Intrinsic value of Dixie Group - DXYN

Previous Close

$3.21

  Intrinsic Value

$1.28

stock screener

  Rating & Target

str. sell

-60%

Previous close

$3.21

 
Intrinsic value

$1.28

 
Up/down potential

-60%

 
Rating

str. sell

We calculate the intrinsic value of DXYN 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

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
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, %
  -5.92
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  397
  409
  422
  436
  452
  468
  486
  505
  526
  548
  571
  595
  621
  649
  678
  709
  741
  776
  812
  850
  890
  933
  977
  1,024
  1,073
  1,125
  1,180
  1,238
  1,298
  1,362
  1,428
Variable operating expenses, $m
 
  311
  321
  332
  344
  356
  370
  385
  400
  417
  434
  453
  472
  493
  515
  539
  564
  590
  617
  646
  677
  709
  743
  779
  816
  856
  897
  941
  987
  1,035
  1,086
Fixed operating expenses, $m
 
  104
  106
  109
  111
  114
  117
  120
  123
  126
  129
  133
  136
  139
  143
  146
  150
  154
  158
  161
  166
  170
  174
  178
  183
  187
  192
  197
  202
  207
  212
Total operating expenses, $m
  401
  415
  427
  441
  455
  470
  487
  505
  523
  543
  563
  586
  608
  632
  658
  685
  714
  744
  775
  807
  843
  879
  917
  957
  999
  1,043
  1,089
  1,138
  1,189
  1,242
  1,298
Operating income, $m
  -3
  -6
  -5
  -4
  -3
  -2
  -1
  1
  3
  5
  7
  10
  13
  16
  20
  24
  28
  32
  37
  42
  48
  54
  60
  67
  75
  83
  91
  100
  110
  120
  131
EBITDA, $m
  11
  8
  9
  11
  12
  14
  16
  18
  21
  24
  27
  30
  34
  38
  43
  48
  53
  59
  65
  71
  78
  86
  94
  102
  111
  121
  131
  142
  154
  166
  179
Interest expense (income), $m
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
Earnings before tax, $m
  -9
  -10
  -10
  -10
  -9
  -8
  -7
  -6
  -4
  -2
  0
  2
  5
  7
  10
  14
  17
  21
  25
  30
  35
  40
  45
  52
  58
  65
  72
  80
  89
  98
  107
Tax expense, $m
  -4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  26
  29
Net income, $m
  -5
  -10
  -10
  -10
  -9
  -8
  -7
  -6
  -4
  -2
  0
  2
  3
  5
  8
  10
  13
  15
  18
  22
  25
  29
  33
  38
  42
  47
  53
  59
  65
  71
  78

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
  269
  277
  286
  296
  306
  317
  329
  342
  356
  371
  387
  403
  421
  440
  459
  480
  502
  526
  550
  576
  603
  632
  662
  694
  727
  762
  800
  838
  879
  922
  968
Adjusted assets (=assets-cash), $m
  269
  277
  286
  296
  306
  317
  329
  342
  356
  371
  387
  403
  421
  440
  459
  480
  502
  526
  550
  576
  603
  632
  662
  694
  727
  762
  800
  838
  879
  922
  968
Revenue / Adjusted assets
  1.476
  1.477
  1.476
  1.473
  1.477
  1.476
  1.477
  1.477
  1.478
  1.477
  1.475
  1.476
  1.475
  1.475
  1.477
  1.477
  1.476
  1.475
  1.476
  1.476
  1.476
  1.476
  1.476
  1.476
  1.476
  1.476
  1.475
  1.477
  1.477
  1.477
  1.475
Average production assets, $m
  100
  103
  106
  110
  114
  118
  123
  127
  133
  138
  144
  150
  157
  164
  171
  179
  187
  195
  205
  214
  224
  235
  246
  258
  271
  284
  297
  312
  327
  343
  360
Working capital, $m
  81
  96
  99
  102
  106
  110
  114
  118
  123
  128
  134
  139
  145
  152
  159
  166
  173
  182
  190
  199
  208
  218
  229
  240
  251
  263
  276
  290
  304
  319
  334
Total debt, $m
  110
  116
  122
  128
  135
  143
  151
  160
  169
  179
  190
  201
  213
  226
  239
  253
  268
  284
  300
  318
  336
  356
  376
  398
  420
  444
  469
  496
  523
  553
  583
Total liabilities, $m
  182
  188
  194
  200
  207
  215
  223
  232
  241
  251
  262
  273
  285
  298
  311
  325
  340
  356
  372
  390
  408
  428
  448
  470
  492
  516
  541
  568
  595
  625
  655
Total equity, $m
  87
  89
  92
  95
  99
  102
  106
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
  271
  284
  298
  313
Total liabilities and equity, $m
  269
  277
  286
  295
  306
  317
  329
  343
  356
  371
  387
  403
  421
  440
  459
  480
  502
  526
  550
  576
  603
  632
  662
  694
  727
  762
  799
  839
  879
  923
  968
Debt-to-equity ratio
  1.264
  1.290
  1.320
  1.340
  1.370
  1.390
  1.420
  1.440
  1.470
  1.500
  1.520
  1.540
  1.570
  1.590
  1.610
  1.630
  1.650
  1.670
  1.690
  1.710
  1.730
  1.740
  1.760
  1.770
  1.790
  1.800
  1.820
  1.830
  1.840
  1.850
  1.870
Adjusted equity ratio
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  -10
  -10
  -10
  -9
  -8
  -7
  -6
  -4
  -2
  0
  2
  3
  5
  8
  10
  13
  15
  18
  22
  25
  29
  33
  38
  42
  47
  53
  59
  65
  71
  78
Depreciation, amort., depletion, $m
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  38
  40
  42
  44
  46
  49
Funds from operations, $m
  41
  4
  5
  6
  7
  8
  10
  12
  14
  17
  19
  22
  25
  27
  31
  34
  38
  42
  46
  51
  56
  61
  66
  72
  79
  86
  93
  101
  109
  118
  127
Change in working capital, $m
  17
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
Cash from operations, $m
  24
  1
  2
  2
  3
  4
  6
  8
  9
  12
  14
  16
  18
  21
  24
  27
  30
  34
  38
  42
  46
  51
  56
  61
  67
  74
  80
  87
  95
  103
  111
Maintenance CAPEX, $m
  0
  -14
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
New CAPEX, $m
  -5
  -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
  -16
  -17
Cash from investing activities, $m
  -5
  -17
  -17
  -18
  -19
  -19
  -21
  -22
  -22
