Intrinsic value of Limoneira Co - LMNR

Previous Close

$19.36

  Intrinsic Value

$3.07

stock screener

  Rating & Target

str. sell

-84%

Previous close

$19.36

 
Intrinsic value

$3.07

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of LMNR 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 0.3

 

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, %
  33.00
  30.20
  27.68
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.79
  12.91
  12.12
  11.41
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
Revenue, $m
  172
  223
  285
  358
  441
  536
  643
  761
  891
  1,032
  1,185
  1,348
  1,522
  1,706
  1,901
  2,106
  2,320
  2,544
  2,779
  3,023
  3,277
  3,541
  3,816
  4,101
  4,398
  4,706
  5,026
  5,359
  5,706
  6,067
Variable operating expenses, $m
  154
  201
  256
  322
  397
  482
  578
  684
  801
  928
  1,065
  1,212
  1,368
  1,534
  1,709
  1,893
  2,086
  2,287
  2,498
  2,717
  2,946
  3,183
  3,430
  3,687
  3,953
  4,231
  4,519
  4,818
  5,130
  5,454
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
  154
  201
  256
  322
  397
  482
  578
  684
  801
  928
  1,065
  1,212
  1,368
  1,534
  1,709
  1,893
  2,086
  2,287
  2,498
  2,717
  2,946
  3,183
  3,430
  3,687
  3,953
  4,231
  4,519
  4,818
  5,130
  5,454
Operating income, $m
  17
  23
  29
  36
  45
  54
  65
  77
  90
  104
  120
  136
  154
  172
  192
  213
  234
  257
  281
  305
  331
  358
  385
  414
  444
  475
  508
  541
  576
  613
EBITDA, $m
  31
  40
  51
  64
  79
  96
  115
  136
  159
  185
  212
  241
  272
  305
  340
  376
  415
  455
  497
  540
  586
  633
  682
  733
  786
  841
  899
  958
  1,020
  1,085
Interest expense (income), $m
  1
  4
  8
  12
  18
  24
  31
  39
  48
  58
  69
  81
  94
  108
  123
  138
  155
  172
  190
  209
  229
  250
  272
  294
  317
  341
  367
  393
  420
  448
  478
Earnings before tax, $m
  13
  15
  16
  19
  21
  23
  26
  29
  32
  35
  39
  42
  46
  50
  54
  58
  62
  67
  71
  76
  81
  86
  91
  97
  103
  109
  115
  121
  128
  135
Tax expense, $m
  4
  4
  4
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  36
Net income, $m
  9
  11
  12
  14
  15
  17
  19
  21
  23
  26
  28
  31
  34
  36
  39
  42
  45
  49
  52
  56
  59
  63
  67
  71
  75
  79
  84
  89
  93
  99

