Intrinsic value of Kimball Electronics - KE

Previous Close

$17.45

  Intrinsic Value

$33.66

stock screener

  Rating & Target

str. buy

+93%

Previous close

$17.45

 
Intrinsic value

$33.66

 
Up/down potential

+93%

 
Rating

str. buy

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

We calculate the intrinsic value of KE 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Kimball Electronics (KE) stock.

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, %
  10.57
  11.90
  11.21
  10.59
  10.03
  9.53
  9.07
  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
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
Revenue, $m
  931
  1,042
  1,159
  1,281
  1,410
  1,544
  1,684
  1,830
  1,982
  2,140
  2,304
  2,475
  2,652
  2,837
  3,028
  3,227
  3,435
  3,650
  3,875
  4,109
  4,352
  4,606
  4,871
  5,148
  5,437
  5,739
  6,054
  6,384
  6,729
  7,089
  7,467
Variable operating expenses, $m
 
  878
  977
  1,080
  1,188
  1,301
  1,419
  1,542
  1,670
  1,803
  1,942
  2,085
  2,234
  2,389
  2,551
  2,719
  2,893
  3,075
  3,264
  3,461
  3,666
  3,880
  4,104
  4,337
  4,580
  4,834
  5,100
  5,378
  5,668
  5,972
  6,290
Fixed operating expenses, $m
 
  108
  110
  113
  116
  119
  122
  125
  128
  131
  134
  138
  141
  145
  148
  152
  156
  160
  164
  168
  172
  176
  181
  185
  190
  195
  200
  205
  210
  215
  220
Total operating expenses, $m
  887
  986
  1,087
  1,193
  1,304
  1,420
  1,541
  1,667
  1,798
  1,934
  2,076
  2,223
  2,375
  2,534
  2,699
  2,871
  3,049
  3,235
  3,428
  3,629
  3,838
  4,056
  4,285
  4,522
  4,770
  5,029
  5,300
  5,583
  5,878
  6,187
  6,510
Operating income, $m
  44
  56
  72
  88
  106
  124
  143
  163
  184
  206
  228
  252
  277
  302
  329
  357
  386
  416
  447
  480
  514
  550
  587
  626
  667
  710
  755
  802
  851
  903
  957
EBITDA, $m
  68
  82
  101
  120
  141
  162
  185
  208
  233
  258
  285
  313
  342
  372
  403
  435
  469
  505
  542
  580
  620
  662
  706
  752
  800
  850
  903
  958
  1,015
  1,076
  1,139
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  19
  21
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
  47
Earnings before tax, $m
  44
  56
  71
  87
  103
  120
  138
  157
  177
  198
  219
  242
  265
  289
  314
  341
  368
  397
  426
  457
  490
  524
  559
  596
  635
  676
  718
  763
  809
  858
  910
Tax expense, $m
  10
  15
  19
  23
  28
  32
  37
  42
  48
  53
  59
  65
  72
  78
  85
  92
  99
  107
  115
  123
  132
  141
  151
  161
  171
  182
  194
  206
  219
  232
  246
Net income, $m
  34
  41
  52
  63
  75
  88
  101
  115
  129
  144
  160
  177
  194
  211
  230
  249
  269
  289
  311
  334
  358
  382
  408
  435
  464
  493
  524
  557
  591
  627
  664

