Intrinsic value of Spartan Motors, Inc. - SPAR

Previous Close

$8.42

  Intrinsic Value

$2.65

stock screener

  Rating & Target

str. sell

-69%

Previous close

$8.42

 
Intrinsic value

$2.65

 
Up/down potential

-69%

 
Rating

str. 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, %
  28.70
  26.33
  24.20
  22.28
  20.55
  18.99
  17.60
  16.34
  15.20
  14.18
  13.26
  12.44
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
Revenue, $m
  1,050
  1,327
  1,648
  2,015
  2,429
  2,890
  3,399
  3,954
  4,555
  5,201
  5,891
  6,623
  7,398
  8,214
  9,070
  9,966
  10,902
  11,878
  12,894
  13,951
  15,051
  16,194
  17,381
  18,616
  19,898
  21,232
  22,618
  24,061
  25,563
  27,126
Variable operating expenses, $m
  1,025
  1,294
  1,606
  1,962
  2,365
  2,813
  3,307
  3,847
  4,431
  5,059
  5,725
  6,437
  7,190
  7,982
  8,814
  9,685
  10,595
  11,543
  12,531
  13,559
  14,627
  15,738
  16,892
  18,092
  19,338
  20,634
  21,982
  23,384
  24,843
  26,363
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
  1,025
  1,294
  1,606
  1,962
  2,365
  2,813
  3,307
  3,847
  4,431
  5,059
  5,725
  6,437
  7,190
  7,982
  8,814
  9,685
  10,595
  11,543
  12,531
  13,559
  14,627
  15,738
  16,892
  18,092
  19,338
  20,634
  21,982
  23,384
  24,843
  26,363
Operating income, $m
  25
  33
  42
  53
  64
  77
  91
  107
  124
  142
  166
  186
  208
  231
  255
  281
  307
  334
  363
  393
  424
  456
  489
  524
  560
  598
  637
  677
  720
  764
EBITDA, $m
  40
  51
  63
  77
  93
  111
  130
  151
  174
  199
  225
  253
  283
  314
  347
  381
  417
  454
  493
  534
  576
  620
  665
  712
  761
  812
  865
  920
  978
  1,038
Interest expense (income), $m
  0
  1
  4
  7
  11
  15
  19
  24
  30
  36
  43
  50
  57
  66
  74
  83
  93
  103
  113
  124
  135
  147
  159
  171
  184
  198
  212
  227
  242
  258
  275
Earnings before tax, $m
  24
  29
  35
  42
  50
  58
  67
  77
  88
  99
  116
  129
  143
  157
  172
  188
  204
  221
  239
  258
  277
  297
  318
  339
  362
  385
  410
  435
  461
  489
Tax expense, $m
  6
  8
  9
  11
  13
  16
  18
  21
  24
  27
  31
  35
  39
  42
  46
  51
  55
  60
  65
  70
  75
  80
  86
  92
  98
  104
  111
  117
  125
  132
Net income, $m
  18
  21
  26
  31
  36
  42
  49
  56
  64
  73
  85
  94
  104
  115
  126
  137
  149
  162
  175
  188
  202
  217
  232
  248
  264
  281
  299
  317
  337
  357

