Intrinsic value of Dogness (International) - DOGZ

Previous Close

$2.99

  Intrinsic Value

$26.94

stock screener

  Rating & Target

str. buy

+801%

Previous close

$2.99

 
Intrinsic value

$26.94

 
Up/down potential

+801%

 
Rating

str. buy

We calculate the intrinsic value of DOGZ 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 2017), $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
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  31.60
  28.94
  26.55
  24.39
  22.45
  20.71
  19.14
  17.72
  16.45
  15.31
  14.27
  13.35
  12.51
  11.76
  11.09
  10.48
  9.93
  9.44
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
Revenue, $m
  28
  36
  45
  56
  69
  83
  99
  116
  135
  156
  178
  202
  228
  254
  282
  312
  343
  375
  409
  444
  481
  519
  559
  600
  642
  687
  733
  781
  831
  883
Variable operating expenses, $m
  16
  20
  26
  32
  39
  47
  56
  66
  77
  89
  101
  115
  129
  144
  160
  177
  195
  213
  232
  252
  273
  294
  317
  340
  364
  389
  416
  443
  471
  501
Fixed operating expenses, $m
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
Total operating expenses, $m
  19
  23
  29
  35
  42
  50
  59
  70
  81
  93
  105
  119
  133
  148
  164
  181
  199
  217
  237
  257
  278
  299
  322
  345
  369
  394
  421
  449
  477
  507
Operating income, $m
  9
  12
  16
  21
  26
  32
  39
  47
  55
  64
  73
  84
  95
  106
  118
  131
  144
  158
  173
  188
  204
  220
  237
  255
  273
  292
  312
  333
  354
  376
EBITDA, $m
  10
  14
  18
  23
  29
  35
  43
  51
  60
  69
  80
  91
  103
  115
  128
  142
  156
  171
  187
  204
  221
  238
  257
  276
  296
  316
  338
  360
  384
  408
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
Earnings before tax, $m
  9
  12
  16
  20
  25
  31
  37
  44
  52
  60
  70
  79
  89
  100
  112
  124
  136
  149
  163
  177
  192
  207
  223
  240
  257
  275
  294
  313
  333
  354
Tax expense, $m
  2
  3
  4
  5
  7
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  37
  40
  44
  48
  52
  56
  60
  65
  69
  74
  79
  85
  90
  96
Net income, $m
  6
  9
  11
  15
  18
  23
  27
  32
  38
  44
  51
  58
  65
  73
  81
  90
  99
  109
  119
  129
  140
  151
  163
  175
  188
  201
  214
  229
  243
  259

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
  23
  29
  37
  46
  57
  69
  82
  96
  112
  129
  148
  167
  188
  210
  234
  258
  284
  311
  338
  368
  398
  429
  462
  496
  531
  568
  606
  646
  687
  730
Adjusted assets (=assets-cash), $m
  23
  29
  37
  46
  57
  69
  82
  96
  112
  129
  148
  167
  188
  210
  234
  258
  284
  311
  338
  368
  398
  429
  462
  496
  531
  568
  606
  646
  687
  730
Revenue / Adjusted assets
  1.217
  1.241
  1.216
  1.217
  1.211
  1.203
  1.207
  1.208
  1.205
  1.209
  1.203
  1.210
  1.213
  1.210
  1.205
  1.209
  1.208
  1.206
  1.210
  1.207
  1.209
  1.210
  1.210
  1.210
  1.209
  1.210
  1.210
  1.209
  1.210
  1.210
Average production assets, $m
  10
  13
  16
  20
  24
  29
  35
  41
  48
  55
  63
  72
  81
  90
  100
  111
  122
  133
  145
  158
  171
  184
  198
  213
  228
  244
  260
  277
  295
  313
Working capital, $m
  1
  1
  2
  2
  3
  3
  4
  5
  6
  6
  7
  8
  9
  10
  12
  13
  14
  15
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  36
Total debt, $m
  9
  12
  17
  22
  28
  35
  43
  51
  60
  70
  81
  92
  105
  117
  131
  145
  160
  175
  192
  209
  226
  244
  263
  283
  304
  325
  347
  370
  394
  419
Total liabilities, $m
  13
  17
  22
  27
  33
  40
  47
  56
  65
  75
  86
  97
  109
  122
  136
  150
  165
  180
  196
  213
  231
  249
  268
  288
  308
  329
  352
  375
  399
  423
Total equity, $m
  10
  12
  16
  19
  24
  29
  34
  40
  47
  54
  62
  70
  79
  88
  98
  108
  119
  130
  142
  154
  167
  180
  194
  208
  223
  239
  255
  271
  289
  307
Total liabilities and equity, $m
  23
  29
  38
  46
  57
  69
  81
  96
  112
  129
  148
  167
  188
  210
  234
  258
  284
  310
  338
  367
  398
  429
  462
  496
  531
  568
  607
  646
  688
  730
Debt-to-equity ratio
  0.900
  1.010
  1.080
  1.140
  1.190
  1.220
  1.250
  1.270
  1.280
  1.300
  1.310
  1.310
  1.320
  1.330
  1.330
  1.340
  1.340
  1.350
  1.350
  1.350
  1.350
  1.360
  1.360
  1.360
  1.360
  1.360
  1.360
  1.360
  1.360
  1.370
Adjusted equity ratio
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  9
  11
  15
  18
  23
  27
  32
  38
  44
  51
  58
  65
  73
  81
  90
  99
  109
  119
  129
  140
  151
  163
  175
  188
  201
  214
  229
  243
  259
Depreciation, amort., depletion, $m
  1
  1
  2
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  18
  20
  21
  23
  24
  26
  28
  29
  31
Funds from operations, $m
  7
  10
  13
  17
  21
  25
  31
  37
  43
  50
  57
  65
  73
  82
  91
  101
  112
  122
  133
  145
  157
  170
  183
  196
  211
  225
  240
  256
  273
  290
Change in working capital, $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  7
  10
  13
  16
  20
  25
  30
  36
  42
  49
  56
  64
  72
  81
  90
  100
  110
  121
  132
  144
  156
  168
  181
  195
  209
  223
  239
  254
  271
  288
Maintenance CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -29
New CAPEX, $m
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
Cash from investing activities, $m
  -3
  -4
  -4
  -6
  -6
  -7
  -9
  -10
  -11
  -12
  -14
  -14
  -16
  -18
  -19
  -21
  -22
  -23
  -25
  -27
  -29
  -31
  -32
  -35
  -36
  -39
  -40
  -43
  -46
  -47
Free cash flow, $m
  4
  6
  8
  11
  14
  17
  22
  26
  31
  37
  43
  49
  56
  63
  71
  80
  88
  97
  107
  117
  127
  138
  149
  160
  172
  185
  198
  211
  225
  240
Issuance/(repayment) of debt, $m
  3
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
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  
  3
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
Total cash flow (excl. dividends), $m
  7
  10
  13
  16
  20
  24
  29
  34
  40
  47
  53
  61
  68
  76
  85
  94
  103
  113
  123
  133
  144
  156
  168
  180
  193
  206
  220
  234
  249
  265
Retained Cash Flow (-), $m
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
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
  4
  7
  9
  12
  15
  19
  24
  28
  34
  39
  46
  52
  59
  67
  75
  83
  92
  102
  111
  121
  132
  143
  154
  166
  178
  191
  204
  218
  232
  247
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
  4
  6
  8
  10
  12
  14
  16
  18
  19
  21
  22
  22
  23
  23
  22
  21
  20
  19
  17
  15
  14
  12
  10
  8
  7
  6
  4
  3
  3
  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

