Intrinsic value of Natural Grocers by Vitamin Cottage, Inc. - NGVC

Previous Close

$11.03

  Intrinsic Value

$1.57

stock screener

  Rating & Target

str. sell

-86%

Previous close

$11.03

 
Intrinsic value

$1.57

 
Up/down potential

-86%

 
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 0.2

 

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, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  929
  1,012
  1,099
  1,189
  1,283
  1,380
  1,481
  1,587
  1,696
  1,810
  1,928
  2,051
  2,179
  2,312
  2,451
  2,596
  2,747
  2,904
  3,069
  3,241
  3,420
  3,607
  3,803
  4,008
  4,223
  4,447
  4,682
  4,928
  5,186
  5,456
Variable operating expenses, $m
  911
  993
  1,078
  1,166
  1,258
  1,353
  1,453
  1,556
  1,663
  1,775
  1,890
  2,011
  2,136
  2,267
  2,403
  2,545
  2,693
  2,847
  3,008
  3,177
  3,353
  3,536
  3,728
  3,929
  4,140
  4,360
  4,590
  4,831
  5,084
  5,349
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
  911
  993
  1,078
  1,166
  1,258
  1,353
  1,453
  1,556
  1,663
  1,775
  1,890
  2,011
  2,136
  2,267
  2,403
  2,545
  2,693
  2,847
  3,008
  3,177
  3,353
  3,536
  3,728
  3,929
  4,140
  4,360
  4,590
  4,831
  5,084
  5,349
Operating income, $m
  18
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  108
EBITDA, $m
  50
  55
  59
  64
  69
  75
  80
  86
  92
  98
  104
  111
  118
  125
  132
  140
  148
  157
  166
  175
  185
  195
  205
  217
  228
  240
  253
  266
  280
  295
Interest expense (income), $m
  1
  4
  5
  7
  8
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  43
  45
  48
  51
  55
  58
  61
  65
  69
Earnings before tax, $m
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  26
  27
  28
  30
  31
  32
  33
  34
  36
  37
  39
Tax expense, $m
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
Net income, $m
  10
  10
  10
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28

