Intrinsic value of Boot Barn Holdings - BOOT

Previous Close

$8.07

  Intrinsic Value

$13.77

stock screener

  Rating & Target

str. buy

+71%

  Value-price divergence*

-66%

Previous close

$8.07

 
Intrinsic value

$13.77

 
Up/down potential

+71%

 
Rating

str. buy

 
Value-price divergence*

-66%

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

We calculate the intrinsic value of BOOT 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 0.2

 

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, %
  41.19
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  569
  584
  600
  619
  639
  661
  684
  710
  737
  766
  798
  831
  866
  904
  943
  985
  1,030
  1,077
  1,126
  1,178
  1,233
  1,291
  1,353
  1,417
  1,485
  1,556
  1,631
  1,711
  1,794
  1,881
  1,973
Variable operating expenses, $m
 
  531
  545
  561
  579
  598
  619
  641
  665
  691
  718
  728
  759
  792
  826
  863
  902
  943
  987
  1,032
  1,081
  1,131
  1,185
  1,241
  1,301
  1,363
  1,429
  1,499
  1,571
  1,648
  1,729
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
  539
  531
  545
  561
  579
  598
  619
  641
  665
  691
  718
  728
  759
  792
  826
  863
  902
  943
  987
  1,032
  1,081
  1,131
  1,185
  1,241
  1,301
  1,363
  1,429
  1,499
  1,571
  1,648
  1,729
Operating income, $m
  30
  53
  55
  57
  60
  63
  66
  69
  72
  76
  80
  103
  107
  112
  117
  122
  128
  133
  140
  146
  153
  160
  168
  176
  184
  193
  202
  212
  222
  233
  244
EBITDA, $m
  44
  78
  80
  83
  86
  89
  92
  95
  99
  103
  107
  111
  116
  121
  126
  132
  138
  144
  151
  158
  165
  173
  181
  190
  199
  209
  219
  229
  240
  252
  264
Interest expense (income), $m
  10
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  42
  44
  46
  49
  52
  55
  57
  61
  64
Earnings before tax, $m
  17
  39
  40
  42
  44
  46
  48
  50
  52
  55
  58
  80
  83
  86
  90
  94
  98
  102
  106
  111
  115
  121
  126
  132
  138
  144
  151
  157
  165
  172
  181
Tax expense, $m
  7
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  22
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  44
  47
  49
Net income, $m
  10
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  58
  61
  63
  66
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7
  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
  539
  546
  561
  578
  597
  617
  640
  663
  689
  716
  745
  777
  809
  844
  882
  921
  962
  1,006
  1,052
  1,101
  1,153
  1,207
  1,264
  1,324
  1,388
  1,455
  1,525
  1,599
  1,676
  1,758
  1,844
Adjusted assets (=assets-cash), $m
  532
  546
  561
  578
  597
  617
  640
  663
  689
  716
  745
  777
  809
  844
  882
  921
  962
  1,006
  1,052
  1,101
  1,153
  1,207
  1,264
  1,324
  1,388
  1,455
  1,525
  1,599
  1,676
  1,758
  1,844
Revenue / Adjusted assets
  1.070
  1.070
  1.070
  1.071
  1.070
  1.071
  1.069
  1.071
  1.070
  1.070
  1.071
  1.069
  1.070
  1.071
  1.069
  1.069
  1.071
  1.071
  1.070
  1.070
  1.069
  1.070
  1.070
  1.070
  1.070
  1.069
  1.070
  1.070
  1.070
  1.070
  1.070
Average production assets, $m
  99
  102
  104
  108
  111
  115
  119
  124
  128
  133
  139
  145
  151
  157
  164
  171
  179
  187
  196
  205
  215
  225
  235
  247
  258
  271
  284
  298
  312
  327
  343
Working capital, $m
  51
  96
  99
  102
  105
  109
  113
  117
  122
  126
  132
  137
  143
  149
  156
  163
  170
  178
  186
  194
  204
  213
  223
  234
  245
  257
  269
  282
  296
  310
  326
Total debt, $m
  255
  257
  268
  280
  293
  307
  323
  339
  357
  376
  397
  418
  441
  466
  491
  519
  548
  578
  611
  645
  680
  718
  758
  800
  844
  891
  940
  991
  1,045
  1,102
  1,162
Total liabilities, $m
  378
  380
  391
  403
  416
  430
  446
  462
  480
  499
  520
  541
  564
  589
  614
  642
  671
  701
  734
  768
  803
  841
  881
  923
  967
  1,014
  1,063
  1,114
  1,168
  1,225
  1,285
Total equity, $m
  161
  165
  170
  175
  181
  187
  194
  201
  209
  217
  226
  235
  245
  256
  267
  279
  292
  305
  319
  334
  349
  366
  383
  401
  420
  441
  462
  484
  508
  533
  559
Total liabilities and equity, $m
  539
  545
  561
  578
  597
  617
  640
  663
  689
  716
  746
  776
  809
  845
  881
  921
  963
  1,006
  1,053
  1,102
  1,152
  1,207
  1,264
  1,324
  1,387
  1,455
  1,525
  1,598
  1,676
  1,758
  1,844
Debt-to-equity ratio
  1.584
  1.560
  1.580
  1.600
  1.620
  1.640
  1.670
  1.690
  1.710
  1.730
  1.760
  1.780
  1.800
  1.820
  1.840
  1.860
  1.880
  1.900
  1.910
  1.930
  1.950
  1.960
  1.980
  1.990
  2.010
  2.020
  2.030
  2.050
  2.060
  2.070
  2.080
Adjusted equity ratio
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303
  0.303

