Intrinsic value of J&J Snack Foods - JJSF

Previous Close

$146.66

  Intrinsic Value

$66.23

stock screener

  Rating & Target

str. sell

-55%

Previous close

$146.66

 
Intrinsic value

$66.23

 
Up/down potential

-55%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of JJSF 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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, %
  9.16
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  1,084
  1,184
  1,288
  1,396
  1,508
  1,625
  1,747
  1,873
  2,005
  2,141
  2,283
  2,431
  2,584
  2,744
  2,910
  3,084
  3,265
  3,453
  3,650
  3,856
  4,070
  4,295
  4,529
  4,774
  5,031
  5,299
  5,580
  5,874
  6,183
  6,505
  6,843
Variable operating expenses, $m
 
  1,049
  1,140
  1,235
  1,334
  1,437
  1,543
  1,654
  1,769
  1,889
  2,014
  2,133
  2,268
  2,408
  2,554
  2,706
  2,865
  3,030
  3,203
  3,383
  3,572
  3,769
  3,974
  4,190
  4,415
  4,650
  4,897
  5,155
  5,425
  5,708
  6,005
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
  966
  1,049
  1,140
  1,235
  1,334
  1,437
  1,543
  1,654
  1,769
  1,889
  2,014
  2,133
  2,268
  2,408
  2,554
  2,706
  2,865
  3,030
  3,203
  3,383
  3,572
  3,769
  3,974
  4,190
  4,415
  4,650
  4,897
  5,155
  5,425
  5,708
  6,005
Operating income, $m
  118
  135
  147
  161
  174
  189
  204
  219
  235
  252
  269
  298
  317
  336
  357
  378
  400
  423
  447
  472
  499
  526
  555
  585
  616
  649
  684
  720
  757
  797
  838
EBITDA, $m
  156
  175
  191
  207
  223
  241
  259
  277
  297
  317
  338
  360
  383
  406
  431
  457
  483
  511
  541
  571
  603
  636
  671
  707
  745
  785
  826
  870
  916
  963
  1,013
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  3
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
Earnings before tax, $m
  122
  135
  147
  159
  173
  186
  200
  215
  231
  246
  263
  291
  308
  327
  347
  367
  388
  410
  433
  457
  482
  508
  536
  564
  594
  626
  658
  693
  729
  766
  806
Tax expense, $m
  43
  36
  40
  43
  47
  50
  54
  58
  62
  67
  71
  78
  83
  88
  94
  99
  105
  111
  117
  123
  130
  137
  145
  152
  160
  169
  178
  187
  197
  207
  218
Net income, $m
  79
  98
  107
  116
  126
  136
  146
  157
  168
  180
  192
  212
  225
  239
  253
  268
  283
  299
  316
  334
  352
  371
  391
  412
  434
  457
  481
  506
  532
  559
  588

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  150
  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
  867
  783
  852
  923
  998
  1,075
  1,155
  1,239
  1,326
  1,416
  1,510
  1,607
  1,709
  1,815
  1,925
  2,040
  2,159
  2,284
  2,414
  2,550
  2,692
  2,840
  2,996
  3,158
  3,327
  3,505
  3,691
  3,885
  4,089
  4,302
  4,526
Adjusted assets (=assets-cash), $m
  717
  783
  852
  923
  998
  1,075
  1,155
  1,239
  1,326
  1,416
  1,510
  1,607
  1,709
  1,815
  1,925
  2,040
  2,159
  2,284
  2,414
  2,550
  2,692
  2,840
  2,996
  3,158
  3,327
  3,505
  3,691
  3,885
  4,089
  4,302
  4,526
Revenue / Adjusted assets
  1.512
  1.512
  1.512
  1.512
  1.511
  1.512
  1.513
  1.512
  1.512
  1.512
  1.512
  1.513
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
  1.512
Average production assets, $m
  258
  282
  306
  332
  359
  387
  416
  446
  477
  510
  543
  578
  615
  653
  693
  734
  777
  822
  869
  918
  969
  1,022
  1,078
  1,136
  1,197
  1,261
  1,328
  1,398
  1,471
  1,548
  1,629
Working capital, $m
  263
  123
  134
  145
  157
  169
  182
  195
  208
  223
  237
  253
  269
  285
  303
  321
  340
  359
  380
  401
  423
  447
  471
  497
  523
  551
  580
  611
  643
  677
  712
Total debt, $m
  1
  18
  36
  54
  73
  93
  114
  136
  158
  181
  206
  231
  257
  284
  313
  342
  373
  405
  439
  474
  511
  549
  589
  631
  674
  720
  768
  818
  871
  926
  984
Total liabilities, $m
  185
  202
  220
  238
  257
  277
  298
  320
  342
  365
  390
  415
  441
  468
  497
  526
  557
  589
  623
  658
  695
  733
  773
  815
  858
  904
  952
  1,002
  1,055
  1,110
  1,168
Total equity, $m
  682
  581
  632
  685
  740
  798
  857
  919
  984
  1,051
  1,120
  1,193
  1,268
  1,347
  1,428
  1,513
  1,602
  1,695
  1,791
  1,892
  1,998
  2,108
  2,223
  2,343
  2,469
  2,601
  2,738
  2,883
  3,034
  3,192
  3,358
Total liabilities and equity, $m
  867
  783
  852
  923
  997
  1,075
  1,155
  1,239
  1,326
  1,416
  1,510
  1,608
  1,709
  1,815
  1,925
  2,039
  2,159
  2,284
  2,414
  2,550
  2,693
  2,841
  2,996
  3,158
  3,327
  3,505
  3,690
  3,885
  4,089
  4,302
  4,526
Debt-to-equity ratio
  0.001
  0.030
  0.060
  0.080
  0.100
  0.120
  0.130
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.260
  0.260
  0.260
  0.270
  0.270
  0.280
  0.280
  0.280
  0.290
  0.290
  0.290
Adjusted equity ratio
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742
  0.742

