Intrinsic value of Carriage Services - CSV

Previous Close

$22.38

  Intrinsic Value

$20.84

stock screener

  Rating & Target

hold

-7%

Previous close

$22.38

 
Intrinsic value

$20.84

 
Up/down potential

-7%

 
Rating

hold

We calculate the intrinsic value of CSV 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 0.4

 

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
  263
  269
  276
  284
  293
  302
  312
  324
  336
  348
  362
  377
  393
  409
  427
  446
  465
  486
  508
  532
  556
  582
  610
  639
  669
  701
  735
  770
  808
  847
Variable operating expenses, $m
  210
  214
  218
  224
  229
  236
  243
  250
  259
  267
  246
  256
  267
  278
  290
  303
  316
  330
  345
  361
  378
  396
  414
  434
  455
  476
  499
  523
  549
  575
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
  210
  214
  218
  224
  229
  236
  243
  250
  259
  267
  246
  256
  267
  278
  290
  303
  316
  330
  345
  361
  378
  396
  414
  434
  455
  476
  499
  523
  549
  575
Operating income, $m
  54
  56
  58
  60
  63
  66
  70
  73
  77
  81
  116
  121
  126
  131
  137
  143
  149
  156
  163
  170
  178
  187
  195
  205
  214
  225
  236
  247
  259
  271
EBITDA, $m
  100
  103
  105
  108
  111
  115
  119
  123
  128
  133
  138
  144
  149
  156
  163
  170
  177
  185
  194
  203
  212
  222
  232
  243
  255
  267
  280
  293
  308
  322
Interest expense (income), $m
  10
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  65
  69
  73
  77
  82
  87
  92
  97
  103
Earnings before tax, $m
  34
  35
  37
  38
  40
  42
  43
  45
  48
  50
  83
  86
  88
  91
  94
  98
  101
  105
  109
  113
  117
  122
  127
  132
  137
  143
  149
  155
  162
  169
Tax expense, $m
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  22
  23
  24
  25
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
Net income, $m
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  61
  62
  64
  67
  69
  71
  74
  77
  79
  83
  86
  89
  93
  96
  100
  104
  109
  113
  118
  123