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  45
  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
  555
  571
  635
  702
  772
  846
  923
  1,003
  1,086
  1,173
  1,263
  1,356
  1,453
  1,554
  1,659
  1,768
  1,882
  2,000
  2,123
  2,251
  2,385
  2,524
  2,669
  2,821
  2,979
  3,145
  3,317
  3,498
  3,687
  3,885
  4,091
Adjusted assets (=assets-cash), $m
  510
  571
  635
  702
  772
  846
  923
  1,003
  1,086
  1,173
  1,263
  1,356
  1,453
  1,554
  1,659
  1,768
  1,882
  2,000
  2,123
  2,251
  2,385
  2,524
  2,669
  2,821
  2,979
  3,145
  3,317
  3,498
  3,687
  3,885
  4,091
Revenue / Adjusted assets
  1.825
  1.825
  1.825
  1.825
  1.826
  1.825
  1.824
  1.825
  1.825
  1.824
  1.824
  1.825
  1.825
  1.826
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
  1.825
Average production assets, $m
  135
  150
  167
  185
  203
  222
  243
  264
  285
  308
  332
  356
  382
  408
  436
  465
  495
  526
  558
  592
  627
  663
  701
  741
  783
  826
  872
  919
  969
  1,021
  1,075
Working capital, $m
  189
  172
  191
  211
  233
  255
  278
  302
  327
  353
  380
  408
  438
  468
  500
  533
  567
  602
  639
  678
  718
  760
  804
  849
  897
  947
  999
  1,053
  1,110
  1,170
  1,232
Total debt, $m
  10
  24
  50
  76
  104
  134
  164
  196
  229
  264
  300
  337
  375
  416
  457
  501
  546
  593
  642
  693
  746
  802
  859
  920
  983
  1,049
  1,117
  1,189
  1,264
  1,343
  1,425
Total liabilities, $m
  213
  227
  253
  279
  307
  337
  367
  399
  432
  467
  503
  540
  578
  619
  660
  704
  749
  796
  845
  896
  949
  1,005
  1,062
  1,123
  1,186
  1,252
  1,320
  1,392
  1,467
  1,546
  1,628
Total equity, $m
  342
  344
  382
  423
  465
  509
  556
  604
  654
  706
  760
  816
  875
  936
  999
  1,065
  1,133
  1,204
  1,278
  1,355
  1,436
  1,519
  1,607
  1,698
  1,793
  1,893
  1,997
  2,106
  2,220
  2,339
  2,463
Total liabilities and equity, $m
  555
  571
  635
  702
  772
  846
  923
  1,003
  1,086
  1,173
  1,263
  1,356
  1,453
  1,555
  1,659
  1,769
  1,882
  2,000
  2,123
  2,251
  2,385
  2,524
  2,669
  2,821
  2,979
  3,145
  3,317
  3,498
  3,687
  3,885
  4,091
Debt-to-equity ratio
  0.029
  0.070
  0.130
  0.180
  0.220
  0.260
  0.300
  0.320
  0.350
  0.370
  0.390
  0.410
  0.430
  0.440
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
Adjusted equity ratio
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  41
  52
  63
  75
  88
  101
  115
  129
  144
  160
  177
  194
  211
  230
  249
  269
  289
  311
  334
  358
  382
  408
  435
  464
  493
  524
  557
  591
  627
  664
Depreciation, amort., depletion, $m
  24
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  60
  65
  69
  74
  79
  84
  89
  95
  100
  106
  112
  119
  126
  133
  140
  148
  156
  164
  173
  182
Funds from operations, $m
  33
  67
  81
  95
  110
  126
  143
  160
  178
  197
  217
  237
  258
  280
  303
  327
  352
  379
  406
  434
  464
  495
  527
  561
  596
  633
  672
  713
  755
  800
  846
Change in working capital, $m
  -14
  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
  62
Cash from operations, $m
  47
  49
  61
  75
  89
  104
  120
  136
  153
  171
  190
  209
  229
  250
  272
  295
  318
  343
  369
  396
  424
  453
  483
  515
  549
  583
  620
  658
  698
  740
  784
Maintenance CAPEX, $m
  0
  -23
  -25
  -28
  -31
  -34
  -38
  -41
  -45
  -48
  -52
  -56
  -60
  -65
  -69
  -74
  -79
  -84
  -89
  -95
  -100
  -106
  -112
  -119
  -126
  -133
  -140
  -148
  -156
  -164
  -173
New CAPEX, $m
  -34
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -50
  -52
  -54
Cash from investing activities, $m
  -36
  -39
  -42
  -46
  -50
  -53
  -58
  -62
  -67
  -71
  -76
  -81
  -86
  -92
  -97
  -103
  -109
  -115
  -121
  -129
  -135
  -143
  -150
  -159
  -168
  -176
  -185
  -195
  -206
  -216
  -227
Free cash flow, $m
  11
  10
  19
  29
  39
  50
  62
  74
  87
  100
  114
  128
  143
  159
  175
  192
  210
  228
  247
  267
  288
  310
  333
  356
  381
  407
  435
  463
  493
  524
  557
Issuance/(repayment) of debt, $m
  1
  24
  25
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
Issuance/(repurchase) of shares, $m
  -22
  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  
  -22
  24
  25
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
Total cash flow (excl. dividends), $m
  -10
  35
  45
  56
  67
  80
  92
  106
  120
  134
  150
  165
  182
  199
  217
  235
  255
  275
  296
  318
  341
  365
  391
  417
  444
  473
  503
  535
  568
  603
  639
Retained Cash Flow (-), $m
  -18
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -100
  -104
  -109
  -114
  -119
  -125
Prev. year cash balance distribution, $m
 
