Intrinsic value of Raven Industries - RAVN

Previous Close

$36.30

  Intrinsic Value

$1.51

stock screener

  Rating & Target

str. sell

-96%

Previous close

$36.30

 
Intrinsic value

$1.51

 
Up/down potential

-96%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of RAVN 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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, %
  7.36
  38.40
  35.06
  32.05
  29.35
  26.91
  24.72
  22.75
  20.98
  19.38
  17.94
  16.65
  15.48
  14.43
  13.49
  12.64
  11.88
  11.19
  10.57
  10.01
  9.51
  9.06
  8.65
  8.29
  7.96
  7.66
  7.40
  7.16
  6.94
  6.75
  6.57
Revenue, $m
  277
  383
  518
  684
  884
  1,122
  1,400
  1,718
  2,079
  2,482
  2,927
  3,414
  3,943
  4,512
  5,120
  5,768
  6,453
  7,175
  7,933
  8,727
  9,557
  10,423
  11,326
  12,264
  13,241
  14,255
  15,310
  16,406
  17,545
  18,729
  19,960
Variable operating expenses, $m
 
  376
  507
  668
  863
  1,094
  1,364
  1,673
  2,023
  2,414
  2,847
  3,316
  3,829
  4,382
  4,973
  5,601
  6,267
  6,968
  7,704
  8,476
  9,282
  10,123
  10,999
  11,911
  12,859
  13,845
  14,869
  15,933
  17,039
  18,189
  19,385
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
  249
  376
  507
  668
  863
  1,094
  1,364
  1,673
  2,023
  2,414
  2,847
  3,316
  3,829
  4,382
  4,973
  5,601
  6,267
  6,968
  7,704
  8,476
  9,282
  10,123
  10,999
  11,911
  12,859
  13,845
  14,869
  15,933
  17,039
  18,189
  19,385
Operating income, $m
  28
  7
  11
  16
  21
  28
  36
  45
  56
  67
  80
  98
  114
  130
  147
  166
  186
  207
  228
  251
  275
  300
  326
  353
  381
  411
  441
  473
  505
  539
  575
EBITDA, $m
  43
  27
  36
  48
  61
  78
  97
  119
  145
  173
  204
  237
  274
  314
  356
  401
  449
  499
  552
  607
  665
  725
  788
  853
  921
  991
  1,065
  1,141
  1,220
  1,302
  1,388
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  5
  6
  8
  10
  12
  14
  17
  20
  23
  26
  30
  33
  37
  42
  46
  50
  55
  60
  65
  70
  76
  81
  87
  94
  100
Earnings before tax, $m
  28
  7
  10
  14
  19
  25
  32
  39
  48
  58
  68
  84
  97
  110
  125
  140
  156
  173
  191
  210
  229
  250
  271
  293
  316
  340
  365
  391
  418
  446
  475
Tax expense, $m
  8
  2
  3
  4
  5
  7
  9
  11
  13
  16
  18
  23
  26
  30
  34
  38
  42
  47
  52
  57
  62
  67
  73
  79
  85
  92
  99
  106
  113
  120
  128
Net income, $m
  20
  5
  7
  10
  14
  18
  23
  29
  35
  42
  50
  61
  70
  80
  91
  102
  114
  126
  139
  153
  168
  182
  198
  214
  231
  248
  267
  285
  305
  325
  347

