Intrinsic value of Christopher&Banks - CBK

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$1.24

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of CBK 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 2017), $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 0.0

 

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, %
  -0.52
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
Revenue, $m
  382
  395
  407
  421
  435
  451
  468
  486
  506
  527
  549
  572
  597
  623
  651
  680
  711
  744
  779
  815
  854
  894
  937
  982
  1,029
  1,079
  1,131
  1,186
  1,244
  1,305
  1,369
Variable operating expenses, $m
 
  158
  163
  169
  175
  181
  188
  195
  203
  211
  220
  229
  239
  250
  261
  273
  285
  298
  312
  327
  342
  359
  376
  394
  413
  433
  454
  476
  499
  523
  549
Fixed operating expenses, $m
 
  253
  260
  266
  273
  279
  286
  294
  301
  308
  316
  324
  332
  340
  349
  358
  367
  376
  385
  395
  405
  415
  425
  436
  447
  458
  469
  481
  493
  505
  518
Total operating expenses, $m
  400
  411
  423
  435
  448
  460
  474
  489
  504
  519
  536
  553
  571
  590
  610
  631
  652
  674
  697
  722
  747
  774
  801
  830
  860
  891
  923
  957
  992
  1,028
  1,067
Operating income, $m
  -19
  -16
  -15
  -14
  -12
  -9
  -6
  -2
  2
  7
  12
  19
  25
  33
  41
  50
  59
  70
  81
  94
  107
  121
  136
  152
  170
  188
  208
  229
  252
  276
  302
EBITDA, $m
  -7
  -6
  -4
  -3
  0
  3
  7
  11
  16
  21
  27
  34
  41
  50
  58
  68
  79
  90
  102
  116
  130
  145
  161
  179
  198
  217
  239
  261
  286
  311
  339
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
Earnings before tax, $m
  -18
  -16
  -16
  -14
  -12
  -9
  -6
  -3
  1
  6
  12
  18
  24
  32
  40
  48
  58
  68
  79
  91
  104
  118
  133
  149
  166
  185
  204
  225
  247
  271
  297
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  2
  3
  5
  7
  9
  11
  13
  16
  18
  21
  25
  28
  32
  36
  40
  45
  50
  55
  61
  67
  73
  80
Net income, $m
  -18
  -16
  -16
  -14
  -12
  -9
  -6
  -3
  1
  5
  8
  13
  18
  23
  29
  35
  42
  50
  58
  67
  76
  86
  97
  109
  121
  135
  149
  164
  181
  198
  217

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
  0
Total assets, $m
  135
  119
  123
  127
  132
  136
  141
  147
  153
  159
  166
  173
  180
  188
  197
  206
  215
  225
  235
  246
  258
  270
  283
  297
  311
  326
  342
  358
  376
  394
  414
Adjusted assets (=assets-cash), $m
  100
  119
  123
  127
  132
  136
  141
  147
  153
  159
  166
  173
  180
  188
  197
  206
  215
  225
  235
  246
  258
  270
  283
  297
  311
  326
  342
  358
  376
  394
  414
Revenue / Adjusted assets
  3.820
  3.319
  3.309
  3.315
  3.295
  3.316
  3.319
  3.306
  3.307
  3.314
  3.307
  3.306
  3.317
  3.314
  3.305
  3.301
  3.307
  3.307
  3.315
  3.313
  3.310
  3.311
  3.311
  3.306
  3.309
  3.310
  3.307
  3.313
  3.309
  3.312
  3.307
Average production assets, $m
  57
  53
  55
  57
  59
  61
  63
  66
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  121
  126
  133
  139
  146
  153
  160
  168
  176
  185
Working capital, $m
  31
  12
  13
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  40
  42
Total debt, $m
  0
  2
  4
  6
  8
  11
  14
  17
  20
  23
  27
  31
  35
  39
  44
  49
  54
  59
  65
  71
  77
  84
  91
  98
  106
  114
  123
  132
  141
  151
  162
Total liabilities, $m
  63
  65
  67
  69
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
  186
  195
  204
  214
  225
Total equity, $m
  71
  55
  56
  58
  60
  62
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  123
  129
  136
  142
  149
  156
  164
  172
  180
  189
Total liabilities and equity, $m
  134
  120
  123
  127
  131
  136
  142
  147
  153
  159
  166
  173
  180
  188
  197
  206
  215
  225
  236
  247
  258
  270
  283
  297
  311
  326
  342
  359
  376
  394
  414
Debt-to-equity ratio
  0.000
  0.030
  0.070
  0.100
  0.140
  0.180
  0.210
  0.250
  0.290
  0.320
  0.360
  0.390
  0.420
  0.460
  0.490
  0.520
  0.550
  0.580
  0.600
  0.630
  0.650
  0.680
  0.700
  0.720
  0.740
  0.770
  0.780
  0.800
  0.820
  0.840
  0.850
Adjusted equity ratio
  0.360
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -18
  -16
  -16
  -14
  -12
  -9
  -6
  -3
  1
  5
  8
  13
  18
  23
  29
  35
  42
  50
  58
  67
  76
  86
  97
  109
  121
  135
  149
  164
  181
  198
  217
Depreciation, amort., depletion, $m
  12
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
Funds from operations, $m
  26
  -6
  -5
  -3
  0
  3
  6
  10
  15
  19
  23
  28
  34
  40
  46
  54
  61
  70
  79
  89
  99
  110
  122
  135
  149
  164
  180
  196
  214
  233
  253
Change in working capital, $m
  16
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  10
  1
  -5
  -3
  -1
  2
  6
  10
  14
  18
  23
  28
  33
  39
  46
  53
  60
  69
  78
  88
  98
  109
  121
  134
  148
  162
  178
  195
  212
  231
  251
Maintenance CAPEX, $m
  0
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -35
New CAPEX, $m
  -10
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
Cash from investing activities, $m
  -6
  -11
  -13
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -18
  -20
  -21
  -22
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
Free cash flow, $m
  4
  -11
  -17
  -16
  -14
  -12
  -9
  -5
  -2
  2
  5
  10
  14
  19
  25
  31
  38
  45
  53
  62
  71
  81
  91
  103
  115
  128
  142
  157
  173
  190
  208
Issuance/(repayment) of debt, $m
  0
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
Issuance/(repurchase) of shares, $m
  0
  0
  17
  16
  14
  11
  8
  5
  1
  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  
  0
  2
  19
  18
  16
  14
  11
  8
  4
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  4
  -9
  -15
  -14
  -12
  -9
  -6
  -2
  2
  5
  9
  13
  18
  24
  30
  36
  43
  51
  59
  68
  77
  87
  98
  110
  123
  136
  150
  166
  182
  200
  218
Retained Cash Flow (-), $m
  17
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
Prev. year cash balance distribution, $m
 
