Intrinsic value of Air T, Inc. - AIRT

Previous Close

$30.15

  Intrinsic Value

$418.89

stock screener

  Rating & Target

str. buy

+999%

Previous close

$30.15

 
Intrinsic value

$418.89

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of AIRT 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, %
  43.00
  39.20
  35.78
  32.70
  29.93
  27.44
  25.19
  23.18
  21.36
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
Revenue, $m
  279
  388
  527
  699
  909
  1,158
  1,450
  1,786
  2,167
  2,595
  3,068
  3,588
  4,152
  4,761
  5,412
  6,107
  6,842
  7,618
  8,433
  9,287
  10,181
  11,113
  12,085
  13,096
  14,148
  15,241
  16,377
  17,558
  18,785
  20,061
Variable operating expenses, $m
  231
  321
  435
  576
  748
  952
  1,192
  1,468
  1,781
  2,132
  2,518
  2,944
  3,408
  3,907
  4,442
  5,012
  5,615
  6,252
  6,921
  7,623
  8,356
  9,121
  9,919
  10,748
  11,612
  12,509
  13,442
  14,411
  15,418
  16,465
Fixed operating expenses, $m
  30
  30
  31
  32
  32
  33
  34
  35
  35
  36
  37
  38
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
Total operating expenses, $m
  261
  351
  466
  608
  780
  985
  1,226
  1,503
  1,816
  2,168
  2,555
  2,982
  3,446
  3,946
  4,482
  5,053
  5,657
  6,295
  6,965
  7,668
  8,402
  9,168
  9,967
  10,797
  11,662
  12,560
  13,494
  14,464
  15,473
  16,521
Operating income, $m
  18
  37
  62
  92
  129
  173
  224
  284
  351
  427
  513
  605
  706
  814
  930
  1,054
  1,184
  1,323
  1,468
  1,620
  1,779
  1,945
  2,118
  2,299
  2,486
  2,681
  2,884
  3,094
  3,313
  3,540
EBITDA, $m
  24
  44
  70
  102
  141
  188
  243
  306
  378
  459
  549
  647
  754
  869
  993
  1,124
  1,264
  1,411
  1,566
  1,728
  1,897
  2,074
  2,259
  2,450
  2,650
  2,858
  3,073
  3,298
  3,531
  3,773
Interest expense (income), $m
  0
  3
  4
  6
  9
  13
  17
  22
  28
  34
  42
  50
  60
  70
  81
  94
  107
  120
  135
  151
  167
  184
  202
  220
  240
  260
  281
  303
  325
  349
  373
Earnings before tax, $m
  16
  33
  55
  83
  116
  156
  202
  256
  317
  385
  463
  546
  636
  733
  836
  947
  1,064
  1,187
  1,317
  1,453
  1,595
  1,744
  1,898
  2,059
  2,226
  2,400
  2,581
  2,769
  2,964
  3,167
Tax expense, $m
  4
  9
  15
  22
  31
  42
  55
  69
  86
  104
  125
  147
  172
  198
  226
  256
  287
  321
  356
  392
  431
  471
  513
  556
  601
  648
  697
  748
  800
  855
Net income, $m
  11
  24
  40
  60
  85
  114
  148
  187
  231
  281
  338
  398
  464
  535
  611
  691
  777
  867
  962
  1,061
  1,165
  1,273
  1,386
  1,503
  1,625
  1,752
  1,884
  2,021
  2,164
  2,312

