Intrinsic value of BRP Inc. Subordinate Voting Shares - DOO

Previous Close

$47.66

  Intrinsic Value

$34.66

stock screener

  Rating & Target

sell

-27%

Previous close

$47.66

 
Intrinsic value

$34.66

 
Up/down potential

-27%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DOO 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of BRP Inc. Subordinate Voting Shares (DOO) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.96
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
Revenue, $m
  4,172
  4,794
  5,460
  6,171
  6,925
  7,721
  8,559
  9,437
  10,356
  11,315
  12,315
  13,355
  14,438
  15,564
  16,734
  17,949
  19,213
  20,526
  21,891
  23,311
  24,788
  26,326
  27,927
  29,596
  31,335
  33,149
  35,042
  37,019
  39,083
  41,239
  43,494
Variable operating expenses, $m
 
  4,207
  4,791
  5,413
  6,073
  6,769
  7,502
  8,271
  9,075
  9,915
  10,790
  11,689
  12,636
  13,622
  14,646
  15,709
  16,815
  17,964
  19,159
  20,402
  21,695
  23,041
  24,442
  25,903
  27,425
  29,013
  30,670
  32,399
  34,206
  36,093
  38,066
Fixed operating expenses, $m
 
  214
  220
  225
  231
  236
  242
  248
  255
  261
  268
  274
  281
  288
  295
  303
  310
  318
  326
  334
  342
  351
  360
  369
  378
  387
  397
  407
  417
  428
  438
Total operating expenses, $m
  3,865
  4,421
  5,011
  5,638
  6,304
  7,005
  7,744
  8,519
  9,330
  10,176
  11,058
  11,963
  12,917
  13,910
  14,941
  16,012
  17,125
  18,282
  19,485
  20,736
  22,037
  23,392
  24,802
  26,272
  27,803
  29,400
  31,067
  32,806
  34,623
  36,521
  38,504
Operating income, $m
  306
  372
  450
  533
  622
  715
  814
  918
  1,026
  1,139
  1,257
  1,392
  1,521
  1,654
  1,793
  1,937
  2,087
  2,243
  2,406
  2,575
  2,751
  2,934
  3,125
  3,324
  3,532
  3,749
  3,975
  4,212
  4,459
  4,718
  4,989
EBITDA, $m
  439
  519
  616
  719
  829
  945
  1,067
  1,195
  1,330
  1,470
  1,617
  1,769
  1,928
  2,093
  2,265
  2,444
  2,629
  2,822
  3,023
  3,232
  3,450
  3,677
  3,913
  4,159
  4,416
  4,684
  4,964
  5,257
  5,562
  5,882
  6,216
Interest expense (income), $m
  48
  39
  41
  55
  69
  84
  100
  117
  134
  153
  172
  192
  213
  235
  257
  281
  305
  331
  357
  384
  413
  442
  473
  505
  539
  574
  610
  648
  688
  729
  772
Earnings before tax, $m
  327
  333
  409
  479
  553
  631
  714
  801
  892
  986
  1,085
  1,200
  1,307
  1,419
  1,535
  1,656
  1,782
  1,913
  2,049
  2,190
  2,338
  2,491
  2,652
  2,819
  2,993
  3,175
  3,365
  3,564
  3,772
  3,989
  4,216
Tax expense, $m
  70
  90
  110
  129
  149
  170
  193
  216
  241
  266
  293
  324
  353
  383
  415
  447
  481
  516
  553
  591
  631
  673
  716
  761
  808
  857
  909
  962
  1,018
  1,077
  1,138
Net income, $m
  257
  243
  299
  350
  404
  461
  521
  585
  651
  720
  792
  876
  954
  1,036
  1,121
  1,209
  1,301
  1,396
  1,496
  1,599
  1,707
  1,819
  1,936
  2,058
  2,185
  2,318
  2,457
  2,602
  2,753
  2,912
  3,078

