Intrinsic value of National Presto Industries - NPK

Previous Close

$127.92

  Intrinsic Value

$78.63

stock screener

  Rating & Target

sell

-39%

Previous close

$127.92

 
Intrinsic value

$78.63

 
Up/down potential

-39%

 
Rating

sell

We calculate the intrinsic value of NPK 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 0.9

 

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, %
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
Revenue, $m
  352
  371
  391
  412
  434
  457
  481
  506
  533
  561
  590
  620
  652
  685
  720
  757
  796
  836
  878
  923
  970
  1,019
  1,070
  1,124
  1,181
  1,240
  1,303
  1,368
  1,437
  1,509
Variable operating expenses, $m
  287
  303
  319
  336
  354
  373
  393
  413
  434
  457
  479
  504
  530
  557
  585
  615
  646
  679
  714
  750
  788
  828
  870
  913
  959
  1,008
  1,058
  1,112
  1,168
  1,226
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
  287
  303
  319
  336
  354
  373
  393
  413
  434
  457
  479
  504
  530
  557
  585
  615
  646
  679
  714
  750
  788
  828
  870
  913
  959
  1,008
  1,058
  1,112
  1,168
  1,226
Operating income, $m
  64
  68
  72
  76
  80
  84
  89
  93
  98
  104
  111
  116
  122
  128
  135
  142
  149
  157
  165
  173
  182
  191
  201
  211
  221
  232
  244
  256
  269
  283
EBITDA, $m
  75
  79
  83
  88
  93
  97
  103
  108
  114
  120
  126
  132
  139
  146
  154
  161
  170
  178
  187
  197
  207
  217
  228
  240
  252
  264
  278
  292
  306
  322
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
Earnings before tax, $m
  64
  68
  72
  75
  79
  83
  88
  92
  97
  102
  109
  114
  120
  126
  132
  139
  146
  153
  161
  169
  177
  186
  196
  205
  215
  226
  237
  249
  262
  275
Tax expense, $m
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  39
  41
  43
  46
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
Net income, $m
  47
  50
  52
  55
  58
  61
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  107
  112
  117
  123
  130
  136
  143
  150
  157
  165
  173
  182
  191
  201

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
  318
  336
  354
  373
  393
  413
  435
  458
  482
  507
  533
  561
  589
  620
  651
  684
  719
  756
  794
  835
  877
  921
  968
  1,016
  1,068
  1,121
  1,178
  1,237
  1,299
  1,364
Adjusted assets (=assets-cash), $m
  318
  336
  354
  373
  393
  413
  435
  458
  482
  507
  533
  561
  589
  620
  651
  684
  719
  756
  794
  835
  877
  921
  968
  1,016
  1,068
  1,121
  1,178
  1,237
  1,299
  1,364
Revenue / Adjusted assets
  1.107
  1.104
  1.105
  1.105
  1.104
  1.107
  1.106
  1.105
  1.106
  1.107
  1.107
  1.105
  1.107
  1.105
  1.106
  1.107
  1.107
  1.106
  1.106
  1.105
  1.106
  1.106
  1.105
  1.106
  1.106
  1.106
  1.106
  1.106
  1.106
  1.106
Average production assets, $m
  58
  61
  65
  68
  72
  75
  79
  84
  88
  92
  97
  102
  108
  113
  119
  125
  131
  138
  145
  152
  160
  168
  177
  185
  195
  205
  215
  226
  237
  249
Working capital, $m
  145
  153
  161
  170
  179
  188
  198
  209
  220
  231
  243
  255
  269
  282
  297
  312
  328
  344
  362
  380
  400
  420
  441
  463
  486
  511
  537
  564
  592
  622
Total debt, $m
  3
  5
  8
  11
  14
  17
  20
  24
  27
  31
  35
  39
  43
  48
  53
  58
  63
  69
  74
  81
  87
  94
  101
  108
  116
  124
  132
  141
  151
  161
Total liabilities, $m
  48
  51
  53
  56
  59
  62
  66
  69
  73
  77
  80
  85
  89
  94
  98
  103
  109
  114
  120
  126
  132
  139
  146
  153
  161
  169
  178
  187
  196
  206
Total equity, $m
  270
  285
  300
  316
  333
  351
  369
  389
  409
  430
  453
  476
  500
  526
  553
  581
  611
  642
  674
  709
  744
  782
  821
  863
  906
  952
  1,000
  1,050
  1,103
  1,158
Total liabilities and equity, $m
  318
  336
  353
  372
  392
  413
  435
  458
  482
  507
  533
  561
  589
  620
  651
  684
  720
  756
  794
  835
  876
  921
  967
  1,016
  1,067
  1,121
  1,178
  1,237
  1,299
  1,364
Debt-to-equity ratio
  0.010
  0.020
  0.030
  0.030
  0.040
  0.050
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.130
  0.140
  0.140
Adjusted equity ratio
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849
  0.849

