Intrinsic value of Aceto - ACET

Previous Close

$1.85

  Intrinsic Value

$22.27

stock screener

  Rating & Target

str. buy

+999%

Previous close

$1.85

 
Intrinsic value

$22.27

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of ACET 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 0001), $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
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  651
  666
  683
  702
  724
  747
  772
  800
  830
  862
  896
  932
  971
  1,012
  1,055
  1,102
  1,151
  1,202
  1,257
  1,315
  1,376
  1,440
  1,508
  1,579
  1,654
  1,734
  1,817
  1,905
  1,997
  2,094
Variable operating expenses, $m
  583
  595
  609
  625
  642
  661
  682
  704
  729
  755
  730
  760
  791
  825
  860
  898
  938
  980
  1,025
  1,072
  1,122
  1,174
  1,229
  1,287
  1,349
  1,413
  1,481
  1,553
  1,628
  1,707
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
  583
  595
  609
  625
  642
  661
  682
  704
  729
  755
  730
  760
  791
  825
  860
  898
  938
  980
  1,025
  1,072
  1,122
  1,174
  1,229
  1,287
  1,349
  1,413
  1,481
  1,553
  1,628
  1,707
Operating income, $m
  68
  71
  74
  78
  82
  86
  91
  96
  101
  107
  165
  172
  179
  187
  195
  204
  213
  222
  232
  243
  254
  266
  279
  292
  306
  320
  336
  352
  369
  387
EBITDA, $m
  133
  136
  140
  144
  148
  153
  158
  163
  170
  176
  183
  190
  198
  207
  216
  225
  235
  246
  257
  269
  281
  294
  308
  323
  338
  354
  371
  389
  408
  428
Interest expense (income), $m
  8
  24
  25
  26
  27
  28
  29
  31
  33
  34
  36
  39
  41
  43
  46
  49
  51
  54
  58
  61
  65
  69
  73
  77
  81
  86
  91
  96
  102
  108
  114
Earnings before tax, $m
  44
  46
  48
  51
  54
  56
  60
  63
  67
  71
  127
  131
  136
  141
  147
  152
  158
  164
  171
  178
  186
  193
  202
  210
  219
  229
  239
  250
  261
  273
Tax expense, $m
  12
  13
  13
  14
  14
  15
  16
  17
  18
  19
  34
  35
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  67
  71
  74
Net income, $m
  32
  34
  35
  37
  39
  41
  44
  46
  49
  52
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  135
  141
  147
  154
  160
  167
  175
  182
  191
  199

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,059
  1,083
  1,111
  1,142
  1,177
  1,215
  1,256
  1,301
  1,349
  1,401
  1,456
  1,515
  1,578
  1,645
  1,716
  1,791
  1,871
  1,955
  2,044
  2,138
  2,237
  2,342
  2,452
  2,568
  2,690
  2,819
  2,954
  3,097
  3,247
  3,405
Adjusted assets (=assets-cash), $m
  1,059
  1,083
  1,111
  1,142
  1,177
  1,215
  1,256
  1,301
  1,349
  1,401
  1,456
  1,515
  1,578
  1,645
  1,716
  1,791
  1,871
  1,955
  2,044
  2,138
  2,237
  2,342
  2,452
  2,568
  2,690
  2,819
  2,954
  3,097
  3,247
  3,405
Revenue / Adjusted assets
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
Average production assets, $m
  188
  192
  197
  203
  209
  216
  223
  231
  240
  249
  259
  269
  281
  292
  305
  318
  333
  348
  363
  380
  398
  416
  436
  456
  478
  501
  525
  550
  577
  605
Working capital, $m
  210
  214
  220
  226
  233
  241
  249
  258
  267
  277
  288
  300
  313
  326
  340
  355
  371
  387
  405
  423
  443
  464
  486
  509
  533
  558
  585
  613
  643
  674
Total debt, $m
  366
  381
  398
  417
  438
  462
  487
  514
  544
  575
  609
  645
  683
  724
  767
  813
  862
  913
  967
  1,025
  1,085
  1,149
  1,216
  1,287
  1,362
  1,440
  1,523
  1,610
  1,701
  1,797
Total liabilities, $m
  646
  661
  678
  697
  718
  741
  766
  794
  823
  855
  888
  924
  963
  1,004
  1,047
  1,093
  1,141
  1,193
  1,247
  1,304
  1,365
  1,428
  1,496
  1,566
  1,641
  1,720
  1,802
  1,889
  1,981
  2,077
Total equity, $m
  413
  422
  433
  445
  459
  474
  490
  507
  526
  546
  568
  591
  616
  642
  669
  699
  730
  763
  797
  834
  872
  913
  956
  1,001
  1,049
  1,099
  1,152
  1,208
  1,266
  1,328
Total liabilities and equity, $m
  1,059
  1,083
  1,111
  1,142
  1,177
  1,215
  1,256
  1,301
  1,349
  1,401
  1,456
  1,515
  1,579
  1,646
  1,716
  1,792
  1,871
  1,956
  2,044
  2,138
  2,237
  2,341
  2,452
  2,567
  2,690
  2,819
  2,954
  3,097
  3,247
  3,405
Debt-to-equity ratio
  0.890
  0.900
  0.920
  0.940
  0.960
  0.970
  0.990
  1.010
  1.030
  1.050
  1.070
  1.090
  1.110
  1.130
  1.150
  1.160
  1.180
  1.200
  1.210
  1.230
  1.240
  1.260
  1.270
  1.290
  1.300
  1.310
  1.320
  1.330
  1.340
  1.350
Adjusted equity ratio
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  32
  34
  35
  37
  39
  41
  44
  46
  49
  52
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  135
  141
  147
  154
  160
  167
  175
  182
  191
  199
Depreciation, amort., depletion, $m
  65
  65
  66
  66
  66
  67
  67
  68
  68
  69
  17
  18
  19
  20
  21
  22
  22
  23
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
Funds from operations, $m
  97
  99
  101
  103
  105
  108
  111
  114
  117
  121
  110
  114
  118
  123
  128
  133
  138
  144
  149
  156
  162
  169
  177
  184
  193
  201
  210
  220
  230
  240
Change in working capital, $m
  4
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
Cash from operations, $m
  93
  94
  95
  97
  99
  100
  103
  105
  108
  110
  99
  102
  106
  110
  114
  118
  122
  127
  132
  137
  143
  149
  155
  161
  168
  176
  183
  191
  200
  209
Maintenance CAPEX, $m
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
New CAPEX, $m
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
Cash from investing activities, $m
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -37
  -39
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -64
  -67
Free cash flow, $m
  77
  77
  77
  78
  79
  80
  81
  82
  83
  85
  73
  74
  77
  79
  81
  84
  86
  89
  93
  96
  99
  103
  107
  111
  116
  120
  125
  131
  136
  142
Issuance/(repayment) of debt, $m
  13
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  36
  38
  41
  43
  46
  49
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  91
  96
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
Cash from financing (excl. dividends), $m  
  13
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  36
  38
  41
  43
  46
  49
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  91
  96
Total cash flow (excl. dividends), $m
  90
  92
  94
  97
  100
  103
  106
  109
  113
  116
  106
  110
  115
  120
  124
  130
  135
  141
  147
  153
  160
  167
  174
  182
  190
  199
  208
  218
  228
  238
Retained Cash Flow (-), $m
  -8
  -9
  -11
  -12
  -14
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -58
  -62
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
  82
  83
  84
  85
  86
  88
  90
  92
  94
  96
  85
  87
  90
  93
  97
  100
  104
  108
  112
  117
  121
  126
  131
  137
  143
  149
  155
  162
  169
  177
Discount rate, %
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
  76
  71
  66
  62
  57
  52
  47
  42
  38
  33
  25
  22
  19
  16
  13
  11
  9
  7
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  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

