Intrinsic value of IntriCon - IIN

Previous Close

$58.55

  Intrinsic Value

$70.15

stock screener

  Rating & Target

hold

+20%

Previous close

$58.55

 
Intrinsic value

$70.15

 
Up/down potential

+20%

 
Rating

hold

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 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 0.4

 

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, %
  29.90
  27.41
  25.17
  23.15
  21.34
  19.70
  18.23
  16.91
  15.72
  14.65
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
Revenue, $m
  114
  146
  182
  225
  272
  326
  386
  451
  522
  598
  680
  767
  859
  957
  1,059
  1,166
  1,278
  1,395
  1,517
  1,644
  1,776
  1,913
  2,056
  2,204
  2,358
  2,518
  2,684
  2,857
  3,037
  3,225
Variable operating expenses, $m
  93
  118
  147
  181
  219
  262
  309
  362
  418
  479
  543
  613
  687
  764
  846
  932
  1,021
  1,115
  1,212
  1,314
  1,419
  1,529
  1,643
  1,761
  1,884
  2,012
  2,145
  2,283
  2,427
  2,577
Fixed operating expenses, $m
  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
  28
  28
  29
Total operating expenses, $m
  108
  134
  163
  197
  236
  279
  326
  380
  436
  498
  562
  632
  707
  784
  867
  953
  1,043
  1,137
  1,235
  1,337
  1,443
  1,553
  1,668
  1,786
  1,910
  2,038
  2,172
  2,311
  2,455
  2,606
Operating income, $m
  6
  12
  19
  27
  37
  47
  59
  71
  85
  100
  118
  135
  153
  172
  192
  213
  235
  258
  282
  307
  333
  360
  388
  417
  448
  479
  512
  546
  582
  619
EBITDA, $m
  10
  17
  25
  34
  44
  56
  69
  83
  99
  115
  133
  152
  173
  194
  216
  240
  265
  290
  317
  345
  374
  404
  436
  468
  502
  538
  574
  612
  652
  694
Interest expense (income), $m
  1
  1
  1
  2
  3
  4
  5
  6
  7
  9
  11
  12
  14
  16
  18
  20
  23
  25
  28
  30
  33
  36
  39
  42
  45
  49
  52
  56
  60
  63
  68
Earnings before tax, $m
  6
  11
  17
  24
  33
  42
  52
  64
  76
  90
  105
  120
  137
  154
  172
  190
  210
  230
  252
  274
  297
  321
  346
  372
  399
  427
  456
  487
  519
  552
Tax expense, $m
  1
  3
  5
  7
  9
  11
  14
  17
  21
  24
  28
  33
  37
  41
  46
  51
  57
  62
  68
  74
  80
  87
  93
  100
  108
  115
  123
  131
  140
  149
Net income, $m
  4
  8
  13
  18
  24
  31
  38
  47
  56
  65
  77
  88
  100
  112
  125
  139
  153
  168
  184
  200
  217
  234
  253
  272
  291
  312
  333
  355
  379
  403

