Intrinsic value of Standex International - SXI

Previous Close

$79.30

  Intrinsic Value

$100.53

stock screener

  Rating & Target

buy

+27%

Previous close

$79.30

 
Intrinsic value

$100.53

 
Up/down potential

+27%

 
Rating

buy

We calculate the intrinsic value of SXI 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 1.0

 

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, %
  17.30
  16.07
  14.96
  13.97
  13.07
  12.26
  11.54
  10.88
  10.29
  9.77
  9.29
  8.86
  8.47
  8.13
  7.81
  7.53
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.79
  5.72
  5.64
  5.58
Revenue, $m
  886
  1,028
  1,182
  1,347
  1,523
  1,710
  1,907
  2,115
  2,333
  2,561
  2,798
  3,046
  3,304
  3,573
  3,852
  4,142
  4,444
  4,757
  5,083
  5,422
  5,774
  6,140
  6,521
  6,919
  7,332
  7,764
  8,214
  8,683
  9,173
  9,685
Variable operating expenses, $m
  797
  919
  1,052
  1,194
  1,345
  1,506
  1,675
  1,854
  2,041
  2,237
  2,407
  2,621
  2,843
  3,074
  3,314
  3,564
  3,823
  4,093
  4,373
  4,664
  4,967
  5,282
  5,610
  5,952
  6,308
  6,679
  7,066
  7,470
  7,892
  8,332
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
  797
  919
  1,052
  1,194
  1,345
  1,506
  1,675
  1,854
  2,041
  2,237
  2,407
  2,621
  2,843
  3,074
  3,314
  3,564
  3,823
  4,093
  4,373
  4,664
  4,967
  5,282
  5,610
  5,952
  6,308
  6,679
  7,066
  7,470
  7,892
  8,332
Operating income, $m
  89
  109
  131
  154
  178
  204
  232
  261
  291
  323
  391
  426
  462
  499
  538
  579
  621
  665
  710
  757
  807
  858
  911
  967
  1,024
  1,085
  1,148
  1,213
  1,282
  1,353
EBITDA, $m
  139
  162
  186
  212
  240
  269
  300
  333
  367
  403
  440
  479
  520
  562
  606
  651
  699
  748
  799
  853
  908
  966
  1,026
  1,088
  1,153
  1,221
  1,292
  1,366
  1,443
  1,523
Interest expense (income), $m
  3
  10
  15
  19
  24
  30
  36
  42
  48
  55
  62
  70
  77
  86
  94
  103
  112
  122
  131
  142
  152
  164
  175
  187
  200
  213
  226
  241
  255
  271
  287
Earnings before tax, $m
  79
  94
  111
  129
  148
  169
  190
  213
  236
  261
  321
  348
  376
  405
  435
  467
  499
  533
  568
  605
  643
  683
  724
  767
  812
  858
  907
  958
  1,011
  1,066
Tax expense, $m
  21
  26
  30
  35
  40
  46
  51
  57
  64
  70
  87
  94
  102
  109
  118
  126
  135
  144
  153
  163
  174
  184
  195
  207
  219
  232
  245
  259
  273
  288
Net income, $m
  58
  69
  81
  94
  108
  123
  139
  155
  173
  191
  235
  254
  275
  296
  318
  341
  364
  389
  415
  442
  469
  498
  528
  560
  592
  627
  662
  699
  738
  778

