Intrinsic value of Raven Industries, Inc. - RAVN

Previous Close

$35.98

  Intrinsic Value

$15.55

stock screener

  Rating & Target

str. sell

-57%

Previous close

$35.98

 
Intrinsic value

$15.55

 
Up/down potential

-57%

 
Rating

str. sell

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

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 1.3

 

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, %
  3.40
  3.56
  3.70
  3.83
  3.95
  4.06
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
Revenue, $m
  390
  404
  419
  435
  452
  470
  490
  510
  532
  556
  580
  607
  634
  663
  694
  726
  761
  797
  835
  874
  916
  961
  1,007
  1,056
  1,108
  1,162
  1,219
  1,278
  1,341
  1,407
Variable operating expenses, $m
  271
  280
  290
  301
  313
  325
  339
  353
  368
  384
  395
  412
  431
  451
  472
  494
  517
  542
  567
  595
  623
  653
  685
  718
  753
  790
  828
  869
  912
  957
Fixed operating expenses, $m
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
  84
  86
  88
  90
  92
  94
  96
  98
  100
  103
  105
  107
  109
Total operating expenses, $m
  329
  340
  351
  363
  377
  390
  405
  421
  437
  455
  467
  486
  507
  528
  551
  575
  600
  626
  653
  683
  713
  745
  779
  814
  851
  890
  931
  974
  1,019
  1,066
Operating income, $m
  61
  64
  67
  71
  75
  80
  85
  90
  95
  101
  113
  120
  127
  135
  143
  152
  161
  171
  181
  192
  203
  216
  228
  242
  256
  272
  288
  304
  322
  341
EBITDA, $m
  79
  83
  87
  91
  96
  101
  106
  112
  118
  125
  132
  140
  148
  157
  166
  175
  186
  197
  208
  220
  233
  247
  261
  276
  292
  309
  327
  346
  366
  387
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
Earnings before tax, $m
  61
  64
  67
  71
  75
  79
  84
  89
  94
  100
  112
  119
  126
  133
  141
  149
  158
  168
  178
  189
  200
  212
  224
  237
  251
  266
  282
  298
  316
  334
Tax expense, $m
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  81
  85
  90
Net income, $m
  44
  47
  49
  52
  55
  58
  61
  65
  69
  73
  82
  87
  92
  97
  103
  109
  116
  123
  130
  138
  146
  154
  164
  173
  184
  194
  206
  218
  230
  244