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
  139
  193
  263
  348
  453
  577
  722
  890
  1,080
  1,293
  1,529
  1,788
  2,069
  2,372
  2,697
  3,043
  3,409
  3,795
  4,202
  4,628
  5,073
  5,537
  6,021
  6,525
  7,049
  7,594
  8,160
  8,748
  9,360
  9,995
Adjusted assets (=assets-cash), $m
  139
  193
  263
  348
  453
  577
  722
  890
  1,080
  1,293
  1,529
  1,788
  2,069
  2,372
  2,697
  3,043
  3,409
  3,795
  4,202
  4,628
  5,073
  5,537
  6,021
  6,525
  7,049
  7,594
  8,160
  8,748
  9,360
  9,995
Revenue / Adjusted assets
  2.007
  2.010
  2.004
  2.009
  2.007
  2.007
  2.008
  2.007
  2.006
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
  2.007
Average production assets, $m
  22
  31
  42
  56
  73
  93
  116
  143
  173
  208
  245
  287
  332
  381
  433
  489
  547
  609
  675
  743
  814
  889
  967
  1,048
  1,132
  1,219
  1,310
  1,405
  1,503
  1,605
Working capital, $m
  47
  66
  90
  119
  154
  197
  246
  304
  368
  441
  522
  610
  706
  809
  920
  1,038
  1,163
  1,295
  1,434
  1,579
  1,731
  1,889
  2,054
  2,226
  2,405
  2,591
  2,784
  2,985
  3,193
  3,410
Total debt, $m
  79
  119
  171
  234
  312
  404
  511
  635
  776
  934
  1,109
  1,301
  1,509
  1,734
  1,974
  2,231
  2,502
  2,789
  3,090
  3,405
  3,735
  4,079
  4,438
  4,811
  5,200
  5,603
  6,023
  6,459
  6,912
  7,383
Total liabilities, $m
  103
  143
  195
  258
  336
  428
  535
  659
  800
  958
  1,133
  1,325
  1,533
  1,758
  1,998
  2,255
  2,526
  2,812
  3,113
  3,429
  3,759
  4,103
  4,462
  4,835
  5,223
  5,627
  6,047
  6,483
  6,936
  7,407
Total equity, $m
  36
  50
  68
  90
  117
  149
  187
  230
  280
  335
  396
  463
  536
  614
  698
  788
  883
  983
  1,088
  1,199
  1,314
  1,434
  1,560
  1,690
  1,826
  1,967
  2,113
  2,266
  2,424
  2,589
Total liabilities and equity, $m
  139
  193
  263
  348
  453
  577
  722
  889
  1,080
  1,293
  1,529
  1,788
  2,069
  2,372
  2,696
  3,043
  3,409
  3,795
  4,201
  4,628
  5,073
  5,537
  6,022
  6,525
  7,049
  7,594
  8,160
  8,749
  9,360
  9,996
Debt-to-equity ratio
  2.200
  2.380
  2.510
  2.600
  2.660
  2.700
  2.730
  2.760
  2.780
  2.790
  2.800
  2.810
  2.820
  2.820
  2.830
  2.830
  2.830
  2.840
  2.840
  2.840
  2.840
  2.840
  2.850
  2.850
  2.850
  2.850
  2.850
  2.850
  2.850
  2.850
Adjusted equity ratio
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  24
  40
  60
  85
  114
  148
  187
  231
  281
  338
  398
  464
  535
  611
  691
  777
  867
  962
  1,061
  1,165
  1,273
  1,386
  1,503
  1,625
  1,752
  1,884
  2,021
  2,164
  2,312
Depreciation, amort., depletion, $m
  5
  7
  8
  10
  13
  15
  19
  23
  27
  32
  36
  42
  48
  55
  63
  71
  79
  88
  98
  108
  118
  129
  140
  152
  164
  177
  190
  204
  218
  233
Funds from operations, $m
  17
  31
  48
  70
  97
  129
  167
  210
  258
  313
  373
  440
  512
  590
  673
  762
  856
  955
  1,059
  1,169
  1,283
  1,402
  1,526
  1,655
  1,789
  1,929
  2,074
  2,225
  2,382
  2,545
Change in working capital, $m
  14
  19
  24
  29
  36
  42
  50
  57
  65
  73
  81
  88
  96
  103
  111
  118
  125
  132
  139
  145
  152
  159
  165
  172
  179
  186
  193
  201
  209
  217
Cash from operations, $m
  2
  12
  25
  41
  62
  87
  117
  152
  194
  241
  293
  352
  416
  486
  563
  644
  731
  823
  921
  1,023
  1,131
  1,243
  1,361
  1,483
  1,610
  1,743
  1,881
  2,024
  2,173
  2,328
Maintenance CAPEX, $m
  -2
  -3
  -5
  -6
  -8
  -11
  -13
  -17
  -21
  -25
  -30
  -36
  -42
  -48
  -55
  -63
  -71
  -79
  -88
  -98
  -108
  -118
  -129
  -140
  -152
  -164
  -177
  -190
  -204
  -218
New CAPEX, $m
  -7
  -9
  -11
  -14
  -17
  -20
  -23
  -27
  -31
  -34
  -38
  -42
  -45
  -49
  -52
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -81
  -84
  -87
  -91
  -94
  -98
  -102
Cash from investing activities, $m
  -9
  -12
  -16
  -20
  -25
  -31
  -36
  -44
  -52
  -59
  -68
  -78
  -87
  -97
  -107
  -119
  -130
  -141
  -153
  -166
  -179
  -193
  -207
  -221
  -236
  -251
  -268
  -284
  -302
  -320
Free cash flow, $m
  -6
  0
  9
  21
  37
  56
  80
  109
  142
  181
  225
  274
  329
  390
  455
  526
  601
  682
  767
  857
  952
  1,051
  1,154
  1,262
  1,374
  1,492
  1,613
  1,740
  1,871
  2,008
Issuance/(repayment) of debt, $m
  31
  40
  51
  64
  77
  92
  108
  124
  141
  158
  175
  192
  208
  225
  241
  256
  271
  286
  301
  315
  330
  344
  359
  373
  388
  404
  420
  436
  453
  471
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  
  31
  40
  51
  64
  77
  92
  108
  124
  141
  158
  175
  192
  208
  225
  241
  256
  271
  286
  301
  315
  330
  344
  359
  373
  388
  404
  420
  436
  453
  471
Total cash flow (excl. dividends), $m
  25
  40
  60
  85
  114
  148
  188
  233
  283
  339
  400
  466
  538
  614
  696
  782
  873
  968
  1,068
  1,173
  1,281
  1,395
  1,513
  1,635
  1,763
  1,895
  2,033
  2,176
  2,324
  2,479
Retained Cash Flow (-), $m
  -11
  -14
  -18
  -22
  -27
  -32
  -38
  -43
  -49
  -55
  -61
  -67
  -73
  -79
  -84
  -90
  -95
  -100
  -105
  -110
  -115
  -120
  -125
  -130
  -136
  -141
  -147
  -152
  -158
  -165
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
  14
  26
  42
  63
  87
  116
  150
  189
  234
  284
  339
  399
  465
  536
  612
  692
  778
  868
  963
  1,062
  1,166
  1,274
  1,387
  1,505
  1,627
  1,754
  1,886
  2,023
  2,166
  2,314
Discount rate, %
  10.20
  10.71
  11.25
  11.81
  12.40
  13.02
  13.67
  14.35
  15.07
  15.82
  16.61
  17.45
  18.32
  19.23
  20.20
  21.21
  22.27
  23.38
  24.55
  25.77
  27.06
  28.42
  29.84
  31.33
  32.90
  34.54
  36.27
  38.08
  39.99
  41.98
PV of cash for distribution, $m
  12
  21
  31
  40
  48
  56
  61
  65
  66
  65
  62
  58
  52
  46
  39
  32
  26
  20
  15
  11
  8
  5
  3
  2
  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

