Intrinsic value of IntriCon Corporation - IIN

Previous Close

$26.02

  Intrinsic Value

$43.70

stock screener

  Rating & Target

str. buy

+68%

Previous close

$26.02

 
Intrinsic value

$43.70

 
Up/down potential

+68%

 
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, %
  41.10
  37.49
  34.24
  31.32
  28.69
  26.32
  24.19
  22.27
  20.54
  18.99
  17.59
  16.33
  15.20
  14.18
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
Revenue, $m
  164
  225
  302
  397
  510
  645
  801
  979
  1,180
  1,404
  1,651
  1,921
  2,213
  2,526
  2,861
  3,217
  3,593
  3,989
  4,405
  4,840
  5,294
  5,768
  6,262
  6,775
  7,309
  7,864
  8,440
  9,040
  9,662
  10,310
Variable operating expenses, $m
  136
  187
  251
  329
  423
  534
  662
  810
  976
  1,161
  1,363
  1,586
  1,827
  2,086
  2,363
  2,656
  2,967
  3,294
  3,637
  3,996
  4,371
  4,763
  5,170
  5,594
  6,035
  6,493
  6,969
  7,464
  7,978
  8,512
Fixed operating expenses, $m
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
Total operating expenses, $m
  148
  200
  264
  342
  436
  548
  676
  824
  991
  1,176
  1,378
  1,602
  1,843
  2,102
  2,380
  2,673
  2,984
  3,312
  3,655
  4,015
  4,390
  4,782
  5,190
  5,614
  6,056
  6,514
  6,991
  7,486
  8,001
  8,535
Operating income, $m
  15
  26
  39
  55
  74
  98
  124
  155
  190
  229
  273
  319
  370
  424
  482
  544
  609
  678
  750
  825
  904
  986
  1,072
  1,161
  1,254
  1,350
  1,450
  1,554
  1,662
  1,774
EBITDA, $m
  19
  31
  45
  63
  85
  110
  140
  174
  212
  255
  302
  354
  410
  470
  534
  602
  674
  749
  829
  912
  999
  1,090
  1,184
  1,283
  1,385
  1,491
  1,601
  1,716
  1,835
  1,959
Interest expense (income), $m
  1
  0
  1
  1
  2
  3
  4
  6
  7
  9
  12
  14
  17
  20
  23
  26
  30
  34
  38
  42
  47
  52
  57
  62
  67
  73
  79
  85
  91
  98
  104
Earnings before tax, $m
  15
  25
  37
  53
  71
  93
  119
  148
  181
  217
  259
  303
  350
  401
  456
  514
  575
  640
  707
  778
  852
  930
  1,010
  1,094
  1,181
  1,271
  1,365
  1,463
  1,564
  1,670
Tax expense, $m
  4
  7
  10
  14
  19
  25
  32
  40
  49
  59
  70
  82
  95
  108
  123
  139
  155
  173
  191
  210
  230
  251
  273
  295
  319
  343
  369
  395
  422
  451
Net income, $m
  11
  18
  27
  39
  52
  68
  87
  108
  132
  158
  189
  221
  256
  293
  333
  375
  420
  467
  516
  568
  622
  679
  737
  798
  862
  928
  997
  1,068
  1,142
  1,219

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
  128
  176
  236
  310
  399
  505
  627
  766
  923
  1,099
  1,292
  1,503
  1,731
  1,977
  2,239
  2,517
  2,812
  3,121
  3,447
  3,787
  4,143
  4,513
  4,900
  5,301
  5,719
  6,153
  6,604
  7,073
  7,561
  8,067
Adjusted assets (=assets-cash), $m
  128
  176
  236
  310
  399
  505
  627
  766
  923
  1,099
  1,292
  1,503
  1,731
  1,977
  2,239
  2,517
  2,812
  3,121
  3,447
  3,787
  4,143
  4,513
  4,900
  5,301
  5,719
  6,153
  6,604
  7,073
  7,561
  8,067
Revenue / Adjusted assets
  1.281
  1.278
  1.280
  1.281
  1.278
  1.277
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
Average production assets, $m
  23
  32
  42
  56
  71
  90
  112
  137
  165
  197
  231
  269
  310
  354
  401
  450
  503
  558
  617
  678
  741
  808
  877
  949
  1,023
  1,101
  1,182
  1,266
  1,353
  1,443
Working capital, $m
  24
  32
  44
  57
  74
  93
  115
  141
  170
  202
  238
  277
  319
  364
  412
  463
  517
  574
  634
  697
  762
  831
  902
  976
  1,052
  1,132
  1,215
  1,302
  1,391
  1,485
Total debt, $m
  10
  22
  37
  56
  78
  105
  136
  172
  212
  256
  305
  359
  417
  479
  546
  616
  691
  770
  852
  939
  1,029
  1,123
  1,221
  1,324
  1,430
  1,540
  1,654
  1,774
  1,897
  2,026
Total liabilities, $m
  33
  45
  60
  79
  101
  128
  159
  195
  235
  279
  328
  382
  440
  502
  569
  639
  714
  793
  875
  962
  1,052
  1,146
  1,244
  1,347
  1,453
  1,563
  1,678
  1,797
  1,920
  2,049
Total equity, $m
  96
  131
  176
  232
  298
  376
  467
  572
  689
  820
  964
  1,121
  1,292
  1,475
  1,670
  1,878
  2,097
  2,329
  2,571
  2,825
  3,090
  3,367
  3,655
  3,955
  4,266
  4,590
  4,927
  5,277
  5,640
  6,018
Total liabilities and equity, $m
  129
  176
  236
  311
  399
  504
  626
  767
  924
  1,099
  1,292
  1,503
  1,732
  1,977
  2,239
  2,517
  2,811
  3,122
  3,446
  3,787
  4,142
  4,513
  4,899
  5,302
  5,719
  6,153
  6,605
  7,074
  7,560
  8,067
Debt-to-equity ratio
  0.100
  0.170
  0.210
  0.240
  0.260
  0.280
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
Adjusted equity ratio
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746
  0.746