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  58
  61
  63
  66
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
Depreciation, amort., depletion, $m
  14
  25
  25
  26
  26
  26
  26
  26
  27
  27
  27
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Funds from operations, $m
  40
  53
  55
  56
  58
  59
  61
  63
  65
  67
  69
  67
  69
  72
  75
  78
  82
  85
  89
  93
  97
  101
  106
  110
  115
  121
  126
  132
  138
  145
  152
Change in working capital, $m
  7
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
Cash from operations, $m
  33
  51
  52
  53
  54
  56
  57
  59
  60
  62
  64
  61
  64
  66
  69
  71
  74
  77
  81
  84
  88
  91
  95
  100
  104
  109
  114
  119
  125
  130
  136
Maintenance CAPEX, $m
  0
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
New CAPEX, $m
  -36
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
Cash from investing activities, $m
  -183
  -9
  -9
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -16
  -16
  -16
  -18
  -18
  -20
  -20
  -22
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
Free cash flow, $m
  -150
  43
  43
  44
  45
  45
  46
  47
  49
  50
  51
  47
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  82
  85
  89
  93
  97
  102
Issuance/(repayment) of debt, $m
  156
  9
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
  60
Issuance/(repurchase) of shares, $m
  3
  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  
  155
  9
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
  60
Total cash flow (excl. dividends), $m
  6
  52
  54
  56
  58
  60
  62
  64
  66
  69
  71
  69
  72
  75
  78
  82
  85
  89
  93
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
Retained Cash Flow (-), $m
  -19
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
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
 
  48
  49
  51
  52
  53
  55
  57
  59
  61
  63
  60
  62
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  118
  124
  129
  135
Discount rate, %
 
  9.70
  10.19
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
 
  43
  41
  37
  34
  31
  27
  24
  21
  18
  15
  12
  10
  8
  6
  5
  4
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
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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

Boot Barn Holdings, Inc., a lifestyle retail company, operates specialty retail stores in the United States. The company’s specialty retail stores offer western and work-related footwear, apparel, and accessories for men, ladies, and kids. It offers boots, denim, western shirts, cowboy hats, belts and belt buckles, western-style jewelry, rugged footwear, outerwear, overalls, safety-toe boots, and flame-resistant and high-visibility clothing. As of July 26, 2016, it operated approximately 210 stores in 29 states. The company also sells its products through e-commerce Websites, including bootbarn.com and sheplers.com. The company was formerly known as WW Top Investment Corporation and changed its name to Boot Barn Holdings, Inc. in June 2014. Boot Barn Holdings, Inc. was founded in 1978 and is headquartered in Irvine, California.

FINANCIAL RATIOS  of  Boot Barn Holdings (BOOT)

Valuation Ratios
P/E Ratio 21.3
Price to Sales 0.4
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 6.4
Price to Free Cash Flow -70.9
Growth Rates
Sales Growth Rate 41.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 157.1%
Cap. Spend. - 3 Yr. Gr. Rate 55.2%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 127.3%
Total Debt to Equity 158.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 3.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.1%
Return On Equity 6.6%
Return On Equity - 3 Yr. Avg. 8.6%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 30.4%
Gross Margin - 3 Yr. Avg. 32.2%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 8.6%
Operating Margin 5.3%
Oper. Margin - 3 Yr. Avg. 6.8%
Pre-Tax Margin 3%
Pre-Tax Margin - 3 Yr. Avg. 3.7%
Net Profit Margin 1.8%
Net Profit Margin - 3 Yr. Avg. 2.2%
Effective Tax Rate 41.2%
Eff/ Tax Rate - 3 Yr. Avg. 37%
Payout Ratio 0%

BOOT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BOOT stock intrinsic value calculation we used $569 million for the last fiscal year's total revenue generated by Boot Barn Holdings. The default revenue input number comes from 2016 income statement of Boot Barn Holdings. 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 BOOT stock valuation model: a) initial revenue growth rate of 2.6% 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 9.7%, whose default value for BOOT is calculated based on our internal credit rating of Boot Barn Holdings, 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 Boot Barn Holdings.
    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 BOOT stock the variable cost ratio is equal to 91%.

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 BOOT 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 5.8% for Boot Barn Holdings.

Corporate tax rate of 27% is the nominal tax rate for Boot Barn Holdings. 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 BOOT 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 BOOT are equal to 17.4%.

Life of production assets of 17.3 years is the average useful life of capital assets used in Boot Barn Holdings 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 BOOT is equal to 16.5%. 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 Boot Barn Holdings - 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 25.164 million for Boot Barn Holdings 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 Boot Barn Holdings at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Why Boot Barn Holdings Inc. Stock Popped Today   [Aug-02-17 08:39PM  Motley Fool]
▶ Boot Barn tops Street 1Q forecasts   [Aug-01-17 11:30PM  Associated Press]
▶ Story Stocks from Briefing.com   [12:17PM  Briefing.com]
▶ Boot Barn misses Street 4Q forecasts   [Jun-01-17 04:38PM  Associated Press]
▶ National apparel retailer opens a second Louisville-area location   [Apr-19-17 07:25AM  American City Business Journals]
▶ Why These 7 Stocks Are Poised to Explode   [09:58AM  TheStreet.com]
▶ Boot Barn meets 3Q profit forecasts   [05:28PM  Associated Press]
▶ Boot Barn Remains Open Amidst Artegon Marketplace Closure   [Jan-13-17 10:16PM  Business Wire]
▶ Should You Buy Boot Barn Holdings Inc (BOOT)?   [Dec-11-16 04:40AM  at Insider Monkey]
Stock chart of BOOT Financial statements of BOOT
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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