Intrinsic value of Park Electrochemical - PKE

Previous Close

$19.76

  Intrinsic Value

$9.38

stock screener

  Rating & Target

str. sell

-53%

Previous close

$19.76

 
Intrinsic value

$9.38

 
Up/down potential

-53%

 
Rating

str. sell

We calculate the intrinsic value of PKE 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, %
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.62
  8.25
  7.93
  7.64
  7.37
  7.14
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
Revenue, $m
  126
  142
  159
  176
  195
  214
  235
  256
  278
  301
  325
  349
  375
  402
  430
  459
  489
  520
  552
  586
  622
  658
  697
  737
  779
  822
  868
  915
  965
  1,017
Variable operating expenses, $m
  115
  129
  144
  160
  177
  194
  212
  231
  251
  272
  292
  315
  338
  362
  387
  413
  440
  468
  498
  528
  560
  593
  628
  664
  702
  741
  782
  825
  870
  917
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
  115
  129
  144
  160
  177
  194
  212
  231
  251
  272
  292
  315
  338
  362
  387
  413
  440
  468
  498
  528
  560
  593
  628
  664
  702
  741
  782
  825
  870
  917
Operating income, $m
  11
  13
  15
  16
  18
  20
  22
  24
  26
  29
  32
  35
  37
  40
  42
  45
  48
  51
  55
  58
  61
  65
  69
  73
  77
  81
  86
  90
  95
  101
EBITDA, $m
  15
  17
  19
  21
  24
  26
  28
  31
  34
  36
  39
  42
  45
  49
  52
  56
  59
  63
  67
  71
  75
  80
  84
  89
  94
  100
  105
  111
  117
  123
Interest expense (income), $m
  1
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
Earnings before tax, $m
  11
  13
  14
  16
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
  62
  65
  68
  72
  76
  80
  84
Tax expense, $m
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  18
  19
  21
  22
  23
Net income, $m
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  55
  58
  61

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
  83
  93
  104
  116
  128
  141
  154
  168
  183
  198
  213
  230
  247
  264
  283
  302
  321
  342
  363
  386
  409
  433
  458
  485
  512
  541
  571
  602
  635
  669
Adjusted assets (=assets-cash), $m
  83
  93
  104
  116
  128
  141
  154
  168
  183
  198
  213
  230
  247
  264
  283
  302
  321
  342
  363
  386
  409
  433
  458
  485
  512
  541
  571
  602
  635
  669
Revenue / Adjusted assets
  1.518
  1.527
  1.529
  1.517
  1.523
  1.518
  1.526
  1.524
  1.519
  1.520
  1.526
  1.517
  1.518
  1.523
  1.519
  1.520
  1.523
  1.520
  1.521
  1.518
  1.521
  1.520
  1.522
  1.520
  1.521
  1.519
  1.520
  1.520
  1.520
  1.520
Average production assets, $m
  26
  29
  32
  36
  40
  43
  48
  52
  56
  61
  66
  71
  76
  82
  87
  93
  99
  106
  112
  119
  126
  134
  141
  150
  158
  167
  176
  186
  196
  207
Working capital, $m
  24
  27
  30
  33
  36
  40
  44
  48
  52
  56
  61
  65
  70
  75
  80
  86
  91
  97
  103
  110
  116
  123
  130
  138
  146
  154
  162
  171
  180
  190
Total debt, $m
  5
  9
  14
  20
  25
  31
  38
  44
  51
  58
  65
  72
  80
  88
  97
  106
  115
  124
  134
  144
  155
  166
  178
  190
  203
  216
  230
  244
  260
  275
Total liabilities, $m
  38
  43
  48
  54
  59
  65
  71
  78
  84
  91
  99
  106
  114
  122
  131
  139
  149
  158
  168
  178
  189
  200
  212
  224
  237
  250
  264
  278
  293
  309
Total equity, $m
  45
  50
  56
  62
  69
  76
  83
  91
  98
  106
  115
  124
  133
  142
  152
  162
  173
  184
  196
  208
  220
  233
  247
  261
  276
  291
  307
  324
  342
  360
Total liabilities and equity, $m
  83
  93
  104
  116
  128
  141
  154
  169
  182
  197
  214
  230
  247
  264
  283
  301
  322
  342
  364
  386
  409
  433
  459
  485
  513
  541
  571
  602
  635
  669
Debt-to-equity ratio
  0.100
  0.190
  0.260
  0.320
  0.370
  0.410
  0.450
  0.490
  0.520
  0.540
  0.560
  0.590
  0.600
  0.620
  0.640
  0.650
  0.660
  0.680
  0.690
  0.700
  0.710
  0.710
  0.720
  0.730
  0.740
  0.740
  0.750
  0.750
  0.760
  0.760
Adjusted equity ratio
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  55
  58
  61
Depreciation, amort., depletion, $m
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  22
  23
Funds from operations, $m
  12
  13
  15
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
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
  7
  8
  8
  9
  9
  9
  10
Cash from operations, $m
  9
  10
  12
  13
  14
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  36
  38
  40
  43
  45
  48
  51
  54
  57
  60
  64
  67
  71
  74
Maintenance CAPEX, $m
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -22
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Cash from investing activities, $m
  -5
  -6
  -6
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -13
  -15
  -16
  -16
  -17
  -19
  -19
  -20
  -21
  -23
  -24
  -24
  -26
  -27
  -29
  -30
  -33
Free cash flow, $m
  4
  4
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  42
Issuance/(repayment) of debt, $m
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
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  
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
Total cash flow (excl. dividends), $m
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  52
  55
  58
Retained Cash Flow (-), $m
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
Prev. year cash balance distribution, $m
  96
  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
  99
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  23
  25
  27
  28
  30
  32
  34
  36
  38
  40
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
  95
  3
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  4
  3
  3
  2
  2
  2
  1
  1
  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