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
  1,018
  1,182
  1,359
  1,549
  1,751
  1,966
  2,192
  2,431
  2,681
  2,943
  3,217
  3,502
  3,798
  4,107
  4,428
  4,761
  5,108
  5,468
  5,842
  6,232
  6,636
  7,058
  7,496
  7,952
  8,428
  8,924
  9,441
  9,981
  10,544
  11,132
Adjusted assets (=assets-cash), $m
  1,018
  1,182
  1,359
  1,549
  1,751
  1,966
  2,192
  2,431
  2,681
  2,943
  3,217
  3,502
  3,798
  4,107
  4,428
  4,761
  5,108
  5,468
  5,842
  6,232
  6,636
  7,058
  7,496
  7,952
  8,428
  8,924
  9,441
  9,981
  10,544
  11,132
Revenue / Adjusted assets
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
Average production assets, $m
  300
  349
  401
  457
  516
  580
  647
  717
  791
  868
  949
  1,033
  1,120
  1,211
  1,306
  1,404
  1,506
  1,613
  1,723
  1,838
  1,957
  2,082
  2,211
  2,345
  2,486
  2,632
  2,784
  2,944
  3,110
  3,283
Working capital, $m
  132
  153
  176
  201
  227
  255
  284
  315
  348
  382
  417
  454
  492
  532
  574
  617
  662
  709
  757
  808
  860
  915
  972
  1,031
  1,093
  1,157
  1,224
  1,294
  1,367
  1,443
Total debt, $m
  272
  358
  452
  552
  659
  773
  893
  1,019
  1,151
  1,290
  1,435
  1,585
  1,742
  1,906
  2,075
  2,252
  2,435
  2,626
  2,824
  3,030
  3,244
  3,466
  3,698
  3,940
  4,191
  4,454
  4,727
  5,013
  5,311
  5,622
Total liabilities, $m
  539
  625
  719
  819
  926
  1,040
  1,160
  1,286
  1,418
  1,557
  1,702
  1,852
  2,009
  2,173
  2,342
  2,519
  2,702
  2,893
  3,091
  3,297
  3,511
  3,733
  3,965
  4,207
  4,458
  4,721
  4,994
  5,280
  5,578
  5,889
Total equity, $m
  480
  557
  640
  729
  825
  926
  1,033
  1,145
  1,263
  1,386
  1,515
  1,649
  1,789
  1,934
  2,086
  2,243
  2,406
  2,575
  2,752
  2,935
  3,126
  3,324
  3,531
  3,746
  3,970
  4,203
  4,447
  4,701
  4,966
  5,243
Total liabilities and equity, $m
  1,019
  1,182
  1,359
  1,548
  1,751
  1,966
  2,193
  2,431
  2,681
  2,943
  3,217
  3,501
  3,798
  4,107
  4,428
  4,762
  5,108
  5,468
  5,843
  6,232
  6,637
  7,057
  7,496
  7,953
  8,428
  8,924
  9,441
  9,981
  10,544
  11,132
Debt-to-equity ratio
  0.570
  0.640
  0.710
  0.760
  0.800
  0.830
  0.860
  0.890
  0.910
  0.930
  0.950
  0.960
  0.970
  0.990
  1.000
  1.000
  1.010
  1.020
  1.030
  1.030
  1.040
  1.040
  1.050
  1.050
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
Adjusted equity ratio
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  69
  81
  94
  108
  123
  139
  155
  173
  191
  235
  254
  275
  296
  318
  341
  364
  389
  415
  442
  469
  498
  528
  560
  592
  627
  662
  699
  738
  778
Depreciation, amort., depletion, $m
  50
  53
  55
  58
  61
  65
  68
  72
  75
  79
  49
  54
  58
  63
  68
  73
  78
  84
  89
  95
  101
  108
  115
  122
  129
  136
  144
  153
  161
  170
Funds from operations, $m
  108
  122
  137
  153
  170
  188
  207
  227
  248
  270
  284
  308
  333
  358
  385
  413
  443
  473
  504
  537
  571
  606
  643
  681
  721
  763
  806
  852
  899
  948
Change in working capital, $m
  19
  21
  23
  25
  26
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  50
  52
  55
  57
  59
  62
  64
  67
  70
  73
  76
Cash from operations, $m
  88
  100
  114
  128
  143
  160
  177
  196
  216
  236
  248
  271
  294
  318
  344
  370
  398
  426
  456
  486
  518
  552
  586
  622
  660
  699
  739
  782
  826
  872
Maintenance CAPEX, $m
  -13
  -16
  -18
  -21
  -24
  -27
  -30
  -34
  -37
  -41
  -45
  -49
  -54
  -58
  -63
  -68
  -73
  -78
  -84
  -89
  -95
  -101
  -108
  -115
  -122
  -129
  -136
  -144
  -153
  -161
New CAPEX, $m
  -45
  -48
  -52
  -56
  -60
  -63
  -67
  -70
  -74
  -77
  -81
  -84
  -88
  -91
  -95
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -135
  -140
  -146
  -153
  -159
  -166
  -174
Cash from investing activities, $m
  -58
  -64
  -70
  -77
  -84
  -90
  -97
  -104
  -111
  -118
  -126
  -133
  -142
  -149
  -158
  -166
  -175
  -184
  -194
  -204
  -214
  -225
  -237
  -250
  -262
  -275
  -289
  -303
  -319
  -335
Free cash flow, $m
  30
  37
  43
  51
  60
  70
  81
  92
  105
  118
  123
  137
  153
  169
  186
  204
  223
  242
  262
  282
  304
  326
  349
  373
  398
  424
  450
  478
  507
  538
Issuance/(repayment) of debt, $m
  80
  87
  94
  100
  107
  114
  120
  126
  132
  139
  145
  151
  157
  163
  170
  176
  183
  191
  198
  206
  214
  223
  232
  241
  252
  262
  274
  285
  298
  311
Issuance/(repurchase) of shares, $m
  13
  8
  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
Cash from financing (excl. dividends), $m  
  93
  95
  96
  100
  107
  114
  120
  126
  132
  139
  145
  151
  157
  163
  170
  176
  183
  191
  198
  206
  214
  223
  232
  241
  252
  262
  274
  285
  298
  311
Total cash flow (excl. dividends), $m
  123
  131
  139
  152
  167
  183
  201
  218
  237
  256
  267
  288
  310
  333
  356
  381
  406
  432
  460
  488
  518
  549
  581
  614
  649
  686
  724
  764
  805
  849
Retained Cash Flow (-), $m
  -71
  -77
  -83
  -89
  -95
  -101
  -107
  -112
  -118
  -123
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -170
  -176
  -183
  -191
  -198
  -206
  -215
  -224
  -234
  -244
  -254
  -265
  -277
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
  52
  54
  56
  62
  72
  82
  94
  106
  119
  133
  139
  154
  170
  187
  205
  223
  243
  263
  283
  305
  327
  350
  374
  399
  425
  452
  480
  510
  540
  572
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
  50
  50
  48
  51
  56
  60
  63
  66
  68
  70
  66
  66
  65
  63
  60
  57
  53
  48
  44
  39
  34
  29
  25
  20
  17
  13
  10
  8
  6
  4
Current shareholders' claim on cash, %
  98.7
  98.0
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9

