Intrinsic value of Kimball International Cl B - KBAL

Previous Close

$16.22

  Intrinsic Value

$30.01

stock screener

  Rating & Target

str. buy

+85%

Previous close

$16.22

 
Intrinsic value

$30.01

 
Up/down potential

+85%

 
Rating

str. 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, %
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
Revenue, $m
  691
  715
  740
  767
  797
  828
  861
  897
  935
  975
  1,018
  1,063
  1,111
  1,161
  1,215
  1,271
  1,330
  1,393
  1,458
  1,528
  1,601
  1,678
  1,759
  1,844
  1,933
  2,028
  2,127
  2,231
  2,340
  2,455
Variable operating expenses, $m
  231
  239
  247
  256
  266
  276
  288
  300
  312
  326
  340
  355
  371
  387
  405
  424
  444
  465
  486
  510
  534
  560
  587
  615
  645
  676
  709
  744
  781
  819
Fixed operating expenses, $m
  408
  417
  426
  435
  445
  455
  465
  475
  485
  496
  507
  518
  529
  541
  553
  565
  578
  590
  603
  617
  630
  644
  658
  673
  687
  703
  718
  734
  750
  766
Total operating expenses, $m
  639
  656
  673
  691
  711
  731
  753
  775
  797
  822
  847
  873
  900
  928
  958
  989
  1,022
  1,055
  1,089
  1,127
  1,164
  1,204
  1,245
  1,288
  1,332
  1,379
  1,427
  1,478
  1,531
  1,585
Operating income, $m
  53
  59
  67
  76
  86
  97
  109
  123
  138
  154
  171
  190
  211
  233
  256
  282
  309
  338
  369
  402
  437
  474
  514
  556
  601
  649
  699
  753
  810
  870
EBITDA, $m
  69
  76
  84
  94
  104
  116
  129
  143
  159
  176
  195
  215
  236
  259
  284
  311
  339
  369
  402
  436
  473
  512
  554
  598
  645
  695
  747
  803
  863
  925
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  19
Earnings before tax, $m
  52
  59
  66
  75
  84
  95
  107
  120
  135
  151
  168
  186
  206
  228
  251
  275
  302
  330
  360
  393
  427
  464
  503
  544
  588
  634
  684
  736
  792
  851
Tax expense, $m
  14
  16
  18
  20
  23
  26
  29
  33
  36
  41
  45
  50
  56
  61
  68
  74
  82
  89
  97
  106
  115
  125
  136
  147
  159
  171
  185
  199
  214
  230
Net income, $m
  38
  43
  48
  55
  62
  70
  78
  88
  98
  110
  123
  136
  151
  166
  183
  201
  220
  241
  263
  287
  312
  338
  367
  397
  429
  463
  499
  538
  578
  621

