Intrinsic value of Lindsay Corporation - LNN

Previous Close

$89.30

  Intrinsic Value

$44.32

stock screener

  Rating & Target

str. sell

-50%

Previous close

$89.30

 
Intrinsic value

$44.32

 
Up/down potential

-50%

 
Rating

str. sell

We calculate the intrinsic value of LNN 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 1.0

 

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
  559
  572
  587
  603
  621
  641
  663
  687
  712
  740
  769
  800
  833
  869
  906
  946
  988
  1,032
  1,079
  1,129
  1,181
  1,236
  1,295
  1,356
  1,420
  1,488
  1,560
  1,635
  1,714
  1,798
Variable operating expenses, $m
  515
  527
  540
  555
  572
  590
  610
  631
  654
  679
  696
  724
  754
  786
  820
  856
  894
  934
  977
  1,022
  1,069
  1,119
  1,172
  1,227
  1,286
  1,347
  1,412
  1,480
  1,552
  1,627
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
  515
  527
  540
  555
  572
  590
  610
  631
  654
  679
  696
  724
  754
  786
  820
  856
  894
  934
  977
  1,022
  1,069
  1,119
  1,172
  1,227
  1,286
  1,347
  1,412
  1,480
  1,552
  1,627
Operating income, $m
  44
  45
  46
  48
  50
  52
  54
  56
  58
  61
  73
  76
  79
  82
  86
  90
  94
  98
  102
  107
  112
  117
  123
  129
  135
  141
  148
  155
  162
  170
EBITDA, $m
  65
  66
  68
  70
  72
  74
  77
  79
  82
  86
  89
  93
  96
  100
  105
  109
  114
  119
  125
  131
  137
  143
  150
  157
  164
  172
  180
  189
  198
  208
Interest expense (income), $m
  5
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  29
  30
  32
Earnings before tax, $m
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  62
  65
  67
  70
  73
  75
  79
  82
  85
  89
  93
  97
  101
  106
  111
  116
  121
  126
  132
  138
Tax expense, $m
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
Net income, $m
  27
  28
  29
  30
  31
  32
  33
  34
  36
  37
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101

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
  428
  438
  449
  461
  475
  491
  507
  526
  545
  566
  588
  612
  638
  665
  693
  724
  756
  790
  826
  864
  904
  946
  990
  1,037
  1,087
  1,139
  1,193
  1,251
  1,312
  1,375
Adjusted assets (=assets-cash), $m
  428
  438
  449
  461
  475
  491
  507
  526
  545
  566
  588
  612
  638
  665
  693
  724
  756
  790
  826
  864
  904
  946
  990
  1,037
  1,087
  1,139
  1,193
  1,251
  1,312
  1,375
Revenue / Adjusted assets
  1.306
  1.306
  1.307
  1.308
  1.307
  1.305
  1.308
  1.306
  1.306
  1.307
  1.308
  1.307
  1.306
  1.307
  1.307
  1.307
  1.307
  1.306
  1.306
  1.307
  1.306
  1.307
  1.308
  1.308
  1.306
  1.306
  1.308
  1.307
  1.306
  1.308
Average production assets, $m
  121
  124
  127
  131
  135
  139
  144
  149
  155
  161
  167
  174
  181
  188
  197
  205
  214
  224
  234
  245
  256
  268
  281
  294
  308
  323
  338
  355
  372
  390
Working capital, $m
  92
  94
  97
  99
  103
  106
  109
  113
  118
  122
  127
  132
  137
  143
  150
  156
  163
  170
  178
  186
  195
  204
  214
  224
  234
  246
  257
  270
  283
  297
Total debt, $m
  121
  126
  132
  139
  146
  155
  164
  173
  184
  195
  207
  219
  233
  247
  262
  279
  296
  314
  333
  353
  374
  397
  421
  445
  472
  499
  529
  559
  591
  625
Total liabilities, $m
  228
  233
  239
  245
  253
  261
  270
  280
  290
  301
  313
  326
  339
  354
  369
  385
  402
  420
  439
  459
  481
  503
  527
  552
  578
  606
  635
  666
  698
  732
Total equity, $m
  200
  205
  210
  216
  222
  230
  237
  246
  255
  265
  275
  286
  298
  311
  324
  339
  354
  370
  386
  404
  423
  443
  464
  485
  509
  533
  559
  585
  614
  644
Total liabilities and equity, $m
  428
  438
  449
  461
  475
  491
  507
  526
  545
  566
  588
  612
  637
  665
  693
  724
  756
  790
  825
  863
  904
  946
  991
  1,037
  1,087
  1,139
  1,194
  1,251
  1,312
  1,376
Debt-to-equity ratio
  0.610
  0.620
  0.630
  0.640
  0.660
  0.670
  0.690
  0.700
  0.720
  0.730
  0.750
  0.770
  0.780
  0.790
  0.810
  0.820
  0.840
  0.850
  0.860
  0.870
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.960
  0.960
  0.970
Adjusted equity ratio
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  27
  28
  29
  30
  31
  32
  33
  34
  36
  37
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
Depreciation, amort., depletion, $m
  21
  21
  21
  22
  22
  23
  23
  24
  24
  25
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
Funds from operations, $m
  48
  49
  50
  52
  53
  54
  56
  58
  60
  62
  62
  64
  66
  69
  72
  75
  78
  81
  85
  89
  92
  97
  101
  106
  110
  115
  121
  126
  132
  139
Change in working capital, $m
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
Cash from operations, $m
  46
  47
  48
  49
  50
  51
  53
  54
  56
  57
  57
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  100
  104
  109
  114
  119
  125
Maintenance CAPEX, $m
  -11
  -12
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
New CAPEX, $m
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
Cash from investing activities, $m
  -13
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -45
  -47
  -49
  -51
  -54
Free cash flow, $m
  33
  33
  33
  33
  33
  34
  34
  35
  36
  37
  35
  36
  37
  38
  39
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
Issuance/(repayment) of debt, $m
  4
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
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  
  4
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
Total cash flow (excl. dividends), $m
  37
  38
  39
  40
  41
  42
  43
  45
  46
  48
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  96
  100
  105
Retained Cash Flow (-), $m
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
Prev. year cash balance distribution, $m
  81
  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
  114
  33
  34
  34
  34
  35
  35
  36
  37
  38
  36
  37
  39
  40
  41
  43
  44
  46
  48
  50
  51
  54
  56
  58
  61
  63
  66
  69
  72
  75
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
  109
  30
  29
  28
  27
  25
  24
  23
  21
  20
  17
  16
  15
  13
  12
  11
  10
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  1
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

