Intrinsic value of Alliance One International - AOI

Previous Close

$23.95

  Intrinsic Value

$6.16

stock screener

  Rating & Target

str. sell

-74%

Previous close

$23.95

 
Intrinsic value

$6.16

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of AOI 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, %
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  1,940
  2,039
  2,142
  2,251
  2,365
  2,485
  2,610
  2,742
  2,880
  3,026
  3,178
  3,338
  3,506
  3,682
  3,867
  4,061
  4,265
  4,479
  4,703
  4,939
  5,187
  5,446
  5,719
  6,006
  6,307
  6,622
  6,954
  7,302
  7,667
  8,051
Variable operating expenses, $m
  1,695
  1,781
  1,871
  1,965
  2,064
  2,168
  2,277
  2,392
  2,512
  2,638
  2,761
  2,899
  3,045
  3,198
  3,359
  3,528
  3,705
  3,890
  4,086
  4,290
  4,505
  4,731
  4,968
  5,217
  5,478
  5,753
  6,041
  6,343
  6,661
  6,994
Fixed operating expenses, $m
  143
  146
  149
  153
  156
  160
  163
  167
  170
  174
  178
  182
  186
  190
  194
  198
  203
  207
  212
  216
  221
  226
  231
  236
  241
  247
  252
  257
  263
  269
Total operating expenses, $m
  1,838
  1,927
  2,020
  2,118
  2,220
  2,328
  2,440
  2,559
  2,682
  2,812
  2,939
  3,081
  3,231
  3,388
  3,553
  3,726
  3,908
  4,097
  4,298
  4,506
  4,726
  4,957
  5,199
  5,453
  5,719
  6,000
  6,293
  6,600
  6,924
  7,263
Operating income, $m
  102
  112
  122
  133
  145
  157
  170
  184
  198
  213
  239
  257
  275
  294
  314
  335
  357
  381
  406
  432
  460
  489
  520
  553
  587
  623
  661
  701
  744
  788
EBITDA, $m
  143
  154
  166
  179
  192
  207
  222
  237
  254
  272
  290
  310
  331
  353
  376
  400
  426
  453
  481
  511
  543
  576
  612
  649
  688
  729
  773
  818
  866
  917
Interest expense (income), $m
  107
  129
  137
  146
  155
  164
  174
  184
  195
  206
  218
  230
  243
  256
  271
  286
  302
  318
  335
  354
  373
  393
  414
  436
  459
  484
  509
  536
  565
  594
  625
Earnings before tax, $m
  -27
  -26
  -24
  -22
  -19
  -17
  -14
  -11
  -8
  -4
  10
  14
  18
  23
  28
  33
  39
  46
  52
  59
  67
  75
  84
  93
  103
  114
  125
  137
  150
  163
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  40
  44
Net income, $m
  -27
  -26
  -24
  -22
  -19
  -17
  -14
  -11
  -8
  -4
  7
  10
  13
  17
  20
  24
  29
  33
  38
  43
  49
  55
  61
  68
  75
  83
  91
  100
  109
  119

