Intrinsic value of Coffee Holding - JVA

Previous Close

$4.40

  Intrinsic Value

$0.95

stock screener

  Rating & Target

str. sell

-78%

Previous close

$4.40

 
Intrinsic value

$0.95

 
Up/down potential

-78%

 
Rating

str. sell

We calculate the intrinsic value of JVA 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 0.0

 

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, %
  24.80
  22.82
  21.04
  19.43
  17.99
  16.69
  15.52
  14.47
  13.52
  12.67
  11.90
  11.21
  10.59
  10.03
  9.53
  9.08
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
Revenue, $m
  96
  118
  143
  171
  202
  235
  272
  311
  353
  398
  445
  495
  548
  603
  660
  720
  783
  848
  915
  985
  1,058
  1,134
  1,213
  1,295
  1,380
  1,469
  1,561
  1,657
  1,757
  1,861
Variable operating expenses, $m
  91
  112
  135
  162
  191
  222
  257
  294
  334
  376
  420
  467
  517
  569
  623
  680
  738
  800
  864
  930
  999
  1,070
  1,145
  1,222
  1,302
  1,386
  1,473
  1,564
  1,658
  1,756
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
  91
  112
  135
  162
  191
  222
  257
  294
  334
  376
  420
  467
  517
  569
  623
  680
  738
  800
  864
  930
  999
  1,070
  1,145
  1,222
  1,302
  1,386
  1,473
  1,564
  1,658
  1,756
Operating income, $m
  5
  6
  8
  9
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  55
  60
  64
  68
  73
  78
  83
  88
  93
  99
  105
EBITDA, $m
  6
  8
  9
  11
  13
  15
  17
  20
  23
  25
  28
  32
  35
  38
  42
  46
  50
  54
  58
  63
  67
  72
  77
  83
  88
  94
  99
  106
  112
  119
Interest expense (income), $m
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
Earnings before tax, $m
  5
  6
  7
  8
  10
  11
  13
  15
  17
  19
  21
  24
  26
  29
  31
  34
  37
  40
  43
  46
  50
  53
  57
  60
  64
  68
  73
  77
  82
  87
Tax expense, $m
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
Net income, $m
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63

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
  50
  61
  74
  89
  105
  122
  141
  162
  184
  207
  231
  257
  285
  313
  343
  374
  407
  440
  475
  512
  550
  589
  630
  673
  717
  763
  811
  861
  913
  967
Adjusted assets (=assets-cash), $m
  50
  61
  74
  89
  105
  122
  141
  162
  184
  207
  231
  257
  285
  313
  343
  374
  407
  440
  475
  512
  550
  589
  630
  673
  717
  763
  811
  861
  913
  967
Revenue / Adjusted assets
  1.920
  1.934
  1.932
  1.921
  1.924
  1.926
  1.929
  1.920
  1.918
  1.923
  1.926
  1.926
  1.923
  1.927
  1.924
  1.925
  1.924
  1.927
  1.926
  1.924
  1.924
  1.925
  1.925
  1.924
  1.925
  1.925
  1.925
  1.925
  1.924
  1.925
Average production assets, $m
  4
  5
  7
  8
  9
  11
  13
  14
  16
  18
  20
  23
  25
  28
  30
  33
  36
  39
  42
  45
  49
  52
  56
  60
  63
  68
  72
  76
  81
  86
Working capital, $m
  33
  40
  49
  58
  69
  80
  93
  106
  121
  136
  152
  169
  187
  206
  226
  246
  268
  290
  313
  337
  362
  388
  415
  443
  472
  502
  534
  567
  601
  637
Total debt, $m
  12
  16
  21
  27
  33
  39
  46
  54
  62
  71
  80
  90
  100
  111
  122
  134
  146
  159
  172
  186
  200
  215
  230
  246
  263
  280
  298
  317
  337
  357
Total liabilities, $m
  19
  23
  28
  33
  39
  46
  53
  61
  69
  78
  87
  97
  107
  118
  129
  141
  153
  166
  179
  192
  207
  222
  237
  253
  270
  287
  305
  324
  343
  364
Total equity, $m
  31
  38
  46
  55
  65
  76
  88
  101
  115
  129
  144
  161
  178
  195
  214
  233
  254
  275
  297
  319
  343
  368
  393
  420
  447
  476
  506
  537
  570
  603
Total liabilities and equity, $m
  50
  61
  74
  88
  104
  122
  141
  162
  184
  207
  231
  258
  285
  313
  343
  374
  407
  441
  476
  511
  550
  590
  630
  673
  717
  763
  811
  861
  913
  967
Debt-to-equity ratio
  0.390
  0.430
  0.460
  0.480
  0.500
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
Funds from operations, $m
  4
  5
  6
  8
  9
  10
  12
  13
  15
  17
  19
  21
  23
  25
  28
  30
  33
  35
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  73
  77
Change in working capital, $m
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
Cash from operations, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  0
  1
  2
  3
  4
  5
  6
  8
  10
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  33
  36
  39
  41
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from investing activities, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
Free cash flow, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -3
  -3
  -2
  -1
  0
  1
  2
  3
  4
  6
  7
  8
  10
  11
  13
  15
  16
  18
  20
  22
  24
Issuance/(repayment) of debt, $m
  4
  4
  5
  5
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
Issuance/(repurchase) of shares, $m
  3
  3
  3
  3
  3
  3
  2
  2
  1
  1
  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  
  7
  7
  8
  8
  9
  10
  9
  10
  9
  10
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
Total cash flow (excl. dividends), $m
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
Retained Cash Flow (-), $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
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
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -8
  -8
  -7
  -7
  -6
  -5
  -4
  -3
  -2
  -1
  0
  1
  2
  4
  5
  6
  7
  9
  10
Discount rate, %
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  89.7
  82.0
  75.9
  71.2
  67.6
  64.9
  62.8
  61.4
  60.5
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1

