Intrinsic value of Ingredion Incorporated - INGR

Previous Close

$81.00

  Intrinsic Value

$92.39

stock screener

  Rating & Target

hold

+14%

Previous close

$81.00

 
Intrinsic value

$92.39

 
Up/down potential

+14%

 
Rating

hold

We calculate the intrinsic value of INGR 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 5.4

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  5,958
  6,095
  6,251
  6,427
  6,622
  6,836
  7,069
  7,321
  7,592
  7,884
  8,195
  8,528
  8,882
  9,259
  9,658
  10,081
  10,529
  11,003
  11,504
  12,032
  12,590
  13,178
  13,798
  14,451
  15,139
  15,864
  16,626
  17,428
  18,272
  19,160
Variable operating expenses, $m
  5,121
  5,236
  5,367
  5,515
  5,678
  5,858
  6,053
  6,264
  6,492
  6,736
  6,873
  7,151
  7,448
  7,764
  8,099
  8,454
  8,830
  9,227
  9,647
  10,090
  10,558
  11,051
  11,571
  12,119
  12,695
  13,303
  13,942
  14,615
  15,323
  16,067
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
  5,121
  5,236
  5,367
  5,515
  5,678
  5,858
  6,053
  6,264
  6,492
  6,736
  6,873
  7,151
  7,448
  7,764
  8,099
  8,454
  8,830
  9,227
  9,647
  10,090
  10,558
  11,051
  11,571
  12,119
  12,695
  13,303
  13,942
  14,615
  15,323
  16,067
Operating income, $m
  837
  859
  884
  912
  944
  978
  1,016
  1,057
  1,100
  1,147
  1,323
  1,377
  1,434
  1,494
  1,559
  1,627
  1,700
  1,776
  1,857
  1,942
  2,032
  2,127
  2,227
  2,333
  2,444
  2,561
  2,684
  2,813
  2,949
  3,093
EBITDA, $m
  1,167
  1,194
  1,225
  1,259
  1,298
  1,340
  1,385
  1,435
  1,488
  1,545
  1,606
  1,671
  1,741
  1,814
  1,893
  1,975
  2,063
  2,156
  2,254
  2,358
  2,467
  2,582
  2,704
  2,832
  2,967
  3,109
  3,258
  3,415
  3,581
  3,755
Interest expense (income), $m
  59
  113
  117
  121
  126
  131
  137
  144
  151
  159
  167
  176
  186
  196
  207
  219
  231
  244
  258
  273
  288
  304
  322
  340
  359
  379
  400
  423
  446
  471
  497
Earnings before tax, $m
  723
  742
  763
  786
  812
  841
  872
  905
  941
  980
  1,147
  1,191
  1,237
  1,287
  1,340
  1,396
  1,455
  1,518
  1,584
  1,654
  1,728
  1,806
  1,887
  1,974
  2,065
  2,160
  2,261
  2,367
  2,479
  2,596
Tax expense, $m
  195
  200
  206
  212
  219
  227
  235
  244
  254
  265
  310
  321
  334
  348
  362
  377
  393
  410
  428
  447
  467
  487
  510
  533
  557
  583
  610
  639
  669
  701
Net income, $m
  528
  542
  557
  574
  593
  614
  636
  661
  687
  715
  837
  869
  903
  940
  978
  1,019
  1,062
  1,108
  1,156
  1,207
  1,261
  1,318
  1,378
  1,441
  1,507
  1,577
  1,651
  1,728
  1,809
  1,895