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
  2,006
  2,108
  2,216
  2,328
  2,446
  2,570
  2,699
  2,836
  2,979
  3,129
  3,286
  3,452
  3,625
  3,807
  3,999
  4,199
  4,410
  4,631
  4,864
  5,108
  5,364
  5,632
  5,915
  6,211
  6,522
  6,848
  7,191
  7,551
  7,929
  8,326
Adjusted assets (=assets-cash), $m
  2,006
  2,108
  2,216
  2,328
  2,446
  2,570
  2,699
  2,836
  2,979
  3,129
  3,286
  3,452
  3,625
  3,807
  3,999
  4,199
  4,410
  4,631
  4,864
  5,108
  5,364
  5,632
  5,915
  6,211
  6,522
  6,848
  7,191
  7,551
  7,929
  8,326
Revenue / Adjusted assets
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
  0.967
Average production assets, $m
  310
  326
  343
  360
  378
  398
  418
  439
  461
  484
  508
  534
  561
  589
  619
  650
  682
  717
  753
  790
  830
  871
  915
  961
  1,009
  1,060
  1,113
  1,168
  1,227
  1,288
Working capital, $m
  916
  962
  1,011
  1,063
  1,116
  1,173
  1,232
  1,294
  1,360
  1,428
  1,500
  1,575
  1,655
  1,738
  1,825
  1,917
  2,013
  2,114
  2,220
  2,331
  2,448
  2,571
  2,700
  2,835
  2,977
  3,126
  3,282
  3,447
  3,619
  3,800
Total debt, $m
  1,432
  1,519
  1,611
  1,708
  1,809
  1,915
  2,026
  2,143
  2,266
  2,395
  2,530
  2,672
  2,821
  2,977
  3,141
  3,313
  3,494
  3,684
  3,883
  4,093
  4,312
  4,543
  4,785
  5,039
  5,306
  5,586
  5,880
  6,189
  6,513
  6,854
Total liabilities, $m
  1,721
  1,809
  1,901
  1,997
  2,099
  2,205
  2,316
  2,433
  2,556
  2,685
  2,820
  2,962
  3,110
  3,267
  3,431
  3,603
  3,784
  3,974
  4,173
  4,382
  4,602
  4,833
  5,075
  5,329
  5,596
  5,876
  6,170
  6,479
  6,803
  7,144
Total equity, $m
  285
  299
  315
  331
  347
  365
  383
  403
  423
  444
  467
  490
  515
  541
  568
  596
  626
  658
  691
  725
  762
  800
  840
  882
  926
  972
  1,021
  1,072
  1,126
  1,182
Total liabilities and equity, $m
  2,006
  2,108
  2,216
  2,328
  2,446
  2,570
  2,699
  2,836
  2,979
  3,129
  3,287
  3,452
  3,625
  3,808
  3,999
  4,199
  4,410
  4,632
  4,864
  5,107
  5,364
  5,633
  5,915
  6,211
  6,522
  6,848
  7,191
  7,551
  7,929
  8,326
Debt-to-equity ratio
  5.030
  5.070
  5.120
  5.170
  5.210
  5.250
  5.290
  5.320
  5.360
  5.390
  5.420
  5.450
  5.480
  5.510
  5.530
  5.560
  5.580
  5.600
  5.620
  5.640
  5.660
  5.680
  5.700
  5.710
  5.730
  5.740
  5.760
  5.770
  5.780
  5.800
Adjusted equity ratio
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -27
  -26
  -24
  -22
  -19
  -17
  -14
  -11
  -8
  -4
  7
  10
  13
  17
  20
  24
  29
  33
  38
  43
  49
  55
  61
  68
  75
  83
  91
  100
  109
  119
Depreciation, amort., depletion, $m
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
  96
  101
  106
  111
  117
  123
  129
Funds from operations, $m
  13
  17
  20
  24
  28
  33
  38
  43
  48
  54
  58
  63
  69
  76
  82
  89
  97
  105
  113
  122
  132
  142
  153
  164
  176
  189
  203
  217
  232
  248
Change in working capital, $m
  44
  47
  49
  51
  54
  56
  59
  62
  65
  69
  72
  75
  79
  83
  87
  92
  96
  101
  106
  111
  117
  123
  129
  135
  142
  149
  156
  164
  173
  181
Cash from operations, $m
  -31
  -30
  -29
  -27
  -25
  -24
  -22
  -19
  -17
  -14
  -14
  -12
  -10
  -8
  -5
  -2
  1
  4
  7
  11
  15
  19
  24
  29
  34
  40
  46
  52
  59
  67
Maintenance CAPEX, $m
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -117
  -123
New CAPEX, $m
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
Cash from investing activities, $m
  -45
  -47
  -50
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -77
  -80
  -84
  -89
  -93
  -98
  -102
  -108
  -113
  -119
  -125
  -131
  -138
  -144
  -152
  -159
  -167
  -175
  -184
Free cash flow, $m
  -75
  -77
  -78
  -79
  -80
  -81
  -81
  -82
  -83
  -84
  -87
  -89
  -90
  -92
  -94
  -95
  -97
  -99
  -100
  -102
  -103
  -105
  -107
  -108
  -110
  -111
  -113
  -114
  -116
  -117
Issuance/(repayment) of debt, $m
  84
  88
  92
  96
  101
  106
  111
  117
  123
  129
  135
  142
  149
  156
  164
  172
  181
  190
  199
  209
  220
  231
  242
  254
  267
  280
  294
  309
  324
  340
Issuance/(repurchase) of shares, $m
  41
  40
  39
  38
  36
  34
  32
  30
  28
  25
  15
  13
  11
  9
  7
  4
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  125
  128
  131
  134
  137
  140
  143
  147
  151
  154
  150
  155
  160
  165
  171
  176
  182
  190
  199
  209
  220
  231
  242
  254
  267
  280
  294
  309
  324
  340
Total cash flow (excl. dividends), $m
  49
  51
  53
  55
  58
  60
  62
  65
  68
  71
  64
  67
  70
  74
  77
  81
  85
  91
  99
  107
  116
  125
  135
  146
  157
  169
  181
  194
  208
  223
Retained Cash Flow (-), $m
  -41
  -40
  -39
  -38
  -36
  -34
  -32
  -30
  -28
  -25
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
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
  9
  11
  14
  18
  22
  26
  30
  35
  40
  45
  41
  43
  46
  48
  50
  53
  55
  60
  66
  73
  80
  87
  95
  104
  113
  122
  133
  143
  155
  167
Discount rate, %
  11.30
  11.87
  12.46
  13.08
  13.74
  14.42
  15.14
  15.90
  16.70
  17.53
  18.41
  19.33
  20.29
  21.31
  22.37
  23.49
  24.67
  25.90
  27.19
  28.55
  29.98
  31.48
  33.06
  34.71
  36.44
  38.27
  40.18
  42.19
  44.30
  46.51
PV of cash for distribution, $m
  8
  9
  10
  11
  11
  11
  11
  11
  10
  9
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  84.2
  71.6
  61.5
  53.5
  47.1
  41.9
  37.7
  34.3
  31.5
  29.3
  28.1
  27.1
  26.4
  25.8
  25.4
  25.2
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1

