Intrinsic value of SpartanNash Company - SPTN

Previous Close

$11.31

  Intrinsic Value

$2.84

stock screener

  Rating & Target

str. sell

-75%

Previous close

$11.31

 
Intrinsic value

$2.84

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of SPTN 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 0.4

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  8,226
  8,416
  8,632
  8,875
  9,144
  9,439
  9,760
  10,108
  10,483
  10,885
  11,316
  11,775
  12,264
  12,784
  13,335
  13,920
  14,538
  15,192
  15,884
  16,613
  17,384
  18,196
  19,052
  19,954
  20,904
  21,904
  22,956
  24,064
  25,230
  26,455
Variable operating expenses, $m
  8,333
  8,524
  8,742
  8,987
  9,258
  9,556
  9,881
  10,232
  10,610
  11,016
  11,420
  11,883
  12,377
  12,901
  13,458
  14,047
  14,672
  15,332
  16,029
  16,766
  17,543
  18,363
  19,227
  20,137
  21,095
  22,105
  23,167
  24,285
  25,461
  26,698
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
  8,333
  8,524
  8,742
  8,987
  9,258
  9,556
  9,881
  10,232
  10,610
  11,016
  11,420
  11,883
  12,377
  12,901
  13,458
  14,047
  14,672
  15,332
  16,029
  16,766
  17,543
  18,363
  19,227
  20,137
  21,095
  22,105
  23,167
  24,285
  25,461
  26,698
Operating income, $m
  -106
  -108
  -110
  -112
  -115
  -117
  -120
  -124
  -127
  -131
  -104
  -108
  -113
  -117
  -122
  -128
  -133
  -139
  -146
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -232
  -243
EBITDA, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
Interest expense (income), $m
  16
  38
  39
  41
  42
  45
  47
  49
  52
  55
  58
  61
  65
  69
  73
  77
  82
  87
  92
  98
  103
  110
  116
  123
  130
  138
  146
  154
  163
  172
  182
Earnings before tax, $m
  -144
  -147
  -151
  -155
  -159
  -164
  -170
  -176
  -182
  -189
  -165
  -173
  -182
  -190
  -200
  -210
  -220
  -232
  -243
  -256
  -269
  -283
  -298
  -313
  -330
  -347
  -365
  -384
  -404
  -425
Tax expense, $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
Net income, $m
  -144
  -147
  -151
  -155
  -159
  -164
  -170
  -176
  -182
  -189
  -165
  -173
  -182
  -190
  -200
  -210
  -220
  -232
  -243
  -256
  -269
  -283
  -298
  -313
  -330
  -347
  -365
  -384
  -404
  -425