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  18
  27
  39
  52
  68
  87
  108
  132
  158
  189
  221
  256
  293
  333
  375
  420
  467
  516
  568
  622
  679
  737
  798
  862
  928
  997
  1,068
  1,142
  1,219
Depreciation, amort., depletion, $m
  4
  5
  7
  8
  10
  13
  16
  19
  22
  26
  30
  34
  40
  45
  51
  58
  64
  72
  79
  87
  95
  104
  112
  122
  131
  141
  151
  162
  173
  185
Funds from operations, $m
  15
  23
  34
  47
  62
  81
  102
  127
  154
  185
  218
  255
  295
  338
  384
  433
  484
  539
  596
  655
  717
  782
  850
  920
  993
  1,069
  1,148
  1,230
  1,315
  1,404
Change in working capital, $m
  7
  9
  11
  14
  16
  19
  22
  26
  29
  32
  36
  39
  42
  45
  48
  51
  54
  57
  60
  63
  65
  68
  71
  74
  77
  80
  83
  86
  90
  93
Cash from operations, $m
  8
  15
  23
  33
  46
  61
  80
  101
  125
  153
  183
  216
  253
  293
  336
  382
  430
  482
  536
  592
  652
  714
  779
  846
  916
  989
  1,065
  1,144
  1,226
  1,311
Maintenance CAPEX, $m
  -2
  -3
  -4
  -5
  -7
  -9
  -12
  -14
  -18
  -21
  -25
  -30
  -34
  -40
  -45
  -51
  -58
  -64
  -72
  -79
  -87
  -95
  -104
  -112
  -122
  -131
  -141
  -151
  -162
  -173
New CAPEX, $m
  -7
  -9
  -11
  -13
  -16
  -19
  -22
  -25
  -28
  -31
  -35
  -38
  -41
  -44
  -47
  -50
  -53
  -55
  -58
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -87
  -91
Cash from investing activities, $m
  -9
  -12
  -15
  -18
  -23
  -28
  -34
  -39
  -46
  -52
  -60
  -68
  -75
  -84
  -92
  -101
  -111
  -119
  -130
  -140
  -151
  -161
  -173
  -184
  -197
  -209
  -222
  -235
  -249
  -264
Free cash flow, $m
  -1
  3
  8
  15
  23
  34
  46
  62
  79
  100
  123
  149
  178
  209
  244
  280
  320
  362
  406
  452
  501
  553
  606
  662
  720
  780
  843
  909
  976
  1,047
Issuance/(repayment) of debt, $m
  10
  12
  15
  19
  23
  27
  31
  35
  40
  45
  49
  54
  58
  62
  67
  71
  75
  79
  83
  86
  90
  94
  98
  102
  106
  110
  115
  119
  124
  129
Issuance/(repurchase) of shares, $m
  17
  18
  18
  17
  14
  10
  4
  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  
  27
  30
  33
  36
  37
  37
  35
  35
  40
  45
  49
  54
  58
  62
  67
  71
  75
  79
  83
  86
  90
  94
  98
  102
  106
  110
  115
  119
  124
  129
Total cash flow (excl. dividends), $m
  26
  33
  41
  50
  60
  71
  82
  97
  119
  145
  172
  203
  236
  272
  310
  351
  395
  440
  488
  539
  592
  647
  704
  764
  826
  891
  958
  1,028
  1,100
  1,176
Retained Cash Flow (-), $m
  -28
  -36
  -45
  -55
  -66
  -78
  -91
  -104
  -117
  -131
  -144
  -157
  -170
  -183
  -196
  -208
  -220
  -231
  -243
  -254
  -265
  -277
  -288
  -300
  -312
  -324
  -337
  -350
  -364
  -378
Prev. year cash balance distribution, $m
  24
  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
  22
  -3
  -4
  -5
  -6
  -8
  -9
  -7
  2
  14
  28
  45
  66
  89
  115
  144
  175
  209
  246
  285
  326
  370
  416
  464
  514
  567
  621
  678
  737
  798
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
  22
  -3
  -3
  -4
  -5
  -6
  -6
  -4
  1
  7
  13
  19
  25
  30
  34
  36
  38
  39
  38
  36
  34
  31
  27
  24
  20
  17
  13
  10
  8
  6
Current shareholders' claim on cash, %
  90.8
  84.4
  80.0
  77.1
  75.2
  74.1
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7

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 Corporation (IIN)

Valuation Ratios
P/E Ratio -35.5
Price to Sales 2.6
Price to Book 9.3
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -88.7
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 $116 million for the last fiscal year's total revenue generated by IntriCon Corporation. The default revenue input number comes from 0001 income statement of IntriCon Corporation. 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 41.1% 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 IIN is calculated based on our internal credit rating of IntriCon Corporation, 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 Corporation.
    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 83.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12 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 5.5% for IntriCon Corporation.

Corporate tax rate of 27% is the nominal tax rate for IntriCon Corporation. 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 14%.

Life of production assets of 7.8 years is the average useful life of capital assets used in IntriCon Corporation 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 14.4%. 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 - $92.227 million for IntriCon Corporation - 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 8.664 million for IntriCon Corporation 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 Corporation at the current share price and the inputted number of shares is $0.2 billion.

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