Intrinsic value of Boise Cascade, L.L.C. - BCC

Previous Close

$30.22

  Intrinsic Value

$28.87

stock screener

  Rating & Target

hold

-4%

Previous close

$30.22

 
Intrinsic value

$28.87

 
Up/down potential

-4%

 
Rating

hold

We calculate the intrinsic value of BCC 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 1.2

 

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
  5,095
  5,212
  5,346
  5,496
  5,663
  5,846
  6,045
  6,260
  6,493
  6,742
  7,008
  7,293
  7,596
  7,918
  8,259
  8,621
  9,004
  9,409
  9,837
  10,289
  10,766
  11,269
  11,800
  12,358
  12,946
  13,566
  14,218
  14,904
  15,626
  16,385
Variable operating expenses, $m
  4,932
  5,045
  5,174
  5,320
  5,481
  5,658
  5,850
  6,058
  6,283
  6,523
  6,773
  7,048
  7,341
  7,652
  7,982
  8,332
  8,702
  9,094
  9,508
  9,945
  10,405
  10,892
  11,404
  11,944
  12,512
  13,111
  13,741
  14,404
  15,102
  15,836
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
  4,932
  5,045
  5,174
  5,320
  5,481
  5,658
  5,850
  6,058
  6,283
  6,523
  6,773
  7,048
  7,341
  7,652
  7,982
  8,332
  8,702
  9,094
  9,508
  9,945
  10,405
  10,892
  11,404
  11,944
  12,512
  13,111
  13,741
  14,404
  15,102
  15,836
Operating income, $m
  163
  167
  172
  177
  182
  188
  195
  202
  210
  218
  235
  244
  255
  265
  277
  289
  302
  315
  330
  345
  361
  378
  396
  414
  434
  455
  477
  500
  524
  549
EBITDA, $m
  286
  293
  300
  308
  318
  328
  339
  351
  364
  378
  393
  409
  426
  444
  464
  484
  505
  528
  552
  577
  604
  632
  662
  694
  727
  761
  798
  836
  877
  920
Interest expense (income), $m
  21
  26
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
  55
  58
  62
  66
  70
  75
  79
  84
  89
  95
  101
  107
  113
  120
  127
  135
  142
Earnings before tax, $m
  137
  140
  143
  146
  150
  155
  159
  164
  170
  176
  189
  196
  203
  211
  219
  227
  236
  245
  255
  266
  277
  288
  301
  314
  327
  342
  357
  372
  389
  407
Tax expense, $m
  37
  38
  39
  40
  41
  42
  43
  44
  46
  47
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  81
  85
  88
  92
  96
  101
  105
  110
Net income, $m
  100
  102
  104
  107
  110
  113
  116
  120
  124
  128
  138
  143
  148
  154
  160
  166
  172
  179
  186
  194
  202
  210
  219
  229
  239
  249
  260
  272
  284
  297