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
  561
  730
  932
  1,169
  1,442
  1,753
  2,101
  2,488
  2,912
  3,373
  3,871
  4,405
  4,974
  5,576
  6,212
  6,881
  7,582
  8,315
  9,080
  9,878
  10,708
  11,571
  12,469
  13,402
  14,371
  15,379
  16,426
  17,515
  18,647
  19,825
Adjusted assets (=assets-cash), $m
  561
  730
  932
  1,169
  1,442
  1,753
  2,101
  2,488
  2,912
  3,373
  3,871
  4,405
  4,974
  5,576
  6,212
  6,881
  7,582
  8,315
  9,080
  9,878
  10,708
  11,571
  12,469
  13,402
  14,371
  15,379
  16,426
  17,515
  18,647
  19,825
Revenue / Adjusted assets
  0.307
  0.305
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
Average production assets, $m
  400
  521
  666
  835
  1,030
  1,252
  1,501
  1,777
  2,080
  2,409
  2,765
  3,146
  3,552
  3,983
  4,437
  4,914
  5,415
  5,939
  6,485
  7,055
  7,648
  8,264
  8,905
  9,572
  10,264
  10,984
  11,731
  12,509
  13,318
  14,159
Working capital, $m
  9
  11
  14
  18
  22
  27
  32
  38
  45
  52
  59
  67
  76
  85
  95
  105
  116
  127
  139
  151
  164
  177
  191
  205
  220
  235
  251
  268
  285
  303
Total debt, $m
  147
  228
  326
  440
  571
  720
  888
  1,074
  1,278
  1,500
  1,739
  1,996
  2,270
  2,559
  2,865
  3,187
  3,524
  3,877
  4,245
  4,629
  5,028
  5,443
  5,875
  6,324
  6,790
  7,274
  7,778
  8,302
  8,847
  9,413
Total liabilities, $m
  270
  351
  448
  562
  694
  843
  1,011
  1,197
  1,401
  1,623
  1,862
  2,119
  2,392
  2,682
  2,988
  3,310
  3,647
  4,000
  4,368
  4,751
  5,150
  5,566
  5,998
  6,446
  6,913
  7,397
  7,901
  8,425
  8,969
  9,536
Total equity, $m
  291
  379
  484
  607
  748
  910
  1,090
  1,291
  1,511
  1,751
  2,009
  2,286
  2,581
  2,894
  3,224
  3,571
  3,935
  4,316
  4,713
  5,127
  5,557
  6,006
  6,471
  6,956
  7,459
  7,982
  8,525
  9,090
  9,678
  10,289
Total liabilities and equity, $m
  561
  730
  932
  1,169
  1,442
  1,753
  2,101
  2,488
  2,912
  3,374
  3,871
  4,405
  4,973
  5,576
  6,212
  6,881
  7,582
  8,316
  9,081
  9,878
  10,707
  11,572
  12,469
  13,402
  14,372
  15,379
  16,426
  17,515
  18,647
  19,825
Debt-to-equity ratio
  0.510
  0.600
  0.670
  0.720
  0.760
  0.790
  0.810
  0.830
  0.850
  0.860
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.900
  0.900
  0.900
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
Adjusted equity ratio
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  11
  12
  14
  15
  17
  19
  21
  23
  26
  28
  31
  34
  36
  39
  42
  45
  49
  52
  56
  59
  63
  67
  71
  75
  79
  84
  89
  93
  99
Depreciation, amort., depletion, $m
  13
  17
  22
  28
  34
  42
  50
  59
  69
  80
  92
  105
  118
  133
  148
  164
  181
  198
  216
  235
  255
  275
  297
  319
  342
  366
  391
  417
  444
  472
Funds from operations, $m
  23
  28
  34
  41
  50
  59
  69
  80
  93
  106
  120
  136
  152
  169
  187
  206
  226
  247
  268
  291
  314
  338
  364
  390
  417
  445
  475
  506
  537
  571
Change in working capital, $m
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
Cash from operations, $m
  21
  25
  31
  38
  45
  54
  64
  74
  86
  99
  113
  128
  143
  160
  177
  196
  215
  235
  257
  278
  301
  325
  350
  376
  402
  430
  459
  489
  520
  553
Maintenance CAPEX, $m
  -10
  -13
  -17
  -22
  -28
  -34
  -42
  -50
  -59
  -69
  -80
  -92
  -105
  -118
  -133
  -148
  -164
  -181
  -198
  -216
  -235
  -255
  -275
  -297
  -319
  -342
  -366
  -391
  -417
  -444
New CAPEX, $m
  -99
  -121
  -144
  -169
  -195
  -222
  -249
  -276
  -303
  -330
  -356
  -381
  -406
  -430
  -454
  -478
  -501
  -524
  -547
  -570
  -593
  -617
  -641
  -666
  -692
  -720
  -748
  -778
  -809
  -842
Cash from investing activities, $m
  -109
  -134
  -161
  -191
  -223
  -256
  -291
  -326
  -362
  -399
  -436
  -473
  -511
  -548
  -587
  -626
  -665
  -705
  -745
  -786
  -828
  -872
  -916
  -963
  -1,011
  -1,062
  -1,114
  -1,169
  -1,226
  -1,286
Free cash flow, $m
  -89
  -109
  -131
  -154
  -178
  -202
  -227
  -252
  -276
  -300
  -323
  -346
  -368
  -389
  -410
  -430
  -449
  -469
  -488
  -507
  -527
  -546
  -567
  -588
  -609
  -632
  -655
  -680
  -706
  -733
Issuance/(repayment) of debt, $m
  67
  81
  97
  114
  131
  149
  168
  186
  204
  222
  240
  257
  273
  290
  306
  322
  337
  353
  368
  384
  399
  415
  432
  449
  466
  485
  504
  524
  545
  567
Issuance/(repurchase) of shares, $m
  63
  77
  93
  109
  127
  144
  162
  179
  197
  214
  230
  246
  262
  276
  291
  305
  318
  332
  345
  358
  372
  385
  399
  413
  428
  444
  460
  477
  494
  513
Cash from financing (excl. dividends), $m  
  130
  158
  190
  223
  258
  293
  330
  365
  401
  436
  470
  503
  535
  566
  597
  627
  655
  685
  713
  742
  771
  800
  831
  862
  894
  929
  964
  1,001
  1,039
  1,080
Total cash flow (excl. dividends), $m
  41
  50
  59
  70
  80
  91
  103
  114
  125
  136
  147
  157
  167
  177
  187
  197
  206
  216
  225
  235
  244
  254
  264
  275
  285
  296
  308
  320
  333
  347
Retained Cash Flow (-), $m
  -72
  -88
  -105
  -123
  -142
  -161
  -181
  -201
  -220
  -239
  -258
  -277
  -295
  -313
  -330
  -347
  -364
  -381
  -397
  -414
  -431
  -448
  -466
  -484
  -503
  -523
  -543
  -565
  -588
  -612
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
  -31
  -38
  -45
  -53
  -61
  -70
  -78
  -87
  -95
  -104
  -112
  -120
  -128
  -135
  -143
  -150
  -158
  -165
  -172
  -179
  -187
  -194
  -202
  -210
  -218
  -226
  -235
  -245
  -254
  -265
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  -30
  -34
  -38
  -41
  -44
  -45
  -46
  -46
  -45
  -44
  -41
  -39
  -35
  -32
  -28
  -24
  -21
  -17
  -14
  -12
  -9
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  84.5
  72.3
  62.6
  54.7
  48.3
  43.1
  38.7
  35.0
  31.9
  29.3
  27.1
  25.1
  23.4
  21.9
  20.6
  19.4
  18.4
  17.5
  16.6
  15.8
  15.1
  14.5
  13.9
  13.4
  12.9
  12.4
  12.0
  11.6
  11.2
  10.8