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
  5,841
  5,975
  6,129
  6,301
  6,492
  6,702
  6,930
  7,177
  7,443
  7,729
  8,035
  8,361
  8,708
  9,077
  9,469
  9,884
  10,323
  10,787
  11,278
  11,796
  12,343
  12,920
  13,527
  14,168
  14,842
  15,552
  16,300
  17,087
  17,914
  18,784
Adjusted assets (=assets-cash), $m
  5,841
  5,975
  6,129
  6,301
  6,492
  6,702
  6,930
  7,177
  7,443
  7,729
  8,035
  8,361
  8,708
  9,077
  9,469
  9,884
  10,323
  10,787
  11,278
  11,796
  12,343
  12,920
  13,527
  14,168
  14,842
  15,552
  16,300
  17,087
  17,914
  18,784
Revenue / Adjusted assets
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
Average production assets, $m
  2,901
  2,968
  3,044
  3,130
  3,225
  3,329
  3,443
  3,565
  3,697
  3,839
  3,991
  4,153
  4,326
  4,509
  4,703
  4,910
  5,128
  5,358
  5,602
  5,860
  6,131
  6,418
  6,720
  7,038
  7,373
  7,726
  8,097
  8,488
  8,899
  9,331
Working capital, $m
  1,049
  1,073
  1,100
  1,131
  1,166
  1,203
  1,244
  1,288
  1,336
  1,388
  1,442
  1,501
  1,563
  1,630
  1,700
  1,774
  1,853
  1,937
  2,025
  2,118
  2,216
  2,319
  2,428
  2,543
  2,664
  2,792
  2,926
  3,067
  3,216
  3,372
Total debt, $m
  2,165
  2,244
  2,333
  2,434
  2,545
  2,667
  2,800
  2,944
  3,100
  3,266
  3,444
  3,634
  3,837
  4,052
  4,280
  4,522
  4,778
  5,049
  5,335
  5,637
  5,956
  6,292
  6,647
  7,020
  7,413
  7,827
  8,263
  8,721
  9,204
  9,711
Total liabilities, $m
  3,405
  3,484
  3,573
  3,674
  3,785
  3,907
  4,040
  4,184
  4,340
  4,506
  4,684
  4,874
  5,077
  5,292
  5,520
  5,762
  6,018
  6,289
  6,575
  6,877
  7,196
  7,532
  7,887
  8,260
  8,653
  9,067
  9,503
  9,961
  10,444
  10,951
Total equity, $m
  2,436
  2,492
  2,556
  2,628
  2,707
  2,795
  2,890
  2,993
  3,104
  3,223
  3,350
  3,486
  3,631
  3,785
  3,948
  4,121
  4,305
  4,498
  4,703
  4,919
  5,147
  5,387
  5,641
  5,908
  6,189
  6,485
  6,797
  7,125
  7,470
  7,833
Total liabilities and equity, $m
  5,841
  5,976
  6,129
  6,302
  6,492
  6,702
  6,930
  7,177
  7,444
  7,729
  8,034
  8,360
  8,708
  9,077
  9,468
  9,883
  10,323
  10,787
  11,278
  11,796
  12,343
  12,919
  13,528
  14,168
  14,842
  15,552
  16,300
  17,086
  17,914
  18,784
Debt-to-equity ratio
  0.890
  0.900
  0.910
  0.930
  0.940
  0.950
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.060
  1.070
  1.080
  1.100
  1.110
  1.120
  1.130
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.210
  1.220
  1.220
  1.230
  1.240
Adjusted equity ratio
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  528
  542
  557
  574
  593
  614
  636
  661
  687
  715
  837
  869
  903
  940
  978
  1,019
  1,062
  1,108
  1,156
  1,207
  1,261
  1,318
  1,378
  1,441
  1,507
  1,577
  1,651
  1,728
  1,809
  1,895
Depreciation, amort., depletion, $m
  331
  336
  341
  347
  354
  361
  369
  378
  387
  397
  283
  295
  307
  320
  334
  348
  364
  380
  397
  416
  435
  455
  477
  499
  523
  548
  574
  602
  631
  662
Funds from operations, $m
  859
  877
  898
  921
  947
  975
  1,006
  1,039
  1,075
  1,113
  1,120
  1,164
  1,210
  1,260
  1,312
  1,367
  1,426
  1,488
  1,554
  1,623
  1,696
  1,773
  1,854
  1,940
  2,030
  2,125
  2,225
  2,330
  2,440
  2,557
Change in working capital, $m
  21
  24
  28
  31
  34
  38
  41
  44
  48
  51
  55
  59
  62
  66
  70
  74
  79
  83
  88
  93
  98
  104
  109
  115
  121
  127
  134
  141
  149
  156
Cash from operations, $m
  838
  853
  870
  890
  913
  937
  965
  995
  1,027
  1,062
  1,065
  1,105
  1,148
  1,193
  1,242
  1,293
  1,347
  1,405
  1,466
  1,530
  1,598
  1,670
  1,745
  1,825
  1,909
  1,997
  2,091
  2,189
  2,292
  2,400
Maintenance CAPEX, $m
  -202
  -206
  -211
  -216
  -222
  -229
  -236
  -244
  -253
  -262
  -272
  -283
  -295
  -307
  -320
  -334
  -348
  -364
  -380
  -397
  -416
  -435
  -455
  -477
  -499
  -523
  -548
  -574
  -602
  -631
New CAPEX, $m
  -57
  -67
  -76
  -86
  -95
  -104
  -113
  -123
  -132
  -142
  -152
  -162
  -172
  -183
  -195
  -206
  -218
  -231
  -244
  -257
  -272
  -286
  -302
  -318
  -335
  -353
  -371
  -391
  -411
  -432
Cash from investing activities, $m
  -259
  -273
  -287
  -302
  -317
  -333
  -349
  -367
  -385
  -404
  -424
  -445
  -467
  -490
  -515
  -540
  -566
  -595
  -624
  -654
  -688
  -721
  -757
  -795
  -834
  -876
  -919
  -965
  -1,013
  -1,063
Free cash flow, $m
  579
  580
  584
  589
  596
  605
  615
  628
  642
  657
  641
  660
  681
  703
  727
  753
  781
  810
  842
  875
  911
  948
  988
  1,030
  1,075
  1,122
  1,171
  1,224
  1,279
  1,337
Issuance/(repayment) of debt, $m
  65
  78
  90
  101
  111
  122
  133
  144
  155
  167
  178
  190
  202
  215
  228
  242
  256
  271
  286
  302
  319
  336
  354
  373
  393
  414
  436
  459
  482
  507
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  65
  78
  90
  101
  111
  122
  133
  144
  155
  167
  178
  190
  202
  215
  228
  242
  256
  271
  286
  302
  319
  336
  354
  373
  393
  414
  436
  459
  482
  507
Total cash flow (excl. dividends), $m
  645
  659
  673
  689
  707
  727
  748
  772
  797
  824
  819
  850
  883
  918
  956
  995
  1,037
  1,081
  1,128
  1,177
  1,230
  1,285
  1,343
  1,404
  1,468
  1,536
  1,607
  1,682
  1,761
  1,844
Retained Cash Flow (-), $m
  -48
  -56
  -64
  -72
  -80
  -87
  -95
  -103
  -111
  -119
  -127
  -136
  -145
  -154
  -163
  -173
  -183
  -194
  -205
  -216
  -228
  -240
  -253
  -267
  -281
  -296
  -312
  -328
  -345
  -363
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
  597
  603
  609
  617
  627
  639
  653
  669
  686
  705
  692
  714
  738
  764
  792
  822
  854
  888
  923
  961
  1,002
  1,044
  1,089
  1,137
  1,187
  1,240
  1,295
  1,354
  1,416
  1,481
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  565
  538
  509
  480
  451
  423
  394
  364
  335
  306
  265
  238
  212
  187
  164
  141
  120
  101
  84
  68
  55
  43
  33
  25
  19
  14
  10
  7
  4
  3
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Ingredion Incorporated is an ingredients solutions provider. The Company manufactures and sells sweetener, starches, nutrition ingredients and biomaterial solutions derived from the wet milling and processing of corn and other starch-based materials to a range of industries, both domestically and internationally. It operates through four segments: North America, South America, Asia Pacific, and Europe, Middle East and Africa (EMEA). It turns corn, tapioca, potatoes, and other vegetables and fruits into ingredients and biomaterials for the food, beverage, paper and corrugating, brewing and other industries. Its product line includes animal feed products and edible corn oil. Its sweetener products include glucose syrups, high maltose syrup, high fructose corn syrup (HFCS), caramel color, dextrose, polyols, maltodextrins and glucose and syrup solids. Its starch-based products include both food-grade and industrial starches, and biomaterials. It also offers specialty ingredients.