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  79
  98
  107
  116
  126
  136
  146
  157
  168
  180
  192
  212
  225
  239
  253
  268
  283
  299
  316
  334
  352
  371
  391
  412
  434
  457
  481
  506
  532
  559
  588
Depreciation, amort., depletion, $m
  38
  41
  43
  46
  49
  52
  55
  58
  62
  65
  69
  62
  66
  70
  74
  79
  84
  88
  93
  99
  104
  110
  116
  122
  129
  136
  143
  150
  158
  166
  175
Funds from operations, $m
  117
  139
  150
  162
  175
  188
  201
  215
  230
  245
  261
  274
  291
  309
  327
  347
  367
  388
  409
  432
  456
  481
  507
  534
  563
  592
  623
  656
  690
  726
  763
Change in working capital, $m
  -8
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
  35
Cash from operations, $m
  125
  129
  140
  151
  163
  176
  189
  202
  216
  231
  246
  259
  275
  292
  310
  329
  348
  368
  389
  411
  434
  458
  483
  509
  536
  564
  594
  625
  658
  692
  728
Maintenance CAPEX, $m
  0
  -28
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -55
  -58
  -62
  -66
  -70
  -74
  -79
  -84
  -88
  -93
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -150
  -158
  -166
New CAPEX, $m
  -72
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -80
Cash from investing activities, $m
  -135
  -52
  -55
  -59
  -63
  -67
  -71
  -75
  -79
  -83
  -89
  -93
  -99
  -104
  -110
  -115
  -122
  -129
  -135
  -142
  -150
  -157
  -166
  -174
  -183
  -193
  -203
  -213
  -223
  -235
  -246
Free cash flow, $m
  -10
  77
  85
  92
  101
  109
  118
  127
  137
  147
  157
  165
  177
  188
  200
  213
  226
  240
  254
  269
  284
  300
  317
  334
  353
  372
  392
  413
  434
  457
  481
Issuance/(repayment) of debt, $m
  0
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
Issuance/(repurchase) of shares, $m
  -11
  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  
  -11
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
Total cash flow (excl. dividends), $m
  -19
  94
  102
  111
  120
  129
  139
  149
  159
  170
  182
  191
  203
  216
  229
  243
  257
  272
  287
  304
  321
  338
  357
  376
  396
  418
  440
  463
  487
  512
  539
Retained Cash Flow (-), $m
  -44
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -144
  -151
  -158
  -166
Prev. year cash balance distribution, $m
 
  150
  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
 
  195
  51
  58
  65
  72
  79
  87
  95
  103
  112
  118
  127
  137
  147
  157
  168
  179
  191
  203
  215
  228
  242
  256
  271
  286
  302
  318
  336
  354
  373
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
 
  187
  47
  50
  53
  56
  58
  59
  59
  59
  59
  56
  54
  52
  49
  46
  43
  39
  35
  31
  27
  24
  20
  17
  14
  11
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  100
  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

