Intrinsic value of Seneca Foods Corp. - SENEA

Previous Close

$24.30

  Intrinsic Value

$10.73

stock screener

  Rating & Target

str. sell

-56%

Previous close

$24.30

 
Intrinsic value

$10.73

 
Up/down potential

-56%

 
Rating

str. sell

We calculate the intrinsic value of SENEA 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 0.2

 

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, %
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  5.00
Revenue, $m
  1,379
  1,447
  1,518
  1,593
  1,672
  1,754
  1,841
  1,932
  2,028
  2,129
  2,234
  2,345
  2,462
  2,585
  2,713
  2,848
  2,990
  3,139
  3,296
  3,460
  3,633
  3,814
  4,004
  4,204
  4,414
  4,634
  4,866
  5,109
  5,364
  5,632
Variable operating expenses, $m
  1,342
  1,408
  1,477
  1,550
  1,627
  1,707
  1,791
  1,880
  1,973
  2,071
  2,174
  2,282
  2,396
  2,515
  2,640
  2,771
  2,909
  3,054
  3,207
  3,367
  3,535
  3,711
  3,896
  4,090
  4,295
  4,509
  4,734
  4,971
  5,219
  5,480
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
  1,342
  1,408
  1,477
  1,550
  1,627
  1,707
  1,791
  1,880
  1,973
  2,071
  2,174
  2,282
  2,396
  2,515
  2,640
  2,771
  2,909
  3,054
  3,207
  3,367
  3,535
  3,711
  3,896
  4,090
  4,295
  4,509
  4,734
  4,971
  5,219
  5,480
Operating income, $m
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  70
  73
  77
  81
  85
  89
  93
  98
  103
  108
  114
  119
  125
  131
  138
  145
  152
EBITDA, $m
  70
  74
  77
  81
  85
  89
  94
  98
  103
  108
  114
  119
  125
  132
  138
  145
  152
  160
  168
  176
  185
  194
  204
  214
  225
  236
  248
  260
  273
  287
Interest expense (income), $m
  8
  24
  26
  28
  29
  31
  33
  35
  38
  40
  42
  45
  48
  50
  53
  56
  60
  63
  67
  70
  74
  79
  83
  88
  92
  97
  103
  108
  114
  120
  127
Earnings before tax, $m
  13
  13
  13
  14
  14
  14
  14
  15
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
  20
  21
  21
  22
  22
  23
  24
  24
  25
Tax expense, $m
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  7
  7
Net income, $m
  9
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
  14
  14
  15
  15
  15
  16
  16
  17
  17
  18
  18

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
  1,079
  1,132
  1,188
  1,247
  1,308
  1,373
  1,441
  1,512
  1,587
  1,666
  1,748
  1,835
  1,927
  2,022
  2,123
  2,229
  2,340
  2,456
  2,579
  2,707
  2,842
  2,984
  3,133
  3,290
  3,454
  3,626
  3,807
  3,997
  4,197
  4,407
Adjusted assets (=assets-cash), $m
  1,079
  1,132
  1,188
  1,247
  1,308
  1,373
  1,441
  1,512
  1,587
  1,666
  1,748
  1,835
  1,927
  2,022
  2,123
  2,229
  2,340
  2,456
  2,579
  2,707
  2,842
  2,984
  3,133
  3,290
  3,454
  3,626
  3,807
  3,997
  4,197
  4,407
Revenue / Adjusted assets
  1.278
  1.278
  1.278
  1.277
  1.278
  1.277
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
  1.278
Average production assets, $m
  261
  274
  287
  301
  316
  332
  348
  365
  383
  402
  422
  443
  465
  488
  513
  538
  565
  593
  623
  654
  687
  721
  757
  795
  834
  876
  920
  966
  1,014
  1,064
Working capital, $m
  624
  654
  686
  720
  756
  793
  832
  873
  917
  962
  1,010
  1,060
  1,113
  1,168
  1,226
  1,287
  1,352
  1,419
  1,490
  1,564
  1,642
  1,724
  1,810
  1,900
  1,995
  2,095
  2,199
  2,309
  2,424
  2,546
Total debt, $m
  479
  511
  545
  580
  617
  655
  696
  739
  784
  831
  881
  933
  988
  1,045
  1,106
  1,169
  1,236
  1,306
  1,379
  1,456
  1,537
  1,622
  1,712
  1,805
  1,904
  2,007
  2,116
  2,230
  2,350
  2,476
Total liabilities, $m
  648
  679
  713
  748
  785
  824
  864
  907
  952
  999
  1,049
  1,101
  1,156
  1,213
  1,274
  1,337
  1,404
  1,474
  1,547
  1,624
  1,705
  1,791
  1,880
  1,974
  2,072
  2,176
  2,284
  2,398
  2,518
  2,644
Total equity, $m
  432
  453
  475
  499
  523
  549
  576
  605
  635
  666
  699
  734
  771
  809
  849
  891
  936
  983
  1,032
  1,083
  1,137
  1,194
  1,253
  1,316
  1,381
  1,450
  1,523
  1,599
  1,679
  1,763
Total liabilities and equity, $m
  1,080
  1,132
  1,188
  1,247
  1,308
  1,373
  1,440
  1,512
  1,587
  1,665
  1,748
  1,835
  1,927
  2,022
  2,123
  2,228
  2,340
  2,457
  2,579
  2,707
  2,842
  2,985
  3,133
  3,290
  3,453
  3,626
  3,807
  3,997
  4,197
  4,407
Debt-to-equity ratio
  1.110
  1.130
  1.150
  1.160
  1.180
  1.190
  1.210
  1.220
  1.230
  1.250
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.320
  1.330
  1.340
  1.340
  1.350
  1.360
  1.370
  1.370
  1.380
  1.380
  1.390
  1.390
  1.400
  1.400
Adjusted equity ratio
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
  14
  14
  15
  15
  15
  16
  16
  17
  17
  18
  18
Depreciation, amort., depletion, $m
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  101
  106
  111
  116
  122
  128
  135
Funds from operations, $m
  42
  44
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  121
  127
  133
  139
  146
  153
Change in working capital, $m
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  95
  100
  105
  110
  115
  121
Cash from operations, $m
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
Maintenance CAPEX, $m
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -116
  -122
  -128
New CAPEX, $m
  -13
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
Cash from investing activities, $m
  -44
  -46
  -48
  -50
  -53
  -56
  -58
  -61
  -64
  -68
  -71
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
  -121
  -127
  -134
  -141
  -148
  -155
  -162
  -170
  -179
Free cash flow, $m
  -31
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -140
  -147
Issuance/(repayment) of debt, $m
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
  58
  60
  63
  67
  70
  73
  77
  81
  85
  89
  94
  99
  103
  109
  114
  120
  126
Issuance/(repurchase) of shares, $m
  11
  12
  13
  13
  15
  16
  17
  18
  19
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  65
Cash from financing (excl. dividends), $m  
  41
  44
  46
  48
  52
  55
  58
  61
  64
  67
  72
  75
  80
  84
  88
  93
  99
  103
  108
  115
  121
  127
  134
  141
  149
  156
  165
  173
  182
  191
Total cash flow (excl. dividends), $m
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
Retained Cash Flow (-), $m
  -21
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
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
  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
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
Discount rate, %
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
  -9
  -8
  -8
  -7
  -7
  -6
  -5
  -5
  -4
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.2
  92.7
  89.2
  85.7
  82.3
  78.9
  75.6
  72.4
  69.3
  66.2
  63.3
  60.4
  57.6
  55.0
  52.4
  49.9
  47.5
  45.2
  43.0
  40.8
  38.8
  36.8
  35.0
  33.2
  31.5
  29.9
  28.3
  26.8
  25.4
  24.1

