If you become a Founding Member of the NabzdykRatings Software today (€9/mo), I will manually grant you Premium Access to this Substack for free (until you cancel the free trial).Become a founding memberThe last part of Hortico - can this company surprise us and, in fact, be an undervalued stock?Phase 4:According to my protocol,You do not need a Reverse DCF to know if a stock can return 11%. You just need the TSR (Total Shareholder Return) Formula.The Formula: Yield + Growth = Expected ReturnFCF yeild:-2.3% calcualted using (OCF - CapEx) / Market Cap.I usually find the conservative revenue growth by dividing their latest revenue growth in two.To see their expected EBIT growth, we need to perform these calculations:(Amortyzacja - amorization - no depreciation is present in filings).Hortico SA2025CapEx:7 122 437,71-Amortyzacja 2 730 949,31= 4391488,4NWC:AKTYWA OBROTOWE (current assets) 124 235 075,73-środki pieniężne i inne aktywa pieniężne (cash & equivalents) 4 035 164,85-Zobowiązania krótkoterminowe (current liabilities) 73 217 550,50=46982360,382024:AKTYWA OBROTOWE (current assets) 103 839 727,05-środki pieniężne i inne aktywa pieniężne (cash & equivalents) 2 215 360,71-Zobowiązania krótkoterminowe (current liabilities) 57 883 247,19=43741119,15change in NWC:3241241,23RR = (4391488,4 + 3241241,23) / 15407023 (NOPAT) = 0,49540587 = 49.54Expected EBIT growth: 49.54 * 16.57 = 820,8778 = 8.2%(I always feel like I’m mixing up the place of the decimal point)Expected return: -2.3 + 8.2 = 6.1%The inventory turnover ratio is calculated as follows:Inventory Turnover= COGS /Average Value of Inventorywhere:COGS=Cost of goods soldCOGS:B. Wartość sprzedanych towarów i materiałów: 2025: 132775562,262024: 130999970,63Inventory:I. Zapasy2025: 66834628,102024: 57359814,822023: 49630584,23Turnover 2025: 132775562,26 / ((66834628,10+57359814,82)÷2) = 2,13812025 Days Sales of Inventory (DSI) = 365 / Inventory Turnover = 170 daysTurnover 2024: 130999970,63 / ((57359814,82+49630584,23) ÷ 2) = 2,4488 2024 Days Sales of Inventory (DSI) = 365 / Inventory Turnover = 147 daysVerdict:The turnover is slow - it takes around 170 days to get rid of the a single batch of inventory for a year, and it’s increasing.Towary (19.41%) is growing faster than NOPAT (12%) - that signals an invenory burden. Holding seeds and fertilisers for so long is a risk.Gardening equipment might go obselete at some point (but will find buyers). Seeds and fertilisers have a due date.Discounting is bound to happen at some point, which will mean lower margins for an already-capital intensive business - a bad sign. Investors should closely monitor inventory turnover and managemnt has to focus on what sells the best and push those sales, while maintaining an experimental pool of inventory items, which might not sell off quickly, but are high-value - eg private brands, like PNOS seeds.Phase 5 - we already know that management is aligned, as described here:Mistakes I made but didn’t show here:Didn’t subtract CapEx.Used a negative change in NWCI used non-consolidated numbersFinal verdict:The company has higher days of inventory turnover, and is overvalued- it’s not a good stock to buy, but it can serve as a good example of management alignment.