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  47
  50
  52
  55
  58
  61
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  107
  112
  117
  123
  130
  136
  143
  150
  157
  165
  173
  182
  191
  201
Depreciation, amort., depletion, $m
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
  39
Funds from operations, $m
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  155
  162
  170
  179
  188
  197
  207
  217
  228
  239
Change in working capital, $m
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Cash from operations, $m
  50
  53
  56
  58
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  123
  129
  135
  142
  149
  157
  164
  173
  181
  190
  200
  210
Maintenance CAPEX, $m
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -34
  -35
  -37
New CAPEX, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Cash from investing activities, $m
  -12
  -12
  -13
  -13
  -15
  -15
  -16
  -16
  -17
  -19
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -34
  -37
  -38
  -40
  -42
  -45
  -46
  -49
Free cash flow, $m
  39
  41
  43
  45
  47
  50
  52
  55
  58
  61
  63
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  114
  120
  126
  132
  139
  146
  153
  161
Issuance/(repayment) of debt, $m
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
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  
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
Total cash flow (excl. dividends), $m
  41
  43
  45
  48
  50
  53
  56
  58
  61
  65
  67
  71
  74
  78
  82
  86
  91
  95
  100
  105
  110
  116
  121
  127
  134
  140
  147
  155
  163
  171
Retained Cash Flow (-), $m
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -46
  -48
  -50
  -53
  -55
Prev. year cash balance distribution, $m
  110
  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
  137
  28
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  95
  100
  105
  110
  115
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
  132
  26
  26
  26
  26
  26
  25
  24
  24
  23
  21
  20
  19
  18
  16
  15
  13
  12
  10
  9
  8
  6
  5
  4
  4
  3
  2
  2
  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

National Presto Industries, Inc. operates through two business segments: the Housewares/Small Appliance segment and the Defense segment. The Housewares/Small Appliance segment designs, markets and distributes housewares and small electrical appliances, including pressure cookers and canners, kitchen electrics and comfort appliances. The Defense segment manufactures 40 millimeter (mm) ammunition, precision mechanical and electro-mechanical assemblies, and medium caliber cartridge cases; performs Load, Assemble and Pack (LAP) operations on ordnance-related products primarily for the United States Government and prime contractors; produces and sells a range of less lethal products and support accessories, and provides training for the use of less lethal products, and manufactures detonators, booster pellets, release cartridges, lead azide, and other military energetic devices and materials. The Company's Defense segment includes the operations of AMTEC Corporation.

FINANCIAL RATIOS  of  National Presto Industries (NPK)

Valuation Ratios
P/E Ratio 19.8
Price to Sales 2.6
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 13.5
Price to Free Cash Flow 15.1
Growth Rates
Sales Growth Rate -3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.7%
Cap. Spend. - 3 Yr. Gr. Rate -34.5%
Financial Strength
Quick Ratio NaN
Current Ratio 1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.2%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 13.1%
Ret/ On T. Cap. - 3 Yr. Avg. 11.1%
Return On Equity 13.1%
Return On Equity - 3 Yr. Avg. 11.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 25.1%
Gross Margin - 3 Yr. Avg. 24.5%
EBITDA Margin 22.8%
EBITDA Margin - 3 Yr. Avg. 21.4%
Operating Margin 18.4%
Oper. Margin - 3 Yr. Avg. 16.5%
Pre-Tax Margin 18.4%
Pre-Tax Margin - 3 Yr. Avg. 16.5%
Net Profit Margin 13.2%
Net Profit Margin - 3 Yr. Avg. 10.7%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 33.1%
Payout Ratio 77.8%

NPK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NPK stock intrinsic value calculation we used $333.633 million for the last fiscal year's total revenue generated by National Presto Industries. The default revenue input number comes from 0001 income statement of National Presto 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 NPK stock valuation model: a) initial revenue growth rate of 5.5% 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 NPK is calculated based on our internal credit rating of National Presto 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 National Presto 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 NPK stock the variable cost ratio is equal to 81.7%.

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 NPK 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 National Presto Industries.

Corporate tax rate of 27% is the nominal tax rate for National Presto 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 NPK 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 NPK are equal to 16.5%.

Life of production assets of 6.4 years is the average useful life of capital assets used in National Presto 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 NPK is equal to 41.2%. 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 - $366.376 million for National Presto 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 6.978 million for National Presto 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 National Presto Industries at the current share price and the inputted number of shares is $0.9 billion.

RELATED COMPANIES Price Int.Val. Rating
RGR Sturm Ruger 56.93 43.16  sell
TRS TriMas 30.14 0.17  str.sell

COMPANY NEWS

▶ 3 High-Yield Stocks Still Worth Buying   [Oct-30-18 10:42AM  Motley Fool]
▶ National Presto: 3Q Earnings Snapshot   [Oct-26-18 04:48PM  Associated Press]
▶ Top Industrial Dividend Yielding Stocks To Profit From   [Jun-09-18 12:02PM  Simply Wall St.]
▶ Best Industrial Dividend Stock Picks   [May-05-18 12:02PM  Simply Wall St.]
▶ Best Industrial Dividend Paying Stock in March   [Mar-31-18 12:02PM  Simply Wall St.]
▶ January Top Industrial Dividend Stock   [Jan-20-18 11:02AM  Simply Wall St.]
▶ Best NasdaqGM Industrial Dividend Picks For The Day   [Dec-16-17 11:02AM  Simply Wall St.]
▶ 5 Industrial Companies Gurus Are Buying   [Dec-13-17 04:08PM  GuruFocus.com]
▶ 6 Stocks With Negative Performances   [12:34PM  GuruFocus.com]
▶ Defense And Aerospace Stocks To Watch And Industry News   [Aug-29-17 09:50AM  Investor's Business Daily]
▶ National Presto posts 1Q profit   [Apr-28-17 04:30PM  Associated Press]
▶ Is Intellia Therapeutics Inc (NTLA) A Good Stock To Buy?   [Dec-12-16 08:33PM  Insider Monkey]
▶ Hedge Funds Are Crazy About Monster Worldwide, Inc. (MWW)   [Nov-27  08:59AM  at Insider Monkey]
▶ 10-Q for National Presto Industries, Inc.   [Aug-16  08:12PM  at Company Spotlight]
▶ 10-Q for National Presto Industries, Inc.   [May-17  08:11PM  at Company Spotlight]
▶ 10-K for National Presto Industries, Inc.   [May-04  08:12PM  at Company Spotlight]
▶ First Quarter 2015 Sales and Earnings   [May-01  04:19PM  at noodls]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.