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
  1,613
  1,650
  1,692
  1,740
  1,793
  1,851
  1,914
  1,982
  2,055
  2,134
  2,219
  2,309
  2,404
  2,506
  2,614
  2,729
  2,850
  2,979
  3,114
  3,257
  3,408
  3,567
  3,735
  3,912
  4,098
  4,294
  4,501
  4,718
  4,946
  5,187
Adjusted assets (=assets-cash), $m
  1,613
  1,650
  1,692
  1,740
  1,793
  1,851
  1,914
  1,982
  2,055
  2,134
  2,219
  2,309
  2,404
  2,506
  2,614
  2,729
  2,850
  2,979
  3,114
  3,257
  3,408
  3,567
  3,735
  3,912
  4,098
  4,294
  4,501
  4,718
  4,946
  5,187
Revenue / Adjusted assets
  3.159
  3.159
  3.160
  3.159
  3.158
  3.158
  3.158
  3.158
  3.160
  3.159
  3.158
  3.159
  3.160
  3.160
  3.160
  3.159
  3.159
  3.158
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
  3.159
Average production assets, $m
  576
  589
  604
  621
  640
  661
  683
  707
  734
  762
  792
  824
  858
  895
  933
  974
  1,017
  1,063
  1,112
  1,163
  1,217
  1,273
  1,333
  1,396
  1,463
  1,533
  1,607
  1,684
  1,766
  1,852
Working capital, $m
  433
  443
  454
  467
  481
  497
  514
  532
  552
  573
  596
  620
  646
  673
  702
  733
  765
  800
  836
  875
  915
  958
  1,003
  1,050
  1,100
  1,153
  1,209
  1,267
  1,328
  1,393
Total debt, $m
  458
  479
  504
  531
  562
  595
  631
  670
  713
  758
  806
  858
  913
  972
  1,034
  1,100
  1,170
  1,243
  1,321
  1,404
  1,490
  1,582
  1,679
  1,780
  1,887
  2,000
  2,119
  2,244
  2,375
  2,513
Total liabilities, $m
  927
  949
  973
  1,000
  1,031
  1,064
  1,100
  1,140
  1,182
  1,227
  1,276
  1,327
  1,383
  1,441
  1,503
  1,569
  1,639
  1,713
  1,791
  1,873
  1,960
  2,051
  2,148
  2,249
  2,357
  2,469
  2,588
  2,713
  2,844
  2,982
Total equity, $m
  685
  701
  719
  739
  762
  786
  813
  842
  873
  907
  943
  981
  1,022
  1,065
  1,111
  1,160
  1,211
  1,266
  1,323
  1,384
  1,448
  1,516
  1,587
  1,663
  1,742
  1,825
  1,913
  2,005
  2,102
  2,204
Total liabilities and equity, $m
  1,612
  1,650
  1,692
  1,739
  1,793
  1,850
  1,913
  1,982
  2,055
  2,134
  2,219
  2,308
  2,405
  2,506
  2,614
  2,729
  2,850
  2,979
  3,114
  3,257
  3,408
  3,567
  3,735
  3,912
  4,099
  4,294
  4,501
  4,718
  4,946
  5,186
Debt-to-equity ratio
  0.670
  0.680
  0.700
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
  0.840
  0.860
  0.870
  0.890
  0.910
  0.930
  0.950
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.060
  1.070
  1.080
  1.100
  1.110
  1.120
  1.130
  1.140
Adjusted equity ratio
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  100
  102
  104
  107
  110
  113
  116
  120
  124
  128
  138
  143
  148
  154
  160
  166
  172
  179
  186
  194
  202
  210
  219
  229
  239
  249
  260
  272
  284
  297
Depreciation, amort., depletion, $m
  123
  125
  128
  132
  136
  140
  144
  149
  154
  160
  158
  165
  172
  179
  187
  195
  203
  213
  222
  233
  243
  255
  267
  279
  293
  307
  321
  337
  353
  370
Funds from operations, $m
  223
  227
  233
  239
  245
  253
  261
  269
  278
  288
  297
  308
  320
  333
  346
  361
  376
  392
  409
  426
  445
  465
  486
  508
  531
  556
  582
  609
  637
  667
Change in working capital, $m
  8
  10
  11
  13
  14
  16
  17
  18
  20
  21
  23
  24
  26
  27
  29
  31
  33
  34
  36
  38
  41
  43
  45
  47
  50
  53
  55
  58
  61
  65
Cash from operations, $m
  214
  217
  221
  226
  231
  237
  244
  251
  259
  267
  274
  284
  294
  305
  317
  330
  343
  357
  372
  388
  405
  422
  441
  461
  481
  503
  526
  550
  576
  603
Maintenance CAPEX, $m
  -113
  -115
  -118
  -121
  -124
  -128
  -132
  -137
  -141
  -147
  -152
  -158
  -165
  -172
  -179
  -187
  -195
  -203
  -213
  -222
  -233
  -243
  -255
  -267
  -279
  -293
  -307
  -321
  -337
  -353
New CAPEX, $m
  -13
  -13
  -15
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -74
  -78
  -82
  -86
Cash from investing activities, $m
  -126
  -128
  -133
  -138
  -143
  -149
  -154
  -161
  -167
  -175
  -182
  -190
  -199
  -208
  -218
  -228
  -238
  -249
  -261
  -273
  -287
  -300
  -315
  -330
  -345
  -363
  -381
  -399
  -419
  -439
Free cash flow, $m
  89
  89
  88
  88
  88
  88
  89
  90
  91
  92
  92
  93
  95
  97
  100
  102
  105
  108
  111
  115
  118
  122
  126
  131
  136
  141
  146
  152
  158
  164
Issuance/(repayment) of debt, $m
  19
  21
  24
  27
  30
  33
  36
  39
  42
  45
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  92
  97
  102
  107
  113
  119
  125
  131
  138
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  
  19
  21
  24
  27
  30
  33
  36
  39
  42
  45
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  92
  97
  102
  107
  113
  119
  125
  131
  138
Total cash flow (excl. dividends), $m
  108
  110
  113
  115
  118
  122
  125
  129
  133
  137
  140
  145
  150
  156
  162
  168
  175
  182
  189
  197
  205
  214
  223
  233
  243
  253
  265
  276
  289
  302
Retained Cash Flow (-), $m
  -13
  -16
  -18
  -20
  -22
  -25
  -27
  -29
  -31
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
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
  95
  95
  95
  95
  96
  97
  98
  100
  102
  104
  104
  107
  110
  113
  116
  119
  123
  127
  132
  136
  141
  146
  152
  157
  164
  170
  177
  184
  192
  200
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  91
  87
  82
  78
  74
  70
  67
  63
  59
  54
  49
  46
  42
  38
  34
  30
  27
  23
  20
  17
  15
  12
  10
  8
  6
  5
  4
  3
  2
  2
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