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
  2,011
  2,058
  2,110
  2,170
  2,236
  2,308
  2,386
  2,471
  2,563
  2,661
  2,767
  2,879
  2,999
  3,126
  3,260
  3,403
  3,555
  3,715
  3,884
  4,062
  4,250
  4,449
  4,658
  4,879
  5,111
  5,355
  5,613
  5,884
  6,169
  6,468
Adjusted assets (=assets-cash), $m
  2,011
  2,058
  2,110
  2,170
  2,236
  2,308
  2,386
  2,471
  2,563
  2,661
  2,767
  2,879
  2,999
  3,126
  3,260
  3,403
  3,555
  3,715
  3,884
  4,062
  4,250
  4,449
  4,658
  4,879
  5,111
  5,355
  5,613
  5,884
  6,169
  6,468
Revenue / Adjusted assets
  4.091
  4.089
  4.091
  4.090
  4.089
  4.090
  4.091
  4.091
  4.090
  4.091
  4.090
  4.090
  4.089
  4.090
  4.090
  4.091
  4.089
  4.089
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
Average production assets, $m
  765
  783
  803
  825
  850
  878
  908
  940
  975
  1,012
  1,052
  1,095
  1,141
  1,189
  1,240
  1,295
  1,352
  1,413
  1,477
  1,545
  1,617
  1,692
  1,772
  1,856
  1,944
  2,037
  2,135
  2,238
  2,346
  2,460
Working capital, $m
  535
  547
  561
  577
  594
  614
  634
  657
  681
  708
  736
  765
  797
  831
  867
  905
  945
  988
  1,032
  1,080
  1,130
  1,183
  1,238
  1,297
  1,359
  1,424
  1,492
  1,564
  1,640
  1,720
Total debt, $m
  723
  753
  786
  824
  866
  912
  962
  1,016
  1,075
  1,137
  1,204
  1,276
  1,352
  1,433
  1,519
  1,610
  1,706
  1,808
  1,916
  2,030
  2,150
  2,276
  2,409
  2,550
  2,698
  2,854
  3,017
  3,190
  3,372
  3,562
Total liabilities, $m
  1,281
  1,311
  1,344
  1,382
  1,424
  1,470
  1,520
  1,574
  1,633
  1,695
  1,762
  1,834
  1,910
  1,991
  2,077
  2,168
  2,264
  2,366
  2,474
  2,587
  2,707
  2,834
  2,967
  3,108
  3,256
  3,411
  3,575
  3,748
  3,929
  4,120
Total equity, $m
  730
  747
  766
  788
  812
  838
  866
  897
  930
  966
  1,004
  1,045
  1,088
  1,135
  1,184
  1,235
  1,290
  1,348
  1,410
  1,474
  1,543
  1,615
  1,691
  1,771
  1,855
  1,944
  2,037
  2,136
  2,239
  2,348
Total liabilities and equity, $m
  2,011
  2,058
  2,110
  2,170
  2,236
  2,308
  2,386
  2,471
  2,563
  2,661
  2,766
  2,879
  2,998
  3,126
  3,261
  3,403
  3,554
  3,714
  3,884
  4,061
  4,250
  4,449
  4,658
  4,879
  5,111
  5,355
  5,612
  5,884
  6,168
  6,468
Debt-to-equity ratio
  0.990
  1.010
  1.030
  1.050
  1.070
  1.090
  1.110
  1.130
  1.160
  1.180
  1.200
  1.220
  1.240
  1.260
  1.280
  1.300
  1.320
  1.340
  1.360
  1.380
  1.390
  1.410
  1.420
  1.440
  1.450
  1.470
  1.480
  1.490
  1.510
  1.520
Adjusted equity ratio
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -144
  -147
  -151
  -155
  -159
  -164
  -170
  -176
  -182
  -189
  -165
  -173
  -182
  -190
  -200
  -210
  -220
  -232
  -243
  -256
  -269
  -283
  -298
  -313
  -330
  -347
  -365
  -384
  -404
  -425
Depreciation, amort., depletion, $m
  102
  104
  106
  108
  110
  113
  116
  119
  122
  125
  98
  102
  107
  111
  116
  121
  126
  132
  138
  144
  151
  158
  166
  173
  182
  190
  200
  209
  219
  230
Funds from operations, $m
  -42
  -43
  -45
  -47
  -49
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -75
  -79
  -84
  -89
  -94
  -100
  -105
  -112
  -118
  -125
  -132
  -140
  -148
  -156
  -165
  -175
  -185
  -195
Change in working capital, $m
  10
  12
  14
  16
  17
  19
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  56
  59
  62
  65
  68
  72
  76
  80
Cash from operations, $m
  -52
  -55
  -59
  -63
  -66
  -71
  -75
  -80
  -84
  -90
  -95
  -101
  -107
  -113
  -120
  -127
  -134
  -142
  -150
  -159
  -168
  -178
  -188
  -198
  -210
  -221
  -234
  -247
  -260
  -275
Maintenance CAPEX, $m
  -70
  -71
  -73
  -75
  -77
  -79
  -82
  -85
  -88
  -91
  -95
  -98
  -102
  -107
  -111
  -116
  -121
  -126
  -132
  -138
  -144
  -151
  -158
  -166
  -173
  -182
  -190
  -200
  -209
  -219
New CAPEX, $m
  -16
  -18
  -20
  -23
  -25
  -27
  -30
  -32
  -35
  -37
  -40
  -43
  -45
  -48
  -51
  -54
  -58
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
Cash from investing activities, $m
  -86
  -89
  -93
  -98
  -102
  -106
  -112
  -117
  -123
  -128
  -135
  -141
  -147
  -155
  -162
  -170
  -179
  -187
  -196
  -206
  -216
  -227
  -238
  -250
  -261
  -275
  -288
  -303
  -317
  -333
Free cash flow, $m
  -138
  -145
  -152
  -160
  -169
  -178
  -187
  -197
  -207
  -218
  -230
  -242
  -255
  -268
  -282
  -297
  -313
  -329
  -347
  -365
  -384
  -404
  -426
  -448
  -471
  -496
  -522
  -549
  -578
  -608
Issuance/(repayment) of debt, $m
  25
  29
  34
  38
  42
  46
  50
  54
  58
  63
  67
  72
  76
  81
  86
  91
  96
  102
  108
  114
  120
  126
  133
  140
  148
  156
  164
  173
  182
  191
Issuance/(repurchase) of shares, $m
  158
  164
  170
  176
  183
  190
  198
  206
  215
  224
  204
  214
  225
  237
  249
  262
  275
  290
  305
  321
  338
  355
  374
  393
  414
  436
  458
  482
  507
  534
Cash from financing (excl. dividends), $m  
  183
  193
  204
  214
  225
  236
  248
  260
  273
  287
  271
  286
  301
  318
  335
  353
  371
  392
  413
  435
  458
  481
  507
  533
  562
  592
  622
  655
  689
  725
Total cash flow (excl. dividends), $m
  45
  49
  51
  54
  56
  59
  61
  64
  66
  69
  41
  44
  47
  49
  52
  56
  59
  62
  66
  69
  73
  77
  81
  86
  90
  95
  100
  105
  111
  117
Retained Cash Flow (-), $m
  -158
  -164
  -170
  -176
  -183
  -190
  -198
  -206
  -215
  -224
  -204
  -214
  -225
  -237
  -249
  -262
  -275
  -290
  -305
  -321
  -338
  -355
  -374
  -393
  -414
  -436
  -458
  -482
  -507
  -534
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
  -113
  -115
  -119
  -122
  -127
  -132
  -137
  -143
  -149
  -155
  -163
  -170
  -178
  -187
  -196
  -206
  -216
  -227
  -239
  -251
  -264
  -278
  -292
  -307
  -323
  -340
  -358
  -377
  -396
  -417
Discount rate, %
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
  -105
  -100
  -95
  -89
  -84
  -78
  -72
  -67
  -61
  -55
  -49
  -43
  -37
  -32
  -27
  -23
  -19
  -15
  -12
  -9
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  76.0
  57.6
  43.4
  32.7
  24.5
  18.4
  13.7
  10.2
  7.6
  5.7
  4.4
  3.3
  2.6
  2.0
  1.5
  1.1
  0.9
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0

