Intrinsic value of Boyd Group Income Fund - BYD-UN

Previous Close

$89.99

  Intrinsic Value

$142.89

stock screener

  Rating & Target

str. buy

+59%

  Value-price divergence*

-103%

Previous close

$89.99

 
Intrinsic value

$142.89

 
Up/down potential

+59%

 
Rating

str. buy

 
Value-price divergence*

-103%

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

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 1.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   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, %
  18.14
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  1,387
  1,502
  1,622
  1,746
  1,876
  2,010
  2,150
  2,295
  2,446
  2,603
  2,766
  2,936
  3,114
  3,298
  3,491
  3,692
  3,901
  4,120
  4,349
  4,588
  4,838
  5,099
  5,373
  5,659
  5,958
  6,272
  6,600
  6,944
  7,305
  7,683
  8,079
Variable operating expenses, $m
 
  1,084
  1,169
  1,257
  1,348
  1,443
  1,542
  1,644
  1,751
  1,862
  1,977
  2,074
  2,199
  2,330
  2,466
  2,608
  2,756
  2,910
  3,072
  3,241
  3,417
  3,602
  3,795
  3,997
  4,209
  4,430
  4,662
  4,905
  5,160
  5,427
  5,706
Fixed operating expenses, $m
 
  343
  352
  361
  370
  379
  388
  398
  408
  418
  429
  440
  451
  462
  473
  485
  497
  510
  522
  536
  549
  563
  577
  591
  606
  621
  637
  653
  669
  686
  703
Total operating expenses, $m
  1,330
  1,427
  1,521
  1,618
  1,718
  1,822
  1,930
  2,042
  2,159
  2,280
  2,406
  2,514
  2,650
  2,792
  2,939
  3,093
  3,253
  3,420
  3,594
  3,777
  3,966
  4,165
  4,372
  4,588
  4,815
  5,051
  5,299
  5,558
  5,829
  6,113
  6,409
Operating income, $m
  57
  75
  101
  129
  158
  188
  220
  253
  287
  323
  360
  423
  464
  507
  552
  599
  648
  700
  755
  812
  872
  935
  1,001
  1,071
  1,144
  1,221
  1,302
  1,387
  1,476
  1,571
  1,670
EBITDA, $m
  91
  120
  148
  177
  208
  240
  274
  309
  346
  384
  424
  465
  509
  555
  602
  652
  705
  760
  818
  878
  942
  1,009
  1,079
  1,153
  1,230
  1,312
  1,397
  1,487
  1,582
  1,682
  1,787
Interest expense (income), $m
  9
  8
  9
  11
  13
  15
  16
  18
  20
  22
  25
  27
  29
  32
  34
  37
  40
  43
  46
  49
  52
  56
  59
  63
  67
  71
  76
  80
  85
  90
  96
Earnings before tax, $m
  57
  67
  92
  118
  145
  174
  203
  234
  267
  300
  336
  396
  434
  475
  517
  562
  609
  657
  709
  763
  819
  879
  942
  1,007
  1,076
  1,149
  1,226
  1,306
  1,391
  1,480
  1,574
Tax expense, $m
  27
  18
  25
  32
  39
  47
  55
  63
  72
  81
  91
  107
  117
  128
  140
  152
  164
  178
  191
  206
  221
  237
  254
  272
  291
  310
  331
  353
  376
  400
  425
Net income, $m
  30
  49
  67
  86
  106
  127
  148
  171
  195
  219
  245
  289
  317
  347
  378
  410
  444
  480
  517
  557
  598
  642
  687
  735
  786
  839
  895
  954
  1,015
  1,081
  1,149