  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 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
 
  24
  0
  0
  0
  0
  0
  0
  0
  2
  6
  10
  15
  20
  26
  32
  39
  46
  54
  63
  72
  82
  92
  104
  116
  129
  143
  158
  174
  191
  209
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
 
  23
  0
  0
  0
  0
  0
  0
  0
  1
  3
  5
  6
  8
  9
  9
  10
  10
  10
  10
  9
  8
  8
  7
  6
  5
  4
  3
  3
  2
  2
Current shareholders' claim on cash, %
  100
  100.0
  69.3
  49.7
  37.2
  29.4
  24.7
  22.3
  21.8
  21.8
  21.8
  21.8
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Christopher & Banks Corporation, through its subsidiaries, operates as a retailer of women’s apparel and accessories in the United States. The company designs and sells women’s apparel and accessories to customers ranging in age from 40 and above. Its stores offer women’s apparel consisting of casual clothing, everyday basics, wear-to-work, leisure/active wear, and sleepwear in missy, petite, and women sizes, as well as jewelry and accessories, including footwear. As of March 10, 2016, the company operated 514 stores, including 314 MPW stores, 77 Outlet stores, 65 Christopher & Banks stores, and 58 CJ Banks stores in 45 states. It also operates an e-commerce Web site christopherandbanks.com for its Christopher & Banks and C.J. Banks brands. The company was formerly known as Braun’s Fashions Corporation and changed its name to Christopher & Banks Corporation in July 2000. Christopher & Banks Corporation was founded in 1956 and is headquartered in Plymouth, Minnesota.

FINANCIAL RATIOS  of  Christopher&Banks (CBK)

Valuation Ratios
P/E Ratio -2.6
Price to Sales 0.1
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 4.7
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -61.5%
Cap. Spend. - 3 Yr. Gr. Rate 2.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -12.6%
Ret/ On Assets - 3 Yr. Avg. -4.5%
Return On Total Capital -22.6%
Ret/ On T. Cap. - 3 Yr. Avg. -8.1%
Return On Equity -22.6%
Return On Equity - 3 Yr. Avg. -8.1%
Asset Turnover 2.7
Profitability Ratios
Gross Margin 33.5%
Gross Margin - 3 Yr. Avg. 34.1%
EBITDA Margin -1.6%
EBITDA Margin - 3 Yr. Avg. 1.2%
Operating Margin -4.7%
Oper. Margin - 3 Yr. Avg. -1.7%
Pre-Tax Margin -4.7%
Pre-Tax Margin - 3 Yr. Avg. -1.8%
Net Profit Margin -4.7%
Net Profit Margin - 3 Yr. Avg. -2.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -255.9%
Payout Ratio 0%

CBK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBK stock intrinsic value calculation we used $384 million for the last fiscal year's total revenue generated by Christopher&Banks. The default revenue input number comes from 2017 income statement of Christopher&Banks. 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 CBK stock valuation model: a) initial revenue growth rate of 2.9% 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 4.3%, whose default value for CBK is calculated based on our internal credit rating of Christopher&Banks, 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 Christopher&Banks.
    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 CBK stock the variable cost ratio is equal to 40.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $247 million in the base year in the intrinsic value calculation for CBK 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 Christopher&Banks.

Corporate tax rate of 27% is the nominal tax rate for Christopher&Banks. 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 CBK 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 CBK are equal to 13.5%.

Life of production assets of 4.3 years is the average useful life of capital assets used in Christopher&Banks 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 CBK is equal to 3.1%. 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 - $88 million for Christopher&Banks - 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 36.285 million for Christopher&Banks 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 Christopher&Banks at the current share price and the inputted number of shares is $0.0 billion.


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Stock chart of CBK Financial statements of CBK Annual reports of CBK
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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