Intrinsic value of Spartan Motors - SPAR

Previous Close

$7.16

  Intrinsic Value

$4.78

stock screener

  Rating & Target

sell

-33%

Previous close

$7.16

 
Intrinsic value

$4.78

 
Up/down potential

-33%

 
Rating

sell

We calculate the intrinsic value of SPAR 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 0.3

 

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, %
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
Revenue, $m
  766
  828
  892
  959
  1,029
  1,101
  1,176
  1,254
  1,335
  1,419
  1,507
  1,598
  1,693
  1,793
  1,896
  2,004
  2,117
  2,235
  2,358
  2,487
  2,621
  2,762
  2,910
  3,064
  3,225
  3,394
  3,572
  3,757
  3,952
  4,156
Variable operating expenses, $m
  717
  775
  834
  897
  961
  1,028
  1,098
  1,170
  1,246
  1,324
  1,402
  1,487
  1,576
  1,668
  1,765
  1,865
  1,971
  2,080
  2,195
  2,315
  2,440
  2,571
  2,708
  2,852
  3,002
  3,160
  3,324
  3,497
  3,678
  3,868
Fixed operating expenses, $m
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  42
  43
  44
  45
  46
  47
  48
  49
  51
  52
  53
  54
  55
  56
  58
Total operating expenses, $m
  748
  806
  866
  930
  994
  1,062
  1,133
  1,206
  1,282
  1,361
  1,440
  1,526
  1,616
  1,709
  1,807
  1,907
  2,014
  2,124
  2,240
  2,361
  2,487
  2,619
  2,757
  2,903
  3,054
  3,213
  3,378
  3,552
  3,734
  3,926
Operating income, $m
  19
  22
  26
  30
  34
  38
  43
  47
  52
  57
  66
  72
  77
  83
  90
  96
  103
  110
  118
  126
  134
  143
  152
  161
  172
  182
  193
  205
  217
  230
EBITDA, $m
  31
  36
  40
  45
  50
  55
  60
  66
  71
  77
  84
  90
  97
  104
  112
  120
  128
  136
  145
  155
  165
  175
  186
  197
  209
  222
  235
  249
  263
  278
Interest expense (income), $m
  0
  2
  3
  4
  5
  6
  7
  9
  10
  11
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  44
  46
  49
  53
  56
  59
Earnings before tax, $m
  17
  20
  22
  25
  28
  31
  34
  37
  41
  44
  52
  56
  60
  64
  69
  73
  78
  84
  89
  95
  101
  107
  114
  121
  128
  136
  144
  152
  161
  171
Tax expense, $m
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
  21
  23
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
Net income, $m
  12
  14
  16
  18
  20
  23
  25
  27
  30
  32
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  74
  78
  83
  88
  93
  99
  105
  111
  118
  125

