Intrinsic value of Boyd Group Income Fund - BYD-UN

Previous Close

$119.87

  Intrinsic Value

$244.42

stock screener

  Rating & Target

str. buy

+104%

Previous close

$119.87

 
Intrinsic value

$244.42

 
Up/down potential

+104%

 
Rating

str. buy

We calculate the intrinsic value of BYD-UN 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 2016), $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 2.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.60
  12.74
  11.97
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
Revenue, $m
  1,576
  1,776
  1,989
  2,213
  2,449
  2,695
  2,953
  3,222
  3,503
  3,795
  4,098
  4,414
  4,742
  5,082
  5,437
  5,805
  6,187
  6,585
  7,000
  7,431
  7,880
  8,348
  8,837
  9,346
  9,877
  10,432
  11,012
  11,617
  12,250
  12,913
Variable operating expenses, $m
  1,136
  1,278
  1,428
  1,586
  1,753
  1,927
  2,109
  2,299
  2,497
  2,704
  2,895
  3,118
  3,349
  3,590
  3,840
  4,100
  4,370
  4,652
  4,944
  5,249
  5,566
  5,897
  6,242
  6,601
  6,977
  7,369
  7,778
  8,206
  8,653
  9,121
Fixed operating expenses, $m
  342
  350
  358
  365
  374
  382
  390
  399
  407
  416
  426
  435
  445
  454
  464
  475
  485
  496
  507
  518
  529
  541
  553
  565
  577
  590
  603
  616
  630
  644
Total operating expenses, $m
  1,478
  1,628
  1,786
  1,951
  2,127
  2,309
  2,499
  2,698
  2,904
  3,120
  3,321
  3,553
  3,794
  4,044
  4,304
  4,575
  4,855
  5,148
  5,451
  5,767
  6,095
  6,438
  6,795
  7,166
  7,554
  7,959
  8,381
  8,822
  9,283
  9,765
Operating income, $m
  97
  149
  203
  261
  322
  387
  454
  524
  598
  675
  778
  861
  948
  1,038
  1,132
  1,230
  1,332
  1,438
  1,549
  1,664
  1,785
  1,911
  2,042
  2,180
  2,323
  2,474
  2,631
  2,795
  2,968
  3,148
EBITDA, $m
  140
  194
  251
  312
  376
  444
  514
  588
  665
  746
  829
  917
  1,007
  1,102
  1,200
  1,303
  1,410
  1,521
  1,637
  1,758
  1,884
  2,016
  2,153
  2,297
  2,447
  2,605
  2,769
  2,941
  3,122
  3,310
Interest expense (income), $m
  9
  8
  10
  13
  16
  19
  22
  26
  30
  33
  37
  41
  46
  50
  54
  59
  64
  69
  75
  80
  86
  92
  98
  105
  112
  119
  126
  134
  142
  150
  159
Earnings before tax, $m
  90
  138
  190
  245
  303
  364
  428
  495
  565
  638
  737
  816
  898
  984
  1,073
  1,166
  1,263
  1,364
  1,469
  1,578
  1,693
  1,813
  1,937
  2,068
  2,205
  2,347
  2,497
  2,653
  2,817
  2,989
Tax expense, $m
  24
  37
  51
  66
  82
  98
  116
  134
  152
  172
  199
  220
  242
  266
  290
  315
  341
  368
  397
  426
  457
  489
  523
  558
  595
  634
  674
  716
  761
  807
Net income, $m
  65
  101
  139
  179
  221
  266
  313
  361
  412
  465
  538
  595
  656
  718
  783
  851
  922
  995
  1,072
  1,152
  1,236
  1,323
  1,414
  1,510
  1,609
  1,714
  1,823
  1,937
  2,057
  2,182