Dogness (International) Corporation is a holding company. The Company is engaged in designing and manufacturing of pet products in the People’s Republic of China. The Company offers range of products such as C2 smart collar, H2 smart harness, nylon and leather collar, anti shock leash, and neoprene and nylon harness. The Company has designed its smart collars to allow owners to find their dogs easily, where the dogs are and to communicate with their pets from around the world. The Company also built communication model around SIM cards and provides cellular data service for the collars.

FINANCIAL RATIOS  of  Dogness (International) (DOGZ)

Valuation Ratios
P/E Ratio 15
Price to Sales 3.6
Price to Book 10.7
Price to Tangible Book
Price to Cash Flow 12.5
Price to Free Cash Flow 37.4
Growth Rates
Sales Growth Rate 31.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 300%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 85.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 32.3%
Ret/ On Assets - 3 Yr. Avg. 40.1%
Return On Total Capital 41.7%
Ret/ On T. Cap. - 3 Yr. Avg. 50.1%
Return On Equity 83.3%
Return On Equity - 3 Yr. Avg. 189.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 38.1%
Gross Margin - 3 Yr. Avg. 38.5%
EBITDA Margin 33.3%
EBITDA Margin - 3 Yr. Avg. 34.9%
Operating Margin 28.6%
Oper. Margin - 3 Yr. Avg. 26.7%
Pre-Tax Margin 28.6%
Pre-Tax Margin - 3 Yr. Avg. 26.7%
Net Profit Margin 23.8%
Net Profit Margin - 3 Yr. Avg. 23.1%
Effective Tax Rate 16.7%
Eff/ Tax Rate - 3 Yr. Avg. 13.9%
Payout Ratio 0%

DOGZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DOGZ stock intrinsic value calculation we used $21 million for the last fiscal year's total revenue generated by Dogness (International). The default revenue input number comes from 2017 income statement of Dogness (International). 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 DOGZ stock valuation model: a) initial revenue growth rate of 31.6% 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 DOGZ is calculated based on our internal credit rating of Dogness (International), 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 Dogness (International).
    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 DOGZ stock the variable cost ratio is equal to 56.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3 million in the base year in the intrinsic value calculation for DOGZ 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 5.6% for Dogness (International).

Corporate tax rate of 27% is the nominal tax rate for Dogness (International). 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 DOGZ 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 DOGZ are equal to 35.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Dogness (International) 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 DOGZ is equal to 4.1%. 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 - $7 million for Dogness (International) - 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 15 million for Dogness (International) 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 Dogness (International) at the current share price and the inputted number of shares is $0.0 billion.

COMPANY NEWS

▶ Dogness to Attend Interzoo 2018   [May-04-18 08:30AM  GlobeNewswire]
▶ Dogness Attends Global Pet Expo 2018   [Mar-27-18 08:30AM  GlobeNewswire]
▶ Dogness Showcases Smart Pet Products at CES 2018   [Jan-22-18 04:30PM  GlobeNewswire]
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