Intrinsic value of PGT Innovations - PGTI

Previous Close

$21.55

  Intrinsic Value

$12.04

stock screener

  Rating & Target

sell

-44%

Previous close

$21.55

 
Intrinsic value

$12.04

 
Up/down potential

-44%

 
Rating

sell

We calculate the intrinsic value of PGTI 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 2017), $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 1.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.50
  10.85
  10.27
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.20
  6.08
  5.98
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
Revenue, $m
  570
  632
  696
  764
  835
  909
  986
  1,066
  1,149
  1,235
  1,325
  1,418
  1,515
  1,616
  1,721
  1,830
  1,943
  2,061
  2,185
  2,313
  2,447
  2,587
  2,733
  2,885
  3,044
  3,211
  3,385
  3,567
  3,757
  3,956
Variable operating expenses, $m
  498
  550
  604
  661
  720
  782
  846
  912
  982
  1,054
  1,107
  1,185
  1,266
  1,350
  1,437
  1,528
  1,623
  1,722
  1,825
  1,932
  2,044
  2,161
  2,283
  2,410
  2,543
  2,682
  2,827
  2,979
  3,139
  3,305
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
  498
  550
  604
  661
  720
  782
  846
  912
  982
  1,054
  1,107
  1,185
  1,266
  1,350
  1,437
  1,528
  1,623
  1,722
  1,825
  1,932
  2,044
  2,161
  2,283
  2,410
  2,543
  2,682
  2,827
  2,979
  3,139
  3,305
Operating income, $m
  72
  82
  92
  104
  115
  127
  140
  153
  167
  181
  218
  233
  249
  266
  283
  301
  320
  339
  360
  381
  403
  426
  450
  475
  501
  529
  557
  587
  619
  651
EBITDA, $m
  128
  142
  157
  172
  188
  205
  222
  240
  259
  278
  299
  320
  341
  364
  388
  412
  438
  465
  492
  521
  551
  583
  616
  650
  686
  723
  763
  804
  847
  892
Interest expense (income), $m
  16
  19
  22
  24
  28
  31
  34
  38
  41
  45
  49
  53
  58
  62
  67
  72
  77
  82
  87
  93
  99
  105
  111
  118
  125
  132
  140
  148
  156
  165
  174
Earnings before tax, $m
  53
  60
  68
  76
  84
  93
  102
  112
  122
  132
  165
  176
  187
  199
  212
  225
  238
  252
  267
  282
  298
  315
  332
  350
  369
  389
  409
  431
  454
  477
Tax expense, $m
  14
  16
  18
  21
  23
  25
  28
  30
  33
  36
  44
  47
  51
  54
  57
  61
  64
  68
  72
  76
  80
  85
  90
  95
  100
  105
  111
  116
  123
  129
Net income, $m
  39
  44
  50
  55
  62
  68
  75
  82
  89
  96
  120
  128
  137
  145
  155
  164
  174
  184
  195
  206
  218
  230
  242
  256
  269
  284
  299
  315
  331
  349