Air T, Inc. is a holding company. The Company operates through five segments: overnight air cargo, ground equipment sales, ground support services, printing equipment and maintenance, and leasing. The company's overnight air cargo segment operates in the air express delivery services industry. The ground equipment sales segment manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the United States military and industrial customers. The ground support services segment provides ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers. The printing equipment and maintenance segment designs, manufactures and sells advanced digital print production equipment, maintenance contracts, spare parts, supplies and consumable items for these systems. The Company's leasing segment provides funding for equipment leasing transactions.

FINANCIAL RATIOS  of  Air T, Inc. (AIRT)

Valuation Ratios
P/E Ratio -20.5
Price to Sales 0.4
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow -7.7
Price to Free Cash Flow -6.2
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 78.3%
Total Debt to Equity 78.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -5.1%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital -7.8%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity -10.5%
Return On Equity - 3 Yr. Avg. 3%
Asset Turnover 2.5
Profitability Ratios
Gross Margin 22.3%
Gross Margin - 3 Yr. Avg. 19.5%
EBITDA Margin -0.7%
EBITDA Margin - 3 Yr. Avg. 2.5%
Operating Margin -4.1%
Oper. Margin - 3 Yr. Avg. 0.9%
Pre-Tax Margin -2.7%
Pre-Tax Margin - 3 Yr. Avg. 1.3%
Net Profit Margin -2%
Net Profit Margin - 3 Yr. Avg. 0.8%
Effective Tax Rate -25%
Eff/ Tax Rate - 3 Yr. Avg. 13.9%
Payout Ratio 0%

AIRT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AIRT stock intrinsic value calculation we used $195 million for the last fiscal year's total revenue generated by Air T, Inc.. The default revenue input number comes from 0001 income statement of Air T, 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 AIRT stock valuation model: a) initial revenue growth rate of 43% 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 10.2%, whose default value for AIRT is calculated based on our internal credit rating of Air T, 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 Air T, 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 AIRT stock the variable cost ratio is equal to 83.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $29 million in the base year in the intrinsic value calculation for AIRT 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 5.4% for Air T, Inc..

Corporate tax rate of 27% is the nominal tax rate for Air T, 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 AIRT 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 AIRT are equal to 8%.

Life of production assets of 6.9 years is the average useful life of capital assets used in Air T, 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 AIRT is equal to 17%. 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 - $25.117851 million for Air T, 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 2.024 million for Air T, 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 Air T, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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