Intrinsic value of Ultralife - ULBI

Previous Close

$6.75

  Intrinsic Value

$0.77

stock screener

  Rating & Target

str. sell

-89%

  Value-price divergence*

-140%

Previous close

$6.75

 
Intrinsic value

$0.77

 
Up/down potential

-89%

 
Rating

str. sell

 
Value-price divergence*

-140%

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

We calculate the intrinsic value of ULBI 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, %
  7.89
  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
  5.48
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
Revenue, $m
  82
  88
  95
  102
  109
  117
  125
  133
  142
  150
  160
  169
  179
  190
  201
  212
  224
  236
  249
  263
  277
  292
  307
  323
  340
  358
  377
  396
  417
  438
  461
Variable operating expenses, $m
 
  85
  91
  98
  105
  112
  119
  127
  135
  143
  152
  159
  168
  178
  188
  199
  210
  222
  234
  246
  260
  274
  288
  303
  319
  336
  354
  372
  391
  411
  432
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
  79
  85
  91
  98
  105
  112
  119
  127
  135
  143
  152
  159
  168
  178
  188
  199
  210
  222
  234
  246
  260
  274
  288
  303
  319
  336
  354
  372
  391
  411
  432
Operating income, $m
  4
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
EBITDA, $m
  7
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
Earnings before tax, $m
  4
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
Tax expense, $m
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
Net income, $m
  4
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  11
  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
  85
  80
  86
  92
  99
  106
  113
  120
  128
  136
  144
  153
  162
  171
  181
  191
  202
  213
  225
  237
  250
  263
  277
  292
  307
  323
  340
  358
  376
  396
  416
Adjusted assets (=assets-cash), $m
  74
  80
  86
  92
  99
  106
  113
  120
  128
  136
  144
  153
  162
  171
  181
  191
  202
  213
  225
  237
  250
  263
  277
  292
  307
  323
  340
  358
  376
  396
  416
Revenue / Adjusted assets
  1.108
  1.100
  1.105
  1.109
  1.101
  1.104
  1.106
  1.108
  1.109
  1.103
  1.111
  1.105
  1.105
  1.111
  1.110
  1.110
  1.109
  1.108
  1.107
  1.110
  1.108
  1.110
  1.108
  1.106
  1.107
  1.108
  1.109
  1.106
  1.109
  1.106
  1.108
Average production assets, $m
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  35
  38
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
  70
  74
  78
  82
Working capital, $m
  39
  30
  32
  35
  37
  40
  43
  45
  48
  51
  54
  58
  61
  65
  68
  72
  76
  81
  85
  90
  94
  99
  105
  110
  116
  122
  128
  135
  142
  149
  157
Total debt, $m
  0
  1
  3
  4
  6
  7
  9
  11
  12
  14
  16
  18
  20
  22
  25
  27
  29
  32
  35
  38
  40
  44
  47
  50
  54
  57
  61
  65
  70
  74
  79
Total liabilities, $m
  17
  18
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  42
  44
  46
  49
  52
  55
  57
  61
  64
  67
  71
  74
  78
  82
  87
  91
  96
Total equity, $m
  68
  61
  66
  71
  76
  81
  87
  92
  98
  105
  111
  118
  125
  132
  139
  147
  155
  164
  173
  182
  192
  203
  213
  225
  237
  249
  262
  275
  290
  305
  320
Total liabilities and equity, $m
  85
  79
  86
  92
  99
  105
  113
  120
  127
  136
  144
  153
  162
  171
  181
  191
  201
  213
  225
  237
  249
  264
  277
  292
  308
  323
  340
  357
  377
  396
  416
Debt-to-equity ratio
  0.000
  0.020
  0.040
  0.060
  0.080
  0.090
  0.100
  0.110
  0.130
  0.140
  0.150
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.200
  0.210
  0.210
  0.210
  0.220
  0.220
  0.230
  0.230
  0.230
  0.240
  0.240
  0.240
  0.250
Adjusted equity ratio
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
Depreciation, amort., depletion, $m
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  5
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
Funds from operations, $m
  9
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Change in working capital, $m
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
Cash from operations, $m
  8
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
Maintenance CAPEX, $m
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from investing activities, $m
  -11
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -11
  -11
Free cash flow, $m
  -3
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
Issuance/(repayment) of debt, $m
  0
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
Issuance/(repurchase) of shares, $m
  0
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  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
  3
  3
  3
  4
  4
  4
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
Total cash flow (excl. dividends), $m
  -4
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
Retained Cash Flow (-), $m
  -2
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
Prev. year cash balance distribution, $m
 