Park Electrochemical Corp. is a global advanced materials company. The Company develops, manufactures, markets and sells digital and radio frequency (RF)/microwave printed circuit materials products principally for the telecommunications and Internet infrastructure and high-end computing markets and advanced composite materials, parts and assemblies and low-volume tooling products for the aerospace markets. The Company operates through integrated business units in Asia, Europe and North America. The Company's manufacturing facilities are located in Singapore, France, Kansas, Arizona and California. The Company also maintains research and development facilities in Arizona, Kansas and Singapore. The Company's foreign operations are conducted principally by the Company's subsidiaries in Singapore and France.

FINANCIAL RATIOS  of  Park Electrochemical (PKE)

Valuation Ratios
P/E Ratio 44.4
Price to Sales 3.5
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 30.7
Price to Free Cash Flow 30.7
Growth Rates
Sales Growth Rate -21.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 60
Current Ratio 0
LT Debt to Equity 37.2%
Total Debt to Equity 39.3%
Interest Coverage 11
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 4.9%
Return On Equity - 3 Yr. Avg. 8.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 26.1%
Gross Margin - 3 Yr. Avg. 28.6%
EBITDA Margin 12.2%
EBITDA Margin - 3 Yr. Avg. 15.5%
Operating Margin 8.7%
Oper. Margin - 3 Yr. Avg. 12.4%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 12.4%
Net Profit Margin 7.8%
Net Profit Margin - 3 Yr. Avg. 10.8%
Effective Tax Rate 10%
Eff/ Tax Rate - 3 Yr. Avg. 12.4%
Payout Ratio 88.9%

PKE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PKE stock intrinsic value calculation we used $111.196 million for the last fiscal year's total revenue generated by Park Electrochemical. The default revenue input number comes from 0001 income statement of Park Electrochemical. 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 PKE stock valuation model: a) initial revenue growth rate of 13.4% 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 PKE is calculated based on our internal credit rating of Park Electrochemical, 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 Park Electrochemical.
    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 PKE stock the variable cost ratio is equal to 91%.

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 PKE 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 Park Electrochemical.

Corporate tax rate of 27% is the nominal tax rate for Park Electrochemical. 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 PKE 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 PKE are equal to 20.3%.

Life of production assets of 9.1 years is the average useful life of capital assets used in Park Electrochemical 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 PKE is equal to 18.7%. 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 - $135.261 million for Park Electrochemical - 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 20.245 million for Park Electrochemical 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 Park Electrochemical at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ Park Electrochemical Corp. Declares Cash Dividend   [Sep-12-18 09:45AM  GlobeNewswire]
▶ Park Electrochemical Corp. Declares Cash Dividend   [Jun-12-18 04:30PM  GlobeNewswire]
▶ Park Electrochemical Corp. to Host Earnings Call   [May-07-18 08:45AM  ACCESSWIRE]
▶ Park Electrochemical Corp. Declares Cash Dividend   [Mar-14-18 09:40AM  GlobeNewswire]
▶ New Strong Sell Stocks for February 14th   [Feb-14-18 04:58AM  Zacks]
▶ New Strong Sell Stocks for February 6th   [Feb-06-18 08:48AM  Zacks]
▶ New Strong Sell Stocks for January 30th   [Jan-30-18 06:40AM  Zacks]
▶ New Strong Sell Stocks for January 16th   [Jan-16-18 05:44AM  Zacks]
▶ Park Electrochemical posts 3Q profit   [Jan-04-18 04:32PM  Associated Press]
▶ Park Electrochemical Corp. Declares Cash Dividend   [Dec-19-17 11:39AM  GlobeNewswire]
▶ Park Electrochemical posts 2Q profit   [Oct-03-17 11:57PM  Associated Press]
▶ Park Electrochemical Corp. Declares Cash Dividend   [Sep-13-17 09:52AM  GlobeNewswire]
▶ Park Electrochemical posts 1Q profit   [Jun-28-17 09:45PM  Associated Press]
▶ Park Electrochemical Corp. Declares Cash Dividend   [Jun-14-17 09:30AM  GlobeNewswire]
▶ Park Electrochemical posts 4Q profit   [May-02-17 06:47AM  Associated Press]
▶ Park Electrochemical Corp. Declares Cash Dividend   [Mar-15-17 02:21PM  GlobeNewswire]

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