Standex International Corporation is a diversified manufacturing company. The Company is a manufacturer of a range of products and services for diverse commercial and industrial market segments. The Company has 11 operating segments, aggregated and organized into five segments: Food Service Equipment, Engraving, Engineering Technologies, Electronics and Hydraulics. The Food Service Equipment business consists of Refrigeration Solutions group, Cooking Solutions group and Specialty Solutions group. The Engraving segment's product lines include Mold-Tech and Innovent. The Engineering Technologies segment provides engineered parts in all workable metal alloys using various forming processes. The Electronics segment is a manufacturer of custom magnetic sensing and power conversion components and assemblies. The Hydraulics segment is a manufacturer of mobile hydraulic cylinders, including single or double acting telescopic, and piston rod hydraulic cylinders.

FINANCIAL RATIOS  of  Standex International (SXI)

Valuation Ratios
P/E Ratio 21.4
Price to Sales 1.3
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 15.9
Price to Free Cash Flow 27.1
Growth Rates
Sales Growth Rate 0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 44.4%
Cap. Spend. - 3 Yr. Gr. Rate 6.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 46.9%
Total Debt to Equity 46.9%
Interest Coverage 22
Management Effectiveness
Return On Assets 6.3%
Ret/ On Assets - 3 Yr. Avg. 7.8%
Return On Total Capital 8.8%
Ret/ On T. Cap. - 3 Yr. Avg. 11.1%
Return On Equity 12.1%
Return On Equity - 3 Yr. Avg. 14.2%
Asset Turnover 1
Profitability Ratios
Gross Margin 33.5%
Gross Margin - 3 Yr. Avg. 33%
EBITDA Margin 11.3%
EBITDA Margin - 3 Yr. Avg. 11.8%
Operating Margin 8.6%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin 8.2%
Pre-Tax Margin - 3 Yr. Avg. 9.1%
Net Profit Margin 6.2%
Net Profit Margin - 3 Yr. Avg. 6.8%
Effective Tax Rate 24.2%
Eff/ Tax Rate - 3 Yr. Avg. 25.5%
Payout Ratio 17%

SXI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SXI stock intrinsic value calculation we used $755.258 million for the last fiscal year's total revenue generated by Standex International. The default revenue input number comes from 0001 income statement of Standex International. 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 SXI stock valuation model: a) initial revenue growth rate of 17.3% 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 SXI is calculated based on our internal credit rating of Standex International, 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 Standex International.
    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 SXI stock the variable cost ratio is equal to 90.6%.

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 SXI 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 Standex International.

Corporate tax rate of 27% is the nominal tax rate for Standex International. 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 SXI 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 SXI are equal to 33.9%.

Life of production assets of 19.3 years is the average useful life of capital assets used in Standex International 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 SXI is equal to 14.9%. 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 - $408.664 million for Standex International - 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 12.832 million for Standex International 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 Standex International at the current share price and the inputted number of shares is $1.0 billion.

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COMPANY NEWS

▶ Standex: Fiscal 1Q Earnings Snapshot   [09:11AM  Associated Press]
▶ Standex: Fiscal 4Q Earnings Snapshot   [08:44AM  Associated Press]
▶ Standex Announces 216th Consecutive Quarterly Cash Dividend   [Jul-26-18 08:33AM  Business Wire]
▶ Standex to Webcast 2018 Investor Day on May 17th   [May-10-18 03:33PM  Business Wire]
▶ Standex: Fiscal 3Q Earnings Snapshot   [May-01-18 09:09AM  Associated Press]
▶ Standex International Q3 Earnings Preview   [Apr-30-18 04:10PM  Benzinga]
▶ Standex reports 2Q loss   [Jan-30-18 09:06AM  Associated Press]
▶ Standex Announces 214th Consecutive Quarterly Cash Dividend   [Jan-25-18 10:51AM  Business Wire]
▶ Standex posts 1Q profit   [Nov-01-17 08:39AM  Associated Press]
▶ Standex to Present at the CL King Best Ideas Conference   [Sep-12-17 09:14AM  Business Wire]
▶ Standex posts 4Q profit   [Aug-28-17 07:38PM  Associated Press]
▶ Standex Declares 212th Quarterly Cash Dividend   [Jul-27-17 09:06AM  Business Wire]
▶ Standex posts 3Q profit   [May-02-17 08:33AM  Associated Press]
▶ Standex Declares 211th Quarterly Cash Dividend   [Apr-25-17 03:49PM  Business Wire]
▶ Top Ranked Momentum Stocks to Buy for April 5th   [Apr-05-17 09:17AM  Zacks]

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