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
  326
  353
  380
  409
  438
  469
  501
  534
  568
  604
  642
  681
  721
  763
  808
  854
  902
  952
  1,004
  1,059
  1,116
  1,176
  1,239
  1,305
  1,374
  1,446
  1,521
  1,600
  1,683
  1,770
Adjusted assets (=assets-cash), $m
  326
  353
  380
  409
  438
  469
  501
  534
  568
  604
  642
  681
  721
  763
  808
  854
  902
  952
  1,004
  1,059
  1,116
  1,176
  1,239
  1,305
  1,374
  1,446
  1,521
  1,600
  1,683
  1,770
Revenue / Adjusted assets
  2.350
  2.346
  2.347
  2.345
  2.349
  2.348
  2.347
  2.348
  2.350
  2.349
  2.347
  2.347
  2.348
  2.350
  2.347
  2.347
  2.347
  2.348
  2.349
  2.348
  2.349
  2.349
  2.349
  2.348
  2.347
  2.347
  2.348
  2.348
  2.348
  2.348
Average production assets, $m
  75
  81
  87
  94
  101
  108
  115
  123
  131
  139
  148
  157
  166
  176
  186
  196
  207
  219
  231
  244
  257
  271
  285
  300
  316
  333
  350
  368
  387
  407
Working capital, $m
  61
  65
  71
  76
  81
  87
  93
  99
  105
  112
  119
  126
  134
  142
  150
  158
  167
  177
  186
  196
  207
  218
  230
  242
  255
  268
  282
  297
  312
  328
Total debt, $m
  29
  41
  53
  65
  78
  92
  106
  120
  135
  151
  167
  185
  202
  221
  240
  260
  282
  304
  327
  351
  376
  402
  430
  459
  489
  520
  554
  588
  625
  663
Total liabilities, $m
  143
  155
  167
  179
  192
  206
  220
  234
  250
  265
  282
  299
  317
  335
  355
  375
  396
  418
  441
  465
  490
  516
  544
  573
  603
  635
  668
  702
  739
  777
Total equity, $m
  183
  198
  213
  229
  246
  263
  281
  299
  319
  339
  360
  382
  405
  428
  453
  479
  506
  534
  563
  594
  626
  660
  695
  732
  771
  811
  853
  898
  944
  993
Total liabilities and equity, $m
  326
  353
  380
  408
  438
  469
  501
  533
  569
  604
  642
  681
  722
  763
  808
  854
  902
  952
  1,004
  1,059
  1,116
  1,176
  1,239
  1,305
  1,374
  1,446
  1,521
  1,600
  1,683
  1,770
Debt-to-equity ratio
  0.160
  0.210
  0.250
  0.280
  0.320
  0.350
  0.380
  0.400
  0.420
  0.450
  0.470
  0.480
  0.500
  0.520
  0.530
  0.540
  0.560
  0.570
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.630
  0.640
  0.650
  0.660
  0.660
  0.670
Adjusted equity ratio
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  14
  16
  18
  20
  23
  25
  27
  30
  32
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  74
  78
  83
  88
  93
  99
  105
  111
  118
  125
Depreciation, amort., depletion, $m
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  18
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  48
Funds from operations, $m
  25
  28
  30
  33
  36
  39
  42
  46
  49
  53
  55
  59
  63
  68
  72
  77
  82
  87
  92
  98
  104
  110
  117
  124
  131
  139
  147
  155
  164
  173
Change in working capital, $m
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
Cash from operations, $m
  20
  23
  25
  28
  31
  33
  36
  39
  43
  46
  48
  52
  56
  60
  64
  68
  73
  78
  83
  88
  93
  99
  105
  112
  118
  125
  133
  140
  148
  157
Maintenance CAPEX, $m
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
New CAPEX, $m
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
Cash from investing activities, $m
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -37
  -38
  -41
  -42
  -45
  -46
  -49
  -52
  -55
  -57
  -60
  -63
  -66
Free cash flow, $m
  6
  8
  9
  11
  13
  14
  16
  18
  20
  22
  23
  26
  28
  30
  33
  36
  39
  42
  45
  48
  51
  55
  59
  63
  67
  71
  76
  80
  86
  91
Issuance/(repayment) of debt, $m
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
Issuance/(repurchase) of shares, $m
  2
  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  
  13
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
Total cash flow (excl. dividends), $m
  19
  20
  21
  23
  26
  28
  30
  33
  35
  38
  40
  43
  46
  49
  52
  56
  60
  64
  68
  72
  76
  81
  86
  91
  97
  103
  109
  115
  122
  129
Retained Cash Flow (-), $m
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -49
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
  5
  5
  6
  7
  9
  11
  12
  14
  16
  18
  19
  21
  23
  25
  28
  30
  33
  35
  38
  41
  44
  48
  51
  55
  58
  62
  66
  71
  75
  80
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
  4
  5
  5
  6
  7
  8
  8
  9
  9
  9
  9
  9
  9
  8
  8
  8
  7
  7
  6
  5
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
Current shareholders' claim on cash, %
  99.3
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1

Spartan Motors, Inc. is an engineer and manufacturer in the heavy-duty, custom vehicles marketplace. The Company operates through three segments: Emergency Response Vehicles, Delivery and Service Vehicles, and Specialty Chassis and Vehicles. The Company's Emergency Response Vehicles segment engineers and manufactures emergency response chassis, emergency response bodies and aerial equipment. The Delivery and Service Vehicles segment manufactures delivery and service vehicles through the Company's subsidiary, Utilimaster Corporation (Utilimaster). The Company's Specialty Chassis and Vehicles segment consists of the operations of Spartan Motors Chassis, Inc. (Spartan Chassis) that engineer and manufacture motor home chassis, defense vehicles and other specialty chassis, and distribute related aftermarket parts and assemblies. The Company markets its products under brands, such as Spartan ERV, Aeromaster, Trademaster, Metromaster and Utilivan.