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  302
  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
  2,516
  2,544
  2,898
  3,276
  3,676
  4,098
  4,543
  5,009
  5,497
  6,006
  6,536
  7,089
  7,664
  8,261
  8,882
  9,527
  10,198
  10,895
  11,619
  12,373
  13,157
  13,973
  14,823
  15,709
  16,632
  17,595
  18,600
  19,649
  20,745
  21,889
  23,086
Adjusted assets (=assets-cash), $m
  2,214
  2,544
  2,898
  3,276
  3,676
  4,098
  4,543
  5,009
  5,497
  6,006
  6,536
  7,089
  7,664
  8,261
  8,882
  9,527
  10,198
  10,895
  11,619
  12,373
  13,157
  13,973
  14,823
  15,709
  16,632
  17,595
  18,600
  19,649
  20,745
  21,889
  23,086
Revenue / Adjusted assets
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
  1.884
Average production assets, $m
  860
  987
  1,125
  1,271
  1,427
  1,591
  1,763
  1,944
  2,133
  2,331
  2,537
  2,751
  2,974
  3,206
  3,447
  3,698
  3,958
  4,228
  4,509
  4,802
  5,106
  5,423
  5,753
  6,097
  6,455
  6,829
  7,219
  7,626
  8,051
  8,495
  8,960
Working capital, $m
  279
  110
  126
  142
  159
  178
  197
  217
  238
  260
  283
  307
  332
  358
  385
  413
  442
  472
  503
  536
  570
  605
  642
  681
  721
  762
  806
  851
  899
  949
  1,000
Total debt, $m
  1,047
  982
  1,300
  1,640
  2,000
  2,381
  2,781
  3,200
  3,639
  4,097
  4,575
  5,072
  5,589
  6,127
  6,686
  7,266
  7,870
  8,497
  9,149
  9,828
  10,533
  11,268
  12,033
  12,830
  13,661
  14,528
  15,432
  16,376
  17,362
  18,392
  19,469
Total liabilities, $m
  2,355
  2,290
  2,608
  2,948
  3,308
  3,689
  4,089
  4,508
  4,947
  5,405
  5,883
  6,380
  6,897
  7,435
  7,994
  8,574
  9,178
  9,805
  10,457
  11,136
  11,841
  12,576
  13,341
  14,138
  14,969
  15,836
  16,740
  17,684
  18,670
  19,700
  20,777
Total equity, $m
  161
  254
  290
  328
  368
  410
  454
  501
  550
  601
  654
  709
  766
  826
  888
  953
  1,020
  1,089
  1,162
  1,237
  1,316
  1,397
  1,482
  1,571
  1,663
  1,760
  1,860
  1,965
  2,074
  2,189
  2,309
Total liabilities and equity, $m
  2,516
  2,544
  2,898
  3,276
  3,676
  4,099
  4,543
  5,009
  5,497
  6,006
  6,537
  7,089
  7,663
  8,261
  8,882
  9,527
  10,198
  10,894
  11,619
  12,373
  13,157
  13,973
  14,823
  15,709
  16,632
  17,596
  18,600
  19,649
  20,744
  21,889
  23,086
Debt-to-equity ratio
  6.503
  3.860
  4.490
  5.010
  5.440
  5.810
  6.120
  6.390
  6.620
  6.820
  7.000
  7.150
  7.290
  7.420
  7.530
  7.630
  7.720
  7.800
  7.870
  7.940
  8.010
  8.060
  8.120
  8.170
  8.210
  8.260
  8.300
  8.330
  8.370
  8.400
  8.430
Adjusted equity ratio
  -0.064
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  257
  243
  299
  350
  404
  461
  521
  585
  651
  720
  792
  876
  954
  1,036
  1,121
  1,209
  1,301
  1,396
  1,496
  1,599
  1,707
  1,819
  1,936
  2,058
  2,185
  2,318
  2,457
  2,602
  2,753
  2,912
  3,078
Depreciation, amort., depletion, $m
  133
  147
  166
  186
  207
  229
  253
  278
  304
  331
  359
  377
  407
  439
  472
  507
  542
  579
  618
  658
  699
  743
  788
  835
  884
  935
  989
  1,045
  1,103
  1,164
  1,227
Funds from operations, $m
  568
  390
  464
  535
  611
  690
  774
  862
  955
  1,051
  1,151
  1,253
  1,362
  1,475
  1,593
  1,716
  1,843
  1,975
  2,113
  2,257
  2,406
  2,562
  2,724
  2,893
  3,069
  3,253
  3,446
  3,646
  3,856
  4,076
  4,305
Change in working capital, $m
  62
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  42
  44
  45
  47
  50
  52
Cash from operations, $m
  506
  376
  449
  519
  593
  672
  755
  842
  934
  1,029
  1,128
  1,229
  1,337
  1,449
  1,566
  1,688
  1,814
  1,945
  2,082
  2,224
  2,372
  2,526
  2,687
  2,854
  3,029
  3,212
  3,402
  3,601
  3,809
  4,026
  4,253
Maintenance CAPEX, $m
  0
  -118
  -135
  -154
  -174
  -195
  -218
  -242
  -266
  -292
  -319
  -348
  -377
  -407
  -439
  -472
  -507
  -542
  -579
  -618
  -658
  -699
  -743
  -788
  -835
  -884
  -935
  -989
  -1,045
  -1,103
  -1,164
New CAPEX, $m
  -187
  -128
  -137
  -146
  -155
  -164
  -173
  -181
  -189
  -198
  -206
  -214
  -223
  -232
  -241
  -250
  -260
  -270
  -281
  -292
  -304
  -317
  -330
  -344
  -358
  -374
  -390
  -407
  -425
  -444
  -464
Cash from investing activities, $m
  -185
  -246
  -272
  -300
  -329
  -359
  -391
  -423
  -455
  -490
  -525
  -562
  -600
  -639
  -680
  -722
  -767
  -812
  -860
  -910
  -962
  -1,016
  -1,073
  -1,132
  -1,193
  -1,258
  -1,325
  -1,396
  -1,470
  -1,547
  -1,628
Free cash flow, $m
  321
  130
  176
  218
  264
  313
  365
  420
  478
  539
  603
  667
  737
  810
  886
  965
  1,047
  1,133
  1,221
  1,314
  1,410
  1,510
  1,614
  1,723
  1,836
  1,954
  2,077
  2,205
  2,339
  2,479
  2,625
Issuance/(repayment) of debt, $m
  -130
  52
  319
  340
  360
  380
  400
  420
  439
  458
  478
  497
  517
  538
  559
  581
  603
  627
  652
  678
  706
  735
  765
  797
  831
  867
  904
  944
  986
  1,030
  1,077
Issuance/(repurchase) of shares, $m
  -72
  35
  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  
  -271
  87
  319
  340
  360
  380
  400
  420
  439
  458
  478
  497
  517
  538
  559
  581
  603
  627
  652
  678
  706
  735
  765
  797
  831
  867
  904
  944
  986
  1,030
  1,077
Total cash flow (excl. dividends), $m
  64
  217
  495
  558
  624
  693
  765
  839
  917
  997
  1,081
  1,164
  1,254
  1,348
  1,445
  1,546
  1,651
  1,760
  1,874
  1,992
  2,116
  2,245
  2,379
  2,520
  2,667
  2,820
  2,981
  3,149
  3,325
  3,509
  3,702
Retained Cash Flow (-), $m
  -180
  -278
  -35
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -72
  -75
  -78
  -82
  -85
  -89
  -92
  -96
  -100
  -105
  -110
  -114
  -120
Prev. year cash balance distribution, $m
 
