Intrinsic value of Cal-Maine Foods, Inc. - CALM

Previous Close

$40.33

  Intrinsic Value

$36.58

stock screener

  Rating & Target

hold

-9%

Previous close

$40.33

 
Intrinsic value

$36.58

 
Up/down potential

-9%

 
Rating

hold

We calculate the intrinsic value of CALM 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 2.0

 

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, %
  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
  1,533
  1,568
  1,609
  1,654
  1,704
  1,759
  1,819
  1,884
  1,954
  2,029
  2,109
  2,194
  2,286
  2,382
  2,485
  2,594
  2,709
  2,831
  2,960
  3,096
  3,240
  3,391
  3,550
  3,719
  3,896
  4,082
  4,278
  4,485
  4,702
  4,930
Variable operating expenses, $m
  692
  707
  724
  743
  764
  788
  813
  840
  870
  902
  892
  929
  967
  1,008
  1,052
  1,098
  1,146
  1,198
  1,252
  1,310
  1,371
  1,435
  1,502
  1,573
  1,648
  1,727
  1,810
  1,898
  1,989
  2,086
Fixed operating expenses, $m
  753
  770
  787
  804
  822
  840
  858
  877
  896
  916
  936
  957
  978
  999
  1,021
  1,044
  1,067
  1,090
  1,114
  1,139
  1,164
  1,190
  1,216
  1,242
  1,270
  1,298
  1,326
  1,355
  1,385
  1,416
Total operating expenses, $m
  1,445
  1,477
  1,511
  1,547
  1,586
  1,628
  1,671
  1,717
  1,766
  1,818
  1,828
  1,886
  1,945
  2,007
  2,073
  2,142
  2,213
  2,288
  2,366
  2,449
  2,535
  2,625
  2,718
  2,815
  2,918
  3,025
  3,136
  3,253
  3,374
  3,502
Operating income, $m
  88
  92
  98
  107
  118
  132
  148
  166
  187
  211
  280
  309
  341
  375
  412
  453
  496
  543
  593
  647
  705
  767
  832
  903
  977
  1,057
  1,142
  1,232
  1,327
  1,428
EBITDA, $m
  183
  188
  196
  206
  219
  234
  252
  273
  297
  323
  351
  383
  418
  455
  496
  540
  588
  639
  693
  752
  814
  881
  952
  1,028
  1,109
  1,195
  1,286
  1,383
  1,486
  1,595
Interest expense (income), $m
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  5
  5
  6
  6
  7
  8
  9
  10
  11
  11
  12
  14
  15
  16
  17
  18
  20
  21
  23
Earnings before tax, $m
  87
  91
  97
  106
  116
  130
  145
  164
  184
  207
  276
  304
  335
  369
  406
  445
  488
  534
  584
  637
  693
  754
  819
  888
  962
  1,040
  1,123
  1,212
  1,306
  1,406
Tax expense, $m
  24
  25
  26
  29
  31
  35
  39
  44
  50
  56
  75
  82
  91
  100
  110
  120
  132
  144
  158
  172
  187
  204
  221
  240
  260
  281
  303
  327
  353
  380
Net income, $m
  64
  66
  71
  77
  85
  95
  106
  119
  134
  151
  202
  222
  245
  269
  296
  325
  356
  390
  426
  465
  506
  551
  598
  648
  702
  759
  820
  885
  953
  1,026

