Intrinsic value of Electronics for Imaging - EFII

Previous Close

$28.04

  Intrinsic Value

$18.62

stock screener

  Rating & Target

sell

-34%

Previous close

$28.04

 
Intrinsic value

$18.62

 
Up/down potential

-34%

 
Rating

sell

We calculate the intrinsic value of EFII 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, %
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.11
  5.09
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
Revenue, $m
  1,050
  1,109
  1,171
  1,235
  1,303
  1,373
  1,447
  1,524
  1,605
  1,690
  1,778
  1,871
  1,968
  2,070
  2,177
  2,289
  2,406
  2,529
  2,659
  2,794
  2,936
  3,085
  3,242
  3,406
  3,578
  3,759
  3,948
  4,147
  4,356
  4,575
Variable operating expenses, $m
  988
  1,041
  1,096
  1,153
  1,213
  1,276
  1,342
  1,411
  1,483
  1,558
  1,584
  1,667
  1,754
  1,845
  1,940
  2,039
  2,144
  2,254
  2,369
  2,490
  2,616
  2,749
  2,888
  3,034
  3,188
  3,349
  3,518
  3,695
  3,881
  4,077
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
  988
  1,041
  1,096
  1,153
  1,213
  1,276
  1,342
  1,411
  1,483
  1,558
  1,584
  1,667
  1,754
  1,845
  1,940
  2,039
  2,144
  2,254
  2,369
  2,490
  2,616
  2,749
  2,888
  3,034
  3,188
  3,349
  3,518
  3,695
  3,881
  4,077
Operating income, $m
  62
  68
  75
  82
  89
  97
  105
  113
  122
  132
  194
  204
  215
  226
  237
  249
  262
  276
  290
  305
  320
  336
  353
  371
  390
  410
  430
  452
  475
  499
EBITDA, $m
  155
  164
  173
  182
  192
  203
  214
  225
  237
  250
  263
  276
  291
  306
  321
  338
  355
  374
  393
  413
  434
  456
  479
  503
  528
  555
  583
  612
  643
  676
Interest expense (income), $m
  3
  20
  23
  25
  28
  30
  33
  36
  40
  43
  46
  50
  54
  58
  62
  66
  71
  76
  81
  86
  92
  97
  103
  110
  117
  124
  131
  139
  147
  155
  164
Earnings before tax, $m
  42
  46
  50
  54
  59
  64
  69
  74
  79
  85
  144
  150
  157
  164
  171
  179
  187
  195
  204
  213
  223
  233
  243
  255
  266
  279
  292
  305
  319
  334
Tax expense, $m
  11
  12
  13
  15
  16
  17
  19
  20
  21
  23
  39
  41
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
Net income, $m
  30
  33
  36
  40
  43
  46
  50
  54
  58
  62
  105
  110
  114
  119
  125
  130
  136
  142
  149
  155
  163
  170
  178
  186
  194
  203
  213
  223
  233
  244

