Intrinsic value of Standex International - SXI

Previous Close

$100.35

  Intrinsic Value

$110.03

stock screener

  Rating & Target

hold

+10%

  Value-price divergence*

+4%

Previous close

$100.35

 
Intrinsic value

$110.03

 
Up/down potential

+10%

 
Rating

hold

 
Value-price divergence*

+4%

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

We calculate the intrinsic value of SXI 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 1.3

 

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, %
  -2.59
  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
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  752
  786
  822
  859
  899
  941
  985
  1,032
  1,081
  1,133
  1,187
  1,245
  1,305
  1,368
  1,435
  1,505
  1,579
  1,656
  1,738
  1,823
  1,913
  2,008
  2,107
  2,212
  2,321
  2,436
  2,557
  2,684
  2,818
  2,958
  3,105
Variable operating expenses, $m
 
  510
  533
  556
  581
  608
  636
  665
  696
  728
  763
  783
  821
  861
  903
  947
  993
  1,042
  1,093
  1,147
  1,204
  1,263
  1,326
  1,391
  1,460
  1,533
  1,609
  1,689
  1,773
  1,861
  1,953
Fixed operating expenses, $m
 
  202
  207
  212
  217
  223
  228
  234
  240
  246
  252
  258
  265
  272
  278
  285
  292
  300
  307
  315
  323
  331
  339
  348
  356
  365
  374
  384
  393
  403
  413
Total operating expenses, $m
  681
  712
  740
  768
  798
  831
  864
  899
  936
  974
  1,015
  1,041
  1,086
  1,133
  1,181
  1,232
  1,285
  1,342
  1,400
  1,462
  1,527
  1,594
  1,665
  1,739
  1,816
  1,898
  1,983
  2,073
  2,166
  2,264
  2,366
Operating income, $m
  70
  74
  82
  91
  100
  110
  121
  133
  145
  158
  173
  203
  219
  236
  254
  273
  293
  315
  337
  361
  387
  414
  442
  473
  505
  538
  574
  612
  652
  694
  738
EBITDA, $m
  88
  97
  105
  114
  124
  135
  146
  158
  171
  184
  199
  214
  231
  248
  267
  286
  307
  329
  353
  378
  404
  432
  461
  492
  525
  560
  597
  636
  677
  720
  766
Interest expense (income), $m
  2
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  16
  17
  18
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
Earnings before tax, $m
  69
  71
  78
  87
  96
  105
  115
  126
  138
  150
  164
  193
  209
  225
  242
  260
  279
  299
  321
  343
  368
  393
  420
  449
  480
  512
  546
  582
  620
  660
  702
Tax expense, $m
  17
  19
  21
  23
  26
  28
  31
  34
  37
  41
  44
  52
  56
  61
  65
  70
  75
  81
  87
  93
  99
  106
  114
  121
  129
  138
  147
  157
  167
  178
  190
Net income, $m
  52
  52
  57
  63
  70
  77
  84
  92
  101
  110
  119
  141
  152
  164
  176
  189
  203
  218
  234
  251
  268
  287
  307
  328
  350
  374
  398
  425
  452
  482
  513