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  51
  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
  302
  347
  469
  619
  801
  1,017
  1,268
  1,557
  1,883
  2,248
  2,651
  3,093
  3,571
  4,087
  4,638
  5,224
  5,845
  6,499
  7,186
  7,905
  8,657
  9,441
  10,259
  11,109
  11,993
  12,912
  13,868
  14,860
  15,892
  16,964
  18,079
Adjusted assets (=assets-cash), $m
  251
  347
  469
  619
  801
  1,017
  1,268
  1,557
  1,883
  2,248
  2,651
  3,093
  3,571
  4,087
  4,638
  5,224
  5,845
  6,499
  7,186
  7,905
  8,657
  9,441
  10,259
  11,109
  11,993
  12,912
  13,868
  14,860
  15,892
  16,964
  18,079
Revenue / Adjusted assets
  1.104
  1.104
  1.104
  1.105
  1.104
  1.103
  1.104
  1.103
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
Average production assets, $m
  123
  170
  230
  304
  393
  498
  622
  763
  923
  1,102
  1,300
  1,516
  1,751
  2,003
  2,273
  2,561
  2,865
  3,186
  3,522
  3,875
  4,244
  4,628
  5,029
  5,445
  5,879
  6,329
  6,798
  7,284
  7,790
  8,316
  8,862
Working capital, $m
  111
  83
  112
  148
  192
  244
  304
  373
  451
  539
  635
  741
  856
  979
  1,111
  1,252
  1,400
  1,557
  1,721
  1,894
  2,074
  2,262
  2,458
  2,661
  2,873
  3,093
  3,322
  3,560
  3,807
  4,064
  4,331
Total debt, $m
  0
  16
  37
  63
  94
  131
  174
  223
  279
  341
  410
  486
  568
  656
  750
  850
  956
  1,068
  1,186
  1,309
  1,437
  1,571
  1,711
  1,857
  2,008
  2,165
  2,328
  2,498
  2,675
  2,858
  3,049
Total liabilities, $m
  42
  59
  80
  106
  137
  174
  217
  266
  322
  384
  453
  529
  611
  699
  793
  893
  999
  1,111
  1,229
  1,352
  1,480
  1,614
  1,754
  1,900
  2,051
  2,208
  2,371
  2,541
  2,718
  2,901
  3,092
Total equity, $m
  259
  288
  389
  513
  664
  843
  1,051
  1,290
  1,561
  1,864
  2,198
  2,564
  2,961
  3,388
  3,845
  4,331
  4,845
  5,387
  5,957
  6,553
  7,177
  7,827
  8,504
  9,209
  9,942
  10,704
  11,496
  12,319
  13,174
  14,063
  14,988
Total liabilities and equity, $m
  301
  347
  469
  619
  801
  1,017
  1,268
  1,556
  1,883
  2,248
  2,651
  3,093
  3,572
  4,087
  4,638
  5,224
  5,844
  6,498
  7,186
  7,905
  8,657
  9,441
  10,258
  11,109
  11,993
  12,912
  13,867
  14,860
  15,892
  16,964
  18,080
Debt-to-equity ratio
  0.000
  0.060
  0.100
  0.120
  0.140
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
Adjusted equity ratio
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829
  0.829