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
  940
  962
  987
  1,014
  1,045
  1,079
  1,116
  1,155
  1,198
  1,244
  1,294
  1,346
  1,402
  1,461
  1,524
  1,591
  1,662
  1,737
  1,816
  1,899
  1,987
  2,080
  2,178
  2,281
  2,390
  2,504
  2,624
  2,751
  2,884
  3,024
Adjusted assets (=assets-cash), $m
  940
  962
  987
  1,014
  1,045
  1,079
  1,116
  1,155
  1,198
  1,244
  1,294
  1,346
  1,402
  1,461
  1,524
  1,591
  1,662
  1,737
  1,816
  1,899
  1,987
  2,080
  2,178
  2,281
  2,390
  2,504
  2,624
  2,751
  2,884
  3,024
Revenue / Adjusted assets
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.281
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
Average production assets, $m
  476
  487
  500
  514
  529
  546
  565
  585
  607
  630
  655
  681
  710
  740
  772
  806
  841
  879
  919
  961
  1,006
  1,053
  1,103
  1,155
  1,210
  1,268
  1,328
  1,393
  1,460
  1,531
Working capital, $m
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
Total debt, $m
  375
  392
  412
  434
  458
  484
  513
  545
  578
  614
  653
  694
  738
  785
  834
  887
  943
  1,001
  1,063
  1,129
  1,198
  1,271
  1,348
  1,429
  1,514
  1,604
  1,699
  1,798
  1,903
  2,013
Total liabilities, $m
  739
  756
  776
  797
  822
  848
  877
  908
  942
  978
  1,017
  1,058
  1,102
  1,149
  1,198
  1,251
  1,306
  1,365
  1,427
  1,493
  1,562
  1,635
  1,712
  1,793
  1,878
  1,968
  2,063
  2,162
  2,267
  2,377
Total equity, $m
  201
  206
  211
  217
  224
  231
  239
  247
  256
  266
  277
  288
  300
  313
  326
  341
  356
  372
  389
  406
  425
  445
  466
  488
  511
  536
  562
  589
  617
  647
Total liabilities and equity, $m
  940
  962
  987
  1,014
  1,046
  1,079
  1,116
  1,155
  1,198
  1,244
  1,294
  1,346
  1,402
  1,462
  1,524
  1,592
  1,662
  1,737
  1,816
  1,899
  1,987
  2,080
  2,178
  2,281
  2,389
  2,504
  2,625
  2,751
  2,884
  3,024
Debt-to-equity ratio
  1.870
  1.910
  1.950
  2.000
  2.050
  2.100
  2.150
  2.200
  2.250
  2.310
  2.360
  2.410
  2.460
  2.510
  2.560
  2.600
  2.650
  2.690
  2.740
  2.780
  2.820
  2.860
  2.890
  2.930
  2.960
  2.990
  3.030
  3.060
  3.080
  3.110
Adjusted equity ratio
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  61
  62
  64
  67
  69
  71
  74
  77
  79
  83
  86
  89
  93
  96
  100
  104
  109
  113
  118
  123
Depreciation, amort., depletion, $m
  46
  47
  47
  48
  48
  49
  49
  50
  51
  52
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  49
  51
Funds from operations, $m
  72
  73
  74
  76
  77
  79
  81
  83
  86
  88
  82
  85
  88
  91
  95
  98
  102
  106
  110
  115
  119
  124
  129
  135
  141
  147
  153
  160
  167
  174
Change in working capital, $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
  1
  1
Cash from operations, $m
  71
  73
  74
  76
  77
  79
  81
  83
  85
  88
  82
  85
  88
  91
  94
  98
  102
  106
  110
  114
  119
  124
  129
  134
  140
  146
  153
  159
  166
  174
Maintenance CAPEX, $m
  -16
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
New CAPEX, $m
  -9
  -11
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -71
Cash from investing activities, $m
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
  -81
  -85
  -89
  -93
  -98
  -103
  -108
  -113
  -120
Free cash flow, $m
  46
  46
  45
  45
  44
  44
  44
  44
  44
  44
  36
  37
  37
  37
  38
  38
  39
  40
  41
  41
  42
  43
  44
  45
  47
  48
  49
  51
  52
  54
Issuance/(repayment) of debt, $m
  15
  17
  19
  22
  24
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  100
  105
  110
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  
  15
  17
  19
  22
  24
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  100
  105
  110
Total cash flow (excl. dividends), $m
  62
  63
  65
  67
  69
  71
  73
  75
  78
  80
  75
  78
  81
  84
  87
  91
  95
  99
  103
  107
  111
  116
  121
  126
  132
  138
  144
  150
  157
  164
Retained Cash Flow (-), $m
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
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
  58
  58
  59
  61
  62
  64
  65
  67
  69
  71
  64
  67
  69
  71
  74
  77
  79
  83
  86
  89
  93
  96
  100
  104
  109
  113
  118
  123
  129
  134
Discount rate, %
  9.70
  10.19
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
  53
  48
  44
  40
  36
  32
  28
  24
  21
  17
  13
  11
  9
  7
  5
  4
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
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

Carriage Services, Inc. is a provider of death care services and merchandise in the United States. The Company operates in two business segments: Funeral Home Operations and Cemetery Operations. The Funeral Homes segment provides funeral services (traditional burial and cremation) and sells related merchandise, such as caskets and urns. Its cemetery products and services include interment services, the rights to interment in cemetery sites and related cemetery merchandise, such as memorials and vaults. It serves suburban and rural markets. It provides funeral and cemetery services and products on both at-need (time of death) and preneed (planned prior to death) basis. It also maintains trusts in connection with funeral home and cemetery operations, including preneed funeral trusts, preneed cemetery merchandise and service trusts and cemetery perpetual care trusts. The Company operates 174 funeral homes in 29 states and 32 cemeteries in 11 states.