Lindsay Corporation, along with its subsidiaries, provides a range of water management and road infrastructure products and services. The Company operates through two segments: Irrigation Segment and Infrastructure Segment. The Irrigation Segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems, which are used primarily in the agricultural industry. The Infrastructure Segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, road marking and road safety equipment, large diameter steel tubing, and railroad signals and structures. It also manufactures and markets hose reel travelers under the Perrot and Greenfield brands in Europe and South Africa. It produces or markets chemical injection systems, variable rate irrigation systems, flow meters, weather stations, soil moisture sensors, and remote monitoring and control systems, which it sells under its GrowSmart brand.

FINANCIAL RATIOS  of  Lindsay Corporation (LNN)

Valuation Ratios
P/E Ratio 41.5
Price to Sales 1.8
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 24.5
Price to Free Cash Flow 31.9
Growth Rates
Sales Growth Rate 0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 43.3%
Total Debt to Equity 43.3%
Interest Coverage 8
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 5%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.9%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 8%
Asset Turnover 1
Profitability Ratios
Gross Margin 28%
Gross Margin - 3 Yr. Avg. 28.2%
EBITDA Margin 11.2%
EBITDA Margin - 3 Yr. Avg. 10.9%
Operating Margin 7.7%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin 6.9%
Pre-Tax Margin - 3 Yr. Avg. 7%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. 4.3%
Effective Tax Rate 36.1%
Eff/ Tax Rate - 3 Yr. Avg. 37.3%
Payout Ratio 52.2%

LNN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LNN stock intrinsic value calculation we used $548 million for the last fiscal year's total revenue generated by Lindsay Corporation. The default revenue input number comes from 0001 income statement of Lindsay Corporation. 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 LNN 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 LNN is calculated based on our internal credit rating of Lindsay Corporation, 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 Lindsay Corporation.
    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 LNN stock the variable cost ratio is equal to 92.2%.

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 LNN 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 Lindsay Corporation.

Corporate tax rate of 27% is the nominal tax rate for Lindsay Corporation. 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 LNN 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 LNN are equal to 21.7%.

Life of production assets of 10.4 years is the average useful life of capital assets used in Lindsay Corporation 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 LNN 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 - $276.866 million for Lindsay Corporation - 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 10.775 million for Lindsay Corporation 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 Lindsay Corporation at the current share price and the inputted number of shares is $1.0 billion.

RELATED COMPANIES Price Int.Val. Rating
ARTW Art's-Way 2.02 0.77  str.sell
AGCO AGCO Corporati 71.97 80.39  buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

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