  185
  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
 
  124
  459
  520
  584
  651
  720
  793
  868
  946
  1,028
  1,109
  1,197
  1,288
  1,383
  1,481
  1,584
  1,690
  1,801
  1,917
  2,037
  2,163
  2,294
  2,431
  2,574
  2,724
  2,880
  3,044
  3,215
  3,395
  3,582
Discount rate, %
 
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
 
  117
  407
  429
  446
  458
  463
  461
  454
  441
  422
  398
  371
  341
  308
  275
  241
  209
  177
  148
  121
  97
  77
  59
  44
  33
  23
  16
  11
  7
  5
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

BRP Inc. is engaged in the design, development, manufacturing, distribution and marketing of power sports vehicles and propulsion systems. The Company manufactures and sells Year-Round Products consisting of all-terrain vehicles (ATVs), side-by-side vehicles (SSVs) and roadsters; Seasonal Products consisting of snowmobiles and personal watercrafts (PWCs), and Propulsion Products consisting of engines for outboard and jet boats, karts, motorcycles and recreational aircraft. The Company's diversified portfolio of brands and products includes Can-Am ATVs, SSVs and roadsters, Ski-Doo and Lynx snowmobiles, Sea-Doo PWCs, and propulsion systems consisting of Evinrude outboard boat engines and Rotax engines for jet boats, karts, motorcycles and recreational aircraft. Additionally, the Company supports its line of products with a parts, accessories and clothing (PAC) business. Its products are sold through a network of dealers, distributors and to original equipment manufacturers.

FINANCIAL RATIOS  of  BRP Inc. Subordinate Voting Shares (DOO)

Valuation Ratios
P/E Ratio 26.8
Price to Sales 1.6
Price to Book 42.8
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 21.6
Growth Rates
Sales Growth Rate 9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.4%
Cap. Spend. - 3 Yr. Gr. Rate 4.1%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 577.6%
Total Debt to Equity 650.3%
Interest Coverage 8
Management Effectiveness
Return On Assets 11.9%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 21%
Ret/ On T. Cap. - 3 Yr. Avg. 10.7%
Return On Equity 362%
Return On Equity - 3 Yr. Avg. -14%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 24.2%
Gross Margin - 3 Yr. Avg. 24%
EBITDA Margin 12.2%
EBITDA Margin - 3 Yr. Avg. 9%
Operating Margin 7.4%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 7.8%
Pre-Tax Margin - 3 Yr. Avg. 4.7%
Net Profit Margin 6.2%
Net Profit Margin - 3 Yr. Avg. 3.2%
Effective Tax Rate 21.4%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

DOO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DOO stock intrinsic value calculation we used $4172 million for the last fiscal year's total revenue generated by BRP Inc. Subordinate Voting Shares. The default revenue input number comes from 2017 income statement of BRP Inc. Subordinate Voting Shares. 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 DOO stock valuation model: a) initial revenue growth rate of 14.9% 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 6%, whose default value for DOO is calculated based on our internal credit rating of BRP Inc. Subordinate Voting Shares, 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 BRP Inc. Subordinate Voting Shares.
    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 DOO stock the variable cost ratio is equal to 87.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $209 million in the base year in the intrinsic value calculation for DOO 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 4.2% for BRP Inc. Subordinate Voting Shares.

Corporate tax rate of 27% is the nominal tax rate for BRP Inc. Subordinate Voting Shares. 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 DOO 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 DOO are equal to 20.6%.

Life of production assets of 7.3 years is the average useful life of capital assets used in BRP Inc. Subordinate Voting Shares 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 DOO is equal to 2.3%. 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 - $161 million for BRP Inc. Subordinate Voting Shares - 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 101.914 million for BRP Inc. Subordinate Voting Shares 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 BRP Inc. Subordinate Voting Shares at the current share price and the inputted number of shares is $4.9 billion.

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Financial statements of DOO
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