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
  505
  560
  617
  678
  740
  806
  874
  945
  1,018
  1,095
  1,174
  1,257
  1,343
  1,432
  1,525
  1,622
  1,723
  1,827
  1,937
  2,051
  2,169
  2,293
  2,422
  2,558
  2,699
  2,846
  3,001
  3,162
  3,331
  3,507
Adjusted assets (=assets-cash), $m
  505
  560
  617
  678
  740
  806
  874
  945
  1,018
  1,095
  1,174
  1,257
  1,343
  1,432
  1,525
  1,622
  1,723
  1,827
  1,937
  2,051
  2,169
  2,293
  2,422
  2,558
  2,699
  2,846
  3,001
  3,162
  3,331
  3,507
Revenue / Adjusted assets
  1.129
  1.129
  1.128
  1.127
  1.128
  1.128
  1.128
  1.128
  1.129
  1.128
  1.129
  1.128
  1.128
  1.128
  1.129
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
  1.128
Average production assets, $m
  346
  383
  423
  464
  507
  552
  598
  647
  697
  750
  804
  861
  920
  981
  1,044
  1,111
  1,180
  1,251
  1,326
  1,404
  1,485
  1,570
  1,659
  1,751
  1,848
  1,949
  2,054
  2,165
  2,281
  2,402
Working capital, $m
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
Total debt, $m
  244
  278
  313
  350
  389
  429
  471
  514
  559
  606
  655
  705
  758
  813
  870
  929
  991
  1,055
  1,122
  1,192
  1,265
  1,341
  1,420
  1,503
  1,589
  1,680
  1,774
  1,873
  1,977
  2,085
Total liabilities, $m
  310
  343
  378
  415
  454
  494
  536
  579
  624
  671
  720
  771
  823
  878
  935
  994
  1,056
  1,120
  1,187
  1,257
  1,330
  1,406
  1,485
  1,568
  1,654
  1,745
  1,839
  1,938
  2,042
  2,150
Total equity, $m
  195
  217
  239
  262
  286
  312
  338
  366
  394
  424
  455
  487
  520
  554
  590
  628
  667
  707
  750
  794
  840
  887
  938
  990
  1,044
  1,101
  1,161
  1,224
  1,289
  1,357
Total liabilities and equity, $m
  505
  560
  617
  677
  740
  806
  874
  945
  1,018
  1,095
  1,175
  1,258
  1,343
  1,432
  1,525
  1,622
  1,723
  1,827
  1,937
  2,051
  2,170
  2,293
  2,423
  2,558
  2,698
  2,846
  3,000
  3,162
  3,331
  3,507
Debt-to-equity ratio
  1.250
  1.280
  1.310
  1.340
  1.360
  1.380
  1.390
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.470
  1.480
  1.490
  1.490
  1.500
  1.500
  1.510
  1.510
  1.510
  1.520
  1.520
  1.520
  1.530
  1.530
  1.530
  1.540
Adjusted equity ratio
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  39
  44
  50
  55
  62
  68
  75
  82
  89
  96
  120
  128
  137
  145
  155
  164
  174
  184
  195
  206
  218
  230
  242
  256
  269
  284
  299
  315
  331
  349
Depreciation, amort., depletion, $m
  57
  61
  65
  69
  73
  77
  82
  87
  92
  97
  80
  86
  92
  98
  104
  111
  118
  125
  133
  140
  149
  157
  166
  175
  185
  195
  205
  216
  228
  240
Funds from operations, $m
  95
  105
  114
  124
  135
  145
  157
  169
  181
  194
  201
  214
  229
  244
  259
  275
  292
  309
  327
  346
  366
  387
  408
  431
  454
  479
  504
  531
  559
  589
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  96
  105
  115
  125
  135
  146
  157
  169
  181
  194
  201
  215
  229
  244
  260
  276
  292
  310
  328
  347
  367
  387
  409
  432
  455
  480
  505
  532
  560
  590
Maintenance CAPEX, $m
  -31
  -35
  -38
  -42
  -46
  -51
  -55
  -60
  -65
  -70
  -75
  -80
  -86
  -92
  -98
  -104
  -111
  -118
  -125
  -133
  -140
  -149
  -157
  -166
  -175
  -185
  -195
  -205
  -216
  -228
New CAPEX, $m
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -50
  -52
  -54
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -89
  -92
  -97
  -101
  -106
  -110
  -116
  -121
Cash from investing activities, $m
  -67
  -73
  -77
  -83
  -89
  -96
  -102
  -109
  -115
  -122
  -129
  -137
  -145
  -153
  -162
  -170
  -180
  -190
  -200
  -211
  -221
  -234
  -246
  -258
  -272
  -286
  -301
  -315
  -332
  -349
Free cash flow, $m
  29
  33
  37
  41
  46
  50
  55
  61
  66
  72
  72
  78
  84
  91
  98
  105
  113
  120
  128
  137
  145
  154
  163
  173
  183
  194
  205
  216
  228
  241
Issuance/(repayment) of debt, $m
  32
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  87
  90
  95
  99
  104
  108
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  
  32
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  87
  90
  95
  99
  104
  108
Total cash flow (excl. dividends), $m
  61
  66
  72
  78
  84
  91
  97
  104
  111
  119
  121
  129
  137
  146
  155
  164
  174
  184
  195
  206
  218
  230
  243
  256
  270
  284
  299
  315
  332
  349
Retained Cash Flow (-), $m
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -62
  -65
  -68
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
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
Cash available for distribution, $m
  40
  45
  50
  55
  60
  65
  71
  77
  83
  89
  90
  97
  104
  111
  119
  127
  135
  144
  153
  162
  172
  182
  193
  204
  215
  227
  240
  253
  266
  281
Discount rate, %
  6.40
  6.72
  7.06
  7.41
  7.78
  8.17
  8.58
  9.01
  9.46
  9.93
  10.42
  10.95
  11.49
  12.07
  12.67
  13.31
  13.97
  14.67
  15.40
  16.17
  16.98
  17.83
  18.72
  19.66
  20.64
  21.67
  22.76
  23.89
  25.09
  26.34
PV of cash for distribution, $m
  38
  40
  41
  41
  41
  41
  40
  38
  37
  35
  30
  28
  25
  23
  20
  17
  15
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

PGT Innovations, Inc., formerly PGT, Inc., is a manufacturer of impact-resistant windows and doors. The Company's brands include CGI, PGT Windows + Doors and WinDoor. CGI serves residential and commercial markets in both new and existing construction. CGI manufacturing and delivery facilities are based in Miami, Florida. PGT Custom Windows + Doors is a manufacturer and supplier of residential impact-resistant glass products. The Company's manufacturing, glass plant, and delivery facilities are located in North Venice, Florida. WinDoor serves five-star resorts, luxury high-rise condominiums and mansions along the United States coastline. WinDoor’s aluminum and vinyl products come in an array of expansive sizes, custom colors, and configurations. WinDoor manufacturing and delivery facilities are based in Orlando, Florida.