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
  1,468
  1,551
  1,637
  1,728
  1,822
  1,921
  2,024
  2,132
  2,245
  2,363
  2,487
  2,617
  2,753
  2,895
  3,045
  3,201
  3,366
  3,538
  3,718
  3,908
  4,106
  4,315
  4,534
  4,763
  5,004
  5,257
  5,522
  5,800
  6,092
  6,399
Adjusted assets (=assets-cash), $m
  1,468
  1,551
  1,637
  1,728
  1,822
  1,921
  2,024
  2,132
  2,245
  2,363
  2,487
  2,617
  2,753
  2,895
  3,045
  3,201
  3,366
  3,538
  3,718
  3,908
  4,106
  4,315
  4,534
  4,763
  5,004
  5,257
  5,522
  5,800
  6,092
  6,399
Revenue / Adjusted assets
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
Average production assets, $m
  374
  395
  417
  440
  464
  489
  515
  543
  571
  601
  633
  666
  701
  737
  775
  815
  857
  900
  946
  995
  1,045
  1,098
  1,154
  1,212
  1,274
  1,338
  1,406
  1,476
  1,551
  1,629
Working capital, $m
  111
  118
  124
  131
  138
  146
  153
  162
  170
  179
  188
  198
  209
  219
  231
  243
  255
  268
  282
  296
  311
  327
  344
  361
  379
  398
  419
  440
  462
  485
Total debt, $m
  357
  398
  440
  484
  530
  578
  628
  680
  735
  793
  853
  917
  983
  1,052
  1,125
  1,201
  1,281
  1,365
  1,453
  1,545
  1,642
  1,744
  1,850
  1,962
  2,079
  2,202
  2,331
  2,467
  2,609
  2,759
Total liabilities, $m
  715
  755
  797
  841
  887
  935
  986
  1,038
  1,093
  1,151
  1,211
  1,274
  1,341
  1,410
  1,483
  1,559
  1,639
  1,723
  1,811
  1,903
  2,000
  2,101
  2,208
  2,320
  2,437
  2,560
  2,689
  2,825
  2,967
  3,116
Total equity, $m
  753
  796
  840
  886
  935
  985
  1,038
  1,094
  1,152
  1,212
  1,276
  1,342
  1,412
  1,485
  1,562
  1,642
  1,727
  1,815
  1,907
  2,005
  2,107
  2,214
  2,326
  2,443
  2,567
  2,697
  2,833
  2,976
  3,125
  3,283
Total liabilities and equity, $m
  1,468
  1,551
  1,637
  1,727
  1,822
  1,920
  2,024
  2,132
  2,245
  2,363
  2,487
  2,616
  2,753
  2,895
  3,045
  3,201
  3,366
  3,538
  3,718
  3,908
  4,107
  4,315
  4,534
  4,763
  5,004
  5,257
  5,522
  5,801
  6,092
  6,399
Debt-to-equity ratio
  0.470
  0.500
  0.520
  0.550
  0.570
  0.590
  0.600
  0.620
  0.640
  0.650
  0.670
  0.680
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.800
  0.810
  0.820
  0.820
  0.830
  0.830
  0.840
Adjusted equity ratio
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  30
  33
  36
  40
  43
  46
  50
  54
  58
  62
  105
  110
  114
  119
  125
  130
  136
  142
  149
  155
  163
  170
  178
  186
  194
  203
  213
  223
  233
  244
Depreciation, amort., depletion, $m
  93
  96
  98
  100
  103
  106
  109
  112
  115
  118
  69
  72
  76
  80
  84
  89
  93
  98
  103
  108
  114
  119
  125
  132
  138
  145
  153
  160
  169
  177
Funds from operations, $m
  124
  129
  134
  140
  146
  152
  159
  166
  173
  180
  174
  182
  191
  200
  209
  219
  229
  240
  252
  264
  276
  289
  303
  318
  333
  349
  366
  383
  402
  421
Change in working capital, $m
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
Cash from operations, $m
  118
  123
  128
  133
  139
  145
  151
  157
  164
  171
  164
  172
  180
  189
  198
  207
  217
  227
  238
  249
  261
  274
  287
  300
  315
  330
  346
  362
  380
  398
Maintenance CAPEX, $m
  -38
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -108
  -114
  -119
  -125
  -132
  -138
  -145
  -153
  -160
  -169
New CAPEX, $m
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -64
  -68
  -71
  -74
  -78
Cash from investing activities, $m
  -58
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -131
  -137
  -144
  -151
  -159
  -167
  -175
  -183
  -193
  -202
  -213
  -224
  -234
  -247
Free cash flow, $m
  59
  61
  63
  65
  67
  69
  72
  74
  76
  79
  67
  70
  73
  76
  80
  83
  86
  90
  94
  98
  102
  107
  112
  116
  122
  127
  133
  138
  145
  151
Issuance/(repayment) of debt, $m
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
  136
  142
  149
Issuance/(repurchase) of shares, $m
  10
  9
  8
  7
  5
  4
  3
  1
  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  
  48
  49
  50
  51
  51
  52
  53
  54
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
  136
  142
  149
Total cash flow (excl. dividends), $m
  108
  110
  113
  116
  118
  121
  125
  128
  131
  137
  128
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  274
  287
  301
Retained Cash Flow (-), $m
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -136
  -143
  -150
  -157
Prev. year cash balance distribution, $m
  68
  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
  135
  68
  69
  69
  70
  71
  72
  73
  73
  76
  64
  67
  70
  73
  76
  79
  82
  86
  89
  93
  97
  101
  106
  110
  115
  120
  126
  131
  137
  143
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
  130
  62
  60
  57
  54
  51
  48
  45
  42
  40
  31
  29
  27
  24
  22
  20
  18
  16
  14
  12
  10
  8
  7
  6
  4
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  99.1
  98.4
  97.8
  97.3
  96.9
  96.7
  96.5
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4

Electronics For Imaging, Inc. is engaged in digital printing, focused on the transformation of the printing, packaging, ceramic tile decoration, and textile industries from the use of traditional analog-based printing to digital on-demand printing. It operates through three segments. The Industrial Inkjet segment consists of its VUTEk and Matan super-wide and wide format display graphics, Reggiani textile, Jetrion label and packaging and Cretaprint ceramic tile decoration and construction material industrial digital inkjet printers; ceramic, water-based, and thermoforming ink, and digital inkjet printer parts, and professional services. The Productivity Software segment consists of a software suite that enables automated end-to-end business and production workflows for the print and packaging industry. The Fiery segment consists of digital front ends that transform digital copiers and printers into networked printing devices for the office, industrial and commercial printing markets.

