Intrinsic value of Superior Group of Companies, Inc. - SGC

Previous Close

$15.58

  Intrinsic Value

$6.71

stock screener

  Rating & Target

str. sell

-57%

Previous close

$15.58

 
Intrinsic value

$6.71

 
Up/down potential

-57%

 
Rating

str. sell

We calculate the intrinsic value of SGC 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, %
  31.10
  28.49
  26.14
  24.03
  22.12
  20.41
  18.87
  17.48
  16.24
  15.11
  14.10
  13.19
  12.37
  11.63
  10.97
  10.37
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
  6.37
  6.23
Revenue, $m
  454
  583
  735
  912
  1,114
  1,341
  1,594
  1,873
  2,177
  2,506
  2,859
  3,236
  3,636
  4,059
  4,505
  4,972
  5,461
  5,972
  6,504
  7,059
  7,636
  8,236
  8,859
  9,507
  10,180
  10,880
  11,607
  12,364
  13,151
  13,970
Variable operating expenses, $m
  407
  521
  654
  809
  986
  1,185
  1,406
  1,651
  1,917
  2,205
  2,505
  2,835
  3,186
  3,556
  3,946
  4,356
  4,784
  5,232
  5,698
  6,184
  6,690
  7,215
  7,761
  8,329
  8,919
  9,532
  10,169
  10,832
  11,522
  12,239
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
  407
  521
  654
  809
  986
  1,185
  1,406
  1,651
  1,917
  2,205
  2,505
  2,835
  3,186
  3,556
  3,946
  4,356
  4,784
  5,232
  5,698
  6,184
  6,690
  7,215
  7,761
  8,329
  8,919
  9,532
  10,169
  10,832
  11,522
  12,239
Operating income, $m
  46
  62
  81
  103
  128
  156
  187
  222
  260
  300
  354
  401
  451
  503
  558
  616
  677
  740
  806
  875
  946
  1,020
  1,098
  1,178
  1,261
  1,348
  1,438
  1,532
  1,629
  1,731
EBITDA, $m
  63
  81
  102
  126
  154
  186
  221
  259
  301
  347
  396
  448
  504
  562
  624
  688
  756
  827
  901
  977
  1,057
  1,140
  1,227
  1,316
  1,410
  1,507
  1,607
  1,712
  1,821
  1,934
Interest expense (income), $m
  1
  6
  9
  13
  18
  23
  28
  35
  42
  50
  59
  68
  79
  89
  101
  113
  126
  139
  153
  168
  183
  199
  216
  233
  251
  270
  289
  309
  330
  352
  375
Earnings before tax, $m
  40
  53
  68
  85
  105
  128
  153
  180
  209
  241
  286
  322
  361
  402
  445
  490
  537
  586
  638
  691
  747
  804
  864
  927
  992
  1,059
  1,129
  1,202
  1,278
  1,356
Tax expense, $m
  11
  14
  18
  23
  28
  34
  41
  49
  57
  65
  77
  87
  97
  109
  120
  132
  145
  158
  172
  187
  202
  217
  233
  250
  268
  286
  305
  324
  345
  366
Net income, $m
  29
  39
  50
  62
  77
  93
  111
  131
  153
  176
  209
  235
  264
  293
  325
  358
  392
  428
  466
  505
  545
  587
  631
  677
  724
  773
  824
  877
  933
  990

