Intrinsic value of Industrias Bachoco, S.A. de C.V. - IBA

Previous Close

$50.34

  Intrinsic Value

$17.98

stock screener

  Rating & Target

str. sell

-64%

Previous close

$50.34

 
Intrinsic value

$17.98

 
Up/down potential

-64%

 
Rating

str. sell

We calculate the intrinsic value of IBA 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 2.5

 

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, %
  17.60
  16.34
  15.21
  14.19
  13.27
  12.44
  11.70
  11.03
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.90
  5.81
  5.73
  5.66
  5.59
Revenue, $m
  3,470
  4,037
  4,651
  5,311
  6,016
  6,764
  7,555
  8,388
  9,263
  10,178
  11,134
  12,131
  13,169
  14,250
  15,373
  16,540
  17,754
  19,014
  20,325
  21,687
  23,103
  24,577
  26,111
  27,708
  29,372
  31,106
  32,915
  34,802
  36,771
  38,828
Variable operating expenses, $m
  3,142
  3,653
  4,206
  4,801
  5,436
  6,111
  6,824
  7,575
  8,363
  9,188
  10,036
  10,935
  11,871
  12,845
  13,857
  14,909
  16,003
  17,139
  18,320
  19,548
  20,825
  22,154
  23,536
  24,976
  26,476
  28,039
  29,669
  31,370
  33,145
  34,999
Fixed operating expenses, $m
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  29
  30
  31
Total operating expenses, $m
  3,158
  3,670
  4,223
  4,818
  5,454
  6,129
  6,843
  7,594
  8,382
  9,208
  10,056
  10,956
  11,892
  12,867
  13,879
  14,932
  16,026
  17,163
  18,344
  19,573
  20,850
  22,180
  23,562
  25,003
  26,504
  28,067
  29,698
  31,399
  33,175
  35,030
Operating income, $m
  312
  368
  428
  493
  562
  635
  713
  795
  880
  970
  1,078
  1,175
  1,277
  1,383
  1,494
  1,608
  1,727
  1,851
  1,980
  2,114
  2,253
  2,398
  2,548
  2,705
  2,869
  3,039
  3,217
  3,402
  3,596
  3,798
EBITDA, $m
  387
  453
  524
  600
  682
  768
  860
  956
  1,057
  1,163
  1,274
  1,390
  1,510
  1,635
  1,765
  1,900
  2,041
  2,187
  2,339
  2,497
  2,661
  2,832
  3,009
  3,194
  3,387
  3,588
  3,798
  4,017
  4,245
  4,484
Interest expense (income), $m
  9
  20
  27
  36
  45
  54
  64
  75
  87
  99
  112
  125
  139
  153
  168
  184
  200
  217
  235
  253
  272
  292
  312
  334
  356
  379
  403
  428
  455
  482
  511
Earnings before tax, $m
  292
  340
  392
  448
  508
  571
  638
  708
  781
  859
  953
  1,037
  1,124
  1,215
  1,310
  1,408
  1,510
  1,617
  1,727
  1,842
  1,961
  2,085
  2,215
  2,349
  2,490
  2,636
  2,788
  2,948
  3,114
  3,287
Tax expense, $m
  79
  92
  106
  121
  137
  154
  172
  191
  211
  232
  257
  280
  304
  328
  354
  380
  408
  436
  466
  497
  530
  563
  598
  634
  672
  712
  753
  796
  841
  888
Net income, $m
  213
  248
  286
  327
  371
  417
  465
  517
  570
  627
  696
  757
  821
  887
  956
  1,028
  1,103
  1,180
  1,261
  1,344
  1,432
  1,522
  1,617
  1,715
  1,817
  1,924
  2,036
  2,152
  2,273
  2,400