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  122
  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
  690
  594
  621
  649
  679
  711
  744
  780
  817
  856
  897
  940
  986
  1,034
  1,084
  1,137
  1,193
  1,251
  1,313
  1,377
  1,445
  1,517
  1,592
  1,670
  1,753
  1,840
  1,931
  2,027
  2,128
  2,234
  2,345
Adjusted assets (=assets-cash), $m
  568
  594
  621
  649
  679
  711
  744
  780
  817
  856
  897
  940
  986
  1,034
  1,084
  1,137
  1,193
  1,251
  1,313
  1,377
  1,445
  1,517
  1,592
  1,670
  1,753
  1,840
  1,931
  2,027
  2,128
  2,234
  2,345
Revenue / Adjusted assets
  1.324
  1.323
  1.324
  1.324
  1.324
  1.323
  1.324
  1.323
  1.323
  1.324
  1.323
  1.324
  1.324
  1.323
  1.324
  1.324
  1.324
  1.324
  1.324
  1.324
  1.324
  1.324
  1.323
  1.325
  1.324
  1.324
  1.324
  1.324
  1.324
  1.324
  1.324
Average production assets, $m
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
  146
  153
  161
  168
  177
  185
  194
  204
  214
  224
  235
  247
  259
  272
  286
  300
  315
  330
  347
  364
  382
Working capital, $m
  222
  105
  109
  114
  120
  125
  131
  137
  144
  151
  158
  166
  174
  182
  191
  200
  210
  220
  231
  243
  254
  267
  280
  294
  309
  324
  340
  357
  375
  393
  413
Total debt, $m
  92
  106
  121
  137
  154
  172
  191
  211
  232
  254
  277
  301
  327
  354
  382
  412
  443
  476
  511
  547
  586
  626
  668
  712
  759
  808
  859
  913
  970
  1,030
  1,092
Total liabilities, $m
  321
  334
  349
  365
  382
  400
  419
  439
  460
  482
  505
  529
  555
  582
  610
  640
  671
  704
  739
  775
  814
  854
  896
  940
  987
  1,036
  1,087
  1,141
  1,198
  1,258
  1,320
Total equity, $m
  370
  259
  271
  284
  297
  311
  325
  341
  357
  374
  392
  411
  431
  452
  474
  497
  521
  547
  574
  602
  632
  663
  696
  730
  766
  804
  844
  886
  930
  976
  1,025
Total liabilities and equity, $m
  691
  593
  620
  649
  679
  711
  744
  780
  817
  856
  897
  940
  986
  1,034
  1,084
  1,137
  1,192
  1,251
  1,313
  1,377
  1,446
  1,517
  1,592
  1,670
  1,753
  1,840
  1,931
  2,027
  2,128
  2,234
  2,345
Debt-to-equity ratio
  0.249
  0.410
  0.450
  0.480
  0.520
  0.550
  0.590
  0.620
  0.650
  0.680
  0.710
  0.730
  0.760
  0.780
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.930
  0.940
  0.960
  0.980
  0.990
  1.000
  1.020
  1.030
  1.040
  1.050
  1.070
Adjusted equity ratio
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  52
  52
  57
  63
  70
  77
  84
  92
  101
  110
  119
  141
  152
  164
  176
  189
  203
  218
  234
  251
  268
  287
  307
  328
  350
  374
  398
  425
  452
  482
  513
Depreciation, amort., depletion, $m
  18
  23
  23
  23
  24
  24
  24
  25
  25
  26
  26
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
Funds from operations, $m
  84
  74
  80
  87
  93
  101
  109
  117
  126
  136
  146
  152
  164
  176
  189
  203
  218
  233
  250
  267
  285
  305
  326
  348
  371
  395
  421
  449
  478
  508
  540
Change in working capital, $m
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
Cash from operations, $m
  80
  70
  75
  82
  88
  95
  103
  111
  119
  129
  139
  145
  156
  168
  180
  194
  208
  223
  239
  256
  273
  292
  313
  334
  356
  380
  405
  432
  460
  489
  521
Maintenance CAPEX, $m
  0
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
New CAPEX, $m
  -18
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
Cash from investing activities, $m
  -29
  -11
  -11
  -12
  -13
  -13
  -13
  -15
  -15
  -16
  -17
  -18
  -18
  -20
  -20
  -22
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
Free cash flow, $m
  51
  59
  64
  70
  76
  82
  89
  96
  104
  113
  122
  127
  137
  148
  160
  172
  185
  199
  214
  230
  246
  264
  282
  302
  323
  345
  369
  393
  419
  447
  476
Issuance/(repayment) of debt, $m
  -10
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
  60
  63
Issuance/(repurchase) of shares, $m
  -5
  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  
  -14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
  60
  63
Total cash flow (excl. dividends), $m
  33
  73
  79
  86
  93
  100
  108
  116
  125
  135
  145
  151
  163
  175
  188
  202
  217
  232
  249
  266
  284
  304
  325
  347
  370
  394
  420
  447
  476
  507
  539
Retained Cash Flow (-), $m
  -21
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
Prev. year cash balance distribution, $m
 
  122
  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
 
  184
  67
  73
  79
  86
  93
  101
  109
  118
  127
  133
  143
  154
  166
  179
  192
  207
  222
  238
  255
  273
  292
  312
  333
  356
  380
  405
  432
  460
  490
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
 
