Kimball International (NASDAQ:KBAL)


Kimball has consistently performed well, bringing in stable positive net income even in FY2020. It hopes to accelerate its growth by becoming leaner with an absolute focus on custom-designed furniture supply. Workplace furniture contributes 60% of sales with the rest 40% being accounted for by the health and hospitality sector. Hence, its sales volatility is likely to be dictated by workplace trends and attitudes. Geographically, 98% of its sales and 90% of its operational facilities are in the US.


We estimate the intrinsic value of Kimball to be $16.33 for our base case through the DCF model. The current share price is $11.30, trading at a discount of 30.8% to its intrinsic value. Even the pessimistic case intrinsic value $12.86 is at premium to the market price. Kimball’s trailing P/E (10x) is substantially lower than the average P/E of industry peers (15.1x). The trailing EV/EBITDA of Kimball is (4.3x), also lower than the industry average (7.7x). Using a 50% P/E & EV/EBITDA methodology of industry peers’ averages and applying to Kimball’s trailing $1.11 EPS and $72.65M EBITDA, the fair price is $16.9 based on relative valuation. Both DCF and relative valuation indicate that Kimball is undervalued. Considering the valuation in conjunction with the key concerns and the lacklustre industry, we hold a Weak Positive outlook for Kimball International.


  • Extremely competitive industry: tight margins, relatively low barriers to entry,

    low concentration with few dominant firms with many small firms

  • The direct impact of Covid-19, uncertain economic climate driving commodity

    price up, success of recent management restructuring is uncertain.

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