Intrinsic value of Natural Grocers by Vitamin Cottage - NGVC

Previous Close

$16.83

  Intrinsic Value

$1.97

stock screener

  Rating & Target

str. sell

-88%

Previous close

$16.83

 
Intrinsic value

$1.97

 
Up/down potential

-88%

 
Rating

str. sell

We calculate the intrinsic value of NGVC 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 0.4

 

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, %
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
Revenue, $m
  842
  918
  998
  1,080
  1,166
  1,256
  1,348
  1,445
  1,545
  1,649
  1,757
  1,870
  1,987
  2,110
  2,237
  2,369
  2,508
  2,652
  2,802
  2,959
  3,124
  3,295
  3,474
  3,662
  3,858
  4,064
  4,279
  4,504
  4,740
  4,987
Variable operating expenses, $m
  818
  892
  969
  1,049
  1,132
  1,219
  1,309
  1,402
  1,500
  1,601
  1,705
  1,815
  1,928
  2,047
  2,170
  2,299
  2,433
  2,573
  2,719
  2,871
  3,031
  3,197
  3,371
  3,553
  3,744
  3,943
  4,151
  4,370
  4,599
  4,838
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
  818
  892
  969
  1,049
  1,132
  1,219
  1,309
  1,402
  1,500
  1,601
  1,705
  1,815
  1,928
  2,047
  2,170
  2,299
  2,433
  2,573
  2,719
  2,871
  3,031
  3,197
  3,371
  3,553
  3,744
  3,943
  4,151
  4,370
  4,599
  4,838
Operating income, $m
  24
  27
  29
  32
  34
  37
  40
  42
  45
  48
  52
  56
  59
  63
  67
  70
  75
  79
  83
  88
  93
  98
  103
  109
  115
  121
  127
  134
  141
  148
EBITDA, $m
  57
  62
  68
  73
  79
  85
  91
  98
  105
  112
  119
  127
  134
  143
  151
  160
  170
  179
  190
  200
  211
  223
  235
  248
  261
  275
  290
  305
  321
  337
Interest expense (income), $m
  1
  4
  5
  6
  7
  8
  9
  11
  12
  13
  14
  16
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
Earnings before tax, $m
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
Tax expense, $m
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
Net income, $m
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66

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
  329
  358
  389
  421
  455
  490
  526
  564
  603
  643
  686
  730
  775
  823
  873
  924
  978
  1,035
  1,093
  1,155
  1,219
  1,286
  1,356
  1,429
  1,505
  1,586
  1,669
  1,757
  1,849
  1,946
Adjusted assets (=assets-cash), $m
  329
  358
  389
  421
  455
  490
  526
  564
  603
  643
  686
  730
  775
  823
  873
  924
  978
  1,035
  1,093
  1,155
  1,219
  1,286
  1,356
  1,429
  1,505
  1,586
  1,669
  1,757
  1,849
  1,946
Revenue / Adjusted assets
  2.559
  2.564
  2.566
  2.565
  2.563
  2.563
  2.563
  2.562
  2.562
  2.565
  2.561
  2.562
  2.564
  2.564
  2.562
  2.564
  2.564
  2.562
  2.564
  2.562
  2.563
  2.562
  2.562
  2.563
  2.563
  2.562
  2.564
  2.563
  2.564
  2.563
Average production assets, $m
  201
  219
  238
  258
  279
  300
  322
  345
  369
  394
  420
  447
  475
  504
  535
  566
  599
  634
  670
  707
  747
  788
  830
  875
  922
  971
  1,023
  1,076
  1,133
  1,192
Working capital, $m
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  70
  75
  79
  84
  89
  95
  100
  106
  112
  118
  125
  132
  139
  146
  154
  163
  171
  180
  190
  199
Total debt, $m
  78
  94
  111
  129
  148
  167
  187
  208
  230
  252
  276
  300
  325
  352
  379
  408
  438
  469
  501
  535
  571
  608
  647
  687
  730
  774
  821
  869
  920
  974
Total liabilities, $m
  182
  198
  216
  234
  252
  271
  291
  312
  334
  356
  380
  404
  430
  456
  483
  512
  542
  573
  606
  640
  675
  712
  751
  792
  834
  878
  925
  974
  1,024
  1,078
Total equity, $m
  147
  160
  174
  188
  203
  218
  235
  251
  269
  287
  306
  325
  346
  367
  389
  412
  436
  461
  488
  515
  544
  573
  605
  637
  671
  707
  745
  784
  825
  868
Total liabilities and equity, $m
  329
  358
  390
  422
  455
  489
  526
  563
  603
  643
  686
  729
  776
  823
  872
  924
  978
  1,034
  1,094
  1,155
  1,219
  1,285
  1,356
  1,429
  1,505
  1,585
  1,670
  1,758
  1,849
  1,946
Debt-to-equity ratio
  0.530
  0.590
  0.640
  0.690
  0.730
  0.760
  0.800
  0.830
  0.850
  0.880
  0.900
  0.920
  0.940
  0.960
  0.970
  0.990
  1.000
  1.020
  1.030
  1.040
  1.050
  1.060
  1.070
  1.080
  1.090
  1.090
  1.100
  1.110
  1.120
  1.120
Adjusted equity ratio
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446
  0.446