Aceto Corporation (Aceto) is engaged in the marketing, sales and distribution of finished dosage form generic pharmaceuticals, nutraceutical products, pharmaceutical active ingredients and intermediates, specialty performance chemicals inclusive of agricultural intermediates and agricultural protection products. The Company's business is organized along product lines into three segments: Human Health, Pharmaceutical Ingredients and Performance Chemicals. As of June 30, 2016, it distributed over 1,100 chemical compounds used primarily as finished products or raw materials in the agricultural, coatings and industrial chemical industries. The Human Health segment includes finished dosage form generic drugs and nutraceutical products. As of June 30, 2016, the Pharmaceutical Ingredients segment had two product groups: Active Pharmaceutical Ingredients and Pharmaceutical Intermediates. The Performance Chemicals segment includes specialty chemicals and agricultural protection products.

FINANCIAL RATIOS  of  Aceto (ACET)

Valuation Ratios
P/E Ratio 5.1
Price to Sales 0.1
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 1.2
Price to Free Cash Flow 1.4
Growth Rates
Sales Growth Rate 14.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -58.3%
Cap. Spend. - 3 Yr. Gr. Rate 20.1%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 84%
Total Debt to Equity 87.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 1.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.7%
Return On Equity 3.1%
Return On Equity - 3 Yr. Avg. 9.7%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 22.1%
Gross Margin - 3 Yr. Avg. 24.1%
EBITDA Margin 7.7%
EBITDA Margin - 3 Yr. Avg. 11%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 2.7%
Pre-Tax Margin - 3 Yr. Avg. 7.4%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 4.7%
Effective Tax Rate 35.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 72.7%

ACET stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACET stock intrinsic value calculation we used $638.318 million for the last fiscal year's total revenue generated by Aceto. The default revenue input number comes from 0001 income statement of Aceto. 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 ACET 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 7.2%, whose default value for ACET is calculated based on our internal credit rating of Aceto, 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 Aceto.
    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 ACET stock the variable cost ratio is equal to 89.7%.

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 ACET 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 6.7% for Aceto.

Corporate tax rate of 27% is the nominal tax rate for Aceto. 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 ACET 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 ACET are equal to 28.9%.

Life of production assets of 14.8 years is the average useful life of capital assets used in Aceto 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 ACET is equal to 32.2%. 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 - $405.067 million for Aceto - 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 30.788 million for Aceto 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 Aceto at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
PFE Pfizer 43.21 34.10  hold
KWR Quaker Chemica 204.48 81.13  str.sell
MRK Merck&Co 74.84 33.05  str.sell
PBH Prestige Brand 37.98 74.77  str.buy
GSK GlaxoSmithKlin 40.41 350.10  str.buy
CBM Cambrex 47.43 54.53  hold

COMPANY NEWS

▶ Aceto: Fiscal 1Q Earnings Snapshot   [05:03AM  Associated Press]
▶ ACETO Reports Fiscal 2019 First Quarter Results   [Nov-08-18 04:30PM  GlobeNewswire]
▶ Penny Stocks to Watch for October 2018   [Oct-01-18 08:24AM  Investopedia]
▶ Aceto: Fiscal 4Q Earnings Snapshot   [07:33AM  Associated Press]
▶ ACETO Announces Credit Agreement Amendment   [Sep-12-18 05:19PM  GlobeNewswire]
▶ Top Dividend Paying Stocks   [09:02AM  Simply Wall St.]
▶ May Healthcare Dividend Stocks To Look Out For   [06:02AM  Simply Wall St.]

CONTACT US       ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2018. All rigths reserved.