Boise Cascade Company is an integrated wood products manufacturer and building materials distributor with operations throughout the United States and one manufacturing facility in Canada. The Company is also a producer of engineered wood products (EWP) and plywood in North America. The Company operates through three segments: Wood Products, Building Materials Distribution, and Corporate and Other. The Company's products are used primarily in new residential construction, residential repair-and-remodeling projects, light commercial construction and industrial applications. The Company manufactures laminated veneer lumber (LVL), I-joists, and laminated beams, which are referred to as EWP. The Company's Building Materials Distribution segment sells a range of building materials, including OSB, plywood and lumber (collectively commodities). The Company's subsidiaries include Boise Cascade Wood Products, L.L.C. and Boise Cascade Building Materials Distribution, L.L.C.

FINANCIAL RATIOS  of  Boise Cascade, L.L.C. (BCC)

Valuation Ratios
P/E Ratio 30.5
Price to Sales 0.3
Price to Book 2
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow 17
Growth Rates
Sales Growth Rate 7.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.5%
Cap. Spend. - 3 Yr. Gr. Rate 12.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 75.5%
Total Debt to Equity 75.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.9%
Return On Equity 6.8%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 2.9
Profitability Ratios
Gross Margin 13.1%
Gross Margin - 3 Yr. Avg. 13.5%
EBITDA Margin 3.6%
EBITDA Margin - 3 Yr. Avg. 4.5%
Operating Margin 1.7%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin 1.1%
Pre-Tax Margin - 3 Yr. Avg. 2.3%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate 11.6%
Eff/ Tax Rate - 3 Yr. Avg. 27.5%
Payout Ratio 0%

BCC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BCC stock intrinsic value calculation we used $4995 million for the last fiscal year's total revenue generated by Boise Cascade, L.L.C.. The default revenue input number comes from 0001 income statement of Boise Cascade, L.L.C.. 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 BCC 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 4.3%, whose default value for BCC is calculated based on our internal credit rating of Boise Cascade, L.L.C., 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 Boise Cascade, L.L.C..
    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 BCC stock the variable cost ratio is equal to 96.8%.

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 BCC 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 6% for Boise Cascade, L.L.C..

Corporate tax rate of 27% is the nominal tax rate for Boise Cascade, L.L.C.. 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 BCC 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 BCC are equal to 11.3%.

Life of production assets of 4 years is the average useful life of capital assets used in Boise Cascade, L.L.C. 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 BCC is equal to 8.5%. 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 - $672.59 million for Boise Cascade, L.L.C. - 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 38.842 million for Boise Cascade, L.L.C. 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 Boise Cascade, L.L.C. at the current share price and the inputted number of shares is $1.2 billion.

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