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
Depreciation, amort., depletion, $m
  33
  35
  38
  42
  45
  48
  52
  55
  59
  63
  67
  71
  75
  80
  85
  90
  95
  101
  106
  112
  118
  125
  132
  139
  146
  154
  162
  171
  180
  189
Funds from operations, $m
  48
  51
  55
  59
  64
  68
  73
  78
  83
  88
  93
  99
  105
  111
  117
  124
  131
  138
  146
  153
  162
  170
  179
  189
  199
  209
  220
  231
  243
  255
Change in working capital, $m
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
Cash from operations, $m
  45
  48
  52
  56
  60
  65
  69
  74
  79
  84
  89
  94
  100
  106
  112
  119
  125
  132
  140
  147
  155
  163
  172
  181
  191
  201
  211
  222
  233
  245
Maintenance CAPEX, $m
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -51
  -55
  -59
  -63
  -67
  -71
  -75
  -80
  -85
  -90
  -95
  -101
  -106
  -112
  -118
  -125
  -132
  -139
  -146
  -154
  -162
  -171
  -180
New CAPEX, $m
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
Cash from investing activities, $m
  -46
  -50
  -54
  -58
  -62
  -65
  -70
  -74
  -79
  -84
  -89
  -94
  -99
  -104
  -110
  -117
  -123
  -129
  -137
  -144
  -151
  -159
  -168
  -177
  -186
  -195
  -205
  -216
  -227
  -239
Free cash flow, $m
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Issuance/(repayment) of debt, $m
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  35
  37
  39
  41
  42
  44
  46
  49
  51
  53
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  
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  35
  37
  39
  41
  42
  44
  46
  49
  51
  53
Total cash flow (excl. dividends), $m
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  54
  57
  60
Retained Cash Flow (-), $m
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
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
  2
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
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
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  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
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Natural Grocers By Vitamin Cottage Inc. (Natural Grocers) is a specialty retailer of natural and organic groceries and dietary supplements. The Company sells natural and organic groceries and dietary supplements. The Company’s grocery products include: bulk food and private label products, dry, frozen and canned groceries, meats and seafood, dairy products and dairy substitutes, prepared foods, bread and baked goods, and beverages. Natural Grocers’ other products include body care, pet care, household and general merchandise, and books and handouts. The Company’s 107,000 square foot bulk food repackaging facility and distribution center is in Golden, Colorado. The Company stock approximately 400 titles in its book department. Titles cover various approaches to diet, lifestyle and health. The Company’s subsidiaries include Vitamin Cottage Natural Food Markets, Inc. and Vitamin Cottage Two Ltd. Liability Company and Natural Systems, LLC.