J & J Snack Foods Corp. is a manufacturer, marketer and distributor of a range of snack foods and beverages for the food service and retail supermarket industries. The Company operates in three business segments: Food Service, Retail Supermarkets and Frozen Beverages. Its portfolio of products includes soft pretzels, frozen beverages, frozen juice treats and desserts, stuffed sandwiches, burritos, churros, fruit pies, funnel cakes, cookies and bakery goods, and other snack foods and drinks. Its principal snack food products are soft pretzels marketed primarily under brand names SUPERPRETZEL and BAVARIAN BAKERY; frozen juice treats and desserts marketed primarily under LUIGI'S, WHOLE FRUIT, ICEE, PHILLY SWIRL and MINUTE MAID brand names; churros marketed primarily under the TIO PEPE'S, CALIFORNIA CHURROS and OREO brand names, and bakery products sold primarily under the READI-BAKE, COUNTRY HOME, MARY B'S and DADDY RAY'S brand names, as well as for private label and contract packing.

FINANCIAL RATIOS  of  J&J Snack Foods (JJSF)

Valuation Ratios
P/E Ratio 34.6
Price to Sales 2.5
Price to Book 4
Price to Tangible Book
Price to Cash Flow 21.9
Price to Free Cash Flow 51.6
Growth Rates
Sales Growth Rate 9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 46.9%
Cap. Spend. - 3 Yr. Gr. Rate 13%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0.1%
Total Debt to Equity 0.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 9.5%
Ret/ On Assets - 3 Yr. Avg. 9.7%
Return On Total Capital 11.9%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 12.1%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 30.5%
Gross Margin - 3 Yr. Avg. 30.7%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 14.9%
Operating Margin 10.9%
Oper. Margin - 3 Yr. Avg. 11.2%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. 11.5%
Net Profit Margin 7.3%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 35.2%
Eff/ Tax Rate - 3 Yr. Avg. 35.9%
Payout Ratio 39.2%

JJSF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JJSF stock intrinsic value calculation we used $1084 million for the last fiscal year's total revenue generated by J&J Snack Foods. The default revenue input number comes from 2017 income statement of J&J Snack Foods. 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 JJSF stock valuation model: a) initial revenue growth rate of 9.2% 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 4.3%, whose default value for JJSF is calculated based on our internal credit rating of J&J Snack Foods, 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 J&J Snack Foods.
    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 JJSF stock the variable cost ratio is equal to 88.7%.

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 JJSF 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 3.5% for J&J Snack Foods.

Corporate tax rate of 27% is the nominal tax rate for J&J Snack Foods. 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 JJSF 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 JJSF are equal to 23.8%.

Life of production assets of 9.3 years is the average useful life of capital assets used in J&J Snack Foods 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 JJSF is equal to 10.4%. 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 - $682 million for J&J Snack Foods - 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 18.705 million for J&J Snack Foods 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 J&J Snack Foods at the current share price and the inputted number of shares is $2.7 billion.

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COMPANY NEWS

▶ Walt Disney Co Leads 5 Dividend Stocks Boosting Payouts   [Dec-04-17 10:42AM  InvestorPlace]
▶ J&J Snack Foods posts 4Q profit   [Nov-09-17 04:53PM  Associated Press]
▶ J & J Snack Foods Schedules Fourth Quarter Conference Call   [Oct-27-17 08:00AM  GlobeNewswire]
▶ J&J Snack Foods posts 3Q profit   [Jul-24-17 09:13PM  Associated Press]
▶ J & J Snack Foods Schedules Third Quarter Conference Call   [Jul-13-17 04:00PM  GlobeNewswire]
▶ J & J Snack Foods Corp. Announces Quarterly Cash Dividend   [Jun-07-17 09:15AM  GlobeNewswire]
▶ ETFs with exposure to J&J Snack Foods Corp. : May 2, 2017   [May-02-17 04:14PM  Capital Cube]
▶ J&J Snack Foods misses 2Q profit forecasts   [Apr-24-17 04:06PM  Associated Press]
▶ J & J Snack Foods Schedules Second Quarter Conference Call   [Apr-12-17 04:00PM  GlobeNewswire]
▶ J&J Snack Foods Introduces Pillsbury® Churro Bites   [Apr-11-17 09:30AM  PR Newswire]
▶ This Sparkling Food Retailer Looks Bright   [Feb-19-17 10:10PM  GuruFocus.com]
Financial statements of JJSF
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