  11
  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
 
  11
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
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
 
  11
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  97.8
  95.9
  94.2
  92.7
  91.5
  90.4
  89.5
  88.7
  88.0
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4

Ultralife Corporation offers products and services ranging from power solutions to communications and electronics systems. The Company designs and manufactures power and communications systems, including rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom engineered systems. The Company's segments include Battery & Energy Products, Communications Systems and Corporate. The Battery & Energy Products segment includes lithium 9-volt, cylindrical, thin cell and other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories. The Communications Systems segment includes radio frequency (RF) amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems for fixed or vehicle applications, and communications and electronics systems design.

FINANCIAL RATIOS  of  Ultralife (ULBI)

Valuation Ratios
P/E Ratio 25.8
Price to Sales 1.3
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 12.9
Price to Free Cash Flow 14.8
Growth Rates
Sales Growth Rate 7.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate 0%
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 4.8%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 2.5%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 2.5%
Asset Turnover 1
Profitability Ratios
Gross Margin 30.5%
Gross Margin - 3 Yr. Avg. 29.8%
EBITDA Margin 8.5%
EBITDA Margin - 3 Yr. Avg. 5.5%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 1.5%
Pre-Tax Margin 4.9%
Pre-Tax Margin - 3 Yr. Avg. 1.9%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 8.3%
Payout Ratio 0%

ULBI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ULBI stock intrinsic value calculation we used $82 million for the last fiscal year's total revenue generated by Ultralife. The default revenue input number comes from 2016 income statement of Ultralife. 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 ULBI stock valuation model: a) initial revenue growth rate of 7.9% 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 ULBI is calculated based on our internal credit rating of Ultralife, 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 Ultralife.
    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 ULBI stock the variable cost ratio is equal to 96.3%.

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 ULBI 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 Ultralife.

Corporate tax rate of 27% is the nominal tax rate for Ultralife. 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 ULBI 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 ULBI are equal to 17.7%.

Life of production assets of 10.8 years is the average useful life of capital assets used in Ultralife 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 ULBI is equal to 34.1%. 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 - $68 million for Ultralife - 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 15.554 million for Ultralife 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 Ultralife at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
CBAK CBAK Energy Te 1.65 0.15  str.sell
HRG HRG Group 15.20 1.91  str.sell

COMPANY NEWS

▶ ETFs with exposure to Ultralife Corp. : June 26, 2017   [Jun-26-17 05:07PM  Capital Cube]
▶ ETFs with exposure to Ultralife Corp. : June 8, 2017   [Jun-08-17 01:59PM  Capital Cube]
▶ Ultralife posts 1Q profit   [May-04-17 08:34AM  Associated Press]
▶ ETFs with exposure to Ultralife Corp. : April 20, 2017   [Apr-20-17 02:34PM  Capital Cube]
▶ Ultralife posts 4Q profit   [Feb-09-17 09:19AM  Associated Press]
▶ ETFs with exposure to Ultralife Corp. : January 20, 2017   [Jan-20-17 02:17PM  Capital Cube]
▶ Insiders Invest in Ultralife   [Nov-16-16 03:25PM  GuruFocus.com]
▶ 10-Q for Ultralife Corp.   [Aug-01  08:09PM  at Company Spotlight]
▶ 10-K for Ultralife Corp.   [May-07  08:09PM  at Company Spotlight]
▶ 10-Q for Ultralife Corp.   [May-04  08:12PM  at Company Spotlight]
Financial statements of ULBI
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.