Intrinsic value of Bravo Brio Restaurant Group - BBRG

Previous Close

$3.75

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

  Value-price divergence*

0%

Previous close

$3.75

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of BBRG 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 0.1

 

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, %
  -3.30
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  410
  418
  428
  439
  451
  465
  480
  496
  514
  533
  553
  575
  599
  623
  650
  678
  708
  739
  772
  807
  845
  884
  925
  969
  1,014
  1,063
  1,114
  1,167
  1,223
  1,283
  1,345
Variable operating expenses, $m
 
  415
  425
  436
  448
  462
  476
  493
  510
  529
  550
  571
  594
  619
  645
  673
  703
  734
  767
  802
  839
  878
  919
  962
  1,007
  1,055
  1,106
  1,159
  1,215
  1,274
  1,336
Fixed operating expenses, $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 operating expenses, $m
  425
  415
  425
  436
  448
  462
  476
  493
  510
  529
  550
  571
  594
  619
  645
  673
  703
  734
  767
  802
  839
  878
  919
  962
  1,007
  1,055
  1,106
  1,159
  1,215
  1,274
  1,336
Operating income, $m
  -15
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
EBITDA, $m
  7
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  62
Interest expense (income), $m
  1
  1
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  11
  11
Earnings before tax, $m
  -17
  1
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
Tax expense, $m
  58
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -75
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -2
  -2

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
  0
Total assets, $m
  167
  170
  174
  179
  184
  189
  195
  202
  209
  217
  225
  234
  244
  254
  265
  276
  288
  301
  315
  329
  344
  360
  377
  395
  413
  433
  454
  475
  498
  522
  548
Adjusted assets (=assets-cash), $m
  167
  170
  174
  179
  184
  189
  195
  202
  209
  217
  225
  234
  244
  254
  265
  276
  288
  301
  315
  329
  344
  360
  377
  395
  413
  433
  454
  475
  498
  522
  548
Revenue / Adjusted assets
  2.455
  2.459
  2.460
  2.453
  2.451
  2.460
  2.462
  2.455
  2.459
  2.456
  2.458
  2.457
  2.455
  2.453
  2.453
  2.457
  2.458
  2.455
  2.451
  2.453
  2.456
  2.456
  2.454
  2.453
  2.455
  2.455
  2.454
  2.457
  2.456
  2.458
  2.454
Average production assets, $m
  162
  165
  169
  173
  178
  183
  189
  195
  202
  210
  218
  227
  236
  246
  256
  267
  279
  291
  304
  318
  333
  348
  364
  382
  400
  419
  439
  460
  482
  505
  530
Working capital, $m
  -56
  -42
  -43
  -44
  -45
  -46
  -48
  -50
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -93
  -97
  -101
  -106
  -111
  -117
  -122
  -128
  -134
Total debt, $m
  42
  6
  10
  14
  18
  23
  29
  35
  41
  48
  56
  64
  72
  82
  91
  102
  112
  124
  136
  149
  163
  177
  192
  208
  225
  243
  261
  281
  301
  323
  346
Total liabilities, $m
  188
  153
  157
  161
  165
  170
  176
  182
  188
  195
  203
  211
  219
  229
  238
  249
  259
  271
  283
  296
  310
  324
  339
  355
  372
  390
  408
  428
  448
  470
  493
Total equity, $m
  -22
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
  52
  55
Total liabilities and equity, $m
  166
  170
  174
  179
  183
  189
  196
  202
  209
  217
  226
  234
  243
  254
  264
  277
  288
  301
  314
  329
  344
  360
  377
  394
  413
  433
  453
  476
  498
  522
  548
Debt-to-equity ratio
  -1.909
  0.370
  0.560
  0.780
  1.000
  1.240
  1.480
  1.730
  1.980
  2.230
  2.480
  2.730
  2.970
  3.210
  3.450
  3.680
  3.900
  4.120
  4.330
  4.530
  4.730
  4.920
  5.100
  5.270
  5.440
  5.600
  5.760
  5.910
  6.050
  6.190
  6.320
Adjusted equity ratio
  -0.132
  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
  -75
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
Depreciation, amort., depletion, $m
  22
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
Funds from operations, $m
  24
  18
  19
  19
  20
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
Change in working capital, $m
  4
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from operations, $m
  20
  18
  20
  20
  21
  22
  22
  23
  24
  25
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  37
  39
  41
  43
  44
  46
  48
  50
  53
  55
  57
Maintenance CAPEX, $m
  0
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
New CAPEX, $m
  -16
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
Cash from investing activities, $m
  -16
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -47
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -76
Free cash flow, $m
  4
  -1
  0
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
Issuance/(repayment) of debt, $m
  -2
  -36
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
Issuance/(repurchase) of shares, $m
  -2
  38
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  4
Cash from financing (excl. dividends), $m  
  -5
  2
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  14
  15
  15
  16
  18
  19
  20
  22
  23
  25
  26
  27
Total cash flow (excl. dividends), $m
  0
  1
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Retained Cash Flow (-), $m
  77
  -39
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
Prev. year cash balance distribution, $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 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
 
