195
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Funds from operations, $m
  11
  21
  24
  27
  31
  34
  38
  42
  47
  51
  56
  61
  66
  71
  77
  83
  89
  95
  102
  108
  115
  123
  130
  138
  147
  155
  164
  174
  183
  194
  204
Change in working capital, $m
  -5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
Cash from operations, $m
  16
  16
  19
  22
  25
  28
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  104
  111
  118
  125
  133
  141
  150
  158
  168
  177
  187
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
New CAPEX, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
Cash from investing activities, $m
  23
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -7
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -14
  -14
  -14
  -15
  -16
  -17
  -17
Free cash flow, $m
  39
  13
  15
  18
  21
  24
  27
  31
  34
  38
  42
  46
  51
  55
  60
  65
  70
  76
  81
  87
  93
  100
  106
  113
  120
  127
  135
  143
  152
  160
  169
Issuance/(repayment) of debt, $m
  0
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
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
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
Total cash flow (excl. dividends), $m
  4
  17
  20
  23
  26
  29
  33
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  124
  132
  140
  148
  156
  165
  175
  184
Retained Cash Flow (-), $m
  25
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
Prev. year cash balance distribution, $m
 
  7
  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
 
  15
  9
  12
  14
  17
  19
  22
  26
  29
  33
  36
  41
  45
  49
  54
  58
  63
  69
  74
  79
  85
  91
  97
  104
  110
  117
  125
  132
  140
  148
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
 
  14
  9
  10
  11
  13
  14
  15
  16
  17
  17
  17
  17
  17
  16
  16
  15
  14
  13
  11
  10
  9
  8
  6
  5
  4
  3
  3
  2
  2
  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
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Marine Products Corporation manufactures fiberglass motorized boats distributed and marketed through its independent dealer network. The Company designs, manufactures and sells recreational fiberglass powerboats in the sportboat, deckboat, cruiser, jet boat and sport fishing markets. The Company's product offerings include Chaparral sterndrive, outboard and jet pleasure boats, and Robalo outboard sport fishing boats. The Company's product line includes Chaparral-Vortex Jet Boat; Chaparral-H2O Sport Series; Chaparral-SunCoast Outboard Deck Boat; Chaparral-SSi Wide Tech; Chaparral-SSX Sport Boat; Chaparral-Sunesta Sport Deck; Chaparral-Signature Cruiser; Robalo-Center Console; Robalo-Cayman Bay Boat, and Robalo-Dual Console Robalo-Walkaround. Its manufacturing facilities are located in Nashville and Valdosta in Georgia. The Chaparral - Vortex Jet Boats are fiberglass sterndrive pleasure boats marketed as jet-powered boats with traditional bowrider styling.

FINANCIAL RATIOS  of  Marine Products (MPX)

Valuation Ratios
P/E Ratio 31.1
Price to Sales 2.2
Price to Book 8.1
Price to Tangible Book
Price to Cash Flow 33.1
Price to Free Cash Flow 37.8
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 17%
Ret/ On Assets - 3 Yr. Avg. 12.9%
Return On Total Capital 21.9%
Ret/ On T. Cap. - 3 Yr. Avg. 16.4%
Return On Equity 21.9%
Return On Equity - 3 Yr. Avg. 16.4%
Asset Turnover 2.4
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 16.4% 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 5.6%.

Life of production assets of 16.5 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 11.6%. 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 - $65 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 34.883 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
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HZO MarineMax 17.00 4.36  str.sell

COMPANY NEWS

▶ Should You Sell Marine Products Corporation (MPX) At $16.93?   [Sep-29-17 09:27PM  Simply Wall St.]
▶ 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]
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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