Intrinsic value of American Woodmark Corporation - AMWD

Previous Close

$80.39

  Intrinsic Value

$134.88

stock screener

  Rating & Target

str. buy

+68%

Previous close

$80.39

 
Intrinsic value

$134.88

 
Up/down potential

+68%

 
Rating

str. buy

We calculate the intrinsic value of AMWD 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 1.4

 

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, %
  31.20
  28.58
  26.22
  24.10
  22.19
  20.47
  18.92
  17.53
  16.28
  15.15
  14.14
  13.22
  12.40
  11.66
  10.99
  10.39
  9.85
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
Revenue, $m
  1,640
  2,109
  2,662
  3,303
  4,036
  4,862
  5,782
  6,796
  7,902
  9,100
  10,386
  11,759
  13,217
  14,758
  16,381
  18,084
  19,866
  21,727
  23,668
  25,689
  27,791
  29,978
  32,250
  34,612
  37,065
  39,616
  42,267
  45,025
  47,893
  50,879
Variable operating expenses, $m
  1,461
  1,871
  2,356
  2,919
  3,561
  4,285
  5,092
  5,981
  6,950
  8,000
  9,104
  10,308
  11,586
  12,937
  14,359
  15,852
  17,414
  19,046
  20,747
  22,519
  24,362
  26,279
  28,270
  30,340
  32,492
  34,727
  37,051
  39,469
  41,983
  44,600
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
  1,461
  1,871
  2,356
  2,919
  3,561
  4,285
  5,092
  5,981
  6,950
  8,000
  9,104
  10,308
  11,586
  12,937
  14,359
  15,852
  17,414
  19,046
  20,747
  22,519
  24,362
  26,279
  28,270
  30,340
  32,492
  34,727
  37,051
  39,469
  41,983
  44,600
Operating income, $m
  179
  237
  305
  385
  475
  577
  691
  816
  952
  1,100
  1,282
  1,451
  1,631
  1,821
  2,021
  2,232
  2,451
  2,681
  2,921
  3,170
  3,429
  3,699
  3,980
  4,271
  4,574
  4,889
  5,216
  5,556
  5,910
  6,278
EBITDA, $m
  239
  308
  388
  482
  589
  710
  844
  992
  1,153
  1,328
  1,516
  1,716
  1,929
  2,154
  2,391
  2,639
  2,899
  3,171
  3,454
  3,749
  4,056
  4,375
  4,707
  5,052
  5,410
  5,782
  6,169
  6,571
  6,990
  7,426
Interest expense (income), $m
  1
  44
  62
  83
  109
  138
  172
  210
  252
  298
  349
  404
  463
  526
  593
  664
  738
  817
  898
  984
  1,073
  1,166
  1,262
  1,362
  1,467
  1,575
  1,688
  1,805
  1,927
  2,053
  2,185
Earnings before tax, $m
  135
  175
  222
  276
  337
  405
  481
  564
  654
  751
  877
  988
  1,105
  1,228
  1,357
  1,493
  1,635
  1,783
  1,937
  2,097
  2,264
  2,437
  2,617
  2,804
  2,999
  3,201
  3,411
  3,629
  3,857
  4,094
Tax expense, $m
  37
  47
  60
  74
  91
  109
  130
  152
  176
  203
  237
  267
  298
  332
  367
  403
  441
  481
  523
  566
  611
  658
  707
  757
  810
  864
  921
  980
  1,041
  1,105
Net income, $m
  99
  128
  162
  201
  246
  296
  351
  412
  477
  548
  641
  721
  806
  896
  991
  1,090
  1,193
  1,301
  1,414
  1,531
  1,653
  1,779
  1,911
  2,047
  2,189
  2,337
  2,490
  2,649
  2,816
  2,988