Alliance One International, Inc. is engaged in purchasing, processing, storing and selling leaf tobacco. It purchases tobacco primarily in the United States, Africa, Europe, South America and Asia for sale to customers primarily in the United States, Europe and Asia. Its segments include North America and Other regions. The North America segment includes Wilson, N.C., Farmville, N.C. and Danville, VA in the United States. The Other regions segment includes South America, Africa, Europe and Asia. It operates in Venancio Aires, Brazil; Ararangua, Brazil, and El Carril, Argentina in South America. It operates in Lilongwe, Malawi; Morogoro, Tanzania, and Harare, Zimbabwe in Africa. It operates in Karlsruhe, Germany in Europe. It operates in Ngoro, Indonesia in Asia. It deals primarily in flue-cured, burley and oriental tobaccos that are used in international brand cigarettes. As of March 31, 2016, it processed tobacco in more than 35 owned and third party facilities across the world.

FINANCIAL RATIOS  of  Alliance One International (AOI)

Valuation Ratios
P/E Ratio -3.7
Price to Sales 0.1
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 0.9
Price to Free Cash Flow 1
Growth Rates
Sales Growth Rate -10%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.6%
Cap. Spend. - 3 Yr. Gr. Rate -15.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 462.3%
Total Debt to Equity 700.5%
Interest Coverage 1
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 10.4%
Return On Total Capital -3.8%
Ret/ On T. Cap. - 3 Yr. Avg. -0.5%
Return On Equity -26.5%
Return On Equity - 3 Yr. Avg. -3.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 12.7%
Gross Margin - 3 Yr. Avg. 12.1%
EBITDA Margin 5.9%
EBITDA Margin - 3 Yr. Avg. 7.8%
Operating Margin 5%
Oper. Margin - 3 Yr. Avg. 6.8%
Pre-Tax Margin -2.3%
Pre-Tax Margin - 3 Yr. Avg. 0.7%
Net Profit Margin -3.7%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate -57.5%
Eff/ Tax Rate - 3 Yr. Avg. -88.7%
Payout Ratio 0%

AOI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AOI stock intrinsic value calculation we used $1845.966 million for the last fiscal year's total revenue generated by Alliance One International. The default revenue input number comes from 0001 income statement of Alliance One International. 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 AOI stock valuation model: a) initial revenue growth rate of 5.1% 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 11.3%, whose default value for AOI is calculated based on our internal credit rating of Alliance One International, 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 Alliance One International.
    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 AOI stock the variable cost ratio is equal to 87.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $140 million in the base year in the intrinsic value calculation for AOI 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 9.6% for Alliance One International.

Corporate tax rate of 27% is the nominal tax rate for Alliance One International. 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 AOI 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 AOI are equal to 16%.

Life of production assets of 10 years is the average useful life of capital assets used in Alliance One International 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 AOI is equal to 47.2%. 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 - $271.866 million for Alliance One International - 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 9.044 million for Alliance One International 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 Alliance One International at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
UVV Universal 64.20 23.90  str.sell
VGR Vector Group 14.13 3.78  str.sell
PM Philip Morris 81.61 31.82  str.sell

CONTACT US       ASSET ALLOCATION

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

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