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
  69
  88
  110
  135
  164
  196
  232
  272
  314
  360
  410
  462
  518
  576
  638
  702
  770
  840
  914
  990
  1,070
  1,152
  1,238
  1,328
  1,420
  1,517
  1,617
  1,721
  1,830
  1,943
Adjusted assets (=assets-cash), $m
  69
  88
  110
  135
  164
  196
  232
  272
  314
  360
  410
  462
  518
  576
  638
  702
  770
  840
  914
  990
  1,070
  1,152
  1,238
  1,328
  1,420
  1,517
  1,617
  1,721
  1,830
  1,943
Revenue / Adjusted assets
  1.652
  1.659
  1.655
  1.667
  1.659
  1.663
  1.664
  1.658
  1.662
  1.661
  1.659
  1.660
  1.658
  1.661
  1.660
  1.661
  1.660
  1.661
  1.660
  1.661
  1.660
  1.661
  1.661
  1.660
  1.661
  1.660
  1.660
  1.660
  1.660
  1.660
Average production assets, $m
  26
  34
  42
  52
  63
  75
  89
  104
  120
  138
  157
  177
  198
  221
  245
  269
  295
  322
  350
  380
  410
  442
  475
  509
  545
  582
  620
  660
  702
  745
Working capital, $m
  6
  8
  10
  13
  15
  18
  22
  25
  29
  33
  38
  43
  48
  54
  59
  65
  72
  78
  85
  92
  99
  107
  115
  123
  132
  141
  150
  160
  170
  181
Total debt, $m
  21
  32
  46
  61
  79
  98
  120
  144
  170
  198
  228
  260
  293
  329
  366
  406
  447
  489
  534
  580
  629
  679
  731
  785
  841
  900
  961
  1,024
  1,090
  1,158
Total liabilities, $m
  42
  53
  67
  82
  100
  119
  141
  165
  191
  219
  249
  280
  314
  350
  387
  426
  467
  510
  555
  601
  649
  700
  752
  806
  862
  921
  981
  1,045
  1,111
  1,179
Total equity, $m
  27
  34
  43
  53
  64
  77
  91
  107
  123
  142
  161
  182
  203
  226
  251
  276
  303
  330
  359
  389
  420
  453
  487
  522
  558
  596
  635
  676
  719
  763
Total liabilities and equity, $m
  69
  87
  110
  135
  164
  196
  232
  272
  314
  361
  410
  462
  517
  576
  638
  702
  770
  840
  914
  990
  1,069
  1,153
  1,239
  1,328
  1,420
  1,517
  1,616
  1,721
  1,830
  1,942
Debt-to-equity ratio
  0.780
  0.940
  1.060
  1.150
  1.220
  1.270
  1.320
  1.350
  1.380
  1.400
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.480
  1.490
  1.490
  1.500
  1.500
  1.500
  1.500
  1.510
  1.510
  1.510
  1.510
  1.520
  1.520
Adjusted equity ratio
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  8
  13
  18
  24
  31
  38
  47
  56
  65
  77
  88
  100
  112
  125
  139
  153
  168
  184
  200
  217
  234
  253
  272
  291
  312
  333
  355
  379
  403
Depreciation, amort., depletion, $m
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  27
  30
  32
  35
  38
  41
  44
  47
  51
  54
  58
  62
  66
  70
  74
Funds from operations, $m
  8
  13
  18
  24
  32
  40
  49
  58
  69
  81
  93
  106
  120
  134
  150
  166
  183
  200
  219
  238
  258
  279
  300
  323
  346
  370
  395
  421
  449
  477
Change in working capital, $m
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
Cash from operations, $m
  7
  11
  16
  22
  29
  37
  45
  55
  65
  76
  88
  101
  114
  129
  144
  160
  177
  194
  212
  231
  251
  271
  292
  314
  337
  361
  386
  412
  439
  467
Maintenance CAPEX, $m
  -2
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -27
  -30
  -32
  -35
  -38
  -41
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
New CAPEX, $m
  -6
  -7
  -8
  -10
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -38
  -40
  -42
  -43
Cash from investing activities, $m
  -8
  -10
  -11
  -14
  -16
  -18
  -22
  -24
  -26
  -30
  -33
  -36
  -39
  -42
  -46
  -49
  -53
  -57
  -60
  -64
  -68
  -73
  -77
  -81
  -87
  -91
  -96
  -102
  -108
  -113
Free cash flow, $m
  -1
  1
  4
  8
  13
  18
  24
  31
  38
  47
  55
  65
  75
  86
  98
  111
  124
  137
  152
  167
  182
  198
  215
  233
  251
  270
  289
  310
  331
  353
Issuance/(repayment) of debt, $m
  10
  11
  13
  15
  18
  20
  22
  24
  26
  28
  30
  32
  34
  36
  37
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
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  
  12
  11
  13
  15
  18
  20
  22
  24
  26
  28
  30
  32
  34
  36
  37
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
Total cash flow (excl. dividends), $m
  10
  13
  18
  24
  30
  38
  46
  55
  64
  75
  85
  97
  109
  122
  136
  150
  165
  180
  196
  213
  230
  248
  267
  287
  307
  328
  350
  373
  397
  422
Retained Cash Flow (-), $m
  -6
  -7
  -9
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -44
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
  1
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  30
Cash available for distribution, $m
  4
  5
  9
  14
  19
  25
  32
  39
  47
  56
  66
  76
  87
  99
  111
  124
  138
  152
  167
  183
  199
  216
  233
  252
  271
  290
  311
  332
  354
  377
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  4
  5
  8
  11
  14
  17
  20
  23
  26
  28
  29
  30
  30
  29
  29
  27
  25
  23
  21
  19
  16
  14
  11
  9
  7
  6
  4
  3
  2
  2
Current shareholders' claim on cash, %
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0

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 -79.9
Price to Sales 5.9
Price to Book 21
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -199.7
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 million for the last fiscal year's total revenue generated by IntriCon. The default revenue input number comes from 2017 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 29.9% 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 4.8%, 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 81.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15 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 1%.

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 23.1%.

Life of production assets of 10 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 5.6%. 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 - $21 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 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 $0.4 billion.

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COMPANY NEWS

▶ 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]
▶ Royal Bank of Scotland in Fridays 52-Week Low Club   [Jul-01-16 04:04PM  at 24/7 Wall St.]
▶ IntriCon Reports Preliminary Second-Quarter Results   [Jun-30-16 04:05PM  Business Wire]
▶ IntriCon Prices Common Stock Offering   [May-13-16 09:16AM  Business Wire]
▶ IntriCon Reports 2016 First-Quarter Results   [04:05PM  Business Wire]
▶ IntriCon Amends Credit Facilities   [04:01PM  Business Wire]
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