Intrinsic value of KVH Industries, Inc. - KVHI

Previous Close

$10.71

  Intrinsic Value

$4.67

stock screener

  Rating & Target

str. sell

-56%

Previous close

$10.71

 
Intrinsic value

$4.67

 
Up/down potential

-56%

 
Rating

str. sell

We calculate the intrinsic value of KVHI 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 0.2

 

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
  192
  214
  237
  261
  287
  313
  341
  370
  400
  431
  463
  497
  532
  568
  606
  645
  686
  728
  773
  819
  867
  917
  970
  1,024
  1,081
  1,141
  1,203
  1,269
  1,337
  1,408
Variable operating expenses, $m
  159
  176
  195
  215
  235
  256
  279
  302
  326
  351
  373
  400
  428
  457
  488
  519
  552
  586
  622
  659
  698
  738
  780
  824
  870
  918
  969
  1,021
  1,076
  1,133
Fixed operating expenses, $m
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  54
  55
  56
  57
  58
  60
  61
  62
  64
  65
  67
  68
  70
  71
Total operating expenses, $m
  197
  215
  234
  255
  276
  298
  322
  346
  371
  397
  420
  448
  477
  507
  539
  571
  606
  641
  678
  716
  756
  798
  841
  886
  934
  983
  1,036
  1,089
  1,146
  1,204
Operating income, $m
  -5
  -1
  2
  6
  10
  15
  19
  24
  29
  34
  43
  49
  55
  61
  67
  73
  80
  87
  95
  103
  111
  119
  128
  138
  147
  158
  168
  180
  191
  204
EBITDA, $m
  11
  15
  20
  26
  31
  37
  43
  49
  56
  63
  70
  77
  85
  93
  102
  110
  119
  129
  139
  149
  160
  172
  184
  196
  209
  223
  237
  252
  268
  284
Interest expense (income), $m
  1
  2
  2
  3
  3
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
  29
  30
  32
  34
Earnings before tax, $m
  -6
  -3
  0
  3
  6
  10
  14
  17
  22
  26
  35
  39
  44
  49
  54
  60
  65
  71
  78
  84
  91
  98
  106
  114
  122
  131
  140
  149
  159
  170
Tax expense, $m
  0
  0
  0
  1
  2
  3
  4
  5
  6
  7
  9
  11
  12
  13
  15
  16
  18
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
Net income, $m
  -6
  -3
  0
  2
  5
  7
  10
  13
  16
  19
  25
  29
  32
  36
  40
  44
  48
  52
  57
  62
  67
  72
  77
  83
  89
  95
  102
  109
  116
  124

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
  211
  235
  260
  287
  315
  344
  374
  406
  439
  473
  508
  545
  584
  624
  665
  708
  753
  800
  848
  899
  952
  1,007
  1,064
  1,124
  1,187
  1,252
  1,321
  1,393
  1,467
  1,546
Adjusted assets (=assets-cash), $m
  211
  235
  260
  287
  315
  344
  374
  406
  439
  473
  508
  545
  584
  624
  665
  708
  753
  800
  848
  899
  952
  1,007
  1,064
  1,124
  1,187
  1,252
  1,321
  1,393
  1,467
  1,546
Revenue / Adjusted assets
  0.910
  0.911
  0.912
  0.909
  0.911
  0.910
  0.912
  0.911
  0.911
  0.911
  0.911
  0.912
  0.911
  0.910
  0.911
  0.911
  0.911
  0.910
  0.912
  0.911
  0.911
  0.911
  0.912
  0.911
  0.911
  0.911
  0.911
  0.911
  0.911
  0.911
Average production assets, $m
  80
  89
  99
  109
  120
  131
  142
  154
  167
  180
  193
  207
  222
  237
  253
  269
  286
  304
  322
  341
  362
  382
  404
  427
  451
  476
  502
  529
  557
  587
Working capital, $m
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  37
  39
  42
  45
  48
  51
  54
  58
  61
  65
  68
  72
  77
  81
  85
  90
  95
  100
  106
  111
Total debt, $m
  40
  52
  64
  76
  89
  103
  117
  132
  147
  163
  180
  198
  216
  234
  254
  274
  295
  317
  340
  364
  389
  414
  441
  470
  499
  530
  562
  596
  631
  668
Total liabilities, $m
  99
  110
  122
  135
  148
  162
  176
  191
  206
  222
  239
  256
  274
  293
  313
  333
  354
  376
  399
  423
  447
  473
  500
  528
  558
  589
  621
  654
  690
  726
Total equity, $m
  112
  124
  138
  152
  167
  182
  198
  215
  233
  251
  269
  289
  309
  330
  352
  375
  399
  424
  450
  476
  504
  534
  564
  596
  629
  664
  700
  738
  778
  819
Total liabilities and equity, $m
  211
  234
  260
  287
  315
  344
  374
  406
  439
  473
  508
  545
  583
  623
  665
  708
  753
  800
  849
  899
  951
  1,007
  1,064
  1,124
  1,187
  1,253
  1,321
  1,392
  1,468
  1,545
Debt-to-equity ratio
  0.360
  0.410
  0.460
  0.500
  0.530
  0.560
  0.590
  0.610
  0.630
  0.650
  0.670
  0.680
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.760
  0.770
  0.780
  0.780
  0.790
  0.790
  0.800
  0.800
  0.810
  0.810
  0.820
Adjusted equity ratio
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -3
  0
  2
  5
  7
  10
  13
  16
  19
  25
  29
  32
  36
  40
  44
  48
  52
  57
  62
  67
  72
  77
  83
  89
  95
  102
  109
  116
  124
Depreciation, amort., depletion, $m
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  52
  55
  59
  62
  65
  69
  72
  76
  80
Funds from operations, $m
  9
  13
  18
  21
  25
  29
  34
  38
  43
  48
  52
  57
  62
  68
  74
  80
  87
  94
  101
  108
  116
  124
  133
  141
  151
  160
  171
  181
  193
  204
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
Cash from operations, $m
  7
  11
  16
  19
  23
  27
  32
  36
  41
  45
  49
  54
  60
  65
  71
  77
  84
  90
  97
  105
  112
  120
  128
  137
  146
  156
  166
  176
  187
  199
Maintenance CAPEX, $m
  -10
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -52
  -55
  -59
  -62
  -65
  -69
  -72
  -76
New CAPEX, $m
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
Cash from investing activities, $m
  -19
  -20
  -22
  -24
  -26
  -27
  -30
  -31
  -33
  -36
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -83
  -87
  -91
  -96
  -100
  -106
Free cash flow, $m
  -11
  -9
  -6
  -4
  -2
  0
  2
  4
  7
  9
  11
  14
  17
  20
  23
  26
  30
  34
  37
  41
  45
  50
  54
  59
  64
  69
  75
  80
  86
  93
Issuance/(repayment) of debt, $m
  11
  11
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
Issuance/(repurchase) of shares, $m
  18
  16
  14
  12
  10
  8
  6
  4
  2
  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  
  29
  27
  26
  25
  23
  22
  20
  19
  17
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
Total cash flow (excl. dividends), $m
  18
  19
  20
  20
  21
  22
  23
  23
  24
  26
  28
  31
  35
  39
  43
  47
  51
  55
  60
  65
  70
  76
  81
  87
  93
  100
  107
  114
  121
  129
Retained Cash Flow (-), $m
  -18
  -16
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
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
  0
  3
  6
  6
  6
  6
  6
  7
  7
  7
  9
  12
  14
  17
  21
  24
  27
  31
  34
  38
  42
  46
  51
  55
  60
  65
  70
  76
  82
  88
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
  0
  2
  5
  5
  5
  5
  4
  4
  4
  4
  4
  5
  6
  6
  6
  6
  6
  6
  5
  5
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  91.2
  84.7
  80.1
  76.6
  74.0
  72.1
  70.9
  70.2
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9
  69.9

