Intrinsic value of Summer Infant, Inc. - SUMR

Previous Close

$0.49

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$0.49

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of SUMR 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 0.0

 

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
  177
  182
  186
  191
  197
  204
  211
  218
  226
  235
  244
  254
  265
  276
  288
  300
  314
  328
  343
  358
  375
  393
  411
  430
  451
  473
  495
  519
  544
  571
Variable operating expenses, $m
  145
  148
  152
  156
  161
  166
  172
  178
  184
  191
  197
  205
  214
  223
  233
  243
  254
  265
  277
  290
  303
  317
  332
  348
  365
  382
  400
  420
  440
  461
Fixed operating expenses, $m
  34
  34
  35
  36
  37
  38
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  54
  56
  57
  58
  59
  61
  62
  63
Total operating expenses, $m
  179
  182
  187
  192
  198
  204
  210
  217
  224
  232
  239
  248
  258
  268
  279
  290
  302
  314
  327
  341
  355
  370
  386
  404
  422
  440
  459
  481
  502
  524
Operating income, $m
  -1
  -1
  -1
  -1
  0
  0
  1
  1
  2
  3
  5
  6
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  27
  29
  32
  35
  39
  42
  46
EBITDA, $m
  3
  3
  4
  4
  4
  5
  5
  6
  7
  8
  9
  10
  11
  13
  14
  16
  18
  19
  22
  24
  26
  29
  31
  34
  37
  40
  44
  48
  51
  56
Interest expense (income), $m
  2
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
Earnings before tax, $m
  -5
  -6
  -6
  -6
  -5
  -5
  -5
  -5
  -5
  -4
  -2
  -2
  -1
  -1
  0
  1
  2
  3
  4
  5
  7
  8
  10
  11
  13
  15
  17
  19
  22
  24
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
Net income, $m
  -5
  -6
  -6
  -6
  -5
  -5
  -5
  -5
  -5
  -4
  -2
  -2
  -1
  -1
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  10
  11
  13
  14
  16
  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
  96
  98
  101
  104
  107
  110
  114
  118
  122
  127
  132
  138
  143
  149
  156
  163
  170
  177
  186
  194
  203
  213
  223
  233
  244
  256
  268
  281
  295
  309
Adjusted assets (=assets-cash), $m
  96
  98
  101
  104
  107
  110
  114
  118
  122
  127
  132
  138
  143
  149
  156
  163
  170
  177
  186
  194
  203
  213
  223
  233
  244
  256
  268
  281
  295
  309
Revenue / Adjusted assets
  1.844
  1.857
  1.842
  1.837
  1.841
  1.855
  1.851
  1.847
  1.852
  1.850
  1.848
  1.841
  1.853
  1.852
  1.846
  1.840
  1.847
  1.853
  1.844
  1.845
  1.847
  1.845
  1.843
  1.845
  1.848
  1.848
  1.847
  1.847
  1.844
  1.848
Average production assets, $m
  17
  17
  18
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
Working capital, $m
  32
  32
  33
  34
  35
  36
  38
  39
  40
  42
  44
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  97
  102
Total debt, $m
  47
  49
  51
  54
  57
  60
  63
  67
  71
  75
  80
  84
  90
  95
  101
  107
  113
  120
  128
  135
  143
  152
  161
  170
  180
  191
  202
  214
  226
  239
Total liabilities, $m
  86
  88
  91
  93
  96
  99
  103
  106
  110
  114
  119
  124
  129
  134
  140
  146
  153
  160
  167
  175
  183
  191
  200
  210
  220
  230
  241
  253
  265
  278
Total equity, $m
  10
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
Total liabilities and equity, $m
  96
  98
  101
  103
  107
  110
  114
  118
  122
  127
  132
  138
  143
  149
  156
  162
  170
  178
  186
  194
  203
  212
  222
  233
  244
  256
  268
  281
  294
  309
Debt-to-equity ratio
  4.900
  4.990
  5.090
  5.200
  5.310
  5.420
  5.540
  5.660
  5.780
  5.900
  6.020
  6.130
  6.250
  6.360
  6.470
  6.570
  6.680
  6.780
  6.870
  6.970
  7.060
  7.140
  7.230
  7.310
  7.390
  7.460
  7.530
  7.600
  7.660
  7.720
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  -6
  -6
  -6
  -5
  -5
  -5
  -5
  -5
  -4
  -2
  -2
  -1
  -1
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  10
  11
  13
  14
  16
  18
Depreciation, amort., depletion, $m
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
Funds from operations, $m
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  16
  17
  19
  21
  23
  25
  27
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
Cash from operations, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  0
  0
  1
  1
  2
  3
  4
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
Maintenance CAPEX, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
New CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
Cash from investing activities, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -12
Free cash flow, $m
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -5
  -5
  -5
  -4
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  0
  1
  1
  2
  3
  4
  5
  7
  8
  9
  11
Issuance/(repayment) of debt, $m
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  11
  11
  12
  12
  13
Issuance/(repurchase) of shares, $m
  6
  6
  6
  6
  6
  6
  6
  5
  5
  5
  3
  2
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  8
  8
  8
  9
  9
  9
  9
  9
  9
  9
  8
  7
  7
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  11
  11
  12
  12
  13
Total cash flow (excl. dividends), $m
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  3
  3
  3
  3
  3
  4
  5
  5
  6
  8
  9
  10
  11
  13
  14
  16
  18
  20
  22
  24
Retained Cash Flow (-), $m
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -5
  -5
  -5
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
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
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -1
  -1
  0
  0
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  17
  18
  20
  22
Discount rate, %
  11.70
  12.29
  12.90
  13.54
  14.22
  14.93
  15.68
  16.46
  17.29
  18.15
  19.06
  20.01
  21.01
  22.06
  23.17
  24.32
  25.54
  26.82
  28.16
  29.57
  31.04
  32.60
  34.23
  35.94
  37.73
  39.62
  41.60
  43.68
  45.87
  48.16
PV of cash for distribution, $m
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  61.1
  37.9
  23.5
  14.8
  9.4
  6.1
  4.0
  2.7
  1.9
  1.4
  1.1
  0.9
  0.8
  0.8
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7
  0.7