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
  777
  876
  981
  1,091
  1,207
  1,329
  1,456
  1,589
  1,727
  1,871
  2,021
  2,176
  2,338
  2,506
  2,681
  2,862
  3,051
  3,247
  3,452
  3,664
  3,886
  4,117
  4,357
  4,608
  4,870
  5,144
  5,430
  5,728
  6,041
  6,367
Adjusted assets (=assets-cash), $m
  777
  876
  981
  1,091
  1,207
  1,329
  1,456
  1,589
  1,727
  1,871
  2,021
  2,176
  2,338
  2,506
  2,681
  2,862
  3,051
  3,247
  3,452
  3,664
  3,886
  4,117
  4,357
  4,608
  4,870
  5,144
  5,430
  5,728
  6,041
  6,367
Revenue / Adjusted assets
  2.028
  2.027
  2.028
  2.028
  2.029
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
Average production assets, $m
  247
  279
  312
  347
  384
  423
  464
  506
  550
  596
  643
  693
  744
  798
  854
  911
  971
  1,034
  1,099
  1,167
  1,237
  1,311
  1,387
  1,467
  1,551
  1,638
  1,729
  1,824
  1,923
  2,027
Working capital, $m
  -35
  -39
  -44
  -49
  -54
  -59
  -65
  -71
  -77
  -83
  -90
  -97
  -104
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -173
  -184
  -194
  -206
  -217
  -230
  -242
  -256
  -270
  -284
Total debt, $m
  235
  298
  366
  437
  511
  590
  671
  757
  846
  938
  1,034
  1,134
  1,238
  1,346
  1,459
  1,575
  1,697
  1,823
  1,954
  2,091
  2,234
  2,382
  2,537
  2,698
  2,867
  3,043
  3,226
  3,418
  3,619
  3,829
Total liabilities, $m
  500
  563
  631
  702
  776
  855
  936
  1,022
  1,111
  1,203
  1,299
  1,399
  1,503
  1,611
  1,724
  1,840
  1,962
  2,088
  2,219
  2,356
  2,499
  2,647
  2,802
  2,963
  3,132
  3,308
  3,491
  3,683
  3,884
  4,094
Total equity, $m
  277
  313
  350
  390
  431
  474
  520
  567
  617
  668
  721
  777
  835
  895
  957
  1,022
  1,089
  1,159
  1,232
  1,308
  1,387
  1,470
  1,556
  1,645
  1,739
  1,836
  1,938
  2,045
  2,157
  2,273
Total liabilities and equity, $m
  777
  876
  981
  1,092
  1,207
  1,329
  1,456
  1,589
  1,728
  1,871
  2,020
  2,176
  2,338
  2,506
  2,681
  2,862
  3,051
  3,247
  3,451
  3,664
  3,886
  4,117
  4,358
  4,608
  4,871
  5,144
  5,429
  5,728
  6,041
  6,367
Debt-to-equity ratio
  0.850
  0.950
  1.040
  1.120
  1.190
  1.240
  1.290
  1.330
  1.370
  1.400
  1.430
  1.460
  1.480
  1.500
  1.520
  1.540
  1.560
  1.570
  1.590
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
  1.660
  1.660
  1.670
  1.680
  1.680
Adjusted equity ratio
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  65
  101
  139
  179
  221
  266
  313
  361
  412
  465
  538
  595
  656
  718
  783
  851
  922
  995
  1,072
  1,152
  1,236
  1,323
  1,414
  1,510
  1,609
  1,714
  1,823
  1,937
  2,057
  2,182
Depreciation, amort., depletion, $m
  43
  45
  48
  51
  54
  57
  60
  64
  67
  71
  51
  55
  60
  64
  68
  73
  78
  83
  88
  93
  99
  105
  111
  117
  124
  131
  138
  146
  154
  162
Funds from operations, $m
  108
  146
  187
  230
  275
  323
  373
  425
  479
  536
  589
  651
  715
  782
  852
  924
  999
  1,078
  1,160
  1,246
  1,335
  1,428
  1,525
  1,627
  1,733
  1,845
  1,961
  2,083
  2,210
  2,344
Change in working capital, $m
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
Cash from operations, $m
  112
  151
  192
  235
  280
  328
  378
  431
  486
  543
  596
  658
  722
  789
  859
  932
  1,008
  1,087
  1,169
  1,255
  1,345
  1,438
  1,536
  1,638
  1,745
  1,857
  1,974
  2,096
  2,224
  2,359
Maintenance CAPEX, $m
  -17
  -20
  -22
  -25
  -28
  -31
  -34
  -37
  -40
  -44
  -48
  -51
  -55
  -60
  -64
  -68
  -73
  -78
  -83
  -88
  -93
  -99
  -105
  -111
  -117
  -124
  -131
  -138
  -146
  -154
New CAPEX, $m
  -29
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -51
  -53
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -83
  -87
  -91
  -95
  -99
  -104
Cash from investing activities, $m
  -46
  -52
  -55
  -60
  -65
  -70
  -74
  -79
  -84
  -90
  -96
  -101
  -106
  -113
  -120
  -126
  -133
  -141
  -148
  -156
  -164
  -173
  -182
  -191
  -200
  -211
  -222
  -233
  -245
  -258
Free cash flow, $m
  66
  99
  136
  175
  216
  259
  304
  351
  401
  453
  501
  557
  615
  676
  740
  806
  875
  947
  1,021
  1,099
  1,181
  1,266
  1,355
  1,447
  1,544
  1,646
  1,752
  1,863
  1,979
  2,101
Issuance/(repayment) of debt, $m
  60
  64
  67
  71
  75
  78
  82
  85
  89
  93
  96
  100
  104
  108
  112
  117
  121
  126
  131
  137
  142
  148
  155
  161
  168
  176
  184
  192
  201
  210
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  
  60
  64
  67
  71
  75
  78
  82
  85
  89
  93
  96
  100
  104
  108
  112
  117
  121
  126
  131
  137
  142
  148
  155
  161
  168
  176
  184
  192
  201
  210
Total cash flow (excl. dividends), $m
  125
  163
  203
  246
  290
  337
  386
  437
  490
  545
  597
  657
  719
  784
  852
  923
  996
  1,073
  1,153
  1,236
  1,323
  1,414
  1,509
  1,609
  1,713
  1,822
  1,936
  2,055
  2,180
  2,311
Retained Cash Flow (-), $m
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -102
  -107
  -111
  -117
Prev. year cash balance distribution, $m
  37
  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
  129
  128
  166
  206
  249
  294
  340
  389
  441
  494
  543
  601
  662
  724
  790
  858
  929
  1,003
  1,080
  1,160
  1,244
  1,332
  1,423
  1,519
  1,619
  1,724
  1,833
  1,948
  2,068
  2,194
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
  123
  117
  144
  170
  193
  213
  230
  243
  253
  259
  258
  257
  252
  243
  232
  218
  202
  185
  166
  147
  129
  111
  93
  77
  63
  50
  39
  30
  23
  17
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

