Intrinsic value of Knoll, Inc. - KNL

Previous Close

$21.11

  Intrinsic Value

$40.80

stock screener

  Rating & Target

str. buy

+93%

Previous close

$21.11

 
Intrinsic value

$40.80

 
Up/down potential

+93%

 
Rating

str. buy

We calculate the intrinsic value of KNL 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 1.1

 

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, %
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  1,461
  1,629
  1,805
  1,990
  2,183
  2,385
  2,596
  2,815
  3,043
  3,280
  3,527
  3,783
  4,049
  4,325
  4,613
  4,912
  5,223
  5,547
  5,884
  6,235
  6,602
  6,984
  7,383
  7,799
  8,234
  8,688
  9,163
  9,659
  10,178
  10,722
Variable operating expenses, $m
  1,187
  1,315
  1,450
  1,592
  1,740
  1,895
  2,056
  2,224
  2,399
  2,581
  2,702
  2,898
  3,102
  3,314
  3,534
  3,763
  4,002
  4,250
  4,508
  4,777
  5,058
  5,351
  5,656
  5,975
  6,308
  6,656
  7,020
  7,400
  7,798
  8,215
Fixed operating expenses, $m
  135
  138
  141
  144
  147
  150
  154
  157
  161
  164
  168
  171
  175
  179
  183
  187
  191
  195
  200
  204
  208
  213
  218
  223
  227
  232
  238
  243
  248
  254
Total operating expenses, $m
  1,322
  1,453
  1,591
  1,736
  1,887
  2,045
  2,210
  2,381
  2,560
  2,745
  2,870
  3,069
  3,277
  3,493
  3,717
  3,950
  4,193
  4,445
  4,708
  4,981
  5,266
  5,564
  5,874
  6,198
  6,535
  6,888
  7,258
  7,643
  8,046
  8,469
Operating income, $m
  139
  175
  214
  254
  296
  340
  386
  434
  484
  535
  657
  713
  772
  832
  896
  962
  1,030
  1,102
  1,176
  1,254
  1,335
  1,420
  1,509
  1,601
  1,698
  1,799
  1,905
  2,016
  2,132
  2,254
EBITDA, $m
  232
  271
  313
  356
  401
  449
  499
  550
  604
  660
  718
  779
  842
  908
  976
  1,047
  1,121
  1,198
  1,279
  1,363
  1,450
  1,542
  1,637
  1,737
  1,841
  1,950
  2,065
  2,184
  2,309
  2,440
Interest expense (income), $m
  5
  30
  36
  43
  50
  58
  66
  74
  83
  92
  101
  111
  121
  132
  143
  154
  166
  179
  192
  205
  219
  233
  248
  264
  281
  298
  316
  335
  354
  375
  396
Earnings before tax, $m
  110
  139
  171
  204
  238
  274
  312
  351
  392
  434
  546
  592
  640
  689
  741
  795
  852
  910
  971
  1,035
  1,102
  1,172
  1,244
  1,320
  1,400
  1,483
  1,570
  1,662
  1,757
  1,857
Tax expense, $m
  30
  38
  46
  55
  64
  74
  84
  95
  106
  117
  147
  160
  173
  186
  200
  215
  230
  246
  262
  280
  298
  316
  336
  357
  378
  400
  424
  449
  474
  501
Net income, $m
  80
  102
  125
  149
  174
  200
  227
  256
  286
  317
  398
  432
  467
  503
  541
  581
  622
  664
  709
  756
  804
  855
  908
  964
  1,022
  1,083
  1,146
  1,213
  1,283
  1,356

