Intrinsic value of Vishay Precision Group - VPG

Previous Close

$33.39

  Intrinsic Value

$89.75

stock screener

  Rating & Target

str. buy

+169%

Previous close

$33.39

 
Intrinsic value

$89.75

 
Up/down potential

+169%

 
Rating

str. buy

We calculate the intrinsic value of VPG 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, %
  19.10
  17.69
  16.42
  15.28
  14.25
  13.33
  12.49
  11.74
  11.07
  10.46
  9.92
  9.42
  8.98
  8.58
  8.23
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
Revenue, $m
  303
  357
  415
  478
  547
  620
  697
  779
  865
  955
  1,050
  1,149
  1,252
  1,360
  1,472
  1,588
  1,709
  1,835
  1,965
  2,101
  2,242
  2,389
  2,541
  2,700
  2,865
  3,038
  3,217
  3,404
  3,600
  3,804
Variable operating expenses, $m
  193
  226
  262
  302
  344
  390
  438
  489
  542
  599
  654
  715
  780
  846
  916
  988
  1,064
  1,142
  1,223
  1,308
  1,395
  1,487
  1,582
  1,681
  1,783
  1,891
  2,002
  2,119
  2,241
  2,367
Fixed operating expenses, $m
  75
  76
  78
  80
  81
  83
  85
  87
  89
  91
  93
  95
  97
  99
  101
  103
  106
  108
  110
  113
  115
  118
  120
  123
  126
  129
  131
  134
  137
  140
Total operating expenses, $m
  268
  302
  340
  382
  425
  473
  523
  576
  631
  690
  747
  810
  877
  945
  1,017
  1,091
  1,170
  1,250
  1,333
  1,421
  1,510
  1,605
  1,702
  1,804
  1,909
  2,020
  2,133
  2,253
  2,378
  2,507
Operating income, $m
  36
  54
  75
  97
  121
  147
  174
  203
  234
  266
  304
  339
  376
  414
  455
  496
  540
  585
  632
  680
  731
  784
  839
  896
  956
  1,018
  1,083
  1,151
  1,222
  1,296
EBITDA, $m
  50
  70
  92
  117
  143
  171
  201
  233
  266
  302
  338
  377
  417
  459
  503
  549
  596
  645
  697
  750
  805
  863
  923
  986
  1,051
  1,119
  1,190
  1,264
  1,341
  1,422
Interest expense (income), $m
  0
  2
  3
  4
  6
  7
  9
  10
  12
  14
  16
  18
  20
  23
  25
  28
  30
  33
  36
  39
  42
  45
  48
  51
  55
  59
  63
  67
  71
  75
  80
Earnings before tax, $m
  34
  52
  71
  92
  114
  138
  164
  191
  220
  250
  286
  319
  353
  389
  427
  466
  507
  549
  593
  639
  686
  736
  788
  841
  897
  956
  1,017
  1,080
  1,147
  1,216
Tax expense, $m
  9
  14
  19
  25
  31
  37
  44
  52
  59
  68
  77
  86
  95
  105
  115
  126
  137
  148
  160
  172
  185
  199
  213
  227
  242
  258
  275
  292
  310
  328
Net income, $m
  25
  38
  52
  67
  83
  101
  120
  140
  160
  183
  209
  233
  258
  284
  312
  340
  370
  401
  433
  466
  501
  537
  575
  614
  655
  698
  742
  789
  837
  888

