Intrinsic value of Willdan Group - WLDN

Previous Close

$36.16

  Intrinsic Value

$21.23

stock screener

  Rating & Target

sell

-41%

Previous close

$36.16

 
Intrinsic value

$21.23

 
Up/down potential

-41%

 
Rating

sell

We calculate the intrinsic value of WLDN 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, %
  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
  279
  285
  293
  301
  310
  320
  331
  343
  355
  369
  384
  399
  416
  433
  452
  472
  493
  515
  538
  563
  589
  617
  646
  676
  708
  742
  778
  816
  855
  897
Variable operating expenses, $m
  263
  269
  276
  284
  292
  301
  312
  323
  334
  347
  356
  370
  385
  402
  419
  437
  457
  477
  499
  522
  546
  572
  599
  627
  657
  688
  721
  756
  793
  831
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
  263
  269
  276
  284
  292
  301
  312
  323
  334
  347
  356
  370
  385
  402
  419
  437
  457
  477
  499
  522
  546
  572
  599
  627
  657
  688
  721
  756
  793
  831
Operating income, $m
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  28
  29
  30
  32
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
EBITDA, $m
  23
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  58
  60
  63
  66
  69
  73
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
Earnings before tax, $m
  15
  16
  16
  17
  17
  18
  18
  19
  20
  21
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  48
  50
  52
  55
  57
Tax expense, $m
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  15
Net income, $m
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42

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
  141
  144
  148
  152
  157
  162
  167
  173
  180
  187
  194
  202
  210
  219
  229
  239
  249
  261
  272
  285
  298
  312
  327
  342
  359
  376
  394
  413
  433
  454
Adjusted assets (=assets-cash), $m
  141
  144
  148
  152
  157
  162
  167
  173
  180
  187
  194
  202
  210
  219
  229
  239
  249
  261
  272
  285
  298
  312
  327
  342
  359
  376
  394
  413
  433
  454
Revenue / Adjusted assets
  1.979
  1.979
  1.980
  1.980
  1.975
  1.975
  1.982
  1.983
  1.972
  1.973
  1.979
  1.975
  1.981
  1.977
  1.974
  1.975
  1.980
  1.973
  1.978
  1.975
  1.977
  1.978
  1.976
  1.977
  1.972
  1.973
  1.975
  1.976
  1.975
  1.976
Average production assets, $m
  25
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  43
  45
  47
  50
  52
  54
  57
  60
  62
  65
  68
  72
  75
  79
Working capital, $m
  13
  14
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
Total debt, $m
  5
  7
  9
  11
  13
  16
  18
  21
  24
  28
  31
  35
  39
  44
  48
  53
  58
  64
  70
  76
  82
  89
  96
  104
  112
  120
  129
  138
  148
  158
Total liabilities, $m
  69
  71
  72
  74
  77
  79
  82
  85
  88
  91
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  146
  153
  160
  167
  175
  184
  193
  202
  212
  222
Total equity, $m
  72
  74
  76
  78
  80
  83
  86
  89
  92
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  146
  152
  159
  167
  175
  183
  192
  201
  211
  221
  232
Total liabilities and equity, $m
  141
  145
  148
  152
  157
  162
  168
  174
  180
  186
  194
  202
  210
  219
  229
  239
  249
  260
  272
  285
  298
  312
  327
  342
  358
  376
  394
  413
  433
  454
Debt-to-equity ratio
  0.080
  0.100
  0.120
  0.140
  0.160
  0.190
  0.210
  0.240
  0.270
  0.290
  0.320
  0.340
  0.370
  0.390
  0.410
  0.440
  0.460
  0.480
  0.500
  0.520
  0.540
  0.560
  0.580
  0.590
  0.610
  0.630
  0.640
  0.660
  0.670
  0.680
Adjusted equity ratio
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511
  0.511

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
Depreciation, amort., depletion, $m
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Funds from operations, $m
  18
  19
  19
  19
  20
  20
  21
  22
  22
  23
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  22
  23
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
Maintenance CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
Cash from investing activities, $m
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -9
  -10
  -11
Free cash flow, $m
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  17
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
Issuance/(repayment) of debt, $m
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  17
  17
  17
  18
  18
  19
  20
  20
  21
  22
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
Retained Cash Flow (-), $m
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
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
  15
  15
  16
  16
  16
  16
  17
  17
  18
  18
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
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
  15
  14
  14
  13
  12
  12
  11
  11
  10
  9
  8
  8
  7
  6
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  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
  100.0

Willdan Group, Inc. is a holding company. The Company provides professional technical and consulting services to utilities, private industry and public agencies at all levels of government, primarily in California and New York. It operates through four segments: Energy Efficiency Services, Engineering Services, Public Finance Services and Homeland Security Services. The Energy Efficiency Services segment provides energy efficiency consulting services to utilities, state agencies, municipalities, private industry and non-profit organizations. The Engineering Services segment offers a range of engineering and planning services to its public and private sector clients. The Public Finance Services segment provides support for the various financing techniques employed by public agencies to finance their operations and infrastructure. The Homeland Security Services segment provides national preparedness, homeland security consulting, public safety and emergency response services.