Coffee Holding Co., Inc. is a wholesale coffee roaster and dealer in the United States. The Company is engaged in manufacturing, roasting, packaging, marketing and distributing roasted and blended coffees for private labeled accounts and its own brands, and it sells green coffee. The Company's products can be divided into three categories: Wholesale Green Coffee, Private Label Coffee and Branded Coffee. Wholesale Green Coffee includes unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators. Private Label Coffee includes coffee roasted, blended, packaged and sold under the specifications and names of others, including supermarkets. Branded Coffee includes coffee roasted and blended to its own specifications. Its private label and branded coffee products are sold throughout the United States, Canada and certain countries in Asia. As of October 31, 2016, its unprocessed green coffee included over 90 specialty coffee offerings.

FINANCIAL RATIOS  of  Coffee Holding (JVA)

Valuation Ratios
P/E Ratio 12.9
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow 12.9
Price to Free Cash Flow 25.8
Growth Rates
Sales Growth Rate -33.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 28%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.6%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 6.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.4%
Return On Equity 8.2%
Return On Equity - 3 Yr. Avg. 8.3%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 15.2%
Gross Margin - 3 Yr. Avg. 11.7%
EBITDA Margin 6.3%
EBITDA Margin - 3 Yr. Avg. 4.6%
Operating Margin 5.1%
Oper. Margin - 3 Yr. Avg. 3.6%
Pre-Tax Margin 5.1%
Pre-Tax Margin - 3 Yr. Avg. 3.6%
Net Profit Margin 2.5%
Net Profit Margin - 3 Yr. Avg. 2.1%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 45.8%
Payout Ratio 0%

JVA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JVA stock intrinsic value calculation we used $77.127595 million for the last fiscal year's total revenue generated by Coffee Holding. The default revenue input number comes from 0001 income statement of Coffee Holding. 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 JVA stock valuation model: a) initial revenue growth rate of 24.8% 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 5.3%, whose default value for JVA is calculated based on our internal credit rating of Coffee Holding, 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 Coffee Holding.
    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 JVA stock the variable cost ratio is equal to 94.8%.

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 JVA 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 Coffee Holding.

Corporate tax rate of 27% is the nominal tax rate for Coffee Holding. 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 JVA 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 JVA are equal to 4.6%.

Life of production assets of 6.2 years is the average useful life of capital assets used in Coffee Holding 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 JVA is equal to 34.2%. 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 - $24.951549 million for Coffee Holding - 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 5.702 million for Coffee Holding 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 Coffee Holding at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ What Is Coffee Holding Co Incs (NASDAQ:JVA) Share Price Doing?   [Oct-14-18 09:27AM  Simply Wall St.]
▶ Who Owns Coffee Holding Co Inc (NASDAQ:JVA)?   [Aug-26-18 10:09AM  Simply Wall St.]
▶ Illy Chairman: Climate change is the biggest risk to business   [Jun-19-18 03:41PM  Yahoo Finance Video]
▶ Should You Buy Coffee Holding Co Inc. (NASDAQ:JVA)?   [Mar-07-18 06:35PM  Simply Wall St.]
▶ Coffee Holding Co., Inc. Reports Year End Results   [Jan-29-18 04:35PM  GlobeNewswire]
▶ Does Coffee Holding Co Incs (JVA) PE Ratio Warrant A Buy?   [Sep-12-17 05:01PM  Simply Wall St.]
▶ How to Trade the Move in Coffee (JO, SBUX)   [May-08-17 08:10AM  Investopedia]
▶ Coffee Holding Co., Inc. Acquires Comfort Foods Inc.   [Feb-24-17 09:00AM  Marketwired]
▶ Coffee Holding Co., Inc. Reports Year End Results   [Jan-26-16 09:19AM  at noodls]
▶ 4 Best Coffee Stocks for 2016 (SBUX, DNKN)   [Dec-31  12:06PM  at Investopedia]
▶ 10-Q for Coffee Holding Co., Inc.   [Jun-13  08:09PM  at Company Spotlight]

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