FINANCIAL RATIOS  of  Carriage Services (CSV)

Valuation Ratios
P/E Ratio 18.6
Price to Sales 1.5
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow 14.3
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.1%
Cap. Spend. - 3 Yr. Gr. Rate 15.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 185.8%
Total Debt to Equity 193.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. 3.1%
Return On Total Capital 4%
Ret/ On T. Cap. - 3 Yr. Avg. 4.1%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 32.3%
Gross Margin - 3 Yr. Avg. 31.8%
EBITDA Margin 23%
EBITDA Margin - 3 Yr. Avg. 22.5%
Operating Margin 19.8%
Oper. Margin - 3 Yr. Avg. 18.5%
Pre-Tax Margin 12.9%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 8.1%
Net Profit Margin - 3 Yr. Avg. 7.9%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 37.4%
Payout Ratio 10%

CSV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSV stock intrinsic value calculation we used $258.139 million for the last fiscal year's total revenue generated by Carriage Services. The default revenue input number comes from 0001 income statement of Carriage Services. 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 CSV 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 9.7%, whose default value for CSV is calculated based on our internal credit rating of Carriage Services, 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 Carriage Services.
    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 CSV stock the variable cost ratio is equal to 79.8%.

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 CSV 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 Carriage Services.

Corporate tax rate of 27% is the nominal tax rate for Carriage Services. 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 CSV 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 CSV are equal to 180.8%.

Life of production assets of 38.5 years is the average useful life of capital assets used in Carriage Services 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 CSV is equal to 1.4%. 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 - $197.656 million for Carriage Services - 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 19.154 million for Carriage Services 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 Carriage Services at the current share price and the inputted number of shares is $0.4 billion.

RELATED COMPANIES Price Int.Val. Rating
SCI Service Intern 43.94 36.24  hold
MATW Matthews Inter 51.55 54.77  hold

COMPANY NEWS

▶ Carriage Services Inc. to Host Earnings Call   [Aug-01-18 09:20AM  ACCESSWIRE]
▶ Carriage Services: 2Q Earnings Snapshot   [Jul-31-18 07:24PM  Associated Press]
▶ Carriage Services Declares Quarterly Cash Dividend   [Jul-25-18 04:30PM  GlobeNewswire]
▶ Carriage Services Declares Quarterly Cash Dividend   [Apr-26-18 04:30PM  GlobeNewswire]
▶ Carriage Services Inc. to Host Earnings Call   [Apr-25-18 07:45AM  ACCESSWIRE]
▶ Carriage Services: 1Q Earnings Snapshot   [Apr-24-18 05:17PM  Associated Press]
▶ What Makes Dean Foods (DF) a Strong Sell?   [Apr-04-18 08:49AM  Zacks]
▶ Carriage Services Inc. to Host Earnings Call   [Feb-15-18 08:10AM  ACCESSWIRE]
▶ Carriage Services posts 4Q profit   [Feb-14-18 06:13PM  Associated Press]
▶ Carriage Declares Quarterly Cash Dividend   [Jan-25-18 04:20PM  PR Newswire]
▶ Houston funeral home company enters Colorado market   [Nov-10-17 01:10PM  American City Business Journals]
▶ Carriage Services Inc. to Host Earnings Call   [Oct-26-17 08:10AM  ACCESSWIRE]
▶ Carriage Services posts 3Q profit   [05:03AM  Associated Press]
▶ Carriage Services Declares Quarterly Cash Dividend   [Jul-27-17 04:15PM  PR Newswire]
▶ Carriage Services posts 2Q profit   [Jul-26-17 11:39PM  Associated Press]
▶ Mortality Provides Opportunity for Investors   [May-02-17 04:50PM  GuruFocus.com]
▶ Carriage Services Declares Quarterly Cash Dividend   [Apr-27-17 04:15PM  PR Newswire]
▶ Carriage Services posts 1Q profit   [Apr-26-17 06:48PM  Associated Press]

CONTACT US       ASSET ALLOCATION

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

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