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
  334
  346
  359
  373
  388
  403
  420
  438
  457
  477
  498
  520
  544
  569
  595
  623
  652
  683
  716
  750
  786
  824
  864
  906
  950
  996
  1,045
  1,096
  1,150
  1,207
Adjusted assets (=assets-cash), $m
  334
  346
  359
  373
  388
  403
  420
  438
  457
  477
  498
  520
  544
  569
  595
  623
  652
  683
  716
  750
  786
  824
  864
  906
  950
  996
  1,045
  1,096
  1,150
  1,207
Revenue / Adjusted assets
  1.168
  1.168
  1.167
  1.166
  1.165
  1.166
  1.167
  1.164
  1.164
  1.166
  1.165
  1.167
  1.165
  1.165
  1.166
  1.165
  1.167
  1.167
  1.166
  1.165
  1.165
  1.166
  1.166
  1.166
  1.166
  1.167
  1.167
  1.166
  1.166
  1.166
Average production assets, $m
  138
  143
  149
  154
  160
  167
  174
  181
  189
  197
  206
  215
  225
  235
  246
  258
  270
  283
  296
  310
  325
  341
  358
  375
  393
  412
  433
  454
  476
  500
Working capital, $m
  86
  89
  92
  96
  99
  103
  108
  112
  117
  122
  128
  133
  140
  146
  153
  160
  167
  175
  184
  192
  202
  211
  222
  232
  244
  256
  268
  281
  295
  310
Total debt, $m
  2
  4
  6
  8
  10
  13
  15
  18
  21
  24
  27
  31
  35
  39
  43
  47
  52
  57
  62
  67
  73
  79
  85
  91
  98
  106
  113
  121
  130
  139
Total liabilities, $m
  52
  54
  56
  59
  61
  63
  66
  69
  72
  75
  78
  82
  85
  89
  93
  98
  102
  107
  112
  118
  123
  129
  136
  142
  149
  156
  164
  172
  181
  189
Total equity, $m
  282
  292
  303
  314
  327
  340
  354
  369
  385
  402
  420
  439
  458
  480
  502
  525
  550
  576
  603
  632
  663
  695
  728
  764
  801
  840
  881
  924
  970
  1,017
Total liabilities and equity, $m
  334
  346
  359
  373
  388
  403
  420
  438
  457
  477
  498
  521
  543
  569
  595
  623
  652
  683
  715
  750
  786
  824
  864
  906
  950
  996
  1,045
  1,096
  1,151
  1,206
Debt-to-equity ratio
  0.010
  0.010
  0.020
  0.020
  0.030
  0.040
  0.040
  0.050
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.140
Adjusted equity ratio
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  44
  47
  49
  52
  55
  58
  61
  65
  69
  73
  82
  87
  92
  97
  103
  109
  116
  123
  130
  138
  146
  154
  164
  173
  184
  194
  206
  218
  230
  244
Depreciation, amort., depletion, $m
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
Funds from operations, $m
  63
  65
  68
  72
  75
  79
  83
  87
  92
  97
  101
  106
  112
  119
  126
  133
  140
  149
  157
  166
  176
  186
  196
  208
  220
  232
  245
  259
  274
  290
Change in working capital, $m
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Cash from operations, $m
  60
  62
  65
  68
  71
  75
  79
  83
  87
  92
  95
  101
  106
  112
  119
  126
  133
  141
  149
  157
  166
  176
  186
  197
  208
  220
  233
  246
  260
  275
Maintenance CAPEX, $m
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
New CAPEX, $m
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Cash from investing activities, $m
  -17
  -18
  -18
  -20
  -20
  -22
  -22
  -23
  -25
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -46
  -48
  -50
  -52
  -55
  -58
  -61
  -64
  -67
Free cash flow, $m
  43
  45
  47
  49
  51
  54
  56
  59
  63
  66
  68
  72
  77
  81
  86
  92
  97
  103
  109
  116
  123
  130
  138
  147
  156
  165
  175
  185
  196
  208
Issuance/(repayment) of debt, $m
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
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  
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Total cash flow (excl. dividends), $m
  44
  47
  49
  51
  53
  56
  59
  62
  66
  69
  72
  76
  81
  85
  90
  96
  102
  108
  114
  121
  129
  136
  145
  153
  163
  172
  183
  193
  205
  217
Retained Cash Flow (-), $m
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -48
Prev. year cash balance distribution, $m
  4
  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
  39
  37
  38
  39
  41
  43
  45
  47
  50
  52
  54
  57
  61
  64
  68
  72
  77
  82
  87
  92
  98
  104
  111
  118
  125
  133
  141
  150
  159
  169
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
  37
  34
  33
  32
  32
  31
  30
  30
  29
  28
  26
  24
  23
  22
  20
  18
  17
  15
  13
  12
  10
  9
  7
  6
  5
  4
  3
  2
  2
  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

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, Inc. (RAVN)

Valuation Ratios
P/E Ratio 64.9
Price to Sales 4.7
Price to Book 5
Price to Tangible Book
Price to Cash Flow 26.5
Price to Free Cash Flow 29.5
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 $377 million for the last fiscal year's total revenue generated by Raven Industries, Inc.. The default revenue input number comes from 0001 income statement of Raven Industries, 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 RAVN stock valuation model: a) initial revenue growth rate of 3.4% 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, 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 Raven Industries, 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 RAVN stock the variable cost ratio is equal to 69.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $57 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 5.4% for Raven Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for Raven Industries, 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 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 35.5%.

Life of production assets of 10.9 years is the average useful life of capital assets used in Raven Industries, 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 RAVN is equal to 22%. 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 - $276.064 million for Raven Industries, 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 35.836 million for Raven Industries, 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 Raven Industries, Inc. at the current share price and the inputted number of shares is $1.3 billion.

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