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
  1,377
  1,535
  1,701
  1,876
  2,058
  2,248
  2,447
  2,653
  2,868
  3,092
  3,324
  3,565
  3,816
  4,077
  4,348
  4,629
  4,923
  5,228
  5,546
  5,877
  6,222
  6,582
  6,958
  7,350
  7,760
  8,188
  8,636
  9,104
  9,593
  10,105
Adjusted assets (=assets-cash), $m
  1,377
  1,535
  1,701
  1,876
  2,058
  2,248
  2,447
  2,653
  2,868
  3,092
  3,324
  3,565
  3,816
  4,077
  4,348
  4,629
  4,923
  5,228
  5,546
  5,877
  6,222
  6,582
  6,958
  7,350
  7,760
  8,188
  8,636
  9,104
  9,593
  10,105
Revenue / Adjusted assets
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
Average production assets, $m
  529
  590
  653
  720
  790
  864
  940
  1,019
  1,102
  1,187
  1,277
  1,369
  1,466
  1,566
  1,670
  1,778
  1,891
  2,008
  2,130
  2,257
  2,390
  2,528
  2,672
  2,823
  2,981
  3,145
  3,317
  3,497
  3,685
  3,881
Working capital, $m
  83
  93
  103
  113
  124
  136
  148
  160
  173
  187
  201
  216
  231
  247
  263
  280
  298
  316
  335
  355
  376
  398
  421
  445
  469
  495
  522
  551
  580
  611
Total debt, $m
  564
  672
  786
  905
  1,030
  1,161
  1,296
  1,438
  1,585
  1,738
  1,897
  2,063
  2,234
  2,413
  2,598
  2,792
  2,992
  3,201
  3,419
  3,646
  3,883
  4,129
  4,387
  4,655
  4,936
  5,229
  5,536
  5,856
  6,192
  6,543
Total liabilities, $m
  943
  1,051
  1,165
  1,285
  1,410
  1,540
  1,676
  1,818
  1,965
  2,118
  2,277
  2,442
  2,614
  2,792
  2,978
  3,171
  3,372
  3,581
  3,799
  4,026
  4,262
  4,509
  4,766
  5,035
  5,316
  5,609
  5,916
  6,236
  6,571
  6,922
Total equity, $m
  434
  483
  536
  591
  648
  708
  771
  836
  903
  974
  1,047
  1,123
  1,202
  1,284
  1,369
  1,458
  1,551
  1,647
  1,747
  1,851
  1,960
  2,073
  2,192
  2,315
  2,444
  2,579
  2,720
  2,868
  3,022
  3,183
Total liabilities and equity, $m
  1,377
  1,534
  1,701
  1,876
  2,058
  2,248
  2,447
  2,654
  2,868
  3,092
  3,324
  3,565
  3,816
  4,076
  4,347
  4,629
  4,923
  5,228
  5,546
  5,877
  6,222
  6,582
  6,958
  7,350
  7,760
  8,188
  8,636
  9,104
  9,593
  10,105
Debt-to-equity ratio
  1.300
  1.390
  1.470
  1.530
  1.590
  1.640
  1.680
  1.720
  1.750
  1.780
  1.810
  1.840
  1.860
  1.880
  1.900
  1.910
  1.930
  1.940
  1.960
  1.970
  1.980
  1.990
  2.000
  2.010
  2.020
  2.030
  2.040
  2.040
  2.050
  2.060
Adjusted equity ratio
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  80
  102
  125
  149
  174
  200
  227
  256
  286
  317
  398
  432
  467
  503
  541
  581
  622
  664
  709
  756
  804
  855
  908
  964
  1,022
  1,083
  1,146
  1,213
  1,283
  1,356
Depreciation, amort., depletion, $m
  93
  96
  99
  102
  106
  109
  113
  116
  120
  125
  61
  66
  70
  75
  80
  85
  91
  97
  102
  109
  115
  122
  128
  136
  143
  151
  159
  168
  177
  187
Funds from operations, $m
  173
  198
  224
  251
  279
  309
  340
  373
  406
  441
  460
  498
  537
  579
  621
  666
  713
  761
  812
  864
  919
  977
  1,037
  1,100
  1,165
  1,234
  1,306
  1,381
  1,460
  1,542
Change in working capital, $m
  9
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
Cash from operations, $m
  164
  188
  213
  240
  268
  298
  328
  360
  393
  428
  446
  483
  522
  563
  605
  649
  695
  743
  792
  844
  898
  955
  1,014
  1,076
  1,140
  1,208
  1,279
  1,353
  1,430
  1,512
Maintenance CAPEX, $m
  -23
  -25
  -28
  -31
  -35
  -38
  -42
  -45
  -49
  -53
  -57
  -61
  -66
  -70
  -75
  -80
  -85
  -91
  -97
  -102
  -109
  -115
  -122
  -128
  -136
  -143
  -151
  -159
  -168
  -177
New CAPEX, $m
  -57
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -89
  -93
  -96
  -100
  -104
  -108
  -113
  -117
  -122
  -127
  -133
  -138
  -144
  -151
  -157
  -164
  -172
  -180
  -188
  -197
Cash from investing activities, $m
  -80
  -86
  -92
  -98
  -105
  -111
  -118
  -124
  -132
  -139
  -146
  -154
  -162
  -170
  -179
  -188
  -198
  -208
  -219
  -229
  -242
  -253
  -266
  -279
  -293
  -307
  -323
  -339
  -356
  -374
Free cash flow, $m
  84
  102
  121
  142
  164
  186
  210
  236
  262
  289
  299
  329
  360
  392
  426
  460
  497
  534
  574
  615
  657
  702
  748
  797
  847
  900
  956
  1,014
  1,074
  1,138
Issuance/(repayment) of debt, $m
  103
  108
  114
  119
  125
  130
  136
  142
  147
  153
  159
  165
  172
  179
  186
  193
  201
  209
  218
  227
  237
  247
  257
  269
  281
  293
  307
  321
  335
  351
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  
  103
  108
  114
  119
  125
  130
  136
  142
  147
  153
  159
  165
  172
  179
  186
  193
  201
  209
  218
  227
  237
  247
  257
  269
  281
  293
  307
  321
  335
  351
Total cash flow (excl. dividends), $m
  187
  210
  235
  261
  288
  317
  346
  377
  409
  442
  458
  494
  532
  571
  611
  654
  698
  744
  791
  842
  894
  948
  1,006
  1,065
  1,128
  1,194
  1,262
  1,334
  1,410
  1,488
Retained Cash Flow (-), $m
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -109
  -113
  -118
  -124
  -129
  -135
  -141
  -147
  -154
  -161
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
  139
  160
  183
  206
  231
  257
  284
  312
  341
  372
  385
  418
  453
  489
  526
  565
  605
  647
  691
  737
  785
  835
  887
  942
  999
  1,059
  1,121
  1,187
  1,255
  1,327
Discount rate, %
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
  129
  137
  143
  147
  148
  146
  143
  137
  129
  120
  105
  95
  84
  73
  63
  52
  43
  35
  27
  21
  16
  12
  8
  6
  4
  3
  2
  1
  1
  0
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