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
  334
  394
  458
  528
  603
  684
  769
  860
  955
  1,055
  1,159
  1,268
  1,382
  1,501
  1,624
  1,753
  1,886
  2,025
  2,169
  2,319
  2,475
  2,636
  2,805
  2,980
  3,163
  3,353
  3,551
  3,758
  3,973
  4,198
Adjusted assets (=assets-cash), $m
  334
  394
  458
  528
  603
  684
  769
  860
  955
  1,055
  1,159
  1,268
  1,382
  1,501
  1,624
  1,753
  1,886
  2,025
  2,169
  2,319
  2,475
  2,636
  2,805
  2,980
  3,163
  3,353
  3,551
  3,758
  3,973
  4,198
Revenue / Adjusted assets
  0.907
  0.906
  0.906
  0.905
  0.907
  0.906
  0.906
  0.906
  0.906
  0.905
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
Average production assets, $m
  90
  106
  123
  142
  162
  184
  207
  231
  257
  284
  312
  341
  372
  404
  437
  472
  508
  545
  584
  624
  666
  709
  755
  802
  851
  902
  956
  1,011
  1,069
  1,130
Working capital, $m
  82
  97
  113
  130
  149
  169
  190
  212
  235
  260
  286
  313
  341
  370
  400
  432
  465
  499
  535
  571
  610
  650
  691
  734
  779
  826
  875
  926
  979
  1,035
Total debt, $m
  54
  77
  102
  129
  159
  190
  224
  259
  296
  335
  376
  419
  463
  510
  558
  608
  660
  715
  771
  830
  890
  954
  1,020
  1,088
  1,159
  1,234
  1,311
  1,392
  1,476
  1,564
Total liabilities, $m
  131
  154
  179
  206
  236
  267
  301
  336
  373
  412
  453
  496
  541
  587
  635
  685
  738
  792
  848
  907
  968
  1,031
  1,097
  1,165
  1,237
  1,311
  1,388
  1,469
  1,554
  1,642
Total equity, $m
  204
  240
  279
  322
  367
  416
  468
  523
  581
  642
  706
  772
  842
  914
  989
  1,067
  1,149
  1,233
  1,321
  1,412
  1,507
  1,606
  1,708
  1,815
  1,926
  2,042
  2,163
  2,288
  2,420
  2,557
Total liabilities and equity, $m
  335
  394
  458
  528
  603
  683
  769
  859
  954
  1,054
  1,159
  1,268
  1,383
  1,501
  1,624
  1,752
  1,887
  2,025
  2,169
  2,319
  2,475
  2,637
  2,805
  2,980
  3,163
  3,353
  3,551
  3,757
  3,974
  4,199
Debt-to-equity ratio
  0.260
  0.320
  0.370
  0.400
  0.430
  0.460
  0.480
  0.490
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.590
  0.600
  0.600
  0.600
  0.600
  0.610
  0.610
  0.610
  0.610
Adjusted equity ratio
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  38
  52
  67
  83
  101
  120
  140
  160
  183
  209
  233
  258
  284
  312
  340
  370
  401
  433
  466
  501
  537
  575
  614
  655
  698
  742
  789
  837
  888
Depreciation, amort., depletion, $m
  14
  16
  18
  20
  22
  24
  27
  30
  33
  35
  35
  38
  41
  45
  49
  52
  56
  61
  65
  69
  74
  79
  84
  89
  95
  100
  106
  112
  119
  126
Funds from operations, $m
  39
  53
  69
  87
  105
  125
  147
  169
  193
  218
  243
  271
  299
  329
  360
  393
  426
  461
  498
  536
  575
  616
  659
  703
  750
  798
  848
  901
  956
  1,013
Change in working capital, $m
  13
  15
  16
  17
  19
  20
  21
  22
  23
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
Cash from operations, $m
  26
  39
  53
  69
  87
  105
  126
  147
  170
  193
  217
  244
  271
  300
  330
  361
  393
  427
  462
  499
  537
  576
  617
  660
  705
  751
  800
  850
  903
  958
Maintenance CAPEX, $m
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -45
  -49
  -52
  -56
  -61
  -65
  -69
  -74
  -79
  -84
  -89
  -95
  -100
  -106
  -112
  -119
New CAPEX, $m
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
Cash from investing activities, $m
  -23
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -52
  -56
  -60
  -64
  -69
  -73
  -78
  -84
  -88
  -93
  -100
  -105
  -111
  -118
  -124
  -131
  -138
  -146
  -153
  -162
  -170
  -180
Free cash flow, $m
  3
  13
  24
  37
  51
  66
  82
  100
  118
  138
  158
  180
  203
  227
  252
  278
  305
  333
  363
  394
  426
  459
  493
  529
  566
  605
  646
  688
  733
  779
Issuance/(repayment) of debt, $m
  21
  23
  25
  27
  29
  31
  33
  35
  37
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
  71
  74
  77
  81
  84
  88
Issuance/(repurchase) of shares, $m
  8
  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  
  29
  23
  25
  27
  29
  31
  33
  35
  37
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
  71
  74
  77
  81
  84
  88
Total cash flow (excl. dividends), $m
  32
  36
  49
  64
  80
  97
  116
  135
  155
  177
  199
  222
  247
  273
  300
  328
  357
  388
  419
  452
  486
  522
  559
  598
  638
  680
  724
  769
  817
  867
Retained Cash Flow (-), $m
  -33
  -36
  -39
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -116
  -121
  -126
  -131
  -137
Prev. year cash balance distribution, $m
  22
  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
  21
  0
  10
  22
  34
  48
  64
  80
  98
  116
  135
  156
  178
  201
  225
  250
  276
  303
  332
  361
  392
  423
  456
  491
  527
  564
  603
  643
  686
  730
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
  21
  0
  9
  18
  27
  35
  43
  50
  56
  61
  64
  67
  68
  67
  66
  64
  60
  56
  51
  46
  41
  35
  30
  25
  20
  16
  13
  10
  7
  5
Current shareholders' claim on cash, %
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
  97.9
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Vishay Precision Group, Inc. (VPG) is a designer, manufacturer and marketer of sensors and sensor-based measurement systems, as well as specialty resistors and strain gages. The Company operates through three business segments: Foil Technology Products, Force Sensors, and Weighing and Control Systems. Its Foil Technology Products segment includes foil resistor and strain gage operating segments. The Foil Technology Products segment's brands include Alpha Electronics, Micro-Measurements, Powertron and Vishay Foil Resistors. The Force Sensors segment includes load cells and force measurement transducers that are offered as precision sensors for industrial and commercial use. The Weighing and Control Systems segment designs and manufactures systems that consists of load cells and instrumentation for weighing and force control/measurement for a range of uses, including on-board weighing and overload monitor systems. The segment's brands include BLH Nobel, KELK and VPG Onboard Weighing.