  176
  62
  64
  65
  67
  68
  68
  68
  68
  67
  63
  61
  59
  56
  53
  49
  45
  41
  37
  32
  28
  24
  20
  17
  14
  11
  9
  7
  5
  4
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

Standex International Corporation is a diversified manufacturing company. The Company is a manufacturer of a range of products and services for diverse commercial and industrial market segments. The Company has 11 operating segments, aggregated and organized into five segments: Food Service Equipment, Engraving, Engineering Technologies, Electronics and Hydraulics. The Food Service Equipment business consists of Refrigeration Solutions group, Cooking Solutions group and Specialty Solutions group. The Engraving segment's product lines include Mold-Tech and Innovent. The Engineering Technologies segment provides engineered parts in all workable metal alloys using various forming processes. The Electronics segment is a manufacturer of custom magnetic sensing and power conversion components and assemblies. The Hydraulics segment is a manufacturer of mobile hydraulic cylinders, including single or double acting telescopic, and piston rod hydraulic cylinders.

FINANCIAL RATIOS  of  Standex International (SXI)

Valuation Ratios
P/E Ratio 24.5
Price to Sales 1.7
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 15.9
Price to Free Cash Flow 20.5
Growth Rates
Sales Growth Rate -2.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.7%
Cap. Spend. - 3 Yr. Gr. Rate 5.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 24.9%
Total Debt to Equity 24.9%
Interest Coverage 36
Management Effectiveness
Return On Assets 7.9%
Ret/ On Assets - 3 Yr. Avg. 8.4%
Return On Total Capital 11.4%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 14.5%
Return On Equity - 3 Yr. Avg. 14.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 33.5%
Gross Margin - 3 Yr. Avg. 32.9%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 12%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 9.6%
Pre-Tax Margin 9.2%
Pre-Tax Margin - 3 Yr. Avg. 9.5%
Net Profit Margin 6.9%
Net Profit Margin - 3 Yr. Avg. 6.7%
Effective Tax Rate 24.6%
Eff/ Tax Rate - 3 Yr. Avg. 26.2%
Payout Ratio 13.5%

SXI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SXI stock intrinsic value calculation we used $752 million for the last fiscal year's total revenue generated by Standex International. The default revenue input number comes from 2016 income statement of Standex International. 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 SXI stock valuation model: a) initial revenue growth rate of 4.5% 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 SXI is calculated based on our internal credit rating of Standex International, 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 Standex International.
    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 SXI stock the variable cost ratio is equal to 65%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $197 million in the base year in the intrinsic value calculation for SXI 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 Standex International.

Corporate tax rate of 27% is the nominal tax rate for Standex International. 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 SXI 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 SXI are equal to 12.3%.

Life of production assets of 13.8 years is the average useful life of capital assets used in Standex International 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 SXI is equal to 13.3%. 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 - $370 million for Standex International - 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 12.84 million for Standex International 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 Standex International at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Standex to Present at the CL King Best Ideas Conference   [Sep-12-17 09:14AM  Business Wire]
▶ Standex posts 4Q profit   [Aug-28-17 07:38PM  Associated Press]
▶ Standex Declares 212th Quarterly Cash Dividend   [Jul-27-17 09:06AM  Business Wire]
▶ Standex posts 3Q profit   [May-02-17 08:33AM  Associated Press]
▶ Standex Declares 211th Quarterly Cash Dividend   [Apr-25-17 03:49PM  Business Wire]
▶ Top Ranked Momentum Stocks to Buy for April 5th   [Apr-05-17 09:17AM  Zacks]
▶ Standex posts 2Q profit   [09:03AM  Associated Press]
▶ Standex Declares 210th Quarterly Cash Dividend   [Jan-26-17 10:45AM  Business Wire]
▶ COMSCORE, Inc. (SCOR): Are Hedge Funds Right About This Stock?   [Dec-08-16 11:46AM  at Insider Monkey]
▶ Standex Declares 209th Quarterly Cash Dividend   [Oct-27-16 12:29PM  Business Wire]
▶ Standex Acquires Horizon Scientific, Inc.   [Oct-17-16 04:51PM  Business Wire]
Financial statements of SXI
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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