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
  2,323
  2,702
  3,113
  3,555
  4,027
  4,528
  5,057
  5,615
  6,200
  6,813
  7,453
  8,120
  8,815
  9,538
  10,290
  11,071
  11,883
  12,727
  13,604
  14,516
  15,464
  16,450
  17,477
  18,546
  19,660
  20,821
  22,031
  23,294
  24,613
  25,989
Adjusted assets (=assets-cash), $m
  2,323
  2,702
  3,113
  3,555
  4,027
  4,528
  5,057
  5,615
  6,200
  6,813
  7,453
  8,120
  8,815
  9,538
  10,290
  11,071
  11,883
  12,727
  13,604
  14,516
  15,464
  16,450
  17,477
  18,546
  19,660
  20,821
  22,031
  23,294
  24,613
  25,989
Revenue / Adjusted assets
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
  1.494
Average production assets, $m
  993
  1,155
  1,330
  1,519
  1,721
  1,935
  2,161
  2,399
  2,649
  2,911
  3,184
  3,470
  3,766
  4,075
  4,397
  4,731
  5,078
  5,438
  5,813
  6,202
  6,608
  7,029
  7,468
  7,924
  8,400
  8,896
  9,414
  9,953
  10,517
  11,105
Working capital, $m
  326
  380
  437
  499
  565
  636
  710
  789
  871
  957
  1,047
  1,140
  1,238
  1,339
  1,445
  1,555
  1,669
  1,787
  1,911
  2,039
  2,172
  2,310
  2,454
  2,605
  2,761
  2,924
  3,094
  3,271
  3,456
  3,650
Total debt, $m
  367
  476
  595
  723
  859
  1,004
  1,157
  1,318
  1,487
  1,664
  1,849
  2,042
  2,243
  2,452
  2,669
  2,895
  3,130
  3,373
  3,627
  3,890
  4,164
  4,449
  4,746
  5,055
  5,377
  5,712
  6,062
  6,427
  6,808
  7,206
Total liabilities, $m
  671
  781
  900
  1,027
  1,164
  1,308
  1,462
  1,623
  1,792
  1,969
  2,154
  2,347
  2,547
  2,756
  2,974
  3,200
  3,434
  3,678
  3,932
  4,195
  4,469
  4,754
  5,051
  5,360
  5,682
  6,017
  6,367
  6,732
  7,113
  7,511
Total equity, $m
  1,652
  1,921
  2,214
  2,528
  2,863
  3,219
  3,596
  3,992
  4,408
  4,844
  5,299
  5,773
  6,267
  6,781
  7,316
  7,872
  8,449
  9,049
  9,673
  10,321
  10,995
  11,696
  12,426
  13,186
  13,978
  14,804
  15,664
  16,562
  17,500
  18,478
Total liabilities and equity, $m
  2,323
  2,702
  3,114
  3,555
  4,027
  4,527
  5,058
  5,615
  6,200
  6,813
  7,453
  8,120
  8,814
  9,537
  10,290
  11,072
  11,883
  12,727
  13,605
  14,516
  15,464
  16,450
  17,477
  18,546
  19,660
  20,821
  22,031
  23,294
  24,613
  25,989
Debt-to-equity ratio
  0.220
  0.250
  0.270
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.390
  0.390
  0.390
  0.390
  0.390
Adjusted equity ratio
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  213
  248
  286
  327
  371
  417
  465
  517
  570
  627
  696
  757
  821
  887
  956
  1,028
  1,103
  1,180
  1,261
  1,344
  1,432
  1,522
  1,617
  1,715
  1,817
  1,924
  2,036
  2,152
  2,273
  2,400
Depreciation, amort., depletion, $m
  75
  85
  96
  107
  120
  133
  147
  162
  177
  193
  197
  214
  232
  252
  271
  292
  313
  336
  359
  383
  408
  434
  461
  489
  519
  549
  581
  614
  649
  685
Funds from operations, $m
  288
  333
  382
  434
  490
  550
  612
  678
  748
  820
  892
  971
  1,053
  1,139
  1,228
  1,320
  1,416
  1,516
  1,620
  1,727
  1,840
  1,956
  2,078
  2,204
  2,336
  2,473
  2,617
  2,766
  2,922
  3,085
Change in working capital, $m
  49
  53
  58
  62
  66
  70
  74
  78
  82
  86
  90
  94
  98
  102
  106
  110
  114
  119
  123
  128
  133
  139
  144
  150
  156
  163
  170
  177
  185
  193
Cash from operations, $m
  239
  280
  324
  372
  424
  479
  538
  600
  665
  734
  802
  877
  956
  1,037
  1,122
  1,210
  1,302
  1,397
  1,496
  1,599
  1,706
  1,818
  1,933
  2,054
  2,180
  2,310
  2,447
  2,589
  2,737
  2,892
Maintenance CAPEX, $m
  -52
  -61
  -71
  -82
  -94
  -106
  -119
  -133
  -148
  -164
  -180
  -197
  -214
  -232
  -252
  -271
  -292
  -313
  -336
  -359
  -383
  -408
  -434
  -461
  -489
  -519
  -549
  -581
  -614
  -649
New CAPEX, $m
  -149
  -162
  -176
  -189
  -202
  -214
  -226
  -238
  -250
  -262
  -273
  -285
  -297
  -309
  -321
  -334
  -347
  -361
  -375
  -390
  -405
  -421
  -439
  -457
  -476
  -496
  -517
  -540
  -563
  -588
Cash from investing activities, $m
  -201
  -223
  -247
  -271
  -296
  -320
  -345
  -371
  -398
  -426
  -453
  -482
  -511
  -541
  -573
  -605
  -639
  -674
  -711
  -749
  -788
  -829
  -873
  -918
  -965
  -1,015
  -1,066
  -1,121
  -1,177
  -1,237
Free cash flow, $m
  39
  57
  77
  102
  129
  159
  192
  228
  267
  309
  349
  396
  444
  496
  549
  605
  663
  723
  786
  851
  918
  988
  1,061
  1,136
  1,215
  1,296
  1,380
  1,468
  1,559
  1,655
Issuance/(repayment) of debt, $m
  100
  110
  119
  128
  136
  145
  153
  161
  169
  177
  185
  193
  201
  209
  217
  226
  235
  244
  253
  263
  274
  285
  297
  309
  322
  335
  350
  365
  381
  398
Issuance/(repurchase) of shares, $m
  35
  21
  6
  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  
  135
  131
  125
  128
  136
  145
  153
  161
  169
  177
  185
  193
  201
  209
  217
  226
  235
  244
  253
  263
  274
  285
  297
  309
  322
  335
  350
  365
  381
  398
Total cash flow (excl. dividends), $m
  173
  188
  202
  229
  265
  304
  345
  390
  436
  486
  534
  588
  645
  705
  766
  831
  898
  967
  1,039
  1,114
  1,192
  1,273
  1,358
  1,445
  1,536
  1,631
  1,730
  1,833
  1,940
  2,052
Retained Cash Flow (-), $m
  -248
  -270
  -292
  -314
  -335
  -356
  -377
  -396
  -416
  -436
  -455
  -474
  -494
  -514
  -535
  -556
  -577
  -600
  -624
  -648
  -674
  -701
  -730
  -760
  -792
  -825
  -861
  -898
  -937
  -979
Prev. year cash balance distribution, $m
  407
  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
  332
  -82
  -90
  -85
  -70
  -52
  -31
  -7
  20
  50
  79
  114
  151
  191
  232
  275
  320
  367
  416
  466
  518
  572
  628
  685
  745
  806
  869
  935
  1,003
  1,074
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
  318
  -75
  -78
  -70
  -54
  -38
  -21
  -4
  12
  26
  38
  49
  57
  64
  68
  70
  70
  68
  64
  59
  54
  47
  41
  35
  29
  24
  19
  14
  11
  8
Current shareholders' claim on cash, %
  98.3
  97.3
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1

