Intrinsic value of AgroFresh Solutions, Inc. - AGFS

Previous Close

$1.53

  Intrinsic Value

$1.72

stock screener

  Rating & Target

hold

+12%

Previous close

$1.53

 
Intrinsic value

$1.72

 
Up/down potential

+12%

 
Rating

hold

We calculate the intrinsic value of AGFS 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
  183
  187
  192
  197
  203
  209
  217
  224
  233
  242
  251
  261
  272
  284
  296
  309
  323
  337
  353
  369
  386
  404
  423
  443
  464
  486
  510
  534
  560
  587
Variable operating expenses, $m
  167
  171
  175
  180
  186
  192
  198
  205
  213
  221
  228
  237
  247
  258
  269
  281
  293
  306
  320
  335
  351
  367
  384
  402
  422
  442
  463
  485
  509
  534
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
  167
  171
  175
  180
  186
  192
  198
  205
  213
  221
  228
  237
  247
  258
  269
  281
  293
  306
  320
  335
  351
  367
  384
  402
  422
  442
  463
  485
  509
  534
Operating income, $m
  15
  16
  16
  17
  17
  18
  18
  19
  20
  21
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  54
EBITDA, $m
  41
  42
  43
  45
  46
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  115
  121
  127
  133
Interest expense (income), $m
  0
  34
  35
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  58
  60
  64
  67
  70
  74
  78
  82
  86
  91
  95
  100
  106
  111
  117
  123
  130
Earnings before tax, $m
  -19
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -26
  -27
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
Tax expense, $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
Net income, $m
  -19
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -26
  -27
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76

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
  917
  939
  963
  990
  1,020
  1,053
  1,089
  1,127
  1,169
  1,214
  1,262
  1,313
  1,368
  1,426
  1,487
  1,552
  1,621
  1,694
  1,772
  1,853
  1,939
  2,029
  2,125
  2,225
  2,331
  2,443
  2,560
  2,684
  2,814
  2,951
Adjusted assets (=assets-cash), $m
  917
  939
  963
  990
  1,020
  1,053
  1,089
  1,127
  1,169
  1,214
  1,262
  1,313
  1,368
  1,426
  1,487
  1,552
  1,621
  1,694
  1,772
  1,853
  1,939
  2,029
  2,125
  2,225
  2,331
  2,443
  2,560
  2,684
  2,814
  2,951
Revenue / Adjusted assets
  0.200
  0.199
  0.199
  0.199
  0.199
  0.198
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
Average production assets, $m
  392
  401
  411
  423
  436
  450
  465
  482
  500
  519
  539
  561
  584
  609
  635
  663
  693
  724
  757
  792
  828
  867
  908
  951
  996
  1,044
  1,094
  1,147
  1,202
  1,261
Working capital, $m
  52
  53
  54
  56
  57
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  100
  104
  109
  114
  120
  125
  131
  138
  144
  151
  158
  166
Total debt, $m
  418
  430
  445
  461
  479
  498
  519
  543
  567
  594
  623
  653
  686
  720
  757
  795
  837
  880
  926
  974
  1,025
  1,079
  1,136
  1,196
  1,259
  1,325
  1,395
  1,469
  1,546
  1,627
Total liabilities, $m
  546
  558
  573
  589
  607
  626
  648
  671
  696
  722
  751
  781
  814
  848
  885
  924
  965
  1,008
  1,054
  1,102
  1,154
  1,207
  1,264
  1,324
  1,387
  1,454
  1,523
  1,597
  1,674
  1,756
Total equity, $m
  372
  380
  390
  401
  413
  426
  441
  457
  474
  492
  511
  532
  554
  577
  602
  629
  657
  686
  717
  750
  785
  822
  861
  901
  944
  989
  1,037
  1,087
  1,140
  1,195
Total liabilities and equity, $m
  918
  938
  963
  990
  1,020
  1,052
  1,089
  1,128
  1,170
  1,214
  1,262
  1,313
  1,368
  1,425
  1,487
  1,553
  1,622
  1,694
  1,771
  1,852
  1,939
  2,029
  2,125
  2,225
  2,331
  2,443
  2,560
  2,684
  2,814
  2,951
Debt-to-equity ratio
  1.120
  1.130
  1.140
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
  1.240
  1.250
  1.260
  1.270
  1.270
  1.280
  1.290
  1.300
  1.310
  1.310
  1.320
  1.330
  1.330
  1.340
  1.350
  1.350
  1.360
  1.360
Adjusted equity ratio
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -19
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -26
  -27
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
Depreciation, amort., depletion, $m
  26
  27
  27
  28
  29
  30
  31
  32
  33
  34
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  76
  79
Funds from operations, $m
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  6
  6
  6
  6
  6
  6
  5
  5
  5
  5
  5
  4
  4
  4
  3
  3
Change in working capital, $m
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Cash from operations, $m
  6
  6
  6
  6
  6
  5
  5
  5
  5
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  0
  0
  -1
  -1
  -2
  -3
  -3
  -4
  -5
Maintenance CAPEX, $m
  -24
  -25
  -25
  -26
  -27
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
New CAPEX, $m
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -58
Cash from investing activities, $m
  -32
  -34
  -35
  -38
  -40
  -41
  -43
  -46
  -48
  -50
  -54
  -56
  -58
  -62
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -134
Free cash flow, $m
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -73
  -77
  -81
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -125
  -132
  -139
Issuance/(repayment) of debt, $m
  11
  13
  14
  16
  18
  20
  21
  23
  25
  27
  29
  30
  32
  34
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  66
  70
  74
  77
  81
Issuance/(repurchase) of shares, $m
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  86
  91
  96
  101
  107
  112
  118
  125
  132
Cash from financing (excl. dividends), $m  
  37
  41
  44
  48
  52
  56
  59
  63
  68
  72
  75
  79
  84
  89
  95
  101
  106
  112
  119
  125
  132
  140
  148
  156
  164
  173
  182
  192
  202
  213
Total cash flow (excl. dividends), $m
  11
  13
  14
  16
  18
  19
  21
  22
  24
  26
  26
  28
  30
  31
  33
  35
  37
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  74
Retained Cash Flow (-), $m
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -46
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -73
  -77
  -81
  -86
  -91
  -96
  -101
  -107
  -112
  -118
  -125
  -132
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
  -15
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -49
  -51
  -54
  -57
Discount rate, %
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
  -14
  -13
  -11
  -10
  -9
  -8
  -8
  -7
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  90.7
  81.9
  73.7
  66.1
  59.0
  52.5
  46.6
  41.2
  36.4
  32.0
  28.2
  24.8
  21.8
  19.0
  16.6
  14.5
  12.6
  11.0
  9.5
  8.3
  7.2
  6.2
  5.3
  4.6
  4.0
  3.4
  2.9
  2.5
  2.2
  1.9

