Intrinsic value of LCI Industries - LCII

Previous Close

$89.22

  Intrinsic Value

$96.64

stock screener

  Rating & Target

hold

+8%

Previous close

$89.22

 
Intrinsic value

$96.64

 
Up/down potential

+8%

 
Rating

hold

We calculate the intrinsic value of LCII 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 2.2

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  2,526
  2,584
  2,650
  2,725
  2,807
  2,898
  2,996
  3,103
  3,218
  3,342
  3,474
  3,615
  3,765
  3,925
  4,094
  4,273
  4,463
  4,664
  4,876
  5,100
  5,337
  5,586
  5,849
  6,126
  6,418
  6,725
  7,048
  7,388
  7,746
  8,122
Variable operating expenses, $m
  2,272
  2,324
  2,382
  2,449
  2,522
  2,602
  2,689
  2,784
  2,886
  2,995
  3,077
  3,201
  3,334
  3,476
  3,626
  3,784
  3,953
  4,130
  4,318
  4,517
  4,726
  4,947
  5,180
  5,425
  5,683
  5,955
  6,241
  6,543
  6,859
  7,193
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
  2,272
  2,324
  2,382
  2,449
  2,522
  2,602
  2,689
  2,784
  2,886
  2,995
  3,077
  3,201
  3,334
  3,476
  3,626
  3,784
  3,953
  4,130
  4,318
  4,517
  4,726
  4,947
  5,180
  5,425
  5,683
  5,955
  6,241
  6,543
  6,859
  7,193
Operating income, $m
  253
  260
  268
  276
  285
  296
  307
  319
  333
  347
  397
  414
  431
  449
  468
  489
  511
  534
  558
  584
  611
  639
  669
  701
  734
  769
  806
  845
  886
  929
EBITDA, $m
  340
  348
  357
  367
  378
  390
  403
  418
  433
  450
  467
  486
  507
  528
  551
  575
  600
  627
  656
  686
  718
  752
  787
  824
  863
  905
  948
  994
  1,042
  1,093
Interest expense (income), $m
  2
  16
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  44
  47
  49
  52
  55
  59
  62
  66
  69
  73
  78
Earnings before tax, $m
  237
  244
  250
  258
  267
  276
  286
  297
  309
  322
  372
  386
  402
  418
  436
  454
  474
  495
  516
  540
  564
  590
  617
  646
  676
  707
  741
  776
  813
  852
Tax expense, $m
  64
  66
  68
  70
  72
  75
  77
  80
  84
  87
  100
  104
  108
  113
  118
  123
  128
  134
  139
  146
  152
  159
  167
  174
  182
  191
  200
  209
  219
  230
Net income, $m
  173
  178
  183
  188
  195
  202
  209
  217
  226
  235
  271
  282
  293
  305
  318
  332
  346
  361
  377
  394
  412
  431
  450
  471
  493
  516
  541
  566
  593
  622

