Intrinsic value of Kimball International, Inc. - KBAL

Previous Close

$16.82

  Intrinsic Value

$23.91

stock screener

  Rating & Target

buy

+42%

Previous close

$16.82

 
Intrinsic value

$23.91

 
Up/down potential

+42%

 
Rating

buy

We calculate the intrinsic value of KBAL 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 0.6

 

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, %
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  772
  862
  958
  1,058
  1,163
  1,273
  1,387
  1,506
  1,630
  1,759
  1,893
  2,032
  2,177
  2,327
  2,484
  2,646
  2,815
  2,991
  3,175
  3,365
  3,564
  3,772
  3,988
  4,214
  4,450
  4,697
  4,954
  5,224
  5,505
  5,800
Variable operating expenses, $m
  705
  787
  873
  964
  1,058
  1,157
  1,261
  1,368
  1,480
  1,597
  1,709
  1,835
  1,965
  2,101
  2,242
  2,389
  2,542
  2,700
  2,866
  3,038
  3,218
  3,405
  3,601
  3,804
  4,017
  4,240
  4,473
  4,716
  4,970
  5,236
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
  705
  787
  873
  964
  1,058
  1,157
  1,261
  1,368
  1,480
  1,597
  1,709
  1,835
  1,965
  2,101
  2,242
  2,389
  2,542
  2,700
  2,866
  3,038
  3,218
  3,405
  3,601
  3,804
  4,017
  4,240
  4,473
  4,716
  4,970
  5,236
Operating income, $m
  67
  75
  85
  95
  105
  115
  127
  138
  150
  163
  184
  198
  212
  226
  242
  257
  274
  291
  309
  327
  347
  367
  388
  410
  433
  457
  482
  508
  535
  564
EBITDA, $m
  91
  102
  113
  125
  138
  151
  164
  178
  193
  208
  224
  241
  258
  276
  294
  313
  333
  354
  376
  398
  422
  447
  472
  499
  527
  556
  587
  618
  652
  687
Interest expense (income), $m
  0
  0
  2
  4
  6
  8
  10
  13
  15
  18
  20
  23
  26
  29
  32
  35
  39
  42
  46
  50
  54
  58
  62
  67
  71
  76
  81
  87
  92
  98
  104
Earnings before tax, $m
  67
  74
  81
  89
  97
  105
  114
  123
  132
  142
  161
  172
  183
  194
  206
  218
  231
  245
  259
  273
  289
  305
  321
  338
  356
  375
  395
  416
  437
  460
Tax expense, $m
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  43
  46
  49
  52
  56
  59
  62
  66
  70
  74
  78
  82
  87
  91
  96
  101
  107
  112
  118
  124
Net income, $m
  49
  54
  59
  65
  71
  77
  83
  90
  97
  104
  117
  125
  133
  142
  150
  159
  169
  179
  189
  200
  211
  222
  234
  247
  260
  274
  288
  303
  319
  336

