Calculating The Intrinsic Value Of Cavco Industries, Inc. (NASDAQ:CVCO)
Calculating The Intrinsic Value Of Cavco Industries, Inc. (NASDAQ:CVCO)
Key Insights
- The projected fair value for Cavco Industries is US$317 based on 2 Stage Free Cash Flow to Equity
- Cavco Industries' US$378 share price indicates it is trading at similar levels as its fair value estimate
- Analyst price target for CVCO is US$389, which is 23% above our fair value estimate
How far off is Cavco Industries, Inc. (NASDAQ:CVCO) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. Believe it or not, it's not too difficult to follow, as you'll see from our example!
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
The Calculation
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
10-year free cash flow (FCF) forecast
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF ($, Millions) | US$218.0m | US$168.1m | US$176.0m | US$169.7m | US$166.7m | US$165.8m | US$166.2m | US$167.7m | US$169.9m | US$172.6m |
Growth Rate Estimate Source | Analyst x1 | Analyst x2 | Analyst x2 | Est @ -3.54% | Est @ -1.79% | Est @ -0.56% | Est @ 0.29% | Est @ 0.89% | Est @ 1.31% | Est @ 1.60% |
Present Value ($, Millions) Discounted @ 7.9% | US$202 | US$144 | US$140 | US$125 | US$114 | US$105 | US$97.4 | US$91.1 | US$85.5 | US$80.5 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$1.2b
After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.9%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$173m× (1 + 2.3%) ÷ (7.9%– 2.3%) = US$3.1b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$3.1b÷ ( 1 + 7.9%)10= US$1.5b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$2.6b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$378, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Important Assumptions
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Cavco Industries as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.9%, which is based on a levered beta of 1.226. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Cavco Industries
- Debt is not viewed as a risk.
- Balance sheet summary for CVCO.
- Earnings declined over the past year.
- Expensive based on P/E ratio and estimated fair value.
- Annual earnings are forecast to grow for the next 3 years.
- Annual earnings are forecast to grow slower than the American market.
- What else are analysts forecasting for CVCO?
Moving On:
Although the valuation of a company is important, it ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Cavco Industries, we've compiled three relevant items you should further examine:
- Financial Health: Does CVCO have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Future Earnings: How does CVCO's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQGS every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
- 根據兩階段股權自由現金流,Cavco Industries的預計公允價值爲317美元
- Cavco Industries的378美元股價表明其交易價格與其公允價值估計相似
- 分析師對CVCO的目標股價爲389美元,比我們的公允價值估計高出23%
Cavco Industries, Inc.(納斯達克股票代碼:CVCO)距離其內在價值有多遠?我們將使用最新的財務數據,通過計算預期的未來現金流並將其折現爲現值,來研究股票的定價是否合理。在這種情況下,我們將使用折扣現金流(DCF)模型。信不信由你,這並不難理解,正如你將從我們的例子中看到的那樣!
我們要提醒的是,對公司進行估值的方法有很多,就像DCF一樣,每種技術在某些情況下都有優點和缺點。如果你對這種估值還有一些迫切的問題,可以看看 Simply Wall St 分析模型。
計算結果
我們使用的是兩階段增長模型,這只是意味着我們考慮了公司增長的兩個階段。在初始階段,公司的增長率可能更高,而第二階段通常被認爲具有穩定的增長率。在第一階段,我們需要估算未來十年的業務現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
差價合約完全是關於未來一美元的價值低於今天一美元的想法,因此我們需要對這些未來現金流的總和進行折現才能得出現值估計:
10 年自由現金流 (FCF) 預測
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF(美元,百萬) | 2.180 億美元 | 168.1 億美元 | 1.760 億美元 | 1.697 億美元 | 166.7 億美元 | 1.658 億美元 | 166.2 億美元 | 1.677 億美元 | 1.699 億美元 | 172.6 億美元 |
增長率估算來源 | 分析師 x1 | 分析師 x2 | 分析師 x2 | 美國東部標準時間 @ -3.54% | 美國東部標準時間 @ -1.79% | 美國東部時間 @ -0.56% | Est @ 0.29% | Est @ 0.89% | 美國東部標準時間 @ 1.31% | Est @ 1.60% |
現值(美元,百萬)折扣 @ 7.9% | 202 美元 | 144 美元 | 140 美元 | 125 美元 | 114 美元 | 105 美元 | 97.4 美元 | 91.1 美元 | 85.5 美元 | 80.5 美元 |
(“Est” = Simply Wall St估計的FCF增長率)
十年期現金流(PVCF)的現值 = 12億美元
在計算了最初10年期內未來現金流的現值之後,我們需要計算終值,該終值涵蓋了第一階段以後的所有未來現金流。出於多種原因,使用的增長率非常保守,不能超過一個國家的GDP增長率。在這種情況下,我們使用10年期國債收益率的5年平均值(2.3%)來估計未來的增長。與10年 “增長” 期一樣,我們使用7.9%的股本成本將未來的現金流折現爲今天的價值。
終端價值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 1.73億美元× (1 + 2.3%) ÷ (7.9% — 2.3%) = 31億美元
終端價值的現值 (PVTV) = 電視/ (1 + r)10= 31億美元÷ (1 + 7.9%)10= 15 億美元
總價值是未來十年的現金流總額加上貼現的終端價值,由此得出總權益價值,在本例中爲26億美元。在最後一步中,我們將股票價值除以已發行股票的數量。與目前的378美元股價相比,該公司在撰寫本文時的價格接近公允價值。任何計算中的假設都會對估值產生重大影響,因此最好將其視爲粗略的估計,而不是精確到最後一美分。
重要假設
現在,貼現現金流的最重要輸入是貼現率,當然還有實際現金流。你不必同意這些輸入,我建議你自己重做計算然後試一試。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將Cavco Industries視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了7.9%,這是基於1.226的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
Cavco 工業的 SWOT 分析
- 債務不被視爲風險。
- CVCO 的資產負債表摘要。
- 在過去的一年中,收益有所下降。
- 根據市盈率和估計的公允價值,價格昂貴。
- 預計未來三年的年收入將增長。
- 預計年收益的增長速度將低於美國市場。
- 分析師對CVCO還有什麼預測?
繼續前進:
儘管公司的估值很重要,但理想情況下,它不會是你仔細檢查公司的唯一分析內容。使用DCF模型不可能獲得萬無一失的估值。相反,它應該被視爲 “需要哪些假設才能低估/高估這隻股票的價值?” 的指南例如,如果稍微調整終值增長率,則可能會極大地改變整體結果。對於Cavco Industries,我們整理了三個相關項目,你應該進一步研究:
- 財務狀況:CVCO的資產負債表是否良好?看看我們的免費資產負債表分析,其中包含對槓桿和風險等關鍵因素的六項簡單檢查。
- 未來收益:與同行和整個市場相比,CVCO的增長率如何?通過與我們的免費分析師增長預期圖表互動,深入了解未來幾年的分析師共識數字。
- 其他穩健的業務:低債務、高股本回報率和良好的過去表現是強大業務的基礎。爲什麼不瀏覽我們具有堅實業務基礎的股票互動清單,看看是否還有其他你可能沒有考慮過的公司!
PS。Simply Wall St應用程序每天對納斯達克證券交易所的每隻股票進行折扣現金流估值。如果您想找到其他股票的計算方法,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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