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  54
  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
  738
  741
  800
  861
  925
  991
  1,060
  1,132
  1,206
  1,283
  1,364
  1,448
  1,535
  1,626
  1,721
  1,820
  1,924
  2,032
  2,145
  2,262
  2,386
  2,514
  2,649
  2,790
  2,938
  3,093
  3,255
  3,424
  3,602
  3,788
  3,984
Adjusted assets (=assets-cash), $m
  684
  741
  800
  861
  925
  991
  1,060
  1,132
  1,206
  1,283
  1,364
  1,448
  1,535
  1,626
  1,721
  1,820
  1,924
  2,032
  2,145
  2,262
  2,386
  2,514
  2,649
  2,790
  2,938
  3,093
  3,255
  3,424
  3,602
  3,788
  3,984
Revenue / Adjusted assets
  2.028
  2.027
  2.028
  2.028
  2.028
  2.028
  2.028
  2.027
  2.028
  2.029
  2.028
  2.028
  2.029
  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
Average production assets, $m
  299
  324
  350
  377
  405
  434
  464
  496
  528
  562
  598
  634
  673
  712
  754
  797
  843
  890
  939
  991
  1,045
  1,101
  1,160
  1,222
  1,287
  1,355
  1,426
  1,500
  1,578
  1,659
  1,745
Working capital, $m
  6
  -33
  -36
  -38
  -41
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -73
  -77
  -81
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -131
  -138
  -145
  -153
  -161
  -169
  -178
Total debt, $m
  192
  211
  249
  289
  330
  372
  417
  463
  510
  560
  612
  666
  722
  781
  842
  906
  972
  1,041
  1,114
  1,190
  1,269
  1,352
  1,438
  1,529
  1,624
  1,724
  1,828
  1,937
  2,051
  2,171
  2,296
Total liabilities, $m
  457
  476
  514
  554
  595
  637
  682
  728
  775
  825
  877
  931
  987
  1,046
  1,107
  1,171
  1,237
  1,306
  1,379
  1,455
  1,534
  1,617
  1,703
  1,794
  1,889
  1,989
  2,093
  2,202
  2,316
  2,436
  2,561
Total equity, $m
  281
  264
  286
  307
  330
  354
  378
  404
  431
  458
  487
  517
  548
  581
  615
  650
  687
  725
  766
  808
  852
  898
  946
  996
  1,049
  1,104
  1,162
  1,222
  1,286
  1,352
  1,422
Total liabilities and equity, $m
  738
  740
  800
  861
  925
  991
  1,060
  1,132
  1,206
  1,283
  1,364
  1,448
  1,535
  1,627
  1,722
  1,821
  1,924
  2,031
  2,145
  2,263
  2,386
  2,515
  2,649
  2,790
  2,938
  3,093
  3,255
  3,424
  3,602
  3,788
  3,983
Debt-to-equity ratio
  0.683
  0.800
  0.870
  0.940
  1.000
  1.050
  1.100
  1.150
  1.190
  1.220
  1.260
  1.290
  1.320
  1.340
  1.370
  1.390
  1.420
  1.440
  1.450
  1.470
  1.490
  1.510
  1.520
  1.540
  1.550
  1.560
  1.570
  1.580
  1.600
  1.610
  1.610
Adjusted equity ratio
  0.332
  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
  30
  49
  67
  86
  106
  127
  148
  171
  195
  219
  245
  289
  317
  347
  378
  410
  444
  480
  517
  557
  598
  642
  687
  735
  786
  839
  895
  954
  1,015
  1,081
  1,149
Depreciation, amort., depletion, $m
  34
  45
  47
  48
  50
  52
  54
  56
  59
  61
  63
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
  96
  101
  106
  111
  117
Funds from operations, $m
  90
  94
  114
  135
  156
  179
  203
  227
  253
  280
  308
  332
  362
  395
  428
  464
  501
  540
  580
  623
  668
  716
  765
  817
  872
  930
  990
  1,054
  1,121
  1,192
  1,266
Change in working capital, $m
  -1
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
Cash from operations, $m
  91
  96
  116
  137
  159
  182
  206
  231
  256
  284
  312
  335
  366
  399
  433
  468
  505
  545
  586
  629
  674
  721
  771
  824
  879
  937
  998
  1,062
  1,129
  1,200
  1,275
Maintenance CAPEX, $m
  0
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -91
  -96
  -101
  -106
  -111
New CAPEX, $m
  -12
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
Cash from investing activities, $m
  -118
  -45
  -48
  -51
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -109
  -115
  -121
  -126
  -133
  -140
  -147
  -154
  -162
  -170
  -179
  -188
  -197
Free cash flow, $m
  -27
  51
  69
  87
  106
  126
  146
  168
  191
  214
  239
  258
  285
  314
  343
  374
  407
  441
  476
  514
  553
  595
  638
  684
  732
  783
  836
  892
  951
  1,013
  1,078
Issuance/(repayment) of debt, $m
  18
  36
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  66
  69
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  120
  126
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
  0
Cash from financing (excl. dividends), $m  
  18
  36
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  66
  69
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  120
  126
Total cash flow (excl. dividends), $m
  -10
  87
  107
  126
  147
  168
  191
  214
  238
  264
  291
  312
  342
  372
  404
  438
  473
  510
  549
  590
  633
  678
  725
  775
  827
  882
  940
  1,001
  1,065
  1,133
  1,204
Retained Cash Flow (-), $m
  -96
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -63
  -67
  -70
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
 
  104
  86
  104
  124
  145
  166
  189
  212
  236
  262
  282
  310
  340
  370
  402
  436
  472
  509
  548
  589
  632
  677
  724
  774
  827
  882
  940
  1,002
  1,066
  1,134
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
 
  99
  78
  91
  102
  112
  121
  127
  132
  136
  137
  134
  132
  129
  124
  118
  111
  103
  94
  84
  75
  65
  56
  47
  39
  32
  26
  20
  15
  12
  9
Current shareholders' claim on cash, %
  100
  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 operates as an unincorporated open-ended mutual fund trust in the United States and Canada. The company, through its operating company, The Boyd Group Inc., operates non-franchised collision repair centers that serve insurance companies, individual vehicle owners, and fleet and lease customers. It offers automotive collision and glass repair, and vehicle glass repair and replacement services. As of March 27, 2015, it operated locations in 5 Canadian provinces under the Boyd Autobody & Glass trade name, as well as in the 17 states of the United States under the Gerber Collision & Glass, Champ's Collision Centers, and Craftmaster Auto Body trade names; and as a retail auto glass operator in the 29 states of the United States under the Gerber Collision & Glass, Glass America, Auto Glass Services, Autoglassonly.com, and Auto Glass Authority trade names. The company also operated approximately 5,500 affiliated glass provider locations and 4,600 affiliated emergency roadside services provider locations in the United States. Boyd Group Income Fund is headquartered in Winnipeg, Canada.

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

Valuation Ratios
P/E Ratio 54.8
Price to Sales 1.2
Price to Book 5.9
Price to Tangible Book
Price to Cash Flow 18.1
Price to Free Cash Flow 20.8
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 8.3% 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 21.6%.

Life of production assets of 14.9 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 18.064 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 $1.6 billion.

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Stock chart of BYD-UN Financial statements of BYD-UN
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The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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