Limoneira Company is engaged in agribusiness and real estate development. The Company's operations consist of fruit production, sales and marketing, rental operations, real estate development and capital investment activities. The Company's segments include lemon operations, other agribusiness, rental operations and real estate development. The Company has three business divisions: agribusiness, rental operations and real estate development. The Company operates its packinghouses in Santa Paula, California and Yuma, Arizona. The Company's water resources include water rights, usage rights and pumping rights to the water in aquifers. The Company's agribusiness includes farming, harvesting, lemon packing and lemon sales operations. The rental operations division includes residential and commercial rentals, leased land operations and organic recycling. The real estate development division includes developable land parcels, multi-family housing and single-family homes.

FINANCIAL RATIOS  of  Limoneira Co (LMNR)

Valuation Ratios
P/E Ratio 34.3
Price to Sales 2.5
Price to Book 2
Price to Tangible Book
Price to Cash Flow 19.6
Price to Free Cash Flow -16.1
Growth Rates
Sales Growth Rate 12%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.4%
Cap. Spend. - 3 Yr. Gr. Rate 23%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 63.3%
Total Debt to Equity 65.5%
Interest Coverage 14
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 2.9%
Return On Total Capital 3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 5.9%
Return On Equity - 3 Yr. Avg. 5.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 20.5%
Gross Margin - 3 Yr. Avg. 20.9%
EBITDA Margin 17%
EBITDA Margin - 3 Yr. Avg. 15.5%
Operating Margin 8%
Oper. Margin - 3 Yr. Avg. 6.9%
Pre-Tax Margin 11.6%
Pre-Tax Margin - 3 Yr. Avg. 11.1%
Net Profit Margin 7.1%
Net Profit Margin - 3 Yr. Avg. 7%
Effective Tax Rate 38.5%
Eff/ Tax Rate - 3 Yr. Avg. 37.1%
Payout Ratio 37.5%

LMNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMNR stock intrinsic value calculation we used $129 million for the last fiscal year's total revenue generated by Limoneira Co. The default revenue input number comes from 0001 income statement of Limoneira Co. 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 LMNR stock valuation model: a) initial revenue growth rate of 33% 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 5.8%, whose default value for LMNR is calculated based on our internal credit rating of Limoneira Co, 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 Limoneira Co.
    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 LMNR stock the variable cost ratio is equal to 89.9%.

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 LMNR 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 Limoneira Co.

Corporate tax rate of 27% is the nominal tax rate for Limoneira Co. 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 LMNR 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 LMNR are equal to 233.4%.

Life of production assets of 41.4 years is the average useful life of capital assets used in Limoneira Co 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 LMNR is equal to 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 - $218.566 million for Limoneira Co - 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 17.777 million for Limoneira Co 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 Limoneira Co at the current share price and the inputted number of shares is $0.3 billion.

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