Intrinsic value of IntriCon - IIN

Previous Close

$29.24

  Intrinsic Value

$81.32

stock screener

  Rating & Target

str. buy

+178%

Previous close

$29.24

 
Intrinsic value

$81.32

 
Up/down potential

+178%

 
Rating

str. buy

We calculate the intrinsic value of IIN 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 0.2

 

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, %
  33.90
  31.01
  28.41
  26.07
  23.96
  22.07
  20.36
  18.82
  17.44
  16.20
  15.08
  14.07
  13.16
  12.35
  11.61
  10.95
  10.36
  9.82
  9.34
  8.90
  8.51
  8.16
  7.85
  7.56
  7.31
  7.07
  6.87
  6.68
  6.51
  6.36
Revenue, $m
  118
  155
  199
  251
  311
  379
  457
  543
  637
  741
  852
  972
  1,100
  1,236
  1,379
  1,530
  1,689
  1,855
  2,028
  2,209
  2,397
  2,592
  2,796
  3,007
  3,227
  3,455
  3,692
  3,939
  4,195
  4,462
Variable operating expenses, $m
  96
  126
  161
  203
  251
  306
  368
  437
  513
  596
  684
  780
  883
  992
  1,107
  1,228
  1,356
  1,489
  1,628
  1,773
  1,924
  2,081
  2,244
  2,414
  2,590
  2,773
  2,963
  3,161
  3,367
  3,582
Fixed operating expenses, $m
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
Total operating expenses, $m
  110
  141
  176
  218
  267
  322
  384
  454
  530
  613
  702
  798
  902
  1,011
  1,126
  1,248
  1,376
  1,510
  1,649
  1,795
  1,946
  2,104
  2,267
  2,438
  2,614
  2,798
  2,988
  3,187
  3,393
  3,609
Operating income, $m
  8
  15
  23
  33
  44
  58
  72
  89
  107
  127
  150
  174
  199
  225
  253
  282
  313
  345
  379
  414
  451
  489
  529
  570
  613
  657
  703
  752
  802
  854
EBITDA, $m
  11
  19
  28
  38
  51
  65
  81
  99
  119
  141
  165
  190
  217
  246
  276
  308
  341
  376
  413
  451
  491
  532
  575
  620
  666
  715
  765
  817
  872
  928
Interest expense (income), $m
  1
  1
  1
  2
  3
  4
  6
  7
  9
  11
  13
  16
  18
  21
  24
  27
  31
  34
  38
  42
  46
  50
  54
  59
  63
  68
  73
  79
  84
  90
  96
Earnings before tax, $m
  7
  13
  21
  30
  40
  52
  65
  80
  96
  114
  135
  155
  177
  201
  226
  252
  279
  308
  337
  369
  401
  435
  470
  507
  544
  584
  625
  668
  712
  758
Tax expense, $m
  2
  4
  6
  8
  11
  14
  18
  22
  26
  31
  36
  42
  48
  54
  61
  68
  75
  83
  91
  100
  108
  117
  127
  137
  147
  158
  169
  180
  192
  205
Net income, $m
  5
  10
  15
  22
  29
  38
  47
  58
  70
  83
  98
  113
  129
  147
  165
  184
  204
  225
  246
  269
  293
  317
  343
  370
  397
  426
  456
  487
  520
  553

