Intrinsic value of Ocean Bio-Chem - OBCI

Previous Close

$4.00

  Intrinsic Value

$29.83

stock screener

  Rating & Target

str. buy

+646%

  Value-price divergence*

-13%

Previous close

$4.00

 
Intrinsic value

$29.83

 
Up/down potential

+646%

 
Rating

str. buy

 
Value-price divergence*

-13%

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

We calculate the intrinsic value of OBCI 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 0.0

 

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, %
  5.88
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  36
  41
  47
  52
  59
  65
  72
  79
  87
  94
  103
  111
  120
  129
  139
  148
  159
  169
  180
  192
  204
  216
  229
  243
  257
  272
  287
  303
  320
  338
  356
Variable operating expenses, $m
 
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  69
Fixed operating expenses, $m
 
  28
  28
  29
  30
  31
  31
  32
  33
  34
  35
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  53
  54
  55
  57
Total operating expenses, $m
  33
  36
  37
  39
  41
  44
  45
  47
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  103
  107
  112
  116
  121
  126
Operating income, $m
  3
  5
  9
  13
  17
  22
  27
  32
  37
  42
  48
  54
  60
  67
  73
  80
  88
  95
  103
  112
  120
  129
  138
  148
  158
  169
  180
  192
  204
  217
  230
EBITDA, $m
  4
  6
  9
  13
  18
  22
  27
  32
  37
  43
  48
  54
  61
  67
  74
  81
  88
  96
  104
  112
  121
  130
  139
  149
  159
  170
  181
  193
  205
  218
  231
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
Earnings before tax, $m
  3
  5
  9
  13
  17
  22
  27
  32
  37
  42
  48
  54
  60
  67
  73
  80
  87
  95
  103
  111
  120
  129
  138
  148
  158
  169
  180
  191
  203
  216
  230
Tax expense, $m
  1
  1
  2
  4
  5
  6
  7
  9
  10
  11
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  45
  49
  52
  55
  58
  62
Net income, $m
  2
  4
  7
  10
  13
  16
  19
  23
  27
  31
  35
  39
  44
  49
  53
  59
  64
  69
  75
  81
  87
  94
  101
  108
  115
  123
  131
  140
  149
  158
  168

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  26
  25
  29
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  125
  132
  140
  149
  157
  166
  176
  185
  196
  207
  218
Adjusted assets (=assets-cash), $m
  22
  25
  29
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  125
  132
  140
  149
  157
  166
  176
  185
  196
  207
  218
Revenue / Adjusted assets
  1.636
  1.640
  1.621
  1.625
  1.639
  1.625
  1.636
  1.646
  1.642
  1.621
  1.635
  1.632
  1.644
  1.633
  1.635
  1.626
  1.639
  1.641
  1.636
  1.641
  1.632
  1.636
  1.636
  1.631
  1.637
  1.639
  1.631
  1.638
  1.633
  1.633
  1.633
Average production assets, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
Working capital, $m
  17
  15
  17
  19
  21
  24
  26
  29
  31
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  69
  74
  78
  83
  88
  93
  98
  104
  110
  116
  122
  129
Total debt, $m
  0
  0
  1
  1
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
Total liabilities, $m
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
Total equity, $m
  23
  22
  25
  28
  31
  34
  38
  42
  46
  50
  54
  59
  63
  68
  73
  78
  84
  89
  95
  101
  108
  114
  121
  128
  136
  144
  152
  160
  169
  178
  188
Total liabilities and equity, $m
  26
  25
  29
  32
  36
  39
  44
  49
  53
  58
  63
  68
  73
  79
  85
  90
  97
  103
  110
  117
  125
  132
  140
  148
  157
  167
  176
  185
  196
  206
  218
Debt-to-equity ratio
  0.000
  0.020
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
Adjusted equity ratio
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864
  0.864

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  4
  7
  10
  13
  16
  19
  23
  27
  31
  35
  39
  44
  49
  53
  59
  64
  69
  75
  81
  87
  94
  101
  108
  115
  123
  131
  140
  149
  158
  168
Depreciation, amort., depletion, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Funds from operations, $m
  3
  4
  7
  10
  13
  16
  20
  23
  27
  31
  35
  40
  44
  49
  54
  59
  64
  70
  76
  82
  88
  94
  101
  108
  116
  124
  132
  140
  149
  159
  169
Change in working capital, $m
  0
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
Cash from operations, $m
  3
  2
  5
  8
  11
  14
  17
  21
  24
  28
  32
  37
  41
  46
  50
  55
  61
  66
  72
  77
  84
  90
  97
  104
  111
  118
  126
  135
  143
  152
  162
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
New CAPEX, $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
  -1
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
Free cash flow, $m
  3
  2
  5
  7
  10
  13
  17
  20
  24
  28
  32
  36
  40
  45
  50
  55
  60
  65
  71
  77
  83
  89
  96
  103
  110
  117
  125
  133
  142
  151
  161
Issuance/(repayment) of debt, $m
  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
  1
  1
  1
  2
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  
  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
  1
  1
  1
  2
Total cash flow (excl. dividends), $m
  3
  2
  5
  8
  11
  14
  17
  21
  25
  29
  33
  37
  41
  46
  51
  56
  61
  66
  72
  78
  84
  90
  97
  104
  111
  119
  126
  135
  143
  153
  162
Retained Cash Flow (-), $m
  -2
  -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
  -9
  -9
  -9
  -10
Prev. year cash balance distribution, $m
 