  35
  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
 
  33
  6
  15
  25
  35
  46
  58
  70
  82
  95
  109
  123
  138
  154
  170
  187
  204
  222
  241
  261
  282
  303
  326
  349
  374
  399
  426
  454
  484
  515
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
 
  32
  6
  13
  21
  27
  33
  39
  44
  47
  50
  52
  53
  53
  52
  50
  47
  44
  41
  37
  33
  29
  25
  21
  18
  15
  12
  9
  7
  5
  4
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

Kimball Electronics, Inc. (Kimball Electronics) is an electronics manufacturing services (EMS) company. The Company is engaged in producing electronics for the automotive, medical, industrial and public safety markets. It provides design, engineering, manufacturing, packaging and distribution of electronic assemblies and circuit boards on a contract basis to a range of industries. The Company offers various engineering, manufacturing and supply chain services, such as design services; production and testing of printed circuit board assemblies (PCBAS); industrialization and automation of manufacturing processes; product design and process validation and qualification; reliability testing, which include testing of products under a series of environmental conditions; assembly, production and packaging of other related non-electronic products, and product life cycle management. It is engaged in producing safety critical electronic assemblies for the automotive market.

FINANCIAL RATIOS  of  Kimball Electronics (KE)

Valuation Ratios
P/E Ratio 13.8
Price to Sales 0.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 10
Price to Free Cash Flow 36
Growth Rates
Sales Growth Rate 10.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.9%
Cap. Spend. - 3 Yr. Gr. Rate 10.1%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 2.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 9.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8.7%
Return On Equity 10.2%
Return On Equity - 3 Yr. Avg. 8.8%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 8.2%
Gross Margin - 3 Yr. Avg. 8.2%
EBITDA Margin 7.3%
EBITDA Margin - 3 Yr. Avg. 6.6%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 4.2%
Pre-Tax Margin 4.7%
Pre-Tax Margin - 3 Yr. Avg. 4.1%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 22.7%
Eff/ Tax Rate - 3 Yr. Avg. 23.3%
Payout Ratio 0%

KE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KE stock intrinsic value calculation we used $931 million for the last fiscal year's total revenue generated by Kimball Electronics. The default revenue input number comes from 2017 income statement of Kimball Electronics. 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 KE stock valuation model: a) initial revenue growth rate of 11.9% 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 KE is calculated based on our internal credit rating of Kimball Electronics, 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 Electronics.
    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 KE stock the variable cost ratio is equal to 84.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $105 million in the base year in the intrinsic value calculation for KE 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 Kimball Electronics.

Corporate tax rate of 27% is the nominal tax rate for Kimball Electronics. 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 KE 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 KE are equal to 14.4%.

Life of production assets of 5.9 years is the average useful life of capital assets used in Kimball Electronics 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 KE is equal to 16.5%. 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 - $342 million for Kimball Electronics - 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 27.501 million for Kimball Electronics 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 Electronics at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
PLXS Plexus 59.16 24.93  str.sell
JBL Jabil 26.37 70.56  str.buy
BHE Benchmark Elec 29.70 26.64  hold
NSYS Nortech System 3.52 1.69  str.sell
SANM Sanmina 26.60 35.68  hold
SGMA Sigmatron Inte 7.68 116.51  str.buy
KTCC Key Tronic 7.23 2.43  str.sell
IEC IEC Electronic 4.08 0.34  str.sell
SPA Sparton 22.76 1.75  str.sell
CLS Celestica 10.68 14.97  buy

COMPANY NEWS

▶ Kimball Electronics, Inc. to Host Earnings Call   [Feb-08-18 07:30AM  ACCESSWIRE]
▶ Kimball Electronics reports 2Q loss   [05:02AM  Associated Press]
▶ Kimball Electronics, Inc. to Host Earnings Call   [Nov-02-17 09:00AM  ACCESSWIRE]
▶ Kimball Electronics posts 1Q profit   [Nov-01-17 06:06PM  Associated Press]
▶ Kimball Electronics posts 4Q profit   [Aug-04-17 12:11AM  Associated Press]
▶ Kimball Electronics posts 3Q profit   [May-01-17 04:14PM  Associated Press]
▶ Kimball Electronics posts 2Q profit   [Feb-01-17 05:56PM  Associated Press]
▶ Here is What Hedge Funds Think About Kimball Electronics Inc (KE)   [Dec-12-16 11:07AM  at Insider Monkey]
▶ Kimball Electronics, Inc. Announces Stock Repurchase Plan   [Sep-29-16 04:15PM  GlobeNewswire]
Financial statements of KE
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.