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
  2,158
  2,775
  3,502
  4,346
  5,311
  6,398
  7,608
  8,942
  10,398
  11,973
  13,666
  15,473
  17,391
  19,419
  21,554
  23,794
  26,139
  28,588
  31,142
  33,801
  36,568
  39,444
  42,434
  45,541
  48,770
  52,126
  55,615
  59,243
  63,017
  66,946
Adjusted assets (=assets-cash), $m
  2,158
  2,775
  3,502
  4,346
  5,311
  6,398
  7,608
  8,942
  10,398
  11,973
  13,666
  15,473
  17,391
  19,419
  21,554
  23,794
  26,139
  28,588
  31,142
  33,801
  36,568
  39,444
  42,434
  45,541
  48,770
  52,126
  55,615
  59,243
  63,017
  66,946
Revenue / Adjusted assets
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
  0.760
Average production assets, $m
  566
  728
  918
  1,140
  1,392
  1,677
  1,995
  2,345
  2,726
  3,139
  3,583
  4,057
  4,560
  5,092
  5,651
  6,239
  6,854
  7,496
  8,165
  8,863
  9,588
  10,342
  11,126
  11,941
  12,788
  13,667
  14,582
  15,533
  16,523
  17,553
Working capital, $m
  144
  186
  234
  291
  355
  428
  509
  598
  695
  801
  914
  1,035
  1,163
  1,299
  1,442
  1,591
  1,748
  1,912
  2,083
  2,261
  2,446
  2,638
  2,838
  3,046
  3,262
  3,486
  3,720
  3,962
  4,215
  4,477
Total debt, $m
  1,144
  1,543
  2,013
  2,558
  3,181
  3,883
  4,665
  5,527
  6,467
  7,485
  8,578
  9,746
  10,985
  12,295
  13,674
  15,121
  16,636
  18,218
  19,868
  21,586
  23,373
  25,231
  27,163
  29,170
  31,256
  33,424
  35,678
  38,021
  40,460
  42,997
Total liabilities, $m
  1,394
  1,792
  2,262
  2,808
  3,431
  4,133
  4,915
  5,777
  6,717
  7,735
  8,828
  9,995
  11,235
  12,545
  13,924
  15,371
  16,886
  18,468
  20,118
  21,835
  23,623
  25,481
  27,413
  29,420
  31,506
  33,673
  35,927
  38,271
  40,709
  43,247
Total equity, $m
  764
  982
  1,240
  1,539
  1,880
  2,265
  2,693
  3,166
  3,681
  4,239
  4,838
  5,477
  6,156
  6,874
  7,630
  8,423
  9,253
  10,120
  11,024
  11,966
  12,945
  13,963
  15,022
  16,122
  17,265
  18,453
  19,688
  20,972
  22,308
  23,699
Total liabilities and equity, $m
  2,158
  2,774
  3,502
  4,347
  5,311
  6,398
  7,608
  8,943
  10,398
  11,974
  13,666
  15,472
  17,391
  19,419
  21,554
  23,794
  26,139
  28,588
  31,142
  33,801
  36,568
  39,444
  42,435
  45,542
  48,771
  52,126
  55,615
  59,243
  63,017
  66,946
Debt-to-equity ratio
  1.500
  1.570
  1.620
  1.660
  1.690
  1.710
  1.730
  1.750
  1.760
  1.770
  1.770
  1.780
  1.780
  1.790
  1.790
  1.800
  1.800
  1.800
  1.800
  1.800
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
Adjusted equity ratio
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  99
  128
  162
  201
  246
  296
  351
  412
  477
  548
  641
  721
  806
  896
  991
  1,090
  1,193
  1,301
  1,414
  1,531
  1,653
  1,779
  1,911
  2,047
  2,189
  2,337
  2,490
  2,649
  2,816
  2,988
Depreciation, amort., depletion, $m
  60
  71
  83
  97
  114
  133
  153
  176
  201
  228
  234
  265
  298
  333
  369
  408
  448
  490
  534
  579
  627
  676
  727
  780
  836
  893
  953
  1,015
  1,080
  1,147
Funds from operations, $m
  159
  199
  245
  299
  360
  428
  504
  588
  678
  776
  875
  986
  1,105
  1,229
  1,360
  1,498
  1,641
  1,791
  1,948
  2,110
  2,279
  2,455
  2,638
  2,828
  3,025
  3,230
  3,443
  3,665
  3,895
  4,136
Change in working capital, $m
  34
  41
  49
  56
  65
  73
  81
  89
  97
  105
  113
  121
  128
  136
  143
  150
  157
  164
  171
  178
  185
  192
  200
  208
  216
  224
  233
  243
  252
  263
Cash from operations, $m
  125
  157
  197
  242
  295
  356
  423
  499
  581
  671
  762
  865
  976
  1,094
  1,218
  1,348
  1,485
  1,628
  1,777
  1,932
  2,094
  2,263
  2,438
  2,620
  2,809
  3,005
  3,210
  3,422
  3,643
  3,873
Maintenance CAPEX, $m
  -28
  -37
  -48
  -60
  -74
  -91
  -110
  -130
  -153
  -178
  -205
  -234
  -265
  -298
  -333
  -369
  -408
  -448
  -490
  -534
  -579
  -627
  -676
  -727
  -780
  -836
  -893
  -953
  -1,015
  -1,080
New CAPEX, $m
  -135
  -162
  -191
  -221
  -253
  -285
  -317
  -350
  -382
  -413
  -444
  -474
  -503
  -532
  -560
  -587
  -615
  -642
  -670
  -697
  -725
  -754
  -784
  -815
  -847
  -880
  -915
  -951
  -990
  -1,030
Cash from investing activities, $m
  -163
  -199
  -239
  -281
  -327
  -376
  -427
  -480
  -535
  -591
  -649
  -708
  -768
  -830
  -893
  -956
  -1,023
  -1,090
  -1,160
  -1,231
  -1,304
  -1,381
  -1,460
  -1,542
  -1,627
  -1,716
  -1,808
  -1,904
  -2,005
  -2,110
Free cash flow, $m
  -39
  -41
  -42
  -39
  -32
  -20
  -4
  18
  46
  80
  113
  157
  208
  264
  325
  391
  462
  537
  617
  701
  790
  882
  978
  1,078
  1,182
  1,290
  1,402
  1,518
  1,638
  1,763
Issuance/(repayment) of debt, $m
  330
  398
  470
  545
  623
  702
  782
  862
  940
  1,018
  1,093
  1,167
  1,239
  1,310
  1,379
  1,447
  1,515
  1,582
  1,650
  1,718
  1,787
  1,858
  1,931
  2,007
  2,086
  2,168
  2,254
  2,344
  2,438
  2,538
Issuance/(repurchase) of shares, $m
  83
  90
  95
  97
  95
  89
  78
  61
  38
  10
  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  
  413
  488
  565
  642
  718
  791
  860
  923
  978
  1,028
  1,093
  1,167
  1,239
  1,310
  1,379
  1,447
  1,515
  1,582
  1,650
  1,718
  1,787
  1,858
  1,931
  2,007
  2,086
  2,168
  2,254
  2,344
  2,438
  2,538
Total cash flow (excl. dividends), $m
  375
  447
  524
  604
  687
  771
  856
  941
  1,025
  1,107
  1,206
  1,325
  1,447
  1,574
  1,704
  1,838
  1,977
  2,120
  2,267
  2,419
  2,577
  2,740
  2,909
  3,085
  3,268
  3,458
  3,655
  3,861
  4,076
  4,301
Retained Cash Flow (-), $m
  -182
  -218
  -258
  -299
  -341
  -385
  -429
  -472
  -515
  -558
  -599
  -640
  -679
  -718
  -756
  -793
  -830
  -867
  -904
  -941
  -979
  -1,018
  -1,058
  -1,100
  -1,143
  -1,188
  -1,235
  -1,284
  -1,336
  -1,391
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
  193
  229
  266
  305
  345
  386
  427
  469
  509
  549
  607
  685
  768
  856
  948
  1,045
  1,147
  1,253
  1,363
  1,478
  1,597
  1,722
  1,851
  1,985
  2,125
  2,270
  2,420
  2,577
  2,740
  2,910
Discount rate, %
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
  178
  193
  203
  209
  210
  207
  199
  188
  174
  157
  143
  132
  119
  104
  90
  75
  62
  49
  38
  29
  21
  15
  11
  7
  5
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  94.2
  89.7
  86.1
  83.3
  81.2
  79.5
  78.4
  77.6
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2