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
  1,268
  1,298
  1,331
  1,368
  1,410
  1,455
  1,505
  1,559
  1,616
  1,679
  1,745
  1,816
  1,891
  1,971
  2,056
  2,146
  2,242
  2,343
  2,449
  2,562
  2,680
  2,806
  2,938
  3,077
  3,223
  3,377
  3,540
  3,711
  3,890
  4,079
Adjusted assets (=assets-cash), $m
  1,268
  1,298
  1,331
  1,368
  1,410
  1,455
  1,505
  1,559
  1,616
  1,679
  1,745
  1,816
  1,891
  1,971
  2,056
  2,146
  2,242
  2,343
  2,449
  2,562
  2,680
  2,806
  2,938
  3,077
  3,223
  3,377
  3,540
  3,711
  3,890
  4,079
Revenue / Adjusted assets
  1.992
  1.991
  1.991
  1.992
  1.991
  1.992
  1.991
  1.990
  1.991
  1.990
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
  1.991
Average production assets, $m
  437
  447
  458
  471
  486
  501
  518
  537
  557
  578
  601
  625
  651
  679
  708
  739
  772
  807
  844
  882
  923
  966
  1,012
  1,060
  1,110
  1,163
  1,219
  1,278
  1,340
  1,405
Working capital, $m
  341
  349
  358
  368
  379
  391
  405
  419
  434
  451
  469
  488
  508
  530
  553
  577
  603
  630
  658
  689
  720
  754
  790
  827
  866
  908
  951
  997
  1,046
  1,096
Total debt, $m
  304
  316
  331
  347
  365
  385
  406
  429
  454
  481
  510
  540
  573
  607
  644
  683
  724
  768
  814
  863
  914
  968
  1,025
  1,085
  1,148
  1,215
  1,285
  1,359
  1,437
  1,518
Total liabilities, $m
  548
  561
  575
  591
  609
  629
  650
  673
  698
  725
  754
  784
  817
  852
  888
  927
  968
  1,012
  1,058
  1,107
  1,158
  1,212
  1,269
  1,329
  1,392
  1,459
  1,529
  1,603
  1,681
  1,762
Total equity, $m
  720
  737
  756
  777
  801
  827
  855
  885
  918
  953
  991
  1,031
  1,074
  1,120
  1,168
  1,219
  1,273
  1,331
  1,391
  1,455
  1,523
  1,594
  1,669
  1,748
  1,831
  1,918
  2,011
  2,108
  2,210
  2,317
Total liabilities and equity, $m
  1,268
  1,298
  1,331
  1,368
  1,410
  1,456
  1,505
  1,558
  1,616
  1,678
  1,745
  1,815
  1,891
  1,972
  2,056
  2,146
  2,241
  2,343
  2,449
  2,562
  2,681
  2,806
  2,938
  3,077
  3,223
  3,377
  3,540
  3,711
  3,891
  4,079
Debt-to-equity ratio
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.480
  0.490
  0.500
  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
  0.630
  0.630
  0.640
  0.640
  0.650
  0.660
Adjusted equity ratio
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  173
  178
  183
  188
  195
  202
  209
  217
  226
  235
  271
  282
  293
  305
  318
  332
  346
  361
  377
  394
  412
  431
  450
  471
  493
  516
  541
  566
  593
  622
Depreciation, amort., depletion, $m
  87
  88
  89
  91
  92
  94
  96
  98
  100
  103
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  142
  149
  156
  163
Funds from operations, $m
  260
  265
  272
  279
  287
  296
  305
  315
  326
  338
  341
  355
  369
  384
  400
  418
  436
  455
  475
  497
  519
  543
  568
  594
  622
  652
  683
  715
  749
  785
Change in working capital, $m
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  44
  46
  48
  51
Cash from operations, $m
  253
  258
  263
  269
  276
  283
  292
  301
  311
  321
  323
  336
  349
  363
  378
  393
  410
  428
  446
  466
  487
  509
  533
  557
  583
  610
  639
  669
  701
  734
Maintenance CAPEX, $m
  -50
  -51
  -52
  -53
  -55
  -56
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -142
  -149
  -156
New CAPEX, $m
  -8
  -10
  -11
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
Cash from investing activities, $m
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -108
  -113
  -119
  -125
  -131
  -137
  -144
  -150
  -157
  -166
  -173
  -182
  -191
  -201
  -211
  -221
Free cash flow, $m
  195
  197
  199
  203
  207
  211
  216
  222
  228
  235
  233
  241
  250
  259
  269
  280
  291
  303
  316
  329
  344
  359
  375
  392
  409
  428
  448
  469
  490
  513
Issuance/(repayment) of debt, $m
  10
  13
  14
  16
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
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  
  10
  13
  14
  16
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
Total cash flow (excl. dividends), $m
  205
  209
  214
  219
  225
  231
  238
  245
  253
  262
  262
  272
  283
  294
  306
  319
  332
  347
  362
  378
  395
  413
  432
  452
  473
  495
  518
  542
  568
  595
Retained Cash Flow (-), $m
  -14
  -17
  -19
  -21
  -24
  -26
  -28
  -30
  -33
  -35
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -57
  -61
  -64
  -67
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -107
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
  191
  193
  195
  198
  201
  205
  210
  215
  221
  227
  224
  232
  240
  248
  258
  268
  278
  289
  301
  314
  328
  342
  357
  373
  389
  407
  426
  445
  466
  488
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
  183
  176
  170
  163
  156
  149
  142
  134
  127
  119
  106
  99
  91
  83
  76
  68
  61
  53
  46
  40
  34
  28
  23
  19
  15
  12
  9
  7
  5
  4
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