AgroFresh Solutions, Inc., formerly Boulevard Acquisition Corp., is a developer of agricultural technologies that preserve the freshness and value of fresh produce, including apples, pears, kiwifruit, avocados and bananas, as well as flowers. The Company's principal product, The SmartFresh Quality System (SmartFresh), regulates the post-harvest ripening effects of ethylene, the naturally occurring plant hormone that triggers ripening in certain fruits and vegetables, through technology. SmartFresh is naturally biodegradable and leaves no detectable residue, which has significant consumer appeal. SmartFresh allows growers and packers to deliver just harvested freshness on a year-round basis. An integral part of the SmartFresh sales process is the AgroFresh Whole Product offering, which is a direct service model that provides customers with on-site applications of SmartFresh at their storage facilities combined with advisory services. The Company operates in approximately 40 countries.

FINANCIAL RATIOS  of  AgroFresh Solutions, Inc. (AGFS)

Valuation Ratios
P/E Ratio -0.7
Price to Sales 0.5
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 2.6
Price to Free Cash Flow 3.2
Growth Rates
Sales Growth Rate -2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 500%
Cap. Spend. - 3 Yr. Gr. Rate 43.1%
Financial Strength
Quick Ratio 5
Current Ratio 0.1
LT Debt to Equity 117.3%
Total Debt to Equity 121.8%
Interest Coverage 0
Management Effectiveness
Return On Assets -10.9%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital -14%
Ret/ On T. Cap. - 3 Yr. Avg. 0.2%
Return On Equity -28.8%
Return On Equity - 3 Yr. Avg. -4.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 62.5%
Gross Margin - 3 Yr. Avg. 60.9%
EBITDA Margin -35%
EBITDA Margin - 3 Yr. Avg. 6%
Operating Margin -23.1%
Oper. Margin - 3 Yr. Avg. 2.5%
Pre-Tax Margin -61.9%
Pre-Tax Margin - 3 Yr. Avg. -15.4%
Net Profit Margin -70%
Net Profit Margin - 3 Yr. Avg. -23.9%
Effective Tax Rate -13.1%
Eff/ Tax Rate - 3 Yr. Avg. 23.5%
Payout Ratio 0%

AGFS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGFS stock intrinsic value calculation we used $179 million for the last fiscal year's total revenue generated by AgroFresh Solutions, Inc.. The default revenue input number comes from 0001 income statement of AgroFresh Solutions, Inc.. 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 AGFS 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 9.3%, whose default value for AGFS is calculated based on our internal credit rating of AgroFresh Solutions, Inc., 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 AgroFresh Solutions, Inc..
    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 AGFS stock the variable cost ratio is equal to 91.6%.

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 AGFS 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 8.4% for AgroFresh Solutions, Inc..

Corporate tax rate of 27% is the nominal tax rate for AgroFresh Solutions, Inc.. 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 AGFS 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 AGFS are equal to 214.7%.

Life of production assets of 15.9 years is the average useful life of capital assets used in AgroFresh Solutions, Inc. 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 AGFS is equal to 28.3%. 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 - $364.313 million for AgroFresh Solutions, Inc. - 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 51.067 million for AgroFresh Solutions, Inc. 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 AgroFresh Solutions, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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