Boyd Group Income Fund (the Fund) is an unincorporated, open-ended mutual fund trust. The Fund's primary line of business is automotive collision and glass repair and related services. It operates in automotive collision repair and related services segment. It is engaged in acquiring and holding an interest in The Boyd Group Inc. The Boyd Group Inc.'s business consists of the ownership and operation of autobody/autoglass repair facilities and related services. It operates in approximately five Canadian provinces under the name Boyd Autobody & Glass, as well as in over 20 states of the United States under the name Gerber Collision & Glass. It is a retail auto glass operator in the United States with locations across approximately 30 states of the United States under the names Gerber Collision & Glass, Glass America, Auto Glass Service, Auto Glass Authority and Autoglassonly.com. It also operates Gerber National Claim Services. The Fund operates in Canada and the United States.

FINANCIAL RATIOS  of  Boyd Group Income Fund (BYD-UN)

Valuation Ratios
P/E Ratio 73
Price to Sales 1.6
Price to Book 7.8
Price to Tangible Book
Price to Cash Flow 24.1
Price to Free Cash Flow 27.7
Growth Rates
Sales Growth Rate 18.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 62.3%
Total Debt to Equity 68.3%
Interest Coverage 7
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 8.8%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. -4.8%
Asset Turnover 2
Profitability Ratios
Gross Margin 8.9%
Gross Margin - 3 Yr. Avg. 8.6%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 4.4%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin 4.1%
Pre-Tax Margin - 3 Yr. Avg. 1.2%
Net Profit Margin 2.2%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 47.4%
Eff/ Tax Rate - 3 Yr. Avg. -409.2%
Payout Ratio 30%

BYD-UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BYD-UN stock intrinsic value calculation we used $1387 million for the last fiscal year's total revenue generated by Boyd Group Income Fund. The default revenue input number comes from 2016 income statement of Boyd Group Income Fund. 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 BYD-UN stock valuation model: a) initial revenue growth rate of 13.6% 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 BYD-UN is calculated based on our internal credit rating of Boyd Group Income Fund, 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 Boyd Group Income Fund.
    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 BYD-UN stock the variable cost ratio is equal to 72.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $335 million in the base year in the intrinsic value calculation for BYD-UN 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 4.4% for Boyd Group Income Fund.

Corporate tax rate of 27% is the nominal tax rate for Boyd Group Income Fund. 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 BYD-UN 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 BYD-UN are equal to 15.7%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Boyd Group Income Fund 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 BYD-UN is equal to -2.2%. 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 - $281 million for Boyd Group Income Fund - 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 19.526 million for Boyd Group Income Fund 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 Boyd Group Income Fund at the current share price and the inputted number of shares is $2.3 billion.

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