Seneca Foods Corporation is a provider of packaged fruits and vegetables. The Company manages its business through two segments: packaging and sale of fruits and vegetables, and packaging and sale of chip products. Its product offerings include canned fruits and vegetables, frozen vegetables and other food products, frozen and bottled produce, and snack chips. Its products are sold under private label, as well as national and regional brands that the Company owns or licenses, including Seneca, Libby's, Green Valley, Aunt Nellie's, READ, Cherryman and Seneca Farms. The Company packs Green Giant, Le Sueur and other brands of canned vegetables, as well as select Green Giant frozen vegetables for B&G Foods North America (B&G) under a contract packing agreement. Its two segments constitute the food operation. The non-food operation is primarily related to the sale of cans and ends, and the Company's trucking and aircraft operations.

FINANCIAL RATIOS  of  Seneca Foods Corp. (SENEA)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 0.2
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow -29.8
Growth Rates
Sales Growth Rate -2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 220%
Cap. Spend. - 3 Yr. Gr. Rate 13.5%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 83.9%
Total Debt to Equity 85.7%
Interest Coverage 4
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 1.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.7%
Return On Equity 3.1%
Return On Equity - 3 Yr. Avg. 6.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 8.5%
Gross Margin - 3 Yr. Avg. 8.9%
EBITDA Margin 4.3%
EBITDA Margin - 3 Yr. Avg. 5.3%
Operating Margin 2.3%
Oper. Margin - 3 Yr. Avg. 3.6%
Pre-Tax Margin 1.6%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate 35%
Eff/ Tax Rate - 3 Yr. Avg. 32%
Payout Ratio 0%

SENEA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SENEA stock intrinsic value calculation we used $1315 million for the last fiscal year's total revenue generated by Seneca Foods Corp.. The default revenue input number comes from 0001 income statement of Seneca Foods Corp.. 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 SENEA stock valuation model: a) initial revenue growth rate of 4.9% 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 9.6%, whose default value for SENEA is calculated based on our internal credit rating of Seneca Foods Corp., 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 Seneca Foods Corp..
    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 SENEA stock the variable cost ratio is equal to 97.3%.

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 SENEA 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 Seneca Foods Corp..

Corporate tax rate of 27% is the nominal tax rate for Seneca Foods Corp.. 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 SENEA 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 SENEA are equal to 18.9%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Seneca Foods Corp. 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 SENEA is equal to 45.2%. 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 - $411.063 million for Seneca Foods Corp. - 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 9.575 million for Seneca Foods Corp. 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 Seneca Foods Corp. at the current share price and the inputted number of shares is $0.2 billion.

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