KVH Industries, Inc. is a manufacturer of solutions that provide high-speed Internet, television and voice services through satellite to mobile users at sea and on land. The Company also provides commercially licensed entertainment, including news, sports, music and movies, to commercial and leisure customers in the maritime, hotel and retail markets. It operates in two geographic segments, in the mobile communications, navigation and guidance and stabilization equipment industry. The Company develops and distributes training films and e-learning computer-based training courses to commercial maritime customers. It is also a manufacturer of navigational sensors and integrated inertial systems for defense and commercial guidance and stabilization applications. It designs, develops, manufactures and markets mobile communications products and services for the marine and land mobile markets, and navigation, guidance and stabilization products for both the commercial and defense markets.

FINANCIAL RATIOS  of  KVH Industries, Inc. (KVHI)

Valuation Ratios
P/E Ratio -22.4
Price to Sales 1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 13.8
Growth Rates
Sales Growth Rate -4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 46.7%
Total Debt to Equity 54.2%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.9%
Ret/ On Assets - 3 Yr. Avg. -0.2%
Return On Total Capital -4.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.2%
Return On Equity -7.1%
Return On Equity - 3 Yr. Avg. -1.8%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 43.8%
Gross Margin - 3 Yr. Avg. 44.4%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 7.6%
Operating Margin -0.6%
Oper. Margin - 3 Yr. Avg. 0.9%
Pre-Tax Margin -1.1%
Pre-Tax Margin - 3 Yr. Avg. 0.4%
Net Profit Margin -4.5%
Net Profit Margin - 3 Yr. Avg. -1.2%
Effective Tax Rate -300%
Eff/ Tax Rate - 3 Yr. Avg. -55.6%
Payout Ratio 0%

KVHI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KVHI stock intrinsic value calculation we used $171 million for the last fiscal year's total revenue generated by KVH Industries, Inc.. The default revenue input number comes from 0001 income statement of KVH Industries, 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 KVHI 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 4.3%, whose default value for KVHI is calculated based on our internal credit rating of KVH Industries, 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 KVH Industries, 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 KVHI stock the variable cost ratio is equal to 83%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $37 million in the base year in the intrinsic value calculation for KVHI 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 KVH Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for KVH Industries, 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 KVHI 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 KVHI are equal to 41.7%.

Life of production assets of 7.3 years is the average useful life of capital assets used in KVH Industries, 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 KVHI is equal to 7.9%. 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 - $99.515 million for KVH Industries, 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 17.744 million for KVH Industries, 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 KVH Industries, Inc. at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
VSAT ViaSat, Inc. 77.87 6.97  str.sell
HRS Harris Corpora 163.30 127.95  sell
IRDM Iridium Commun 26.10 3.45  str.sell
CMTL Comtech Teleco 22.41 15.19  sell
FEIM Frequency Elec 11.56 6.75  sell
LLL L3 Technologie 210.35 2,051.80  str.buy
TNAV Telenav, Inc. 6.37 0.43  str.sell
HON Honeywell Inte 156.93 132.66  hold

CONTACT US       ASSET ALLOCATION

About X-FIN       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2019. All rigths reserved.