Intrinsic value of Alico, Inc. - ALCO

Previous Close

$29.75

  Intrinsic Value

$13.71

stock screener

  Rating & Target

str. sell

-54%

Previous close

$29.75

 
Intrinsic value

$13.71

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of ALCO 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 0.2

 

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
  83
  85
  87
  89
  92
  95
  98
  102
  105
  109
  114
  118
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  191
  200
  210
  220
  231
  242
  253
  266
Variable operating expenses, $m
  86
  87
  89
  90
  92
  94
  96
  98
  100
  103
  72
  74
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
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
  86
  87
  89
  90
  92
  94
  96
  98
  100
  103
  72
  74
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
Operating income, $m
  -3
  -3
  -2
  -1
  0
  1
  2
  4
  5
  7
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  78
  82
  85
  90
  94
  99
EBITDA, $m
  45
  46
  47
  48
  50
  51
  53
  55
  57
  59
  61
  64
  67
  69
  72
  76
  79
  82
  86
  90
  94
  99
  103
  108
  113
  119
  125
  131
  137
  144
Interest expense (income), $m
  8
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
Earnings before tax, $m
  -13
  -12
  -12
  -11
  -11
  -10
  -9
  -9
  -8
  -7
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
Net income, $m
  -13
  -12
  -12
  -11
  -11
  -10
  -9
  -9
  -8
  -7
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44

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
  415
  425
  436
  448
  461
  476
  493
  510
  529
  549
  571
  594
  619
  645
  673
  703
  734
  767
  802
  838
  877
  918
  962
  1,007
  1,055
  1,105
  1,159
  1,215
  1,273
  1,335
Adjusted assets (=assets-cash), $m
  415
  425
  436
  448
  461
  476
  493
  510
  529
  549
  571
  594
  619
  645
  673
  703
  734
  767
  802
  838
  877
  918
  962
  1,007
  1,055
  1,105
  1,159
  1,215
  1,273
  1,335
Revenue / Adjusted assets
  0.200
  0.200
  0.200
  0.199
  0.200
  0.200
  0.199
  0.200
  0.198
  0.199
  0.200
  0.199
  0.199
  0.198
  0.199
  0.199
  0.199
  0.199
  0.200
  0.199
  0.200
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
Average production assets, $m
  353
  361
  370
  381
  392
  405
  419
  434
  450
  467
  486
  505
  526
  548
  572
  597
  624
  652
  681
  713
  746
  781
  817
  856
  897
  940
  985
  1,032
  1,082
  1,135
Working capital, $m
  23
  24
  24
  25
  26
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  71
  74
Total debt, $m
  180
  186
  193
  200
  208
  217
  227
  238
  249
  261
  274
  288
  303
  319
  336
  354
  373
  393
  414
  436
  459
  484
  510
  538
  567
  597
  629
  663
  699
  736
Total liabilities, $m
  251
  257
  263
  271
  279
  288
  298
  308
  320
  332
  345
  359
  374
  390
  407
  424
  443
  463
  484
  506
  530
  555
  581
  608
  637
  668
  700
  734
  769
  806
Total equity, $m
  164
  168
  173
  177
  183
  189
  195
  202
  210
  218
  226
  235
  245
  255
  267
  278
  291
  304
  317
  332
  347
  364
  381
  399
  418
  438
  459
  481
  504
  529
Total liabilities and equity, $m
  415
  425
  436
  448
  462
  477
  493
  510
  530
  550
  571
  594
  619
  645
  674
  702
  734
  767
  801
  838
  877
  919
  962
  1,007
  1,055
  1,106
  1,159
  1,215
  1,273
  1,335
Debt-to-equity ratio
  1.100
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.180
  1.190
  1.200
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.320
  1.330
  1.340
  1.350
  1.360
  1.360
  1.370
  1.380
  1.390
  1.390
Adjusted equity ratio
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396
  0.396