FINANCIAL RATIOS  of  PGT Innovations (PGTI)

Valuation Ratios
P/E Ratio 44.2
Price to Sales 2.3
Price to Book 8
Price to Tangible Book
Price to Cash Flow 23
Price to Free Cash Flow 37.9
Growth Rates
Sales Growth Rate 17.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5.9%
Cap. Spend. - 3 Yr. Gr. Rate 17.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 186.5%
Total Debt to Equity 186.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 8.6%
Return On Total Capital 7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 20%
Return On Equity - 3 Yr. Avg. 24.2%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 30.5%
Gross Margin - 3 Yr. Avg. 30.5%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 13.9%
Operating Margin 12.2%
Oper. Margin - 3 Yr. Avg. 12%
Pre-Tax Margin 7.8%
Pre-Tax Margin - 3 Yr. Avg. 8.8%
Net Profit Margin 5.2%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.8%
Payout Ratio 0%

PGTI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PGTI stock intrinsic value calculation we used $511 million for the last fiscal year's total revenue generated by PGT Innovations. The default revenue input number comes from 2017 income statement of PGT Innovations. 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 PGTI stock valuation model: a) initial revenue growth rate of 11.5% 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 6.4%, whose default value for PGTI is calculated based on our internal credit rating of PGT Innovations, 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 PGT Innovations.
    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 PGTI stock the variable cost ratio is equal to 87.9%.

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 PGTI 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 8.8% for PGT Innovations.

Corporate tax rate of 27% is the nominal tax rate for PGT Innovations. 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 PGTI stock is equal to 0.4%.

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 PGTI are equal to 60.7%.

Life of production assets of 10 years is the average useful life of capital assets used in PGT Innovations 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 PGTI is equal to -0.6%. 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 - $175 million for PGT Innovations - 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 50 million for PGT Innovations 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 PGT Innovations at the current share price and the inputted number of shares is $1.1 billion.

RELATED COMPANIES Price Int.Val. Rating
GFF Griffon 18.50 14.79  hold
NX Quanex Buildin 17.80 9.24  sell
AWI Armstrong Worl 68.00 21.89  str.sell
ROCK Gibraltar Indu 39.30 28.52  hold
HBP Huttig Buildin 4.30 4.81  hold

COMPANY NEWS

▶ CGIs Sparta Brings Strength and Affordability to Homeowners   [Jul-16-18 09:26AM  Business Wire]
▶ 6 Winning Stocks to Buy as Housing Starts Hit 11-Yr High   [Jun-20-18 11:00AM  InvestorPlace]
▶ Florida Governor Visits PGT Innovations   [May-11-18 04:37PM  Business Wire]
▶ 3 Momentum ETFs & Stocks to Buy as Market Bounces Back   [May-08-18 11:50AM  InvestorPlace]
▶ PGT: 1Q Earnings Snapshot   [May-01-18 08:31AM  Associated Press]
▶ PGTI Reports First Quarter 2018 Results   [07:30AM  Business Wire]
▶ 5 Stocks to Buy as Housing Data Remains Bullish   [Apr-25-18 08:25AM  Zacks]
▶ PGT beats Street 4Q forecasts   [Feb-20-18 06:35AM  Associated Press]
▶ PGT misses Street 3Q forecasts   [Nov-02-17 06:06AM  Associated Press]
▶ PGT Innovations Embraces Heroes   [Oct-23-17 07:00AM  Business Wire]
▶ Sarasota County's biggest employer names a new CEO   [Oct-13-17 07:55AM  American City Business Journals]
▶ Boise Cascade Shows Market Leadership With Jump To 91 RS Rating   [Sep-26-17 03:00AM  Investor's Business Daily]
▶ How a $28M sale by PGT will impact the companys workers   [Sep-22-17 01:50PM  American City Business Journals]
▶ PGT tops Street 2Q forecasts   [Aug-03-17 05:39PM  Associated Press]
▶ PGT Innovations Executives Ring NYSE Bell   [Aug-01-17 07:00AM  Business Wire]
▶ PGT meets 1Q profit forecasts   [May-04-17 06:28AM  Associated Press]
▶ PGT Innovations Announces Expansion Plans in Miami   [Apr-21-17 08:00AM  Business Wire]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

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

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