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
  439
  564
  712
  883
  1,078
  1,298
  1,543
  1,813
  2,107
  2,425
  2,767
  3,133
  3,520
  3,930
  4,361
  4,813
  5,287
  5,781
  6,296
  6,833
  7,392
  7,972
  8,576
  9,203
  9,855
  10,532
  11,237
  11,969
  12,731
  13,524
Adjusted assets (=assets-cash), $m
  439
  564
  712
  883
  1,078
  1,298
  1,543
  1,813
  2,107
  2,425
  2,767
  3,133
  3,520
  3,930
  4,361
  4,813
  5,287
  5,781
  6,296
  6,833
  7,392
  7,972
  8,576
  9,203
  9,855
  10,532
  11,237
  11,969
  12,731
  13,524
Revenue / Adjusted assets
  1.034
  1.034
  1.032
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
Average production assets, $m
  84
  108
  136
  169
  206
  248
  295
  346
  403
  464
  529
  599
  673
  751
  833
  920
  1,010
  1,105
  1,203
  1,306
  1,413
  1,524
  1,639
  1,759
  1,883
  2,013
  2,147
  2,287
  2,433
  2,584
Working capital, $m
  199
  255
  322
  399
  488
  587
  698
  820
  953
  1,097
  1,252
  1,417
  1,593
  1,778
  1,973
  2,178
  2,392
  2,616
  2,849
  3,092
  3,344
  3,607
  3,880
  4,164
  4,459
  4,765
  5,084
  5,415
  5,760
  6,119
Total debt, $m
  175
  244
  325
  419
  526
  647
  782
  930
  1,092
  1,267
  1,455
  1,656
  1,869
  2,095
  2,332
  2,581
  2,841
  3,113
  3,396
  3,692
  3,999
  4,318
  4,650
  4,995
  5,354
  5,726
  6,113
  6,516
  6,935
  7,372
Total liabilities, $m
  242
  310
  391
  485
  593
  714
  849
  997
  1,159
  1,334
  1,522
  1,723
  1,936
  2,161
  2,398
  2,647
  2,908
  3,180
  3,463
  3,758
  4,065
  4,385
  4,717
  5,062
  5,420
  5,793
  6,180
  6,583
  7,002
  7,438
Total equity, $m
  198
  254
  320
  397
  485
  584
  694
  816
  948
  1,091
  1,245
  1,410
  1,584
  1,768
  1,962
  2,166
  2,379
  2,601
  2,833
  3,075
  3,326
  3,588
  3,859
  4,141
  4,435
  4,740
  5,056
  5,386
  5,729
  6,086
Total liabilities and equity, $m
  440
  564
  711
  882
  1,078
  1,298
  1,543
  1,813
  2,107
  2,425
  2,767
  3,133
  3,520
  3,929
  4,360
  4,813
  5,287
  5,781
  6,296
  6,833
  7,391
  7,973
  8,576
  9,203
  9,855
  10,533
  11,236
  11,969
  12,731
  13,524
Debt-to-equity ratio
  0.880
  0.960
  1.010
  1.050
  1.080
  1.110
  1.130
  1.140
  1.150
  1.160
  1.170
  1.170
  1.180
  1.180
  1.190
  1.190
  1.190
  1.200
  1.200
  1.200
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
Adjusted equity ratio
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  29
  39
  50
  62
  77
  93
  111
  131
  153
  176
  209
  235
  264
  293
  325
  358
  392
  428
  466
  505
  545
  587
  631
  677
  724
  773
  824
  877
  933
  990
Depreciation, amort., depletion, $m
  17
  18
  21
  23
  26
  30
  33
  37
  42
  46
  42
  47
  53
  59
  66
  72
  80
  87
  95
  103
  111
  120
  129
  138
  148
  158
  169
  180
  192
  204
Funds from operations, $m
  46
  57
  70
  86
  103
  123
  145
  169
  195
  223
  250
  282
  317
  353
  390
  430
  472
  515
  560
  607
  656
  707
  760
  815
  872
  932
  993
  1,057
  1,124
  1,194
Change in working capital, $m
  47
  57
  67
  77
  88
  100
  111
  122
  133
  144
  155
  165
  175
  185
  195
  205
  214
  224
  233
  243
  253
  263
  273
  284
  295
  306
  319
  331
  345
  359
Cash from operations, $m
  -1
  0
  4
  8
  15
  23
  34
  46
  61
  79
  96
  117
  141
  167
  195
  226
  258
  291
  327
  365
  404
  444
  487
  531
  577
  625
  675
  726
  779
  835
Maintenance CAPEX, $m
  -5
  -7
  -8
  -11
  -13
  -16
  -20
  -23
  -27
  -32
  -36
  -42
  -47
  -53
  -59
  -66
  -72
  -80
  -87
  -95
  -103
  -111
  -120
  -129
  -138
  -148
  -158
  -169
  -180
  -192
New CAPEX, $m
  -20
  -24
  -28
  -33
  -37
  -42
  -47
  -52
  -56
  -61
  -65
  -70
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -103
  -107
  -111
  -115
  -120
  -125
  -129
  -135
  -140
  -146
  -152
Cash from investing activities, $m
  -25
  -31
  -36
  -44
  -50
  -58
  -67
  -75
  -83
  -93
  -101
  -112
  -121
  -131
  -141
  -152
  -162
  -174
  -186
  -198
  -210
  -222
  -235
  -249
  -263
  -277
  -293
  -309
  -326
  -344
Free cash flow, $m
  -26
  -30
  -33
  -35
  -36
  -35
  -33
  -28
  -22
  -14
  -6
  6
  20
  36
  54
  73
  95
  117
  142
  167
  194
  222
  252
  282
  314
  347
  382
  417
  454
  492
Issuance/(repayment) of debt, $m
  57
  69
  81
  94
  107
  121
  135
  148
  162
  175
  188
  201
  213
  225
  237
  249
  260
  272
  284
  295
  307
  319
  332
  345
  358
  373
  387
  403
  419
  436
Issuance/(repurchase) of shares, $m
  18
  18
  17
  15
  11
  6
  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  
  75
  87
  98
  109
  118
  127
  135
  148
  162
  175
  188
  201
  213
  225
  237
  249
  260
  272
  284
  295
  307
  319
  332
  345
  358
  373
  387
  403
  419
  436
Total cash flow (excl. dividends), $m
  49
  56
  65
  74
  83
  92
  102
  120
  140
  161
  182
  207
  233
  261
  291
  322
  355
  389
  425
  462
  501
  542
  584
  627
  673
  720
  769
  820
  873
  928
Retained Cash Flow (-), $m
  -47
  -56
  -66
  -77
  -88
  -99
  -110
  -121
  -132
  -143
  -154
  -164
  -174
  -184
  -194
  -204
  -213
  -222
  -232
  -242
  -251
  -261
  -272
  -282
  -293
  -305
  -317
  -330
  -343
  -357
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
  2
  0
  -2
  -3
  -5
  -7
  -8
  -1
  7
  18
  28
  42
  59
  77
  97
  119
  142
  167
  193
  221
  250
  280
  312
  345
  379
  415
  452
  490
  530
  571
Discount rate, %
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
  2
  0
  -1
  -2
  -4
  -4
  -4
  -1
  3
  6
  8
  11
  12
  13
  13
  13
  12
  11
  9
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  93.1
  88.1
  84.6
  82.2
  80.8
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2