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
  373
  417
  463
  511
  562
  615
  670
  728
  788
  850
  915
  982
  1,052
  1,124
  1,200
  1,278
  1,360
  1,445
  1,534
  1,626
  1,722
  1,822
  1,927
  2,036
  2,150
  2,269
  2,393
  2,523
  2,660
  2,802
Adjusted assets (=assets-cash), $m
  373
  417
  463
  511
  562
  615
  670
  728
  788
  850
  915
  982
  1,052
  1,124
  1,200
  1,278
  1,360
  1,445
  1,534
  1,626
  1,722
  1,822
  1,927
  2,036
  2,150
  2,269
  2,393
  2,523
  2,660
  2,802
Revenue / Adjusted assets
  2.070
  2.067
  2.069
  2.070
  2.069
  2.070
  2.070
  2.069
  2.069
  2.069
  2.069
  2.069
  2.069
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.069
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.071
  2.070
  2.070
Average production assets, $m
  100
  111
  124
  137
  150
  164
  179
  194
  210
  227
  244
  262
  281
  300
  320
  341
  363
  386
  410
  434
  460
  487
  515
  544
  574
  606
  639
  674
  710
  748
Working capital, $m
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
Total debt, $m
  18
  36
  55
  75
  97
  119
  142
  166
  191
  217
  244
  272
  301
  332
  363
  396
  430
  466
  503
  541
  582
  623
  667
  713
  760
  810
  862
  917
  973
  1,033
Total liabilities, $m
  156
  174
  193
  214
  235
  257
  280
  304
  329
  355
  382
  410
  440
  470
  502
  534
  569
  604
  641
  680
  720
  762
  805
  851
  899
  948
  1,000
  1,055
  1,112
  1,171
Total equity, $m
  217
  242
  269
  298
  327
  358
  390
  424
  458
  495
  532
  571
  612
  654
  698
  744
  792
  841
  893
  946
  1,002
  1,061
  1,121
  1,185
  1,251
  1,321
  1,393
  1,469
  1,548
  1,631
Total liabilities and equity, $m
  373
  416
  462
  512
  562
  615
  670
  728
  787
  850
  914
  981
  1,052
  1,124
  1,200
  1,278
  1,361
  1,445
  1,534
  1,626
  1,722
  1,823
  1,926
  2,036
  2,150
  2,269
  2,393
  2,524
  2,660
  2,802
Debt-to-equity ratio
  0.080
  0.150
  0.200
  0.250
  0.300
  0.330
  0.360
  0.390
  0.420
  0.440
  0.460
  0.480
  0.490
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.590
  0.590
  0.600
  0.610
  0.610
  0.620
  0.620
  0.630
  0.630
Adjusted equity ratio
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  54
  59
  65
  71
  77
  83
  90
  97
  104
  117
  125
  133
  142
  150
  159
  169
  179
  189
  200
  211
  222
  234
  247
  260
  274
  288
  303
  319
  336
Depreciation, amort., depletion, $m
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  40
  43
  46
  49
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  110
  116
  123
Funds from operations, $m
  73
  80
  88
  95
  104
  112
  121
  130
  140
  149
  157
  168
  179
  191
  203
  215
  228
  242
  256
  271
  286
  302
  319
  336
  354
  373
  393
  414
  436
  458
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  74
  81
  88
  96
  104
  112
  121
  130
  140
  150
  158
  169
  180
  191
  203
  216
  229
  243
  257
  271
  287
  303
  319
  337
  355
  374
  394
  415
  436
  459
Maintenance CAPEX, $m
  -14
  -16
  -18
  -20
  -22
  -25
  -27
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -49
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -80
  -84
  -89
  -94
  -99
  -105
  -110
  -116
New CAPEX, $m
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
Cash from investing activities, $m
  -25
  -28
  -30
  -33
  -36
  -39
  -42
  -44
  -48
  -51
  -54
  -58
  -62
  -65
  -69
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -108
  -113
  -119
  -126
  -132
  -140
  -146
  -154
Free cash flow, $m
  48
  53
  57
  63
  68
  74
  79
  86
  92
  99
  103
  111
  118
  126
  134
  142
  151
  160
  170
  180
  190
  201
  212
  223
  236
  248
  261
  275
  290
  305
Issuance/(repayment) of debt, $m
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  57
  60
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  
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  57
  60
Total cash flow (excl. dividends), $m
  65
  71
  77
  83
  89
  96
  103
  110
  117
  125
  130
  139
  147
  156
  166
  175
  185
  196
  207
  218
  230
  242
  255
  269
  283
  298
  313
  330
  347
  364
Retained Cash Flow (-), $m
  -24
  -25
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -49
  -52
  -54
  -56
  -58
  -61
  -64
  -66
  -69
  -72
  -76
  -79
  -83
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
  41
  45
  50
  55
  60
  65
  70
  76
  82
  89
  93
  100
  107
  114
  122
  130
  138
  146
  155
  164
  174
  184
  195
  205
  217
  229
  241
  254
  267
  281
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
  40
  42
  43
  45
  46
  47
  48
  48
  47
  46
  44
  42
  41
  38
  36
  33
  30
  27
  24
  21
  18
  15
  13
  10
  8
  7
  5
  4
  3
  2
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
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Kimball International, Inc. creates design driven furnishings. The Company sells a portfolio of furniture products and services under three brands, which include Kimball Office, National Office Furniture, and Kimball Hospitality. The Company's portfolio offers solutions for the workplace, learning, healing, and hospitality environments. The Company, through its brands, offers various products, which include modern and classic desks, credenzas, seating, tables, collaborative workstations, panel systems, filing and storage units, accessories/accents, headboards, desks, tables, dressers, entertainment centers, chests, wall panels, upholstered seating, task seating, cabinets, and vanities with a mix of wood, metal, stone, laminate, finish, and fabric options. The Company also offers several products designed specifically for the healthcare market, such as patient room and lounge seating and casegoods.

FINANCIAL RATIOS  of  Kimball International, Inc. (KBAL)

Valuation Ratios
P/E Ratio 16.5
Price to Sales 0.9
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 9.7
Price to Free Cash Flow 12.1
Growth Rates
Sales Growth Rate 5.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.8%
Cap. Spend. - 3 Yr. Gr. Rate -17.5%
Financial Strength
Quick Ratio 25
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 2.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 12.9%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital 23%
Ret/ On T. Cap. - 3 Yr. Avg. 14.8%
Return On Equity 23.3%
Return On Equity - 3 Yr. Avg. 14.8%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 33.3%
Gross Margin - 3 Yr. Avg. 32.3%
EBITDA Margin 11%
EBITDA Margin - 3 Yr. Avg. 8.3%
Operating Margin 8.5%
Oper. Margin - 3 Yr. Avg. 5.5%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 5.6%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 4.1%
Effective Tax Rate 34.5%
Eff/ Tax Rate - 3 Yr. Avg. 36.6%
Payout Ratio 23.7%

KBAL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KBAL stock intrinsic value calculation we used $686 million for the last fiscal year's total revenue generated by Kimball International, Inc.. The default revenue input number comes from 0001 income statement of Kimball International, Inc.. 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 KBAL stock valuation model: a) initial revenue growth rate of 12.5% 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 KBAL is calculated based on our internal credit rating of Kimball International, Inc., 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 Kimball International, Inc..
    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 KBAL stock the variable cost ratio is equal to 91.5%.

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 KBAL 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 10.7% for Kimball International, Inc..

Corporate tax rate of 27% is the nominal tax rate for Kimball International, Inc.. 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 KBAL 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 KBAL are equal to 12.9%.

Life of production assets of 6.1 years is the average useful life of capital assets used in Kimball International, Inc. 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 KBAL is equal to -0.3%. 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 - $193.024 million for Kimball International, Inc. - 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 36.712 million for Kimball International, Inc. 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 Kimball International, Inc. at the current share price and the inputted number of shares is $0.6 billion.

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