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
  336
  366
  397
  430
  464
  499
  536
  574
  613
  655
  697
  742
  788
  836
  887
  939
  993
  1,050
  1,110
  1,172
  1,237
  1,305
  1,376
  1,450
  1,527
  1,608
  1,693
  1,782
  1,876
  1,973
Adjusted assets (=assets-cash), $m
  336
  366
  397
  430
  464
  499
  536
  574
  613
  655
  697
  742
  788
  836
  887
  939
  993
  1,050
  1,110
  1,172
  1,237
  1,305
  1,376
  1,450
  1,527
  1,608
  1,693
  1,782
  1,876
  1,973
Revenue / Adjusted assets
  2.765
  2.765
  2.768
  2.765
  2.765
  2.766
  2.763
  2.765
  2.767
  2.763
  2.766
  2.764
  2.765
  2.766
  2.763
  2.765
  2.766
  2.766
  2.765
  2.765
  2.765
  2.764
  2.764
  2.764
  2.766
  2.766
  2.766
  2.765
  2.764
  2.765
Average production assets, $m
  207
  226
  245
  265
  286
  308
  330
  354
  378
  404
  430
  457
  486
  516
  547
  579
  613
  648
  684
  723
  763
  804
  848
  894
  942
  992
  1,044
  1,099
  1,157
  1,217
Working capital, $m
  25
  27
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  83
  87
  92
  97
  103
  108
  114
  120
  126
  133
  140
  147
Total debt, $m
  69
  85
  101
  118
  136
  155
  174
  194
  214
  236
  258
  281
  305
  331
  357
  384
  413
  442
  473
  506
  540
  575
  612
  651
  691
  734
  778
  824
  873
  924
Total liabilities, $m
  175
  191
  207
  224
  242
  261
  280
  300
  320
  342
  364
  387
  411
  437
  463
  490
  519
  548
  579
  612
  646
  681
  718
  757
  797
  840
  884
  930
  979
  1,030
Total equity, $m
  161
  175
  190
  206
  222
  239
  256
  274
  293
  313
  333
  355
  377
  400
  424
  449
  475
  502
  531
  560
  591
  624
  658
  693
  730
  769
  809
  852
  897
  943
Total liabilities and equity, $m
  336
  366
  397
  430
  464
  500
  536
  574
  613
  655
  697
  742
  788
  837
  887
  939
  994
  1,050
  1,110
  1,172
  1,237
  1,305
  1,376
  1,450
  1,527
  1,609
  1,693
  1,782
  1,876
  1,973
Debt-to-equity ratio
  0.430
  0.490
  0.530
  0.580
  0.610
  0.650
  0.680
  0.710
  0.730
  0.750
  0.770
  0.790
  0.810
  0.830
  0.840
  0.860
  0.870
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.950
  0.960
  0.970
  0.970
  0.980
Adjusted equity ratio
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10
  10
  10
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
Depreciation, amort., depletion, $m
  32
  35
  38
  41
  45
  48
  51
  55
  59
  63
  66
  70
  75
  79
  84
  89
  94
  100
  105
  111
  117
  124
  130
  138
  145
  153
  161
  169
  178
  187
Funds from operations, $m
  42
  45
  49
  52
  56
  60
  63
  67
  72
  76
  80
  85
  90
  95
  100
  106
  112
  118
  124
  130
  137
  145
  152
  160
  168
  177
  186
  195
  205
  215
Change in working capital, $m
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Cash from operations, $m
  40
  43
  46
  50
  53
  57
  61
  65
  69
  73
  77
  82
  86
  91
  97
  102
  108
  113
  119
  126
  133
  139
  147
  154
  162
  171
  179
  188
  198
  208
Maintenance CAPEX, $m
  -29
  -32
  -35
  -38
  -41
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -94
  -100
  -105
  -111
  -117
  -124
  -130
  -138
  -145
  -153
  -161
  -169
  -178
New CAPEX, $m
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
Cash from investing activities, $m
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -74
  -78
  -83
  -88
  -93
  -99
  -105
  -110
  -116
  -123
  -129
  -137
  -143
  -151
  -159
  -168
  -176
  -186
  -195
  -205
  -216
  -226
  -238
Free cash flow, $m
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
Issuance/(repayment) of debt, $m
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
Issuance/(repurchase) of shares, $m
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  17
  19
Cash from financing (excl. dividends), $m  
  19
  20
  21
  22
  23
  23
  25
  26
  27
  27
  28
  30
  31
  32
  34
  35
  38
  39
  41
  42
  45
  47
  49
  52
  54
  57
  60
  63
  66
  70
Total cash flow (excl. dividends), $m
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  39
Retained Cash Flow (-), $m
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
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
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
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
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.4
  96.9
  95.4
  94.0
  92.7
  91.4
  90.1
  88.9
  87.8
  86.6
  85.6
  84.6
  83.6
  82.7
  81.7
  80.8
  79.9
  78.9
  78.0
  77.2
  76.3
  75.4
  74.5
  73.6
  72.8
  71.9
  71.1
  70.2
  69.4
  68.5

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, Inc. (NGVC)

Valuation Ratios
P/E Ratio 35.4
Price to Sales 0.3
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 6
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 $849 million for the last fiscal year's total revenue generated by Natural Grocers by Vitamin Cottage, Inc.. The default revenue input number comes from 0001 income statement of Natural Grocers by Vitamin Cottage, 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 NGVC stock valuation model: a) initial revenue growth rate of 9.4% 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, 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 Natural Grocers by Vitamin Cottage, 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 NGVC stock the variable cost ratio is equal to 98.1%.

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 7.9% for Natural Grocers by Vitamin Cottage, Inc..

Corporate tax rate of 27% is the nominal tax rate for Natural Grocers by Vitamin Cottage, 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 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 22.3%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Natural Grocers by Vitamin Cottage, 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 NGVC is equal to 2.7%. 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 - $146.726 million for Natural Grocers by Vitamin Cottage, 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 22.407 million for Natural Grocers by Vitamin Cottage, 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 Natural Grocers by Vitamin Cottage, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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