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
  73
  96
  123
  155
  192
  235
  283
  336
  395
  459
  528
  602
  681
  765
  854
  948
  1,046
  1,148
  1,256
  1,368
  1,484
  1,605
  1,731
  1,862
  1,998
  2,139
  2,286
  2,439
  2,598
  2,763
Adjusted assets (=assets-cash), $m
  73
  96
  123
  155
  192
  235
  283
  336
  395
  459
  528
  602
  681
  765
  854
  948
  1,046
  1,148
  1,256
  1,368
  1,484
  1,605
  1,731
  1,862
  1,998
  2,139
  2,286
  2,439
  2,598
  2,763
Revenue / Adjusted assets
  1.616
  1.615
  1.618
  1.619
  1.620
  1.613
  1.615
  1.616
  1.613
  1.614
  1.614
  1.615
  1.615
  1.616
  1.615
  1.614
  1.615
  1.616
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
  1.615
Average production assets, $m
  18
  24
  31
  39
  48
  59
  71
  84
  99
  115
  132
  151
  171
  192
  214
  237
  262
  287
  314
  342
  371
  402
  433
  466
  500
  536
  572
  611
  650
  692
Working capital, $m
  13
  18
  23
  29
  35
  43
  52
  62
  73
  84
  97
  111
  125
  141
  157
  174
  193
  211
  231
  252
  273
  296
  319
  343
  368
  394
  421
  449
  478
  509
Total debt, $m
  23
  36
  53
  72
  94
  120
  149
  181
  216
  255
  296
  341
  389
  439
  493
  549
  608
  670
  735
  802
  872
  945
  1,021
  1,099
  1,181
  1,266
  1,355
  1,447
  1,542
  1,642
Total liabilities, $m
  44
  58
  74
  93
  116
  141
  170
  202
  238
  276
  318
  362
  410
  461
  514
  570
  630
  691
  756
  823
  893
  966
  1,042
  1,121
  1,203
  1,288
  1,376
  1,468
  1,564
  1,663
Total equity, $m
  29
  38
  49
  62
  77
  94
  113
  134
  157
  183
  210
  240
  271
  305
  340
  377
  416
  457
  500
  544
  591
  639
  689
  741
  795
  851
  910
  971
  1,034
  1,100
Total liabilities and equity, $m
  73
  96
  123
  155
  193
  235
  283
  336
  395
  459
  528
  602
  681
  766
  854
  947
  1,046
  1,148
  1,256
  1,367
  1,484
  1,605
  1,731
  1,862
  1,998
  2,139
  2,286
  2,439
  2,598
  2,763
Debt-to-equity ratio
  0.780
  0.950
  1.080
  1.170
  1.230
  1.280
  1.320
  1.350
  1.380
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.460
  1.470
  1.470
  1.470
  1.480
  1.480
  1.480
  1.480
  1.490
  1.490
  1.490
  1.490
  1.490
  1.490
Adjusted equity ratio
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  10
  15
  22
  29
  38
  47
  58
  70
  83
  98
  113
  129
  147
  165
  184
  204
  225
  246
  269
  293
  317
  343
  370
  397
  426
  456
  487
  520
  553
Depreciation, amort., depletion, $m
  3
  4
  5
  6
  7
  8
  9
  10
  12
  14
  14
  16
  18
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  70
  74
Funds from operations, $m
  8
  14
  20
  27
  36
  45
  56
  69
  82
  97
  112
  130
  148
  167
  188
  209
  232
  255
  280
  306
  333
  361
  390
  420
  451
  484
  518
  553
  590
  628
Change in working capital, $m
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
Cash from operations, $m
  5
  9
  15
  21
  29
  38
  48
  59
  71
  85
  100
  116
  133
  152
  171
  192
  214
  237
  260
  285
  311
  338
  367
  396
  426
  458
  491
  525
  560
  597
Maintenance CAPEX, $m
  -1
  -2
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -12
  -14
  -16
  -18
  -21
  -23
  -26
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -62
  -66
  -70
New CAPEX, $m
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -41
Cash from investing activities, $m
  -6
  -8
  -10
  -11
  -13
  -16
  -18
  -21
  -24
  -27
  -29
  -33
  -36
  -39
  -43
  -46
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -80
  -84
  -89
  -95
  -100
  -106
  -111
Free cash flow, $m
  -1
  2
  5
  10
  15
  22
  29
  38
  48
  59
  70
  83
  97
  112
  128
  146
  164
  183
  203
  224
  245
  268
  292
  316
  342
  369
  396
  425
  455
  486
Issuance/(repayment) of debt, $m
  11
  14
  16
  19
  22
  26
  29
  32
  35
  38
  42
  45
  48
  51
  53
  56
  59
  62
  65
  67
  70
  73
  76
  79
  82
  85
  88
  92
  96
  99
Issuance/(repurchase) of shares, $m
  2
  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  
  13
  14
  16
  19
  22
  26
  29
  32
  35
  38
  42
  45
  48
  51
  53
  56
  59
  62
  65
  67
  70
  73
  76
  79
  82
  85
  88
  92
  96
  99
Total cash flow (excl. dividends), $m
  13
  15
  22
  29
  38
  47
  58
  70
  83
  97
  112
  128
  145
  163
  182
  202
  223
  245
  267
  291
  315
  341
  368
  395
  424
  454
  485
  517
  551
  586
Retained Cash Flow (-), $m
  -7
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
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
  6
  11
  16
  23
  30
  39
  49
  60
  72
  84
  98
  113
  129
  147
  165
  184
  204
  225
  246
  269
  293
  317
  343
  370
  397
  426
  456
  487
  520
Discount rate, %
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
  5
  6
  9
  13
  17
  21
  25
  28
  31
  33
  35
  36
  36
  36
  35
  33
  31
  28
  25
  22
  19
  16
  13
  10
  8
  6
  5
  3
  2
  2
Current shareholders' claim on cash, %
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9

IntriCon Corporation is engaged in designing, developing, engineering, manufacturing and distributing body-worn devices. The Company operates through body-worn device segment. The Company serves the body-worn device market by designing, developing, engineering and manufacturing micro-miniature products, microelectronics, micro-mechanical assemblies, complete assemblies and software solutions, primarily for the value hearing health market, the medical bio-telemetry market and the professional audio communication market. The Company has facilities in Minnesota, California, Singapore, Indonesia, the United Kingdom and Germany, and operates through its subsidiaries. The Company's product offering includes a hearing aid discount program for health plans. This program is available around the nation to health insurers, including employer-sponsored, individual and Medicare plans. The Company also has various international value hearing aid (VHA) initiatives.