Knoll, Inc. is a manufacturer of commercial and residential furniture, accessories and coverings. The Company operates through three segments: Office, Studio and Coverings. The Office segment includes a range of workplace products that address workplace planning paradigms. These products include systems furniture, seating, storage, tables, desks and KnollExtra accessories, as well as the international sales of its North American Office products. The Studio segment includes KnollStudio products, DatesWeiser, HOLLY HUNT and Knoll Europe. The Coverings segment includes KnollTextiles, Spinneybeck (including Filzfelt), and Edelman Leather. These businesses provide a range of customers with fabrics, felt, leather and related architectural products. KnollStudio products include iconic seating, lounge furniture, side, cafe and dining chairs, as well as conference, training, dining and occasional tables.

FINANCIAL RATIOS  of  Knoll, Inc. (KNL)

Valuation Ratios
P/E Ratio 12.6
Price to Sales 0.9
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 10
Price to Free Cash Flow 16.2
Growth Rates
Sales Growth Rate 5.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.3%
Cap. Spend. - 3 Yr. Gr. Rate 6.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 67.3%
Total Debt to Equity 70.6%
Interest Coverage 27
Management Effectiveness
Return On Assets 9.9%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 16.4%
Ret/ On T. Cap. - 3 Yr. Avg. 13.7%
Return On Equity 29.1%
Return On Equity - 3 Yr. Avg. 26.3%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 38.3%
Gross Margin - 3 Yr. Avg. 37%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 11.7%
Operating Margin 11.7%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin 11%
Pre-Tax Margin - 3 Yr. Avg. 9.2%
Net Profit Margin 7%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 35.9%
Eff/ Tax Rate - 3 Yr. Avg. 36.7%
Payout Ratio 35.4%

KNL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KNL stock intrinsic value calculation we used $1302 million for the last fiscal year's total revenue generated by Knoll, Inc.. The default revenue input number comes from 0001 income statement of Knoll, 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 KNL stock valuation model: a) initial revenue growth rate of 12.2% 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 7.7%, whose default value for KNL is calculated based on our internal credit rating of Knoll, 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 Knoll, 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 KNL stock the variable cost ratio is equal to 81.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $132 million in the base year in the intrinsic value calculation for KNL 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 6.4% for Knoll, Inc..

Corporate tax rate of 27% is the nominal tax rate for Knoll, 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 KNL 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 KNL are equal to 36.2%.

Life of production assets of 20.8 years is the average useful life of capital assets used in Knoll, 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 KNL is equal to 5.7%. 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 - $386.304 million for Knoll, 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 49.762 million for Knoll, 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 Knoll, Inc. at the current share price and the inputted number of shares is $1.1 billion.

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