Intrinsic value of CSS Industries, Inc. - CSS

Previous Close

$5.30

  Intrinsic Value

$5.57

stock screener

  Rating & Target

hold

+5%

Previous close

$5.30

 
Intrinsic value

$5.57

 
Up/down potential

+5%

 
Rating

hold

We calculate the intrinsic value of CSS 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, %
  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
  369
  378
  387
  398
  410
  424
  438
  454
  471
  489
  508
  529
  550
  574
  599
  625
  653
  682
  713
  746
  780
  817
  855
  896
  938
  983
  1,030
  1,080
  1,132
  1,187
Variable operating expenses, $m
  358
  366
  375
  386
  397
  410
  424
  439
  455
  472
  485
  504
  525
  548
  571
  596
  623
  651
  680
  712
  745
  779
  816
  855
  895
  938
  983
  1,031
  1,081
  1,133
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
  358
  366
  375
  386
  397
  410
  424
  439
  455
  472
  485
  504
  525
  548
  571
  596
  623
  651
  680
  712
  745
  779
  816
  855
  895
  938
  983
  1,031
  1,081
  1,133
Operating income, $m
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
EBITDA, $m
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
Interest expense (income), $m
  0
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
Earnings before tax, $m
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
Tax expense, $m
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
Net income, $m
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29

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
  373
  381
  391
  402
  414
  428
  442
  458
  475
  493
  513
  533
  555
  579
  604
  630
  658
  688
  719
  752
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
Adjusted assets (=assets-cash), $m
  373
  381
  391
  402
  414
  428
  442
  458
  475
  493
  513
  533
  555
  579
  604
  630
  658
  688
  719
  752
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
Revenue / Adjusted assets
  0.989
  0.992
  0.990
  0.990
  0.990
  0.991
  0.991
  0.991
  0.992
  0.992
  0.990
  0.992
  0.991
  0.991
  0.992
  0.992
  0.992
  0.991
  0.992
  0.992
  0.991
  0.992
  0.991
  0.991
  0.990
  0.991
  0.990
  0.991
  0.990
  0.991
Average production assets, $m
  76
  77
  79
  82
  84
  87
  90
  93
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  167
  175
  184
  192
  202
  211
  221
  232
  243
Working capital, $m
  121
  124
  127
  130
  134
  139
  143
  148
  154
  160
  166
  173
  180
  188
  196
  204
  213
  223
  233
  244
  255
  267
  280
  293
  307
  321
  337
  353
  370
  388
Total debt, $m
  43
  45
  48
  52
  55
  59
  64
  69
  74
  79
  85
  92
  98
  106
  113
  121
  130
  139
  148
  158
  169
  180
  192
  205
  218
  232
  246
  261
  277
  294
Total liabilities, $m
  114
  116
  119
  123
  126
  130
  135
  140
  145
  150
  156
  163
  169
  177
  184
  192
  201
  210
  219
  230
  240
  251
  263
  276
  289
  303
  317
  332
  349
  365
Total equity, $m
  259
  265
  272
  279
  288
  297
  307
  318
  330
  343
  356
  371
  386
  402
  420
  438
  458
  478
  500
  523
  547
  573
  600
  628
  658
  689
  723
  758
  794
  833
Total liabilities and equity, $m
  373
  381
  391
  402
  414
  427
  442
  458
  475
  493
  512
  534
  555
  579
  604
  630
  659
  688
  719
  753
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
Debt-to-equity ratio
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.210
  0.220
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.280
  0.280
  0.290
  0.300
  0.300
  0.310
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.350
Adjusted equity ratio
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
Depreciation, amort., depletion, $m
  13
  13
  14
  14
  14
  14
  15
  15
  15
  16
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
Funds from operations, $m
  20
  20
  21
  21
  22
  22
  23
  23
  24
  25
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  44
  46
  49
  51
  53
Change in working capital, $m
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
Cash from operations, $m
  17
  17
  17
  18
  18
  18
  18
  18
  19
  19
  18
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  25
  26
  27
  29
  30
  31
  32
  34
  35
Maintenance CAPEX, $m
  -7
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
New CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
Cash from investing activities, $m
  -9
  -10
  -10
  -10
  -10
  -11
  -12
  -12
  -12
  -14
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -20
  -22
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
Free cash flow, $m
  9
  8
  8
  7
  7
  7
  6
  6
  6
  6
  4
  4
  4
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
Issuance/(repayment) of debt, $m
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  1
  1
  2
  2
  3
  3
  0
  0
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
Cash from financing (excl. dividends), $m  
  2
  3
  3
  3
  5
  5
  6
  7
  8
  9
  6
  6
  8
  8
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  23
  24
  25
  27
Total cash flow (excl. dividends), $m
  11
  11
  11
  11
  12
  12
  13
  13
  14
  15
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  27
Retained Cash Flow (-), $m
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
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
  5
  5
  4
  3
  3
  3
  3
  3
  2
  2
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
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
  5
  4
  3
  3
  3
  2
  2
  2
  1
  1
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  99.8
  99.3
  98.6
  97.6
  96.5
  95.3
  93.9
  93.9
  93.8
  93.6
  93.2
  92.7
  92.1
  91.4
  90.5
  89.6
  88.6
  87.6
  86.4
  85.3
  84.1
  82.8
  81.5
  80.2
  78.9
  77.6
  76.2

