Intrinsic value of Inventure Foods - SNAK

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$3.70

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$3.70

 
Intrinsic value

$0.10

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of SNAK 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 0.1

 

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, %
  -4.95
  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
  269
  274
  281
  288
  296
  305
  315
  326
  337
  350
  363
  377
  393
  409
  426
  445
  464
  485
  507
  530
  554
  580
  607
  635
  666
  697
  731
  766
  803
  842
  882
Variable operating expenses, $m
 
  300
  307
  315
  323
  333
  344
  356
  368
  382
  396
  410
  427
  445
  464
  484
  505
  527
  551
  576
  603
  630
  660
  691
  724
  758
  794
  833
  873
  915
  960
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
  287
  300
  307
  315
  323
  333
  344
  356
  368
  382
  396
  410
  427
  445
  464
  484
  505
  527
  551
  576
  603
  630
  660
  691
  724
  758
  794
  833
  873
  915
  960
Operating income, $m
  -18
  -25
  -26
  -27
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
EBITDA, $m
  -10
  -18
  -19
  -19
  -20
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -57
  -59
Interest expense (income), $m
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
Earnings before tax, $m
  -28
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
Tax expense, $m
  2
  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
Net income, $m
  -30
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1
  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
  181
  184
  188
  193
  198
  204
  211
  218
  226
  234
  243
  253
  263
  274
  285
  298
  311
  325
  339
  355
  371
  388
  406
  425
  445
  467
  489
  513
  537
  563
  591
Adjusted assets (=assets-cash), $m
  180
  184
  188
  193
  198
  204
  211
  218
  226
  234
  243
  253
  263
  274
  285
  298
  311
  325
  339
  355
  371
  388
  406
  425
  445
  467
  489
  513
  537
  563
  591
Revenue / Adjusted assets
  1.494
  1.489
  1.495
  1.492
  1.495
  1.495
  1.493
  1.495
  1.491
  1.496
  1.494
  1.490
  1.494
  1.493
  1.495
  1.493
  1.492
  1.492
  1.496
  1.493
  1.493
  1.495
  1.495
  1.494
  1.497
  1.493
  1.495
  1.493
  1.495
  1.496
  1.492
Average production assets, $m
  41
  42
  43
  44
  45
  46
  48
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  122
  128
  134
Working capital, $m
  -61
  54
  55
  57
  58
  60
  62
  64
  66
  69
  72
  74
  77
  81
  84
  88
  91
  96
  100
  104
  109
  114
  120
  125
  131
  137
  144
  151
  158
  166
  174
Total debt, $m
  115
  117
  121
  125
  130
  135
  141
  147
  154
  161
  169
  177
  186
  195
  205
  216
  227
  239
  252
  265
  280
  294
  310
  327
  344
  363
  382
  402
  424
  446
  470
Total liabilities, $m
  158
  159
  163
  167
  172
  177
  183
  189
  196
  203
  211
  219
  228
  237
  247
  258
  269
  281
  294
  307
  322
  336
  352
  369
  386
  405
  424
  444
  466
  488
  512
Total equity, $m
  24
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  79
Total liabilities and equity, $m
  182
  183
  188
  193
  198
  204
  211
  218
  226
  234
  243
  253
  263
  273
  285
  298
  310
  324
  339
  354
  371
  388
  406
  426
  445
  467
  489
  512
  537
  563
  591
Debt-to-equity ratio
  4.792
  4.800
  4.840
  4.880
  4.920
  4.970
  5.020
  5.070
  5.120
  5.170
  5.220
  5.270
  5.320
  5.370
  5.410
  5.460
  5.500
  5.550
  5.590
  5.630
  5.670
  5.710
  5.740
  5.780
  5.810
  5.840
  5.870
  5.900
  5.930
  5.960
  5.980
Adjusted equity ratio
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -30
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
Depreciation, amort., depletion, $m
  8
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
Funds from operations, $m
  -10
  -23
  -24
  -25
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
Change in working capital, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
Cash from operations, $m
  -11
  -59
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
Maintenance CAPEX, $m
  0
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
New CAPEX, $m
  -11
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -11
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -9
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -16
  -18
  -18
  -19
  -20
  -22
  -22
  -23
Free cash flow, $m
  -22
  -65
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -82
  -87
  -91
  -95
  -100
  -105
  -110
Issuance/(repayment) of debt, $m
  31
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
Issuance/(repurchase) of shares, $m
  0
  62
  29
  29
  30
  31
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
Cash from financing (excl. dividends), $m  
  24
  65
  33
  33
  35
  36
  38
  39
  41
  42
  45
  46
  49
  50
  53
  56
  58
  61
  64
  67
  70
  74
  78
  82
  85
  89
  93
  98
  103
  109
  114
Total cash flow (excl. dividends), $m
  2
  -61
  -28
  -29
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -82
  -86
Retained Cash Flow (-), $m
  28
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
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
 