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
  455
  575
  715
  874
  1,053
  1,253
  1,474
  1,715
  1,975
  2,255
  2,555
  2,872
  3,208
  3,562
  3,933
  4,322
  4,727
  5,151
  5,591
  6,050
  6,527
  7,022
  7,537
  8,073
  8,629
  9,207
  9,809
  10,434
  11,085
  11,763
Adjusted assets (=assets-cash), $m
  455
  575
  715
  874
  1,053
  1,253
  1,474
  1,715
  1,975
  2,255
  2,555
  2,872
  3,208
  3,562
  3,933
  4,322
  4,727
  5,151
  5,591
  6,050
  6,527
  7,022
  7,537
  8,073
  8,629
  9,207
  9,809
  10,434
  11,085
  11,763
Revenue / Adjusted assets
  2.308
  2.308
  2.305
  2.305
  2.307
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
  2.306
Average production assets, $m
  98
  123
  153
  187
  226
  269
  316
  368
  424
  484
  548
  616
  688
  764
  843
  927
  1,014
  1,105
  1,199
  1,297
  1,400
  1,506
  1,616
  1,731
  1,851
  1,975
  2,104
  2,238
  2,377
  2,523
Working capital, $m
  103
  130
  161
  197
  238
  283
  333
  387
  446
  510
  577
  649
  725
  805
  889
  977
  1,068
  1,164
  1,264
  1,367
  1,475
  1,587
  1,703
  1,824
  1,950
  2,081
  2,217
  2,358
  2,505
  2,658
Total debt, $m
  74
  130
  196
  271
  356
  450
  554
  668
  791
  923
  1,064
  1,214
  1,373
  1,540
  1,715
  1,898
  2,090
  2,290
  2,498
  2,714
  2,939
  3,173
  3,416
  3,669
  3,931
  4,204
  4,488
  4,783
  5,091
  5,411
Total liabilities, $m
  215
  272
  337
  412
  497
  592
  696
  809
  932
  1,065
  1,206
  1,356
  1,514
  1,681
  1,856
  2,040
  2,231
  2,431
  2,639
  2,856
  3,081
  3,315
  3,558
  3,810
  4,073
  4,346
  4,630
  4,925
  5,232
  5,552
Total equity, $m
  240
  304
  377
  461
  556
  662
  778
  905
  1,043
  1,191
  1,349
  1,517
  1,694
  1,881
  2,077
  2,282
  2,496
  2,720
  2,952
  3,194
  3,446
  3,708
  3,980
  4,262
  4,556
  4,861
  5,179
  5,509
  5,853
  6,211
Total liabilities and equity, $m
  455
  576
  714
  873
  1,053
  1,254
  1,474
  1,714
  1,975
  2,256
  2,555
  2,873
  3,208
  3,562
  3,933
  4,322
  4,727
  5,151
  5,591
  6,050
  6,527
  7,023
  7,538
  8,072
  8,629
  9,207
  9,809
  10,434
  11,085
  11,763
Debt-to-equity ratio
  0.310
  0.430
  0.520
  0.590
  0.640
  0.680
  0.710
  0.740
  0.760
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.840
  0.850
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.860
  0.870
  0.870
  0.870
  0.870
Adjusted equity ratio
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  18
  21
  26
  31
  36
  42
  49
  56
  64
  73
  85
  94
  104
  115
  126
  137
  149
  162
  175
  188
  202
  217
  232
  248
  264
  281
  299
  317
  337
  357
Depreciation, amort., depletion, $m
  15
  18
  21
  25
  29
  33
  39
  44
  50
  57
  60
  67
  75
  83
  92
  101
  110
  120
  130
  141
  152
  164
  176
  188
  201
  215
  229
  243
  258
  274
Funds from operations, $m
  32
  39
  47
  55
  65
  76
  88
  100
  114
  129
  144
  161
  179
  198
  217
  238
  259
  282
  305
  329
  354
  381
  408
  436
  465
  496
  528
  561
  595
  631
Change in working capital, $m
  23
  27
  31
  36
  41
  45
  50
  54
  59
  63
  68
  72
  76
  80
  84
  88
  92
  96
  100
  104
  108
  112
  116
  121
  126
  131
  136
  141
  147
  153
Cash from operations, $m
  9
  12
  15
  19
  24
  31
  38
  46
  56
  66
  77
  89
  103
  118
  133
  150
  168
  186
  205
  226
  247
  269
  291
  315
  340
  365
  392
  419
  448
  478
Maintenance CAPEX, $m
  -8
  -11
  -13
  -17
  -20
  -25
  -29
  -34
  -40
  -46
  -53
  -60
  -67
  -75
  -83
  -92
  -101
  -110
  -120
  -130
  -141
  -152
  -164
  -176
  -188
  -201
  -215
  -229
  -243
  -258
New CAPEX, $m
  -22
  -26
  -30
  -34
  -39
  -43
  -47
  -52
  -56
  -60
  -64
  -68
  -72
  -76