Summer Infant, Inc. is an infant and juvenile products company. The Company is engaged in the juvenile industry, providing mothers and caregivers a range of products to care for babies and toddlers. As of December 31, 2016, it marketed over 1,100 products in several product categories, including monitoring, safety, nursery, baby gear and feeding products. It markets its products, under its Summer Infant, SwaddleMe and Born Free brand names. Its anchor products in its product categories include monitoring, such as wireless fidelity (Wi-Fi)/Internet, video, audio and prenatal; safety, including gates, bath, potties, boosters and positioners; nursery, such as swaddle, travel accessories, safe sleep, soothers and sleep aides; baby gear, including strollers, bassinets, high chairs and playards, and feeding products, such as bottles, drinking cups, bibs and placemats, electronics and pacifiers. It sells its products across the globe to national retailers, as well as independent retailers.

FINANCIAL RATIOS  of  Summer Infant, Inc. (SUMR)

Valuation Ratios
P/E Ratio -2.2
Price to Sales 0
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 1
Price to Free Cash Flow 1.3
Growth Rates
Sales Growth Rate -5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 273.3%
Total Debt to Equity 306.7%
Interest Coverage -2
Management Effectiveness
Return On Assets -2.5%
Ret/ On Assets - 3 Yr. Avg. -3%
Return On Total Capital -6.1%
Ret/ On T. Cap. - 3 Yr. Avg. -5.8%
Return On Equity -23.5%
Return On Equity - 3 Yr. Avg. -20.6%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 32%
Gross Margin - 3 Yr. Avg. 31.6%
EBITDA Margin 0.5%
EBITDA Margin - 3 Yr. Avg. 1%
Operating Margin -1.5%
Oper. Margin - 3 Yr. Avg. -1.6%
Pre-Tax Margin -3.1%
Pre-Tax Margin - 3 Yr. Avg. -3.1%
Net Profit Margin -2.1%
Net Profit Margin - 3 Yr. Avg. -2.1%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 52.8%
Payout Ratio 0%

SUMR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SUMR stock intrinsic value calculation we used $174 million for the last fiscal year's total revenue generated by Summer Infant, Inc.. The default revenue input number comes from 0001 income statement of Summer Infant, 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 SUMR 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 11.7%, whose default value for SUMR is calculated based on our internal credit rating of Summer Infant, 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 Summer Infant, 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 SUMR stock the variable cost ratio is equal to 81.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $33 million in the base year in the intrinsic value calculation for SUMR 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 9.6% for Summer Infant, Inc..

Corporate tax rate of 27% is the nominal tax rate for Summer Infant, 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 SUMR 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 SUMR are equal to 9.5%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Summer Infant, 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 SUMR is equal to 17.9%. 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 - $9.27 million for Summer Infant, 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 18.628 million for Summer Infant, 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 Summer Infant, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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