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  5
  7
  10
  14
  18
  23
  29
  35
  42
  50
  61
  70
  80
  91
  102
  114
  126
  139
  153
  168
  182
  198
  214
  231
  248
  267
  285
  305
  325
  347
Depreciation, amort., depletion, $m
  15
  20
  25
  32
  40
  50
  61
  74
  89
  105
  123
  139
  161
  184
  209
  235
  263
  292
  323
  355
  389
  425
  461
  500
  539
  581
  624
  668
  715
  763
  813
Funds from operations, $m
  58
  25
  33
  42
  54
  68
  84
  103
  124
  147
  173
  200
  231
  264
  299
  337
  377
  419
  463
  509
  557
  607
  659
  714
  770
  829
  890
  954
  1,020
  1,088
  1,160
Change in working capital, $m
  9
  23
  29
  36
  44
  52
  60
  69
  78
  87
  97
  106
  115
  123
  132
  140
  149
  157
  165
  172
  180
  188
  196
  204
  212
  220
  229
  238
  247
  257
  267
Cash from operations, $m
  49
  2
  3
  6
  11
  16
  24
  34
  46
  60
  77
  95
  116
  141
  167
  197
  228
  262
  298
  336
  377
  419
  464
  510
  558
  609
  661
  716
  773
  831
  893
Maintenance CAPEX, $m
  0
  -11
  -16
  -21
  -28
  -36
  -46
  -57
  -70
  -85
  -101
  -119
  -139
  -161
  -184
  -209
  -235
  -263
  -292
  -323
  -355
  -389
  -425
  -461
  -500
  -539
  -581
  -624
  -668
  -715
  -763
New CAPEX, $m
  -5
  -47
  -60
  -74
  -89
  -106
  -123
  -141
  -160
  -179
  -198
  -216
  -235
  -253
  -270
  -287
  -304
  -321
  -337
  -353
  -369
  -384
  -401
  -417
  -433
  -451
  -468
  -487
  -506
  -526
  -547
Cash from investing activities, $m
  -5
  -58
  -76
  -95
  -117
  -142
  -169
  -198
  -230
  -264
  -299
  -335
  -374
  -414
  -454
  -496
  -539
  -584
  -629
  -676
  -724
  -773
  -826
  -878
  -933
  -990
  -1,049
  -1,111
  -1,174
  -1,241
  -1,310
Free cash flow, $m
  44
  -57
  -72
  -88
  -106
  -125
  -145
  -165
  -184
  -204
  -222
  -241
  -257
  -273
  -287
  -299
  -311
  -321
  -331
  -340
  -347
  -355
  -362
  -368
  -375
  -381
  -388
  -394
  -401
  -409
  -417
Issuance/(repayment) of debt, $m
  0
  16
  21
  26
  31
  37
  43
  49
  56
  62
  69
  75
  82
  88
  94
  100
  106
  112
  117
  123
  129
  134
  140
  145
  151
  157
  163
  170
  176
  183
  191
Issuance/(repurchase) of shares, $m
  -8
  75
  93
  114
  137
  161
  185
  210
  236
  260
  284
  305
  326
  347
  366
  384
  400
  416
  430
  443
  456
  468
  479
  491
  502
  514
  525
  537
  550
  564
  578
Cash from financing (excl. dividends), $m  
  -8
  91
  114
  140
  168
  198
  228
  259
  292
  322
  353
  380
  408
  435
  460
  484
  506
  528
  547
  566
  585
  602
  619
  636
  653
  671
  688
  707
  726
  747
  769
Total cash flow (excl. dividends), $m
  36
  34
  42
  51
  61
  72
  83
  95
  107
  119
  131
  139
  151
  162
  174
  185
  196
  206
  217
  227
  237
  247
  258
  268
  279
  290
  301
  313
  325
  338
  352
Retained Cash Flow (-), $m
  5
  -80
  -101
  -125
  -151
  -179
  -208
  -239
  -271
  -302
  -334
  -366
  -397
  -427
  -457
  -486
  -514
  -542
  -569
  -596
  -623
  -650
  -677
  -705
  -733
  -762
  -792
  -823
  -855
  -889
  -924
Prev. year cash balance distribution, $m
 
  51
  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
 
  6
  -58
  -73
  -89
  -107
  -125
  -144
  -164
  -183
  -203
  -227
  -246
  -265
  -283
  -301
  -319
  -336
  -353
  -370
  -386
  -403
  -420
  -437
  -454
  -472
  -491
  -510
  -530
  -551
  -573
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
 
  5
  -54
  -64
  -74
  -83
  -91
  -97
  -102
  -105
  -106
  -108
  -105
  -101
  -95
  -88
  -81
  -73
  -65
  -57
  -49
  -42
  -35
  -29
  -23
  -18
  -14
  -11
  -8
  -6
  -4
Current shareholders' claim on cash, %
  100
  93.4
  87.7
  82.9
  78.8
  75.2
  72.1
  69.3
  66.9
  64.8
  62.9
  61.2
  59.7
  58.3
  57.1
  56.0
  55.0
  54.1
  53.2
  52.5
  51.8
  51.1
  50.5
  49.9
  49.4
  48.9
  48.4
  48.0
  47.6
  47.2
  46.8