FINANCIAL RATIOS  of  Spartan Motors (SPAR)

Valuation Ratios
P/E Ratio 27.4
Price to Sales 0.4
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 10.7
Price to Free Cash Flow 24.6
Growth Rates
Sales Growth Rate 7.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 160%
Cap. Spend. - 3 Yr. Gr. Rate 26.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 5.8%
Ret/ On T. Cap. - 3 Yr. Avg. -1.3%
Return On Equity 5.9%
Return On Equity - 3 Yr. Avg. -1.4%
Asset Turnover 2.5
Profitability Ratios
Gross Margin 12.4%
Gross Margin - 3 Yr. Avg. 10.7%
EBITDA Margin 2.9%
EBITDA Margin - 3 Yr. Avg. 1.1%
Operating Margin 1.5%
Oper. Margin - 3 Yr. Avg. -0.3%
Pre-Tax Margin 1.5%
Pre-Tax Margin - 3 Yr. Avg. -0.3%
Net Profit Margin 1.5%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 56.4%
Payout Ratio 33.3%

SPAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPAR stock intrinsic value calculation we used $707.098 million for the last fiscal year's total revenue generated by Spartan Motors. The default revenue input number comes from 0001 income statement of Spartan Motors. 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 SPAR stock valuation model: a) initial revenue growth rate of 8.4% 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 SPAR is calculated based on our internal credit rating of Spartan Motors, 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 Spartan Motors.
    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 SPAR stock the variable cost ratio is equal to 93.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $30 million in the base year in the intrinsic value calculation for SPAR 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 9.5% for Spartan Motors.

Corporate tax rate of 27% is the nominal tax rate for Spartan Motors. 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 SPAR 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 SPAR are equal to 9.8%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Spartan Motors 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 SPAR is equal to 7.9%. 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 - $168.927 million for Spartan Motors - 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 35.191 million for Spartan Motors 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 Spartan Motors at the current share price and the inputted number of shares is $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
FSS Federal Signal 21.16 25.91  hold
WGO Winnebago Indu 22.98 86.55  str.buy
ALG Alamo Group 77.77 333.12  str.buy
PATK Patrick Indust 35.17 244.10  str.buy
WKHS Workhorse Grou 0.540 0.02  str.sell

COMPANY NEWS

▶ Spartan Motors Receives Multi-Unit Fire Apparatus Order   [Dec-10-18 08:00AM  PR Newswire]
▶ Spartan Motors Announces Semi-Annual Dividend   [Nov-01-18 08:30AM  PR Newswire]
▶ Why Spartan Motors Stock Dropped 35% Today   [Oct-31-18 03:08PM  Motley Fool]
▶ Spartan Motors: 3Q Earnings Snapshot   [08:22AM  Associated Press]
▶ Spartan Motors: 2Q Earnings Snapshot   [07:45AM  Associated Press]
▶ Spartan Motors Announces Senior Leadership Appointments   [May-15-18 04:30PM  PR Newswire]
▶ Spartan Motors Announces Semi-Annual Dividend   [May-04-18 08:30AM  PR Newswire]
▶ Spartan Motors: 1Q Earnings Snapshot   [May-03-18 07:58AM  Associated Press]
▶ /C O R R E C T I O N -- Spartan Motors, Inc./   [Apr-13-18 04:30PM  PR Newswire]
▶ U.S. Auto Sales Rev Up in March: 5 Solid Picks   [Apr-04-18 09:23AM  Zacks]
▶ Modine Awarded Spartan Motors' Diamond Award   [Mar-22-18 11:24AM  PR Newswire]
▶ Spartan Motors tops Street 4Q forecasts   [08:51AM  Associated Press]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.