  -38
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
Discount rate, %
 
  11.10
  11.66
  12.24
  12.85
  13.49
  14.17
  14.88
  15.62
  16.40
  17.22
  18.08
  18.98
  19.93
  20.93
  21.98
  23.08
  24.23
  25.44
  26.71
  28.05
  29.45
  30.92
  32.47
  34.09
  35.80
  37.59
  39.47
  41.44
  43.51
  45.69
PV of cash for distribution, $m
 
  -34
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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
  49.6
  49.0
  48.1
  46.9
  45.5
  44.0
  42.2
  40.4
  38.4
  36.3
  34.1
  31.9
  29.7
  27.5
  25.3

Bravo Brio Restaurant Group, Inc. owns and operates Italian restaurants in the United States. The company operates full-service Italian restaurants under the BRAVO! Cucina Italiana brand name; Italian chophouse restaurants under the BRIO Tuscan Grille brand name; and full-service American-French bistro restaurant under the Bon Vie brand name. Its restaurants primarily offer Italian food and wine. As of December 27, 2015, it operated 51 BRAVO! restaurants, 65 BRIO restaurants, and 1 Bon Vie restaurant in 33 states. The company was formerly known as Bravo Development, Inc. and changed its name to Bravo Brio Restaurant Group, Inc. in June 2010. Bravo Brio Restaurant Group, Inc. was incorporated in 1987 and is based in Columbus, Ohio.

FINANCIAL RATIOS  of  Bravo Brio Restaurant Group (BBRG)

Valuation Ratios
P/E Ratio -0.8
Price to Sales 0.1
Price to Book -2.6
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow 14.1
Growth Rates
Sales Growth Rate -3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36%
Cap. Spend. - 3 Yr. Gr. Rate -11.8%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity -172.7%
Total Debt to Equity -190.9%
Interest Coverage -16
Management Effectiveness
Return On Assets -34%
Ret/ On Assets - 3 Yr. Avg. -8.6%
Return On Total Capital -127.1%
Ret/ On T. Cap. - 3 Yr. Avg. -37.3%
Return On Equity -454.5%
Return On Equity - 3 Yr. Avg. -143.4%
Asset Turnover 2
Profitability Ratios
Gross Margin 73.9%
Gross Margin - 3 Yr. Avg. 74.1%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. 5.5%
Operating Margin -3.7%
Oper. Margin - 3 Yr. Avg. 0.2%
Pre-Tax Margin -4.1%
Pre-Tax Margin - 3 Yr. Avg. -0.1%
Net Profit Margin -18.3%
Net Profit Margin - 3 Yr. Avg. -4.7%
Effective Tax Rate -341.2%
Eff/ Tax Rate - 3 Yr. Avg. -159%
Payout Ratio 0%

BBRG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BBRG stock intrinsic value calculation we used $410 million for the last fiscal year's total revenue generated by Bravo Brio Restaurant Group. The default revenue input number comes from 2016 income statement of Bravo Brio Restaurant Group. 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 BBRG stock valuation model: a) initial revenue growth rate of 2% 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 11.1%, whose default value for BBRG is calculated based on our internal credit rating of Bravo Brio Restaurant Group, 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 Bravo Brio Restaurant Group.
    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 BBRG stock the variable cost ratio is equal to 99.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BBRG 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 3.5% for Bravo Brio Restaurant Group.

Corporate tax rate of 27% is the nominal tax rate for Bravo Brio Restaurant Group. 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 BBRG 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 BBRG are equal to 39.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Bravo Brio Restaurant Group 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 BBRG is equal to -10%. 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 - $-22 million for Bravo Brio Restaurant Group - 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 14.024 million for Bravo Brio Restaurant Group 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 Bravo Brio Restaurant Group at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Potbelly's Chances of a Sale Increase as Activist Hovers   [Jul-17-17 12:06PM  TheStreet.com]
▶ Bravo Brio Restaurant Group, Inc. Provides Business Update   [Jun-08-17 05:42PM  GlobeNewswire]
▶ Top Ranked Growth Stocks to Buy for May 3rd   [May-03-17 09:50AM  Zacks]
▶ Bravo Brio beats 1Q profit forecasts   [May-02-17 07:11PM  Associated Press]
▶ New Strong Buy Stocks for April 4th   [Apr-04-17 10:12AM  Zacks]
▶ 5 Top Stocks to Blossom Heading into April   [Mar-31-17 10:05AM  Zacks]
▶ New Strong Buy Stocks for March 24th   [Mar-24-17 08:48AM  Zacks]
▶ Major shareholder pushing for seats on the board at Bravo Brio   [Jan-23-17 04:20PM  at bizjournals.com]
▶ Is Brio Restaurant Group, Inc. (BBRG) a Good Stock to Buy?   [Dec-13-16 06:26AM  at Insider Monkey]
Stock chart of BBRG Financial statements of BBRG Annual reports of BBRG
Valuation of Stocks

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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