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  -12
  -12
  -11
  -11
  -10
  -9
  -9
  -8
  -7
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
Depreciation, amort., depletion, $m
  48
  48
  49
  49
  50
  50
  51
  51
  52
  53
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
Funds from operations, $m
  35
  36
  37
  38
  39
  40
  41
  43
  44
  46
  40
  41
  43
  45
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  71
  74
  78
  82
  85
  89
Change in working capital, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
Cash from operations, $m
  35
  35
  36
  37
  38
  39
  40
  42
  43
  44
  39
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  78
  82
  86
Maintenance CAPEX, $m
  -14
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
New CAPEX, $m
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
Cash from investing activities, $m
  -21
  -22
  -23
  -25
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -65
  -68
  -71
  -75
  -79
  -82
  -87
  -91
  -96
Free cash flow, $m
  14
  13
  13
  12
  11
  11
  10
  10
  10
  9
  2
  1
  0
  0
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
Issuance/(repayment) of debt, $m
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  36
  37
Issuance/(repurchase) of shares, $m
  16
  16
  16
  16
  16
  16
  16
  16
  15
  15
  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  
  21
  22
  23
  23
  24
  25
  26
  27
  26
  27
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  36
  37
Total cash flow (excl. dividends), $m
  34
  35
  35
  36
  36
  36
  36
  36
  36
  37
  15
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
Retained Cash Flow (-), $m
  -16
  -16
  -16
  -16
  -16
  -16
  -16
  -16
  -15
  -15
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
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
  30
  19
  19
  19
  20
  20
  20
  21
  21
  22
  6
  6
  6
  5
  5
  5
  5
  5
  5
  4
  4
  4
  4
  4
  4
  4
  4
  3
  3
  3
Discount rate, %
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
  27
  16
  15
  14
  13
  12
  10
  9
  8
  7
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  92.9
  86.3
  80.3
  74.9
  69.9
  65.5
  61.5
  57.9
  54.7
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8

Alico, Inc. is an agribusiness and natural resources management company. The Company's segments include Orange Co., Conservation and Environmental Resources and, Other Operations. Its principal lines of business are citrus groves, cattle ranching and conservation. The Orange Co. segment includes activities related to planting, owning, cultivating and/or managing citrus groves in order to produce fruit for sale to fresh and processed citrus markets, including activities related to the purchase and resale of fruit and value-added services, which include contracting for the harvesting, marketing and hauling of citrus. The conservation and environmental resources segment includes activities related to cattle grazing, sod, native plant and animal sales, leasing, management and/or conservation of unimproved native pasture land. The other operations segment consists of activities related to rock mining royalties, oil exploration and other insignificant lines of business.

FINANCIAL RATIOS  of  Alico, Inc. (ALCO)

Valuation Ratios
P/E Ratio -27.2
Price to Sales 1.9
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 8.8
Price to Free Cash Flow 16.3
Growth Rates
Sales Growth Rate -9.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.1%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 1
Current Ratio 1.3
LT Debt to Equity 112.4%
Total Debt to Equity 115.5%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.7%
Ret/ On Assets - 3 Yr. Avg. 2.1%
Return On Total Capital -2.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1.2%
Return On Equity -5.4%
Return On Equity - 3 Yr. Avg. 2.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 6.9%
Gross Margin - 3 Yr. Avg. 18.3%
EBITDA Margin 7.7%
EBITDA Margin - 3 Yr. Avg. 20.5%
Operating Margin -4.6%
Oper. Margin - 3 Yr. Avg. 7.7%
Pre-Tax Margin -10%
Pre-Tax Margin - 3 Yr. Avg. 4.7%
Net Profit Margin -6.9%
Net Profit Margin - 3 Yr. Avg. 2.1%
Effective Tax Rate 23.1%
Eff/ Tax Rate - 3 Yr. Avg. 36.9%
Payout Ratio -22.2%

ALCO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALCO stock intrinsic value calculation we used $81 million for the last fiscal year's total revenue generated by Alico, Inc.. The default revenue input number comes from 0001 income statement of Alico, 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 ALCO 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 7.5%, whose default value for ALCO is calculated based on our internal credit rating of Alico, 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 Alico, 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 ALCO stock the variable cost ratio is equal to 104.9%.

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 ALCO 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 Alico, Inc..

Corporate tax rate of 27% is the nominal tax rate for Alico, 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 ALCO 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 ALCO are equal to 427.2%.

Life of production assets of 25.2 years is the average useful life of capital assets used in Alico, 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 ALCO is equal to 27.9%. 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 - $172.117 million for Alico, 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 7.463 million for Alico, 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 Alico, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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