FINANCIAL RATIOS  of  Electronics for Imaging (EFII)

Valuation Ratios
P/E Ratio 28.4
Price to Sales 1.3
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 10.8
Price to Free Cash Flow 13.2
Growth Rates
Sales Growth Rate 12.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.2%
Cap. Spend. - 3 Yr. Gr. Rate -15.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 38.6%
Total Debt to Equity 38.6%
Interest Coverage 14
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 5.6%
Return On Equity - 3 Yr. Avg. 4.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 51.3%
Gross Margin - 3 Yr. Avg. 52.6%
EBITDA Margin 9.8%
EBITDA Margin - 3 Yr. Avg. 9.4%
Operating Margin 5.6%
Oper. Margin - 3 Yr. Avg. 6.3%
Pre-Tax Margin 3.9%
Pre-Tax Margin - 3 Yr. Avg. 4.5%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. 4.3%
Effective Tax Rate -17.9%
Eff/ Tax Rate - 3 Yr. Avg. 3.9%
Payout Ratio 0%

EFII stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EFII stock intrinsic value calculation we used $993.26 million for the last fiscal year's total revenue generated by Electronics for Imaging. The default revenue input number comes from 0001 income statement of Electronics for Imaging. 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 EFII stock valuation model: a) initial revenue growth rate of 5.7% 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 EFII is calculated based on our internal credit rating of Electronics for Imaging, 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 Electronics for Imaging.
    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 EFII stock the variable cost ratio is equal to 94.4%.

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 EFII 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 6.3% for Electronics for Imaging.

Corporate tax rate of 27% is the nominal tax rate for Electronics for Imaging. 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 EFII 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 EFII are equal to 35.6%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Electronics for Imaging 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 EFII is equal to 10.6%. 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 - $781.311 million for Electronics for Imaging - 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 44.375 million for Electronics for Imaging 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 Electronics for Imaging at the current share price and the inputted number of shares is $1.2 billion.

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COMPANY NEWS

▶ EFI Adds Experienced Executive to Board of Directors   [Nov-08-18 04:05PM  GlobeNewswire]
▶ Electronics for Imaging: 3Q Earnings Snapshot   [05:14PM  Associated Press]
▶ EFI Appoints Bill Muir as New CEO   [Oct-04-18 04:35PM  GlobeNewswire]
▶ Morgan Stanley Is Buying These Two Small Stocks Now   [Aug-23-18 01:03PM  Barrons.com]
▶ Electronics for Imaging: 2Q Earnings Snapshot   [Jul-30-18 05:56PM  Associated Press]
▶ EFI to Present at Upcoming Citi and Stifel Conferences   [May-29-18 04:05PM  GlobeNewswire]
▶ Why Electronics for Imaging Inc. Stock Popped Today   [May-01-18 04:09PM  Motley Fool]
▶ Electronics for Imaging: 1Q Earnings Snapshot   [Apr-30-18 05:13PM  Associated Press]
▶ EFI Strengthens Leadership Team with Three Key New Hires   [Mar-02-18 09:00AM  GlobeNewswire]
▶ EFI Files Form 12b-25   [09:00AM  GlobeNewswire]
▶ Electronics for Imaging posts 4Q loss   [Jan-31-18 05:45PM  Associated Press]
▶ EFI Files its Q3 2017 Form 10-Q and Other Amended Filings   [Nov-27-17 05:22PM  GlobeNewswire]
▶ EFI Receives Nasdaq Notice Related to Delay in 10-Q Filing   [Nov-21-17 04:05PM  GlobeNewswire]
▶ EFI Files Form 12b-25   [Nov-13-17 06:37PM  GlobeNewswire]
▶ Why Electronics For Imaging, Inc. Stock Plummeted Friday   [Oct-27-17 11:50AM  Motley Fool]
▶ Electronics for Imaging posts 3Q profit   [Oct-26-17 07:19PM  Associated Press]
▶ EFI Reports Third Quarter 2017 Results   [04:05PM  GlobeNewswire]

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