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
  324
  335
  347
  359
  373
  388
  404
  420
  438
  457
  477
  498
  520
  544
  569
  595
  623
  652
  683
  716
  750
  786
  824
  864
  906
  950
  996
  1,045
  1,096
  1,150
Adjusted assets (=assets-cash), $m
  324
  335
  347
  359
  373
  388
  404
  420
  438
  457
  477
  498
  520
  544
  569
  595
  623
  652
  683
  716
  750
  786
  824
  864
  906
  950
  996
  1,045
  1,096
  1,150
Revenue / Adjusted assets
  2.133
  2.134
  2.133
  2.136
  2.137
  2.134
  2.131
  2.136
  2.135
  2.133
  2.134
  2.135
  2.137
  2.134
  2.135
  2.136
  2.135
  2.137
  2.135
  2.134
  2.135
  2.135
  2.135
  2.134
  2.134
  2.135
  2.136
  2.135
  2.135
  2.135
Average production assets, $m
  88
  91
  94
  97
  101
  105
  109
  114
  119
  124
  129
  135
  141
  147
  154
  161
  169
  177
  185
  194
  203
  213
  223
  234
  246
  258
  270
  283
  297
  312
Working capital, $m
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
Total debt, $m
  8
  13
  18
  24
  30
  36
  43
  50
  58
  67
  75
  85
  94
  105
  116
  127
  139
  152
  166
  180
  195
  211
  227
  245
  263
  282
  303
  324
  347
  370
Total liabilities, $m
  142
  147
  152
  157
  163
  170
  177
  184
  192
  200
  209
  218
  228
  238
  249
  261
  273
  286
  299
  313
  328
  344
  361
  378
  397
  416
  436
  458
  480
  504
Total equity, $m
  182
  188
  195
  202
  210
  218
  227
  236
  246
  257
  268
  280
  292
  306
  320
  335
  350
  367
  384
  402
  421
  442
  463
  485
  509
  534
  560
  587
  616
  646
Total liabilities and equity, $m
  324
  335
  347
  359
  373
  388
  404
  420
  438
  457
  477
  498
  520
  544
  569
  596
  623
  653
  683
  715
  749
  786
  824
  863
  906
  950
  996
  1,045
  1,096
  1,150
Debt-to-equity ratio
  0.050
  0.070
  0.090
  0.120
  0.140
  0.170
  0.190
  0.210
  0.240
  0.260
  0.280
  0.300
  0.320
  0.340
  0.360
  0.380
  0.400
  0.410
  0.430
  0.450
  0.460
  0.480
  0.490
  0.500
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
Adjusted equity ratio
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  38
  43
  48
  55
  62
  70
  78
  88
  98
  110
  123
  136
  151
  166
  183
  201
  220
  241
  263
  287
  312
  338
  367
  397
  429
  463
  499
  538
  578
  621
Depreciation, amort., depletion, $m
  16
  17
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
Funds from operations, $m
  54
  59
  65
  72
  80
  89
  98
  109
  120
  132
  146
  160
  176
  193
  211
  230
  251
  273
  296
  321
  348
  376
  407
  439
  473
  509
  548
  588
  631
  677
Change in working capital, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  55
  60
  66
  73
  81
  89
  99
  109
  121
  133
  146
  161
  177
  193
  212
  231
  252
  274
  297
  323
  349
  378
  408
  440
  475
  511
  549
  590
  633
  679
Maintenance CAPEX, $m
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
New CAPEX, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
Cash from investing activities, $m
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -25
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -61
  -65
  -68
Free cash flow, $m
  37
  41
  46
  53
  59
  67
  76
  85
  95
  107
  119
  132
  146
  162
  178
  196
  215
  236
  257
  281
  305
  332
  360
  390
  421
  455
  491
  529
  569
  611
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
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  
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
Total cash flow (excl. dividends), $m
  41
  46
  52
  58
  65
  74
  83
  92
  103
  115
  128
  141
  156
  172
  189
  208
  227
  249
  271
  295
  320
  348
  376
  407
  440
  474
  511
  550
  591
  635
Retained Cash Flow (-), $m
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
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
  35
  40
  45
  51
  58
  65
  74
  83
  93
  104
  116
  130
  144
  159
  175
  193
  212
  232
  254
  277
  301
  327
  355
  385
  416
  450
  485
  523
  562
  605
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
  34
  37
  39
  42
  45
  47
  50
  52
  54
  55
  55
  55
  55
  53
  51
  49
  46
  43
  39
  35
  31
  27
  23
  20
  16
  13
  10
  8
  6
  5
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

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 Cl B (KBAL)

Valuation Ratios
P/E Ratio 15.9
Price to Sales 0.9
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 9.3
Price to Free Cash Flow 11.6
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 $669.934 million for the last fiscal year's total revenue generated by Kimball International Cl B. The default revenue input number comes from 0001 income statement of Kimball International Cl B. 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 3.2% 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 KBAL is calculated based on our internal credit rating of Kimball International Cl B, 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 Cl B.
    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 33.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $399 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 5.4% for Kimball International Cl B.

Corporate tax rate of 27% is the nominal tax rate for Kimball International Cl B. 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 12.7%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Kimball International Cl B 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 -1.8%. 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 - $176.204 million for Kimball International Cl B - 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 36.831 million for Kimball International Cl B 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 Cl B at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ Kimball International: Fiscal 1Q Earnings Snapshot   [Nov-05-18 06:42PM  Associated Press]
▶ Kimball International to Present to Investors   [Jul-06-18 01:15PM  GlobeNewswire]
▶ Kimball International CEO To Retire   [08:45AM  GlobeNewswire]
▶ Kimball International: Fiscal 3Q Earnings Snapshot   [May-01-18 05:45PM  Associated Press]
▶ Kimball International, Inc. Declares Dividend   [Apr-24-18 04:05PM  GlobeNewswire]
▶ Kimball International, Inc. Declares Dividend   [Feb-13-18 04:05PM  GlobeNewswire]
▶ Kimball International posts 2Q profit   [Jan-31-18 05:25PM  Associated Press]
▶ Kimball International to Present to Investors   [Nov-13-17 02:18PM  GlobeNewswire]
▶ Kimball International posts 1Q profit   [Nov-01-17 06:32PM  Associated Press]
▶ Kimball International, Inc. Declares Dividend   [Aug-29-17 04:05PM  GlobeNewswire]
▶ Kimball International posts 4Q profit   [Aug-04-17 12:11AM  Associated Press]
▶ Kimball International posts 3Q profit   [05:02AM  Associated Press]
▶ Kimball International, Inc. Declares Dividend   [Apr-25-17 04:05PM  GlobeNewswire]
▶ Kimball International, Inc. Declares Dividend   [Feb-07-17 04:05PM  GlobeNewswire]
▶ Kimball International posts 2Q profit   [Feb-01-17 05:54PM  Associated Press]

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