  4
  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
 
  4
  2
  5
  8
  11
  14
  17
  21
  24
  28
  32
  37
  41
  46
  50
  55
  60
  66
  72
  77
  83
  90
  97
  103
  111
  118
  126
  135
  143
  152
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
 
  4
  2
  4
  6
  8
  10
  12
  13
  14
  15
  15
  16
  16
  15
  15
  14
  13
  12
  11
  10
  9
  7
  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
  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

Ocean Bio-Chem, Inc. manufactures, markets, and distributes appearance, performance, and maintenance products for the marine, automotive, power sports, recreational vehicle, and outdoor power equipment markets in the United States and Canada. The company offers marine products, including polishes, cleaners, protectants, and waxes; enzyme fuel treatments; private label products; motor and teak oils, boat washes, vinyl and teak cleaners, protectants, bilge and hull cleaners, silicone and polyurethane sealants, polysulfide sealants, gasket materials, lubricants, antifouling additives, and anti-freeze coolants; and brushes, poles, tie-downs and other related accessories. It also manufactures automotive products, such as fuel treatments for gas and diesel engines, motor oils, greases, and related items; anti-freeze and windshield washes; and automotive polishes, cleaners, and other items. In addition, the company offers fuel treatment and other specialty products to the recreational vehicle market; viable solution to various problems associated with E-10 fuel; and other specialty recreational vehicle/power sports products, including cleaners, polishes, detergents, fabric cleaners and protectors, silicone sealants, waterproofers, gasket materials, degreasers, vinyl cleaners and protectors, toilet treatment fluids, and anti-freeze/coolants. Further, it provides a solution to rectify operating engine problems in commercial lawn, and other home and garden power equipment; and blends and packages chemical formulations, as well as manufactures PVC and HDPE blow molded bottles. Additionally, the company offers disinfectants for hard, non-porous surfaces, and air care products, as well as provides sanitizing and deodorizing products. Ocean Bio-Chem, Inc. sells its products under the Star Tron, Performacide, and Star brite brands through retailers and online retailers, as well as to distributors. The company was founded in 1973 and is headquartered in Fort Lauderdale, Florida.


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FINANCIAL RATIOS  of  Ocean Bio-Chem (OBCI)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 1
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 12.2
Growth Rates
Sales Growth Rate 5.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
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 8%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 8.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 9.1%
Return On Equity - 3 Yr. Avg. 6.5%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 38.9%
Gross Margin - 3 Yr. Avg. 35.5%
EBITDA Margin 11.1%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 8.3%
Oper. Margin - 3 Yr. Avg. 6.7%
Pre-Tax Margin 8.3%
Pre-Tax Margin - 3 Yr. Avg. 6.7%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 3.8%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 55.6%
Payout Ratio 50%

OBCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OBCI stock intrinsic value calculation we used $36 million for the last fiscal year's total revenue generated by Ocean Bio-Chem. The default revenue input number comes from 2016 income statement of Ocean Bio-Chem. 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 OBCI stock valuation model: a) initial revenue growth rate of 14.3% 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 OBCI is calculated based on our internal credit rating of Ocean Bio-Chem, 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 Ocean Bio-Chem.
    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 OBCI stock the variable cost ratio is equal to 19.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for OBCI 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 Ocean Bio-Chem.

Corporate tax rate of 27% is the nominal tax rate for Ocean Bio-Chem. 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 OBCI 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 OBCI are equal to 2.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Ocean Bio-Chem 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 OBCI is equal to 36.1%. 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 - $23 million for Ocean Bio-Chem - 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 9.039 million for Ocean Bio-Chem 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 Ocean Bio-Chem at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ ETFs with exposure to Ocean Bio-Chem, Inc. : May 23, 2017   [May-23-17 01:02PM  Capital Cube]
▶ Ocean Bio-Chem (OBCI) Stock Surges After Q2 Earnings   [Aug-15-16 12:29PM  TheStreet.com]
▶ 10-Q for Ocean Bio-Chem, Inc.   [Aug-17  08:13PM  at Company Spotlight]
▶ 10-Q for Ocean Bio-Chem, Inc.   [May-18  08:12PM  at Company Spotlight]
▶ 10-K for Ocean Bio-Chem, Inc.   [Apr-26  08:14PM  at Company Spotlight]
▶ Gas Price Drop Helps OBCI   [Dec-23  03:31PM  at noodls]
▶ 10-Q for Ocean Bio-Chem, Inc.   [Nov-17  07:09PM  Company Spotlight]
▶ OCEAN BIO CHEM INC Files SEC form 8-K, Other Events   [Sep-26  04:00PM  EDGAR Online]
▶ OCEAN BIO CHEM INC Files SEC form 10-Q, Quarterly Report   [Aug-14  11:22AM  EDGAR Online]
Stock chart of OBCI Financial statements of OBCI Annual reports of OBCI
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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