  -80
  -83
  -87
  -91
  -95
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -134
  -140
  -145
Cash from investing activities, $m
  -30
  -37
  -43
  -51
  -59
  -68
  -76
  -86
  -96
  -106
  -117
  -128
  -139
  -151
  -163
  -175
  -188
  -201
  -215
  -228
  -243
  -258
  -274
  -291
  -307
  -325
  -344
  -363
  -383
  -403
Free cash flow, $m
  -21
  -25
  -28
  -32
  -35
  -37
  -39
  -40
  -40
  -40
  -40
  -38
  -36
  -33
  -29
  -25
  -20
  -15
  -9
  -3
  3
  10
  17
  25
  32
  40
  48
  57
  65
  74
Issuance/(repayment) of debt, $m
  48
  57
  66
  75
  85
  94
  104
  114
  123
  132
  141
  150
  159
  167
  175
  183
  192
  200
  208
  216
  225
  234
  243
  253
  263
  273
  284
  295
  307
  320
Issuance/(repurchase) of shares, $m
  36
  42
  48
  53
  59
  63
  67
  71
  73
  75
  73
  74
  73
  72
  70
  68
  65
  62
  58
  54
  49
  45
  40
  35
  29
  24
  18
  13
  7
  1
Cash from financing (excl. dividends), $m  
  84
  99
  114
  128
  144
  157
  171
  185
  196
  207
  214
  224
  232
  239
  245
  251
  257
  262
  266
  270
  274
  279
  283
  288
  292
  297
  302
  308
  314
  321
Total cash flow (excl. dividends), $m
  63
  74
  85
  97
  109
  121
  133
  145
  156
  167
  174
  185
  196
  206
  216
  226
  237
  247
  257
  267
  278
  289
  300
  312
  324
  337
  351
  365
  380
  395
Retained Cash Flow (-), $m
  -54
  -63
  -74
  -84
  -95
  -106
  -116
  -127
  -138
  -148
  -158
  -168
  -177
  -187
  -196
  -205
  -214
  -223
  -233
  -242
  -252
  -262
  -272
  -283
  -294
  -305
  -318
  -330
  -344
  -358
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
  11
  12
  13
  14
  15
  16
  17
  19
  20
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
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
  9
  10
  10
  11
  11
  11
  11
  11
  11
  10
  8
  7
  7
  7
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  89.1
  80.3
  73.0
  67.1
  62.1
  57.9
  54.4
  51.5
  49.0
  46.9
  45.1
  43.6
  42.3
  41.2
  40.3
  39.5
  38.8
  38.2
  37.7
  37.2
  36.9
  36.6
  36.3
  36.1
  36.0
  35.9
  35.8
  35.7
  35.7
  35.7

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, Inc. (SPAR)

Valuation Ratios
P/E Ratio 32.2
Price to Sales 0.5
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 12.6
Price to Free Cash Flow 28.9
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 $816 million for the last fiscal year's total revenue generated by Spartan Motors, Inc.. The default revenue input number comes from 0001 income statement of Spartan Motors, 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 SPAR stock valuation model: a) initial revenue growth rate of 28.7% 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, 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 Spartan Motors, 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 SPAR stock the variable cost ratio is equal to 97.7%.

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 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 5.4% for Spartan Motors, Inc..

Corporate tax rate of 27% is the nominal tax rate for Spartan Motors, 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 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 9.3%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Spartan Motors, 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 SPAR is equal to 9.8%. 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 - $186.74 million for Spartan Motors, 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 35.229 million for Spartan Motors, 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 Spartan Motors, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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