FINANCIAL RATIOS  of  Willdan Group (WLDN)

Valuation Ratios
P/E Ratio 37.7
Price to Sales 1.4
Price to Book 6
Price to Tangible Book
Price to Cash Flow 13.7
Price to Free Cash Flow 15.1
Growth Rates
Sales Growth Rate 54.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 6%
Total Debt to Equity 14%
Interest Coverage 0
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 12.1%
Return On Total Capital 15.8%
Ret/ On T. Cap. - 3 Yr. Avg. 20.2%
Return On Equity 18.2%
Return On Equity - 3 Yr. Avg. 22%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 50.2%
Gross Margin - 3 Yr. Avg. 60%
EBITDA Margin 6.7%
EBITDA Margin - 3 Yr. Avg. 6.9%
Operating Margin 5.7%
Oper. Margin - 3 Yr. Avg. 6.1%
Pre-Tax Margin 5.3%
Pre-Tax Margin - 3 Yr. Avg. 6%
Net Profit Margin 3.8%
Net Profit Margin - 3 Yr. Avg. 5%
Effective Tax Rate 27.3%
Eff/ Tax Rate - 3 Yr. Avg. 19.2%
Payout Ratio 0%

WLDN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WLDN stock intrinsic value calculation we used $273.352 million for the last fiscal year's total revenue generated by Willdan Group. The default revenue input number comes from 0001 income statement of Willdan 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 WLDN 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 4.3%, whose default value for WLDN is calculated based on our internal credit rating of Willdan 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 Willdan 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 WLDN stock the variable cost ratio is equal to 94.5%.

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 WLDN 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 Willdan Group.

Corporate tax rate of 27% is the nominal tax rate for Willdan 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 WLDN 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 WLDN are equal to 8.8%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Willdan 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 WLDN is equal to 4.8%. 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 - $70.652 million for Willdan 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 8.913 million for Willdan 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 Willdan Group at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Willdan Completes Acquisition of Lime Energy   [Nov-09-18 04:05PM  Business Wire]
▶ Nasdaq Sinks On Apple Flop, Small Caps Up; Can This Sector Fight Back?   [Nov-02-18 01:00PM  Investor's Business Daily]
▶ Willdan: 3Q Earnings Snapshot   [07:09PM  Associated Press]
▶ Is Willdan Group Inc (NASDAQ:WLDN) A Strong Service Bet?   [Oct-17-18 10:40AM  Simply Wall St.]
▶ Willdan Group Reports Second Quarter 2018 Results   [Aug-02-18 04:15PM  Business Wire]
▶ Spotlight On Willdan Group Incs (NASDAQ:WLDN) Fundamentals   [Jun-21-18 09:29AM  Simply Wall St.]
▶ 5 Top-Ranked Stocks Shining Amid Market Turmoil   [May-04-18 01:10PM  InvestorPlace]
▶ Willdan: 1Q Earnings Snapshot   [May-03-18 07:31PM  Associated Press]
▶ Willdan Selected to Implement PSE&Gs Direct Install Program   [Apr-23-18 08:00AM  Business Wire]
▶ Ride on DuPont Analysis & Pick 5 Top Stocks   [Apr-19-18 08:51AM  Zacks]
▶ Willdan Group to Participate in 30th Annual ROTH Conference   [Mar-09-18 08:00AM  Business Wire]
▶ Willdan posts 4Q profit   [Mar-08-18 05:57PM  Associated Press]
▶ Willdan Selected for Expanded Data Centers Offering   [Feb-05-18 08:00AM  Business Wire]
▶ 5 Top Stocks with Solid Net Profit Margin   [Dec-27-17 08:59AM  Zacks]
▶ Willdan posts 3Q profit   [Nov-06-17 05:39AM  Associated Press]
▶ 3 Stocks That Turned $8,000 Into $125,000 in 5 Years   [Oct-09-17 01:12PM  Motley Fool]
▶ Did Willdan Group Inc (WLDN) Create Value For Shareholders?   [Oct-03-17 04:26PM  Simply Wall St.]
▶ Should You Buy Willdan Group Inc (WLDN)?   [Sep-19-17 01:03PM  Simply Wall St.]
▶ Willdan buys data analytics firm Integral Analytics for $30 million   [Aug-04-17 04:40PM  American City Business Journals]
▶ Willdan Group Reports Second Quarter 2017 Financial Results   [Aug-03-17 04:07PM  Business Wire]
▶ 5 Stocks to Buy on New Analyst Coverage   [Jul-19-17 09:46AM  Zacks]
▶ ETFs with exposure to Willdan Group, Inc. : June 16, 2017   [Jun-16-17 04:26PM  Capital Cube]

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