Raven Industries, Inc. is a diversified technology company providing a range of products to customers within the industrial, agricultural, energy, construction and defense markets. The Company operates through three segments: Applied Technology Division (Applied Technology), Engineered Films Division (Engineered Films) and Aerostar Division (Aerostar). The Applied Technology segment designs, manufactures, sells and services precision agriculture products and information management tools for growers. The Engineered Films segment produces plastic films and sheeting for energy, agricultural, construction, geomembrane and industrial applications. The Aerostar segment designs and manufactures products, including balloons, tethered aerostats and radar processing systems. It conducts business through its subsidiaries, including Aerostar International, Inc. (Aerostar), Vista Research, Inc. (Vista), Raven International Holding Company BV (Raven Holdings) and Raven Industries Canada, Inc.

FINANCIAL RATIOS  of  Raven Industries (RAVN)

Valuation Ratios
P/E Ratio 65.5
Price to Sales 4.7
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 26.7
Price to Free Cash Flow 29.8
Growth Rates
Sales Growth Rate 7.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -61.5%
Cap. Spend. - 3 Yr. Gr. Rate -30.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 7.6%
Ret/ On T. Cap. - 3 Yr. Avg. 7%
Return On Equity 7.6%
Return On Equity - 3 Yr. Avg. 7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 28.2%
Gross Margin - 3 Yr. Avg. 27.1%
EBITDA Margin 15.5%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin 10.1%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin 10.1%
Pre-Tax Margin - 3 Yr. Avg. 7.8%
Net Profit Margin 7.2%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 28.6%
Eff/ Tax Rate - 3 Yr. Avg. 10.3%
Payout Ratio 95%

RAVN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RAVN stock intrinsic value calculation we used $277 million for the last fiscal year's total revenue generated by Raven Industries. The default revenue input number comes from 2017 income statement of Raven 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 RAVN stock valuation model: a) initial revenue growth rate of 38.4% 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 RAVN is calculated based on our internal credit rating of Raven 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 Raven 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 RAVN stock the variable cost ratio is equal to 98.6%.

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 RAVN 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 3.5% for Raven Industries.

Corporate tax rate of 27% is the nominal tax rate for Raven 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 RAVN 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 RAVN are equal to 44.4%.

Life of production assets of 10.9 years is the average useful life of capital assets used in Raven 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 RAVN is equal to 21.7%. 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 - $259 million for Raven 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 36.099 million for Raven 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 Raven Industries at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Raven Announces Appointment of Director   [Dec-05-17 05:39PM  GlobeNewswire]
▶ Raven Industries beats 3Q profit forecasts   [Nov-20-17 05:47PM  Associated Press]
▶ 3 Stocks With Microsoft-like Return Potential   [Oct-31-17 06:23AM  Motley Fool]
▶ Raven Industries beats 2Q profit forecasts   [Aug-23-17 09:41PM  Associated Press]
▶ Raven Releases Two New Innovations   [12:00PM  GlobeNewswire]
▶ Which Companies Are Now Outperforming 95% Of All Stocks?   [Jun-17-17 06:28PM  Investor's Business Daily]
▶ Farming Stock And Deere Rival With 140% Growth Plows Ahead   [Jun-13-17 04:32PM  Investor's Business Daily]
▶ Raven Industries Starts Its New Fiscal Year With a Win   [May-22-17 10:25PM  Motley Fool]
▶ Raven Industries posts 1Q profit   [06:06PM  Associated Press]
▶ Raven Industries Manufactures Another Solid Quarter   [Mar-27-17 08:34PM  Motley Fool]
▶ Raven Industries posts 4Q profit   [06:24PM  Associated Press]
Financial statements of RAVN
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