LCI Industries, formerly Drew Industries Incorporated, through its subsidiary, Lippert Components, Inc. and its subsidiaries (LCI), supplies an array of components for the original equipment manufacturers (OEMs) of recreational vehicles (RVs) and adjacent industries. The Company's segments include OEM Segment and Aftermarket Segment. The OEM Segment manufactures or distributes an array of components for the OEMs of RVs and adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; manufactured homes; modular housing, and mobile office units. The Aftermarket Segment supplies components to the related aftermarket channels of the RV and adjacent industries, primarily to retail dealers, wholesale distributors and service centers. The Aftermarket Segment also includes the sale of replacement glass and awnings to fulfill insurance claims.

FINANCIAL RATIOS  of  LCI Industries (LCII)

Valuation Ratios
P/E Ratio 17
Price to Sales 1.3
Price to Book 4
Price to Tangible Book
Price to Cash Flow 10.9
Price to Free Cash Flow 14
Growth Rates
Sales Growth Rate 19.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 55.2%
Cap. Spend. - 3 Yr. Gr. Rate 6.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 9.1%
Total Debt to Equity 9.1%
Interest Coverage 101
Management Effectiveness
Return On Assets 18.6%
Ret/ On Assets - 3 Yr. Avg. 14.7%
Return On Total Capital 23.9%
Ret/ On T. Cap. - 3 Yr. Avg. 19.1%
Return On Equity 26.3%
Return On Equity - 3 Yr. Avg. 20.5%
Asset Turnover 2.4
Profitability Ratios
Gross Margin 25.6%
Gross Margin - 3 Yr. Avg. 22.8%
EBITDA Margin 14.7%
EBITDA Margin - 3 Yr. Avg. 12.3%
Operating Margin 12%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin 11.9%
Pre-Tax Margin - 3 Yr. Avg. 9.3%
Net Profit Margin 7.7%
Net Profit Margin - 3 Yr. Avg. 6.1%
Effective Tax Rate 34.7%
Eff/ Tax Rate - 3 Yr. Avg. 34.8%
Payout Ratio 26.2%

LCII stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LCII stock intrinsic value calculation we used $2476 million for the last fiscal year's total revenue generated by LCI Industries. The default revenue input number comes from 0001 income statement of LCI Industries. 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 LCII stock valuation model: a) initial revenue growth rate of 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 LCII is calculated based on our internal credit rating of LCI Industries, 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 LCI Industries.
    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 LCII stock the variable cost ratio is equal to 90%.

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 LCII 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 LCI Industries.

Corporate tax rate of 27% is the nominal tax rate for LCI Industries. 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 LCII 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 LCII are equal to 17.3%.

Life of production assets of 8.6 years is the average useful life of capital assets used in LCI Industries 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 LCII is equal to 13.5%. 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 - $706.255 million for LCI Industries - 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 24.893 million for LCI Industries 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 LCI Industries at the current share price and the inputted number of shares is $2.2 billion.

RELATED COMPANIES Price Int.Val. Rating
LCII LCI Industries 89.22 101.62  buy
PATK Patrick Indust 44.44 98.79  str.buy
SPAR Spartan Motors 9.06 2.75  str.sell
MNTX Manitex Intern 7.05 6.00  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

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