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
  942
  964
  989
  1,017
  1,047
  1,081
  1,118
  1,158
  1,201
  1,247
  1,296
  1,349
  1,405
  1,464
  1,527
  1,594
  1,665
  1,740
  1,819
  1,903
  1,991
  2,084
  2,182
  2,286
  2,394
  2,509
  2,629
  2,756
  2,890
  3,030
Adjusted assets (=assets-cash), $m
  942
  964
  989
  1,017
  1,047
  1,081
  1,118
  1,158
  1,201
  1,247
  1,296
  1,349
  1,405
  1,464
  1,527
  1,594
  1,665
  1,740
  1,819
  1,903
  1,991
  2,084
  2,182
  2,286
  2,394
  2,509
  2,629
  2,756
  2,890
  3,030
Revenue / Adjusted assets
  1.627
  1.627
  1.627
  1.626
  1.628
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.626
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
  1.627
Average production assets, $m
  492
  503
  516
  531
  547
  565
  584
  605
  627
  651
  677
  704
  734
  765
  798
  833
  870
  909
  950
  994
  1,040
  1,088
  1,140
  1,194
  1,250
  1,310
  1,373
  1,440
  1,509
  1,583
Working capital, $m
  155
  158
  162
  167
  172
  178
  184
  190
  197
  205
  213
  222
  231
  241
  251
  262
  274
  286
  299
  313
  327
  342
  359
  376
  393
  412
  432
  453
  475
  498
Total debt, $m
  10
  15
  20
  26
  32
  40
  47
  56
  65
  74
  85
  96
  108
  120
  133
  147
  162
  178
  195
  212
  231
  250
  271
  292
  315
  339
  365
  391
  419
  449
Total liabilities, $m
  198
  202
  208
  213
  220
  227
  235
  243
  252
  262
  272
  283
  295
  308
  321
  335
  350
  365
  382
  400
  418
  438
  458
  480
  503
  527
  552
  579
  607
  636
Total equity, $m
  744
  762
  781
  803
  827
  854
  883
  915
  949
  985
  1,024
  1,066
  1,110
  1,157
  1,207
  1,260
  1,316
  1,375
  1,437
  1,503
  1,573
  1,647
  1,724
  1,806
  1,892
  1,982
  2,077
  2,178
  2,283
  2,394
Total liabilities and equity, $m
  942
  964
  989
  1,016
  1,047
  1,081
  1,118
  1,158
  1,201
  1,247
  1,296
  1,349
  1,405
  1,465
  1,528
  1,595
  1,666
  1,740
  1,819
  1,903
  1,991
  2,085
  2,182
  2,286
  2,395
  2,509
  2,629
  2,757
  2,890
  3,030
Debt-to-equity ratio
  0.010
  0.020
  0.030
  0.030
  0.040
  0.050
  0.050
  0.060
  0.070
  0.080
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.120
  0.130
  0.140
  0.140
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.180
  0.190
Adjusted equity ratio
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  64
  66
  71
  77
  85
  95
  106
  119
  134
  151
  202
  222
  245
  269
  296
  325
  356
  390
  426
  465
  506
  551
  598
  648
  702
  759
  820
  885
  953
  1,026
Depreciation, amort., depletion, $m
  95
  96
  98
  99
  101
  103
  105
  107
  109
  112
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  109
  115
  120
  126
  132
  138
  145
  152
  159
  167
Funds from operations, $m
  159
  163
  169
  176
  186
  198
  211
  226
  244
  263
  273
  296
  322
  350
  380
  413
  448
  486
  526
  569
  616
  665
  718
  774
  834
  897
  965
  1,036
  1,112
  1,193
Change in working capital, $m
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
Cash from operations, $m
  156
  159
  165
  172
  181
  192
  205
  220
  237
  256
  265
  288
  313
  340
  370
  402
  436
  473
  513
  556
  601
  650
  702
  757
  816
  878
  945
  1,015
  1,090
  1,170
Maintenance CAPEX, $m
  -51
  -52
  -53
  -54
  -56
  -58
  -59
  -61
  -64
  -66
  -69
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -109
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
New CAPEX, $m
  -10
  -11
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
Cash from investing activities, $m
  -61
  -63
  -66
  -69
  -72
  -76
  -78
  -82
  -86
  -90
  -95
  -98
  -103
  -108
  -114
  -119
  -125
  -131
  -137
  -144
  -151
  -158
  -166
  -174
  -183
  -192
  -201
  -211
  -222
  -232
Free cash flow, $m
  95
  96
  99
  103
  109
  117
  126
  138
  151
  166
  170
  189
  209
  232
  256
  283
  312
  343
  376
  412
  450
  492
  536
  583
  633
  687
  744
  805
  869
  937
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
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  
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
Total cash flow (excl. dividends), $m
  100
  101
  104
  109
  115
  124
  134
  146
  160
  175
  181
  200
  221
  244
  270
  297
  326
  358
  393
  430
  469
  511
  556
  605
  656
  711
  769
  831
  897
  967
Retained Cash Flow (-), $m
  -14
  -17
  -20
  -22
  -24
  -27
  -29
  -31
  -34
  -36
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -73
  -77
  -82
  -86
  -91
  -95
  -100
  -105
  -111
Prev. year cash balance distribution, $m
  223
  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
  308
  84
  84
  87
  91
  97
  105
  115
  126
  139
  142
  158
  177
  197
  220
  244
  270
  299
  330
  363
  399
  438
  479
  523
  570
  620
  674
  731
  792
  856
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
  296
  76
  73
  71
  71
  71
  71
  72
  72
  73
  67
  68
  67
  66
  64
  62
  59
  55
  51
  46
  41
  36
  31
  27
  22
  18
  14
  11
  9
  6
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