Superior Uniform Group, Inc. (Superior) manufactures and sells a range of uniforms, corporate identity apparel, career apparel and accessories for the medical and health fields, as well as for the industrial, commercial, leisure and public safety markets. Superior operates through two segments: Uniforms and Related Products, and Remote Staffing Solutions. The Uniforms and Related Products segment consists of the sale of uniforms and related items. Its principal products are uniforms and service apparel, and related products for personnel of hospitals and health facilities; hotels, commercial buildings, residential buildings and food service facilities; retail stores; general and special purpose industrial uses; commercial enterprises, such as career apparel for banks and airlines; public and private safety and security organizations, and for miscellaneous service uses. The Remote Staffing Solutions segment consists of sales of staffing solutions.

FINANCIAL RATIOS  of  Superior Group of Companies, Inc. (SGC)

Valuation Ratios
P/E Ratio 15.1
Price to Sales 0.9
Price to Book 2
Price to Tangible Book
Price to Cash Flow 18.8
Price to Free Cash Flow 45.2
Growth Rates
Sales Growth Rate 20.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.5%
Cap. Spend. - 3 Yr. Gr. Rate 28.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 32.4%
Total Debt to Equity 37.8%
Interest Coverage 21
Management Effectiveness
Return On Assets 9%
Ret/ On Assets - 3 Yr. Avg. 8.9%
Return On Total Capital 11.1%
Ret/ On T. Cap. - 3 Yr. Avg. 11.2%
Return On Equity 14.7%
Return On Equity - 3 Yr. Avg. 14.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 34.4%
Gross Margin - 3 Yr. Avg. 34.5%
EBITDA Margin 10.3%
EBITDA Margin - 3 Yr. Avg. 11%
Operating Margin 8.3%
Oper. Margin - 3 Yr. Avg. 8.8%
Pre-Tax Margin 7.9%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 5.9%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 31.8%
Payout Ratio 33.3%

SGC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SGC stock intrinsic value calculation we used $346 million for the last fiscal year's total revenue generated by Superior Group of Companies, Inc.. The default revenue input number comes from 0001 income statement of Superior Group of Companies, 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 SGC stock valuation model: a) initial revenue growth rate of 31.1% 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 7.2%, whose default value for SGC is calculated based on our internal credit rating of Superior Group of Companies, 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 Superior Group of Companies, 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 SGC stock the variable cost ratio is equal to 90.5%.

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 SGC 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 Superior Group of Companies, Inc..

Corporate tax rate of 27% is the nominal tax rate for Superior Group of Companies, 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 SGC 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 SGC are equal to 18.5%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Superior Group of Companies, 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 SGC is equal to 43.8%. 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 - $150.921 million for Superior Group of Companies, 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 15.344 million for Superior Group of Companies, 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 Superior Group of Companies, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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