FINANCIAL RATIOS  of  Vishay Precision Group (VPG)

Valuation Ratios
P/E Ratio 73.4
Price to Sales 2
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 40
Price to Free Cash Flow 440.4
Growth Rates
Sales Growth Rate -3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 7.4%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity 19.3%
Total Debt to Equity 21.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.2%
Ret/ On Assets - 3 Yr. Avg. -0.5%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. -0.6%
Return On Equity 3.5%
Return On Equity - 3 Yr. Avg. -0.7%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 36.9%
Gross Margin - 3 Yr. Avg. 36.5%
EBITDA Margin 9.3%
EBITDA Margin - 3 Yr. Avg. 7.2%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 3%
Pre-Tax Margin 4.4%
Pre-Tax Margin - 3 Yr. Avg. 2.4%
Net Profit Margin 2.7%
Net Profit Margin - 3 Yr. Avg. -0.6%
Effective Tax Rate 40%
Eff/ Tax Rate - 3 Yr. Avg. 496.7%
Payout Ratio 0%

VPG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VPG stock intrinsic value calculation we used $254.35 million for the last fiscal year's total revenue generated by Vishay Precision Group. The default revenue input number comes from 0001 income statement of Vishay Precision Group. 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 VPG stock valuation model: a) initial revenue growth rate of 19.1% 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 VPG is calculated based on our internal credit rating of Vishay Precision Group, 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 Vishay Precision Group.
    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 VPG stock the variable cost ratio is equal to 63.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $73 million in the base year in the intrinsic value calculation for VPG 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 Vishay Precision Group.

Corporate tax rate of 27% is the nominal tax rate for Vishay Precision Group. 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 VPG 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 VPG are equal to 29.7%.

Life of production assets of 9 years is the average useful life of capital assets used in Vishay Precision Group 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 VPG is equal to 27.2%. 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 - $193.156 million for Vishay Precision Group - 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 12.449 million for Vishay Precision Group 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 Vishay Precision Group at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ Vishay: 3Q Earnings Snapshot   [Nov-06-18 07:49AM  Associated Press]
▶ Is It Time To Buy Vishay Precision Group Inc (NYSE:VPG)?   [Sep-10-18 10:23AM  Simply Wall St.]
▶ Vishay: 2Q Earnings Snapshot   [08:22AM  Associated Press]
▶ VPG Announces Annual Meeting Location and Webcast   [May-10-18 07:30AM  Business Wire]
▶ VPG Reports Fiscal 2018 First Quarter Results   [May-08-18 07:30AM  Business Wire]
▶ Is Vishay Precision Group Inc (NYSE:VPG) Undervalued?   [Dec-25-17 01:35PM  Simply Wall St.]
▶ How Financially Strong Is Vishay Precision Group Inc (VPG)?   [Nov-13-17 07:05PM  Simply Wall St.]
▶ Vishay posts 3Q profit   [Nov-07-17 07:47AM  Associated Press]
▶ What Is Vishay Precision Group Incs (VPG) Share Price Doing?   [Sep-11-17 06:21PM  Simply Wall St.]
▶ Vishay posts 2Q profit   [Aug-08-17 05:57PM  Associated Press]
▶ VPG Announces Annual Meeting Location and Webcast   [May-18-17 07:30AM  Business Wire]
▶ Vishay posts 1Q profit   [07:57AM  Associated Press]
▶ Vishay posts 4Q profit   [07:56AM  Associated Press]

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