CSS Industries, Inc. is a consumer products company, which is engaged in the design, manufacture, procurement, distribution and sale of non-durable all occasion and seasonal social expression products, principally to mass market retailers in the United States and Canada. The Company's occasion and seasonal products include classroom exchange Valentines, infant products, journals, buttons, gift wrap, floral accessories, craft and educational products, Easter egg dyes and novelties, memory books, scrapbooks, stickers, stationery and other items. Its Christmas products include decorative ribbons and bows, boxed greeting cards, gift tags, gift bags, gift boxes, gift card holders, tissue paper and decorations. Valentine product offerings include classroom exchange Valentine cards and other related Valentine products, while its Easter product offerings include Dudley's brand of Easter egg dyes and related Easter seasonal products. Its brands include Paper Magic, Berwick, Offray and others.

FINANCIAL RATIOS  of  CSS Industries, Inc. (CSS)

Valuation Ratios
P/E Ratio 1.7
Price to Sales 0.1
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 3.2
Price to Free Cash Flow 4.8
Growth Rates
Sales Growth Rate 1.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.7%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 0.3%
Total Debt to Equity 0.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 7.7%
Return On Equity 10.3%
Return On Equity - 3 Yr. Avg. 7.7%
Asset Turnover 1
Profitability Ratios
Gross Margin 28.9%
Gross Margin - 3 Yr. Avg. 31.2%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 11.3%
Operating Margin 9%
Oper. Margin - 3 Yr. Avg. 8.7%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 8.8%
Net Profit Margin 9%
Net Profit Margin - 3 Yr. Avg. 6.6%
Effective Tax Rate 3.3%
Eff/ Tax Rate - 3 Yr. Avg. 25.8%
Payout Ratio 24.1%

CSS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSS stock intrinsic value calculation we used $362 million for the last fiscal year's total revenue generated by CSS Industries, Inc.. The default revenue input number comes from 0001 income statement of CSS Industries, 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 CSS 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 CSS is calculated based on our internal credit rating of CSS Industries, 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 CSS Industries, 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 CSS stock the variable cost ratio is equal to 97%.

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 CSS 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 CSS Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for CSS Industries, 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 CSS 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 CSS are equal to 20.5%.

Life of production assets of 10 years is the average useful life of capital assets used in CSS Industries, 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 CSS is equal to 32.7%. 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 - $253.695 million for CSS Industries, 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 8.836 million for CSS Industries, 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 CSS Industries, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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