American Woodmark Corporation manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. The Company offers framed stock cabinets in approximately 500 different cabinet lines, ranging in price from relatively inexpensive to medium-priced styles. Styles vary by design and color from natural wood finishes to low-pressure laminate surfaces. The product offering of stock cabinets includes approximately 90 door designs in over 20 colors. Stock cabinets consist of cabinet interiors of varying dimensions and construction options, and a maple, oak, cherry, or hickory front frame, door and/or drawer front. The Company's products are sold under the brand names of American Woodmark, Simply Woodmark, Timberlake, Shenandoah Cabinetry, Shenandoah Value Series and Waypoint Living Spaces. The Company's primary raw materials used include hard maple, soft maple, oak, cherry, and hickory lumber and plywood.

FINANCIAL RATIOS  of  American Woodmark Corporation (AMWD)

Valuation Ratios
P/E Ratio 18.4
Price to Sales 1.3
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 16.9
Price to Free Cash Flow 23.7
Growth Rates
Sales Growth Rate 8.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.1%
Cap. Spend. - 3 Yr. Gr. Rate 22.4%
Financial Strength
Quick Ratio 115
Current Ratio 0
LT Debt to Equity 4.3%
Total Debt to Equity 4.8%
Interest Coverage 110
Management Effectiveness
Return On Assets 14.8%
Ret/ On Assets - 3 Yr. Avg. 12.9%
Return On Total Capital 21.1%
Ret/ On T. Cap. - 3 Yr. Avg. 19.2%
Return On Equity 22.4%
Return On Equity - 3 Yr. Avg. 20.9%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 21.8%
Gross Margin - 3 Yr. Avg. 20.5%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 10.8%
Operating Margin 10.5%
Oper. Margin - 3 Yr. Avg. 9%
Pre-Tax Margin 10.6%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 6.9%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. 34.7%
Payout Ratio 0%

AMWD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMWD stock intrinsic value calculation we used $1250 million for the last fiscal year's total revenue generated by American Woodmark Corporation. The default revenue input number comes from 0001 income statement of American Woodmark Corporation. 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 AMWD stock valuation model: a) initial revenue growth rate of 31.2% 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 8.6%, whose default value for AMWD is calculated based on our internal credit rating of American Woodmark Corporation, 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 American Woodmark Corporation.
    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 AMWD stock the variable cost ratio is equal to 89.5%.

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 AMWD 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 American Woodmark Corporation.

Corporate tax rate of 27% is the nominal tax rate for American Woodmark Corporation. 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 AMWD 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 AMWD are equal to 34.5%.

Life of production assets of 15.3 years is the average useful life of capital assets used in American Woodmark Corporation 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 AMWD is equal to 8.8%. 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 - $581.665 million for American Woodmark Corporation - 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 16.909 million for American Woodmark Corporation 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 American Woodmark Corporation at the current share price and the inputted number of shares is $1.4 billion.

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