  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
 
  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
Discount rate, %
 
  13.60
  14.28
  14.99
  15.74
  16.53
  17.36
  18.23
  19.14
  20.09
  21.10
  22.15
  23.26
  24.42
  25.64
  26.93
  28.27
  29.69
  31.17
  32.73
  34.37
  36.08
  37.89
  39.78
  41.77
  43.86
  46.05
  48.36
  50.78
  53.31
  55.98
PV of cash for 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
Current shareholders' claim on cash, %
  100
  56.5
  41.9
  31.0
  23.0
  17.0
  12.6
  9.3
  6.9
  5.1
  3.8
  2.8
  2.1
  1.5
  1.1
  0.8
  0.6
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Inventure Foods, Inc. manufactures and markets healthy/natural and indulgent specialty snack food products in the United States and internationally. It operates in two segments, Frozen Products and Snack Products. The company’s healthy/natural food products include Rader Farms frozen berries; Boulder Canyon kettle cooked potato chips; Willamette Valley Fruit Company frozen berries; Fresh Frozen brand frozen vegetables; Jamba branded blend-and-serve smoothie kits; Seattle’s Best Coffee Frozen Coffee Blends branded blend-and-serve frozen coffee beverage; and private label frozen fruits and healthy/natural snacks. Its indulgent specialty snack food products include snack food under the T.G.I. Friday’s, Nathan’s Famous, and Vidalia brands; kettle cooked potato chips under the Poore Brothers and Bob’s Texas Style brands; Tato Skins brand potato snacks; and Sin In A Tin chocolate pate and other frozen desserts. The company also manufactures private label snack chip products for various grocery chains and natural stores, and co-pack products for other snack manufacturers. It markets its products through various channels, including grocery stores, natural food stores, mass merchandisers, drug and convenience stores, and club stores, as well as company-owned and third-party warehouses, direct store delivery, distribution centers, and other facilities. The company was formerly known as The Inventure Group, Inc. and changed its name to Inventure Foods, Inc. in May 2010. Inventure Foods, Inc. was founded in 1986 and is headquartered in Phoenix, Arizona.

FINANCIAL RATIOS  of  Inventure Foods (SNAK)

Valuation Ratios
P/E Ratio -2.4
Price to Sales 0.3
Price to Book 3
Price to Tangible Book
Price to Cash Flow -6.6
Price to Free Cash Flow -3.3
Growth Rates
Sales Growth Rate -4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.3%
Cap. Spend. - 3 Yr. Gr. Rate 12.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 479.2%
Interest Coverage -5
Management Effectiveness
Return On Assets -12.6%
Ret/ On Assets - 3 Yr. Avg. -5.3%
Return On Total Capital -19.9%
Ret/ On T. Cap. - 3 Yr. Avg. -8.4%
Return On Equity -78.9%
Return On Equity - 3 Yr. Avg. -32%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 12.3%
Gross Margin - 3 Yr. Avg. 12.6%
EBITDA Margin -5.6%
EBITDA Margin - 3 Yr. Avg. -2%
Operating Margin -6.7%
Oper. Margin - 3 Yr. Avg. -3.1%
Pre-Tax Margin -10.4%
Pre-Tax Margin - 3 Yr. Avg. -5.5%
Net Profit Margin -11.2%
Net Profit Margin - 3 Yr. Avg. -4.9%
Effective Tax Rate -7.1%
Eff/ Tax Rate - 3 Yr. Avg. 20.2%
Payout Ratio 0%

SNAK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SNAK stock intrinsic value calculation we used $269 million for the last fiscal year's total revenue generated by Inventure Foods. The default revenue input number comes from 2016 income statement of Inventure Foods. 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 SNAK 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 13.6%, whose default value for SNAK is calculated based on our internal credit rating of Inventure Foods, 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 Inventure Foods.
    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 SNAK stock the variable cost ratio is equal to 109.3%.

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 SNAK 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 4.4% for Inventure Foods.

Corporate tax rate of 27% is the nominal tax rate for Inventure Foods. 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 SNAK 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 SNAK are equal to 15.2%.

Life of production assets of 7.5 years is the average useful life of capital assets used in Inventure Foods 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 SNAK is equal to 19.7%. 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 - $24 million for Inventure Foods - 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 21.738 million for Inventure Foods 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 Inventure Foods at the current share price and the inputted number of shares is $0.1 billion.


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