FINANCIAL RATIOS  of  Natural Grocers by Vitamin Cottage (NGVC)

Valuation Ratios
P/E Ratio 54
Price to Sales 0.5
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate 8.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.1%
Cap. Spend. - 3 Yr. Gr. Rate 2.1%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 45.5%
Total Debt to Equity 46.3%
Interest Coverage 11
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 7.5%
Return On Equity 5.4%
Return On Equity - 3 Yr. Avg. 9.8%
Asset Turnover 2.6
Profitability Ratios
Gross Margin 27.6%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 5.3%
EBITDA Margin - 3 Yr. Avg. 6.3%
Operating Margin 1.8%
Oper. Margin - 3 Yr. Avg. 3.1%
Pre-Tax Margin 1.3%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin 0.9%
Net Profit Margin - 3 Yr. Avg. 1.7%
Effective Tax Rate 30%
Eff/ Tax Rate - 3 Yr. Avg. 34.6%
Payout Ratio 0%

NGVC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NGVC stock intrinsic value calculation we used $769.03 million for the last fiscal year's total revenue generated by Natural Grocers by Vitamin Cottage. The default revenue input number comes from 0001 income statement of Natural Grocers by Vitamin Cottage. 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 NGVC stock valuation model: a) initial revenue growth rate of 9.5% 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 NGVC is calculated based on our internal credit rating of Natural Grocers by Vitamin Cottage, 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 Natural Grocers by Vitamin Cottage.
    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 NGVC stock the variable cost ratio is equal to 97.1%.

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 NGVC 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 6.3% for Natural Grocers by Vitamin Cottage.

Corporate tax rate of 27% is the nominal tax rate for Natural Grocers by Vitamin Cottage. 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 NGVC 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 NGVC are equal to 23.9%.

Life of production assets of 6.3 years is the average useful life of capital assets used in Natural Grocers by Vitamin Cottage 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 NGVC is equal to 4%. 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 - $133.883 million for Natural Grocers by Vitamin Cottage - 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 22.364 million for Natural Grocers by Vitamin Cottage 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 Natural Grocers by Vitamin Cottage at the current share price and the inputted number of shares is $0.4 billion.

RELATED COMPANIES Price Int.Val. Rating
SFM Sprouts Farmer 27.45 30.06  buy
KR Kroger 31.37 31.05  hold
VSI Vitamin Shoppe 7.61 10.09  sell
WMT Walmart 103.87 83.10  hold

COMPANY NEWS

▶ Natural Grocers is hiring for new store in Woodland Park   [Oct-25-18 05:03PM  PR Newswire]
▶ Natural Grocers Announces Closure of Tulsa-Central Store   [Sep-10-18 03:25PM  PR Newswire]
▶ PRESS DIGEST -Wall Street Journal - Aug 27   [Aug-27-18 12:32AM  Reuters]
▶ Natural Grocers Shrug Off Amazon-Whole Foods Threat   [Aug-26-18 09:21PM  The Wall Street Journal]
▶ Natural Grocers Shrug Off Amazon-Whole Foods Threat   [03:55PM  The Wall Street Journal]
▶ Natural Grocers is hiring for new store in Dubuque   [Aug-20-18 07:07AM  PR Newswire]
▶ Natural Grocers is hiring for new store in Salida   [Aug-10-18 07:07AM  PR Newswire]
▶ Natural Grocers: Fiscal 3Q Earnings Snapshot   [05:05AM  Associated Press]
▶ Natural Grocers is hiring for new store in Fredricksburg   [Jun-26-18 03:32PM  PR Newswire]
▶ Natural Grocers Teams Up with HotSchedules   [Jun-04-18 09:30AM  GlobeNewswire]
▶ Bear of the Day: Farmer Bros (FARM)   [May-16-18 07:01AM  Zacks]
▶ Natural Grocers: Fiscal 2Q Earnings Snapshot   [May-03-18 06:48PM  Associated Press]
▶ Natural Grocers boosts minimum pay to $11 per hour   [Apr-18-18 07:22AM  PR Newswire]
▶ Top Cheap Stocks This Week   [Mar-10-18 09:02AM  Simply Wall St.]
▶ Natural Grocers is hiring for new store in Coos Bay   [Feb-15-18 01:53PM  PR Newswire]
▶ Heres how Walmart is taking on Amazon in the e-commerce battle   [Feb-08-18 11:16AM  Yahoo Finance Video]
▶ Natural Grocers misses 1Q profit forecasts   [Feb-01-18 05:25PM  Associated Press]
▶ Natural Grocers is hiring in Portland   [Jan-22-18 04:04PM  PR Newswire]
▶ Natural Grocers is hiring in Warrenton   [Dec-01-17 05:17PM  PR Newswire]

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