FINANCIAL RATIOS  of  IntriCon (IIN)

Valuation Ratios
P/E Ratio -39.9
Price to Sales 2.9
Price to Book 10.5
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -99.7
Growth Rates
Sales Growth Rate -2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 52.6%
Total Debt to Equity 63.2%
Interest Coverage -2
Management Effectiveness
Return On Assets -9.3%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital -16.7%
Ret/ On T. Cap. - 3 Yr. Avg. -0%
Return On Equity -26.3%
Return On Equity - 3 Yr. Avg. -0.4%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 25%
Gross Margin - 3 Yr. Avg. 26.2%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 4.4%
Operating Margin -2.9%
Oper. Margin - 3 Yr. Avg. 1.9%
Pre-Tax Margin -4.4%
Pre-Tax Margin - 3 Yr. Avg. 1%
Net Profit Margin -7.4%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IIN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IIN stock intrinsic value calculation we used $88.31 million for the last fiscal year's total revenue generated by IntriCon. The default revenue input number comes from 0001 income statement of IntriCon. 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 IIN stock valuation model: a) initial revenue growth rate of 33.9% 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 5.1%, whose default value for IIN is calculated based on our internal credit rating of IntriCon, 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 IntriCon.
    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 IIN stock the variable cost ratio is equal to 81.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $14 million in the base year in the intrinsic value calculation for IIN 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 6.2% for IntriCon.

Corporate tax rate of 27% is the nominal tax rate for IntriCon. 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 IIN 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 IIN are equal to 15.5%.

Life of production assets of 9.3 years is the average useful life of capital assets used in IntriCon 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 IIN is equal to 11.4%. 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 - $21.692 million for IntriCon - 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 7.19 million for IntriCon 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 IntriCon at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Can IntriCon Corporation (NASDAQ:IIN) Improve Its Returns?   [Dec-02-18 08:52AM  Simply Wall St.]
▶ 10 Triple-A Stocks to Buy for the Rest of 2018   [Nov-21-18 11:11AM  InvestorPlace]
▶ IntriCon to Present at Stifel 2018 Healthcare Conference   [Nov-07-18 09:00AM  Business Wire]
▶ IntriCon Reports 2018 Third-Quarter Results   [Nov-05-18 04:05PM  Business Wire]
▶ Micro-manufacturer IntriCon starts thinking bigger   [Sep-27-18 03:37PM  American City Business Journals]
▶ Retailer Breaks Out As This Dow Jones Stock Is A New Emerging Winner   [Aug-17-18 02:45PM  Investor's Business Daily]
▶ IntriCon Reports 2018 Second-Quarter Results   [Jul-25-18 04:05PM  Business Wire]
▶ Will IntriCon (IIN) Continue to Surge Higher?   [Jul-20-18 09:26AM  Zacks]
▶ When Should You Buy IntriCon Corporation (NASDAQ:IIN)?   [Jun-26-18 08:44AM  Simply Wall St.]
▶ IntriCon Reports 2018 First-Quarter Results   [May-07-18 04:05PM  Business Wire]
▶ IntriCon Reports 2017 Fourth-Quarter and Full-Year Results   [Feb-12-18 04:05PM  Business Wire]
▶ OSI Systems (OSIS) Jumps: Stock Rises 5.9%   [Jan-17-18 08:43AM  Zacks]
▶ IntriCon Completes Acquisition of Hearing Help Express   [Dec-18-17 04:15PM  Business Wire]
▶ Intricon Joins Elite List Of Stocks With 95-Plus Composite Rating   [Dec-01-17 03:00AM  Investor's Business Daily]
▶ ETFs with exposure to Intricon Corp. : November 28, 2017   [Nov-28-17 12:26PM  Capital Cube]
▶ IntriCon Reports 2017 Third-Quarter Results   [Nov-06-17 04:05PM  Business Wire]
▶ IntriCon Reports 2017 Second-Quarter Results   [Aug-02-17 04:05PM  Business Wire]
▶ ETFs with exposure to Intricon Corp. : June 26, 2017   [Jun-26-17 04:11PM  Capital Cube]
▶ IntriCon Reports 2017 First-Quarter Results   [Apr-25-17 04:05PM  Business Wire]
▶ IntriCon Reports 2016 Fourth-Quarter Results   [04:05PM  Business Wire]
▶ ETFs with exposure to Intricon Corp. : December 8, 2016   [Dec-08-16 12:39PM  Capital Cube]
▶ IntriCon Reports 2016 Third-Quarter Results   [04:05PM  Business Wire]
▶ IntriCon Reports 2016 Second-Quarter Results   [04:05PM  Business Wire]

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