Industrias Bachoco, S.A.B. de C.V. (Bachoco) is a holding company. The Company owns and manages over 1,000 facilities, organized in approximately 10 production complexes and over 60 distribution centers in Mexico, and a production complex in the United States. Bachoco operates through two segments: poultry and others. The poultry segment consists of chicken and egg operations. The others segment includes the operations of pigs, balanced feed for animal consumption and other by-products. The Company participates in the food industry in Mexico and in the United States, mainly in the poultry industry. In Mexico, the Company's core business is poultry (chicken and egg products). It also produces and sells a range of other products, which it refers to as other business lines, which include the production and selling of balanced feed, live swine, beef and turkey products, as well as a laboratory that produces vaccines for the poultry industry and other similar industries.

FINANCIAL RATIOS  of  Industrias Bachoco, S.A. de C.V. (IBA)

Valuation Ratios
P/E Ratio 151
Price to Sales 11.5
Price to Book 18.8
Price to Tangible Book
Price to Cash Flow 197.4
Price to Free Cash Flow 2517
Growth Rates
Sales Growth Rate 12.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 45.4%
Cap. Spend. - 3 Yr. Gr. Rate 37.2%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 3%
Total Debt to Equity 13.4%
Interest Coverage 32
Management Effectiveness
Return On Assets 9.5%
Ret/ On Assets - 3 Yr. Avg. 10.8%
Return On Total Capital 11.7%
Ret/ On T. Cap. - 3 Yr. Avg. 13.5%
Return On Equity 13.3%
Return On Equity - 3 Yr. Avg. 15.2%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 18.1%
Gross Margin - 3 Yr. Avg. 20.2%
EBITDA Margin 12.9%
EBITDA Margin - 3 Yr. Avg. 14.1%
Operating Margin 9.2%
Oper. Margin - 3 Yr. Avg. 11%
Pre-Tax Margin 10.7%
Pre-Tax Margin - 3 Yr. Avg. 12%
Net Profit Margin 7.6%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 29.3%
Eff/ Tax Rate - 3 Yr. Avg. 29.8%
Payout Ratio 20%

IBA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IBA stock intrinsic value calculation we used $2951 million for the last fiscal year's total revenue generated by Industrias Bachoco, S.A. de C.V.. The default revenue input number comes from 0001 income statement of Industrias Bachoco, S.A. de C.V.. 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 IBA stock valuation model: a) initial revenue growth rate of 17.6% 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 IBA is calculated based on our internal credit rating of Industrias Bachoco, S.A. de C.V., 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 Industrias Bachoco, S.A. de C.V..
    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 IBA stock the variable cost ratio is equal to 90.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16 million in the base year in the intrinsic value calculation for IBA 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 7.5% for Industrias Bachoco, S.A. de C.V..

Corporate tax rate of 27% is the nominal tax rate for Industrias Bachoco, S.A. de C.V.. 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 IBA 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 IBA are equal to 28.6%.

Life of production assets of 16.2 years is the average useful life of capital assets used in Industrias Bachoco, S.A. de C.V. 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 IBA is equal to 9.4%. 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 - $1810.82628368 million for Industrias Bachoco, S.A. de C.V. - 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 49.912 million for Industrias Bachoco, S.A. de C.V. 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 Industrias Bachoco, S.A. de C.V. at the current share price and the inputted number of shares is $2.5 billion.

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