SpartanNash Company is a multi-regional grocery distributor and grocery retailer. The Company's core businesses include distributing grocery products to independent grocery retailers (independent retailers), select national retailers, its corporate owned retail stores, and the United States military commissaries. The Company operates through three segments: Food Distribution, Military and Retail. The Food Distribution segment provides a range of nationally branded and private brand grocery products and perishable food products to independent retailers, food service distributors and its corporate owned retail stores. The Military segment contracts with manufacturers to distribute a range of grocery products primarily to military commissaries and exchanges located in the United States, the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. As of December 31, 2016, the Retail segment operated 157 corporate owned retail stores in the Midwest and Great Lakes regions.

FINANCIAL RATIOS  of  SpartanNash Company (SPTN)

Valuation Ratios
P/E Ratio 7.4
Price to Sales 0.1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow 5.2
Growth Rates
Sales Growth Rate 1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.6%
Cap. Spend. - 3 Yr. Gr. Rate 14.6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 50.2%
Total Debt to Equity 52.2%
Interest Coverage 7
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. 7.8%
Asset Turnover 4
Profitability Ratios
Gross Margin 14.4%
Gross Margin - 3 Yr. Avg. 14.5%
EBITDA Margin 2.4%
EBITDA Margin - 3 Yr. Avg. 2.5%
Operating Margin 1.4%
Oper. Margin - 3 Yr. Avg. 1.5%
Pre-Tax Margin 1.2%
Pre-Tax Margin - 3 Yr. Avg. 1.2%
Net Profit Margin 0.7%
Net Profit Margin - 3 Yr. Avg. 0.8%
Effective Tax Rate 36.7%
Eff/ Tax Rate - 3 Yr. Avg. 36%
Payout Ratio 40.4%

SPTN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPTN stock intrinsic value calculation we used $8065 million for the last fiscal year's total revenue generated by SpartanNash Company. The default revenue input number comes from 0001 income statement of SpartanNash Company. 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 SPTN stock valuation model: a) initial revenue growth rate of 2% 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 7.1%, whose default value for SPTN is calculated based on our internal credit rating of SpartanNash Company, 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 SpartanNash Company.
    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 SPTN stock the variable cost ratio is equal to 101.3%.

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 SPTN 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 SpartanNash Company.

Corporate tax rate of 27% is the nominal tax rate for SpartanNash Company. 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 SPTN 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 SPTN are equal to 9.3%.

Life of production assets of 10.7 years is the average useful life of capital assets used in SpartanNash Company 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 SPTN is equal to 6.5%. 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 - $715.947 million for SpartanNash Company - 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 35.952 million for SpartanNash Company 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 SpartanNash Company at the current share price and the inputted number of shares is $0.4 billion.

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