FINANCIAL RATIOS  of  Ingredion Incorporated (INGR)

Valuation Ratios
P/E Ratio 12.1
Price to Sales 1
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow 12
Growth Rates
Sales Growth Rate 1.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.4%
Cap. Spend. - 3 Yr. Gr. Rate -1%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 72.1%
Total Debt to Equity 76.3%
Interest Coverage 14
Management Effectiveness
Return On Assets 9.7%
Ret/ On Assets - 3 Yr. Avg. 8.6%
Return On Total Capital 11.4%
Ret/ On T. Cap. - 3 Yr. Avg. 10%
Return On Equity 20.6%
Return On Equity - 3 Yr. Avg. 18.2%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 24.6%
Gross Margin - 3 Yr. Avg. 22.1%
EBITDA Margin 17.5%
EBITDA Margin - 3 Yr. Avg. 15.4%
Operating Margin 14.2%
Oper. Margin - 3 Yr. Avg. 12%
Pre-Tax Margin 13%
Pre-Tax Margin - 3 Yr. Avg. 10.9%
Net Profit Margin 8.5%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 33.2%
Eff/ Tax Rate - 3 Yr. Avg. 31.5%
Payout Ratio 29.1%

INGR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INGR stock intrinsic value calculation we used $5841 million for the last fiscal year's total revenue generated by Ingredion Incorporated. The default revenue input number comes from 0001 income statement of Ingredion Incorporated. 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 INGR stock valuation model: a) initial revenue growth rate of 2% 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 5.6%, whose default value for INGR is calculated based on our internal credit rating of Ingredion Incorporated, 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 Ingredion Incorporated.
    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 INGR stock the variable cost ratio is equal to 86%.

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 INGR 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 5.4% for Ingredion Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Ingredion Incorporated. 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 INGR 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 INGR are equal to 48.7%.

Life of production assets of 14.1 years is the average useful life of capital assets used in Ingredion Incorporated 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 INGR is equal to 17.6%. 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 - $2388 million for Ingredion Incorporated - 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 66.709 million for Ingredion Incorporated 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 Ingredion Incorporated at the current share price and the inputted number of shares is $5.4 billion.

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