Cal-Maine Foods, Inc. is a producer and marketer of shell eggs in the United States. The Company operates through the segment of production, grading, packaging, marketing and distribution of shell eggs. It offers shell eggs, including specialty and non-specialty eggs. It classifies cage free, organic and brown eggs as specialty products. It classifies all other shell eggs as non-specialty products. The Company markets its specialty shell eggs under the brands, including Egg-Land's Best, Land O' Lakes, Farmhouse and 4-Grain. The Company, through Egg-Land's Best, Inc. (EB), produces, markets and distributes Egg-Land's Best and Land O' Lakes branded eggs. It markets cage-free eggs under its Farmhouse brand and distributes them throughout southeast and southwest regions of the United States. It markets organic, wholesome, cage-free, vegetarian and omega-3 eggs under its 4-Grain brand. It also produces, markets and distributes private label specialty shell eggs to customers.

FINANCIAL RATIOS  of  Cal-Maine Foods, Inc. (CALM)

Valuation Ratios
P/E Ratio -26.5
Price to Sales 1.8
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow -40
Price to Free Cash Flow -16.9
Growth Rates
Sales Growth Rate -43.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.8%
Cap. Spend. - 3 Yr. Gr. Rate 2.6%
Financial Strength
Quick Ratio 31
Current Ratio 0
LT Debt to Equity 0.7%
Total Debt to Equity 1.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -6.9%
Ret/ On Assets - 3 Yr. Avg. 14.3%
Return On Total Capital -8.2%
Ret/ On T. Cap. - 3 Yr. Avg. 17.3%
Return On Equity -8.4%
Return On Equity - 3 Yr. Avg. 18.5%
Asset Turnover 1
Profitability Ratios
Gross Margin 4.3%
Gross Margin - 3 Yr. Avg. 21.1%
EBITDA Margin -6%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin -12.3%
Oper. Margin - 3 Yr. Avg. 9.1%
Pre-Tax Margin -10.6%
Pre-Tax Margin - 3 Yr. Avg. 10.2%
Net Profit Margin -6.9%
Net Profit Margin - 3 Yr. Avg. 6.6%
Effective Tax Rate 35.1%
Eff/ Tax Rate - 3 Yr. Avg. 34.7%
Payout Ratio 0%

CALM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CALM stock intrinsic value calculation we used $1503 million for the last fiscal year's total revenue generated by Cal-Maine Foods, Inc.. The default revenue input number comes from 0001 income statement of Cal-Maine Foods, 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 CALM 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 CALM is calculated based on our internal credit rating of Cal-Maine Foods, 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 Cal-Maine Foods, 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 CALM stock the variable cost ratio is equal to 45.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $737 million in the base year in the intrinsic value calculation for CALM 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 Cal-Maine Foods, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cal-Maine Foods, 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 CALM 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 CALM are equal to 32.1%.

Life of production assets of 9.5 years is the average useful life of capital assets used in Cal-Maine Foods, 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 CALM is equal to 10.1%. 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 - $953.333 million for Cal-Maine Foods, 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 48.736 million for Cal-Maine Foods, 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 Cal-Maine Foods, Inc. at the current share price and the inputted number of shares is $2.0 billion.

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