Intrinsic value of ARC Group Worldwide, Inc. - ARCW

Previous Close

$0.49

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$0.49

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of ARCW 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 0.0

 

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, %
  20.00
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
Revenue, $m
  98
  117
  137
  158
  182
  207
  234
  262
  292
  324
  357
  392
  428
  466
  505
  546
  588
  633
  679
  726
  776
  827
  881
  937
  995
  1,055
  1,118
  1,184
  1,252
  1,324
Variable operating expenses, $m
  111
  131
  152
  176
  202
  229
  258
  289
  322
  357
  389
  427
  466
  507
  550
  595
  641
  689
  739
  791
  845
  901
  959
  1,020
  1,083
  1,149
  1,217
  1,289
  1,363
  1,441
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
  111
  131
  152
  176
  202
  229
  258
  289
  322
  357
  389
  427
  466
  507
  550
  595
  641
  689
  739
  791
  845
  901
  959
  1,020
  1,083
  1,149
  1,217
  1,289
  1,363
  1,441
Operating income, $m
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -27
  -30
  -33
  -32
  -35
  -38
  -41
  -45
  -49
  -52
  -56
  -60
  -65
  -69
  -74
  -78
  -83
  -88
  -94
  -99
  -105
  -111
  -118
EBITDA, $m
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
Interest expense (income), $m
  3
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  17
  19
  21
  24
  26
  28
  30
  33
  35
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
Earnings before tax, $m
  -16
  -18
  -21
  -24
  -28
  -31
  -35
  -39
  -44
  -48
  -49
  -54
  -59
  -65
  -71
  -77
  -83
  -89
  -96
  -103
  -110
  -117
  -125
  -133
  -142
  -150
  -160
  -169
  -179
  -189
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
  -16
  -18
  -21
  -24
  -28
  -31
  -35
  -39
  -44
  -48
  -49
  -54
  -59
  -65
  -71
  -77
  -83
  -89
  -96
  -103
  -110
  -117
  -125
  -133
  -142
  -150
  -160
  -169
  -179
  -189

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
  108
  128
  150
  174
  199
  227
  257
  288
  321
  355
  392
  430
  469
  511
  554
  599
  645
  694
  744
  796
  851
  907
  966
  1,027
  1,091
  1,157
  1,226
  1,298
  1,373
  1,451
Adjusted assets (=assets-cash), $m
  108
  128
  150
  174
  199
  227
  257
  288
  321
  355
  392
  430
  469
  511
  554
  599
  645
  694
  744
  796
  851
  907
  966
  1,027
  1,091
  1,157
  1,226
  1,298
  1,373
  1,451
Revenue / Adjusted assets
  0.907
  0.914
  0.913
  0.908
  0.915
  0.912
  0.911
  0.910
  0.910
  0.913
  0.911
  0.912
  0.913
  0.912
  0.912
  0.912
  0.912
  0.912
  0.913
  0.912
  0.912
  0.912
  0.912
  0.912
  0.912
  0.912
  0.912
  0.912
  0.912
  0.912
Average production assets, $m
  62
  73
  86
  99
  114
  130
  146
  164
  183
  203
  224
  245
  268
  292
  316
  342
  368
  396
  425
  455
  486
  518
  551
  586
  623
  660
  700
  741
  784
  829
Working capital, $m
  12
  14
  17
  19
  22
  25
  29
  32
  36
  40
  44
  48
  52
  57
  62
  67
  72
  77
  83
  89
  95
  101
  107
  114
  121
  129
  136
  144
  153
  161
Total debt, $m
  51
  64
  78
  94
  110
  128
  147
  167
  188
  210
  234
  258
  283
  310
  338
  366
  396
  427
  460
  493
  528
  564
  602
  641
  682
  725
  769
  815
  864
  914
Total liabilities, $m
  69
  82
  96
  111
  128
  146
  165
  185
  206
  228
  251
  276
  301
  328
  356
  384
  414
  445
  478
  511
  546
  582
  620
  659
  700
  743
  787
  833
  881
  932
Total equity, $m
  39
  46
  54
  62
  71
  81
  92
  103
  115
  127
  140
  154
  168
  183
  198
  214
  231
  248
  266
  285
  305
  325
  346
  368
  390
  414
  439
  465
  492
  520
Total liabilities and equity, $m
  108
  128
  150
  173
  199
  227
  257
  288
  321
  355
  391
  430
  469
  511
  554
  598
  645
  693
  744
  796
  851
  907
  966
  1,027
  1,090
  1,157
  1,226
  1,298
  1,373
  1,452
Debt-to-equity ratio
  1.330
  1.400
  1.460
  1.500
  1.540
  1.570
  1.600
  1.620
  1.640
  1.650
  1.670
  1.680
  1.690
  1.700
  1.700
  1.710
  1.720
  1.720
  1.730
  1.730
  1.730
  1.740
  1.740
  1.740
  1.750
  1.750
  1.750
  1.750
  1.760
  1.760
Adjusted equity ratio
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -16
  -18
  -21
  -24
  -28
  -31
  -35
  -39
  -44
  -48
  -49
  -54
  -59
  -65
  -71
  -77
  -83
  -89
  -96
  -103
  -110
  -117
  -125
  -133
  -142
  -150
  -160
  -169
  -179
  -189
Depreciation, amort., depletion, $m
  14
  15
  17
  20
  22
  25
  27
  30
  33
  36
  36
  40
  43
  47
  51
  55
  59
  64
  69
  73
  78
  84
  89
  95
  100
  107
  113
  120
  126
  134
Funds from operations, $m
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
Change in working capital, $m
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
Cash from operations, $m
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -58
  -61
  -64
Maintenance CAPEX, $m
  -8
  -10
  -12
  -14
  -16
  -18
  -21
  -24
  -26
  -30
  -33
  -36
  -40
  -43
  -47
  -51
  -55
  -59
  -64
  -69
  -73
  -78
  -84
  -89
  -95
  -100
  -107
  -113
  -120
  -126
New CAPEX, $m
  -10
  -11
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -45
Cash from investing activities, $m
  -18
  -21
  -25
  -28
  -31
  -34
  -38
  -42
  -45
  -50
  -54
  -58
  -63
  -67
  -72
  -77
  -82
  -87
  -93
  -99
  -104
  -110
  -118
  -124
  -131
  -138
  -146
  -154
  -163
  -171
Free cash flow, $m
  -23
  -26
  -30
  -35
  -39
  -44
  -49
  -54
  -59
  -65
  -71
  -77
  -83
  -89
  -96
  -103
  -110
  -118
  -125
  -134
  -142
  -151
  -160
  -169
  -179
  -190
  -200
  -212
  -223
  -236
Issuance/(repayment) of debt, $m
  11
  13
  14
  15
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
Issuance/(repurchase) of shares, $m
  22
  25
  29
  33
  37
  41
  46
  50
  55
  61
  62
  68
  74
  80
  86
  93
  99
  106
  114
  121
  129
  138
  146
  155
  164
  174
  184
  195
  206
  217
Cash from financing (excl. dividends), $m  
  33
  38
  43
  48
  54
  59
  65
  70
  76
  83
  85
  92
  99
  107
  114
  122
  129
  137
  146
  155
  164
  174
  184
  194
  205
  217
  228
  241
  254
  267
Total cash flow (excl. dividends), $m
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
Retained Cash Flow (-), $m
  -22
  -25
  -29
  -33
  -37
  -41
  -46
  -50
  -55
  -61
  -62
  -68
  -74
  -80
  -86
  -93
  -99
  -106
  -114
  -121
  -129
  -138
  -146
  -155
  -164
  -174
  -184
  -195
  -206
  -217
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
  -11
  -14
  -16
  -19
  -23
  -26
  -30
  -34
  -38
  -43
  -47
  -52
  -57
  -63
  -68
  -74
  -80
  -87
  -93
  -100
  -107
  -114
  -122
  -130
  -138
  -147
  -156
  -165
  -175
  -185
Discount rate, %
  10.00
  10.50
  11.03
  11.58
  12.16
  12.76
  13.40
  14.07
  14.77
  15.51
  16.29
  17.10
  17.96
  18.86
  19.80
  20.79
  21.83
  22.92
  24.07
  25.27
  26.53
  27.86
  29.25
  30.72
  32.25
  33.86
  35.56
  37.33
  39.20
  41.16
PV of cash for distribution, $m
  -10
  -11
  -12
  -12
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.3
  25.9
  13.6
  7.3
  3.9
  2.2
  1.2
  0.7
  0.4
  0.2
  0.1
  0.1
  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
  0.0
  0.0
  0.0

ARC Group Worldwide, Inc. is a manufacturing company. The Company has two segments: Precision Components Group, 3DMT Group. It provides a set of manufacturing solutions, from design and prototyping through production. Through the Company's product offering, it provides its customers with a prototyping and production solution for both precision metal and plastic fabrication. The Precision Components Group companies provide fabricated metal components using processes, consisting of metal injection molding, precision metal stamping and hermetic sealing. The 3DMT Group focuses on rapid prototyping, short-run production and rapid tooling.

FINANCIAL RATIOS  of  ARC Group Worldwide, Inc. (ARCW)

Valuation Ratios
P/E Ratio -0.9
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 3
Price to Free Cash Flow -2.2
Growth Rates
Sales Growth Rate 5.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 133.3%
Cap. Spend. - 3 Yr. Gr. Rate 11.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 128.6%
Total Debt to Equity 137.1%
Interest Coverage -5
Management Effectiveness
Return On Assets -6.8%
Ret/ On Assets - 3 Yr. Avg. -2%
Return On Total Capital -11%
Ret/ On T. Cap. - 3 Yr. Avg. -4.3%
Return On Equity -25.6%
Return On Equity - 3 Yr. Avg. -10%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 10.1%
Gross Margin - 3 Yr. Avg. 16.8%
EBITDA Margin -4%
EBITDA Margin - 3 Yr. Avg. 6.6%
Operating Margin -14.1%
Oper. Margin - 3 Yr. Avg. -2.6%
Pre-Tax Margin -17.2%
Pre-Tax Margin - 3 Yr. Avg. -6.6%
Net Profit Margin -10.1%
Net Profit Margin - 3 Yr. Avg. -4.1%
Effective Tax Rate 17.6%
Eff/ Tax Rate - 3 Yr. Avg. 47.5%
Payout Ratio 0%

ARCW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ARCW stock intrinsic value calculation we used $82 million for the last fiscal year's total revenue generated by ARC Group Worldwide, Inc.. The default revenue input number comes from 0001 income statement of ARC Group Worldwide, 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 ARCW stock valuation model: a) initial revenue growth rate of 20% 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%, whose default value for ARCW is calculated based on our internal credit rating of ARC Group Worldwide, 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 ARC Group Worldwide, 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 ARCW stock the variable cost ratio is equal to 113.4%.

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 ARCW 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 8.3% for ARC Group Worldwide, Inc..

Corporate tax rate of 27% is the nominal tax rate for ARC Group Worldwide, 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 ARCW 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 ARCW are equal to 62.6%.

Life of production assets of 6.2 years is the average useful life of capital assets used in ARC Group Worldwide, 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 ARCW is equal to 12.2%. 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 - $32.164 million for ARC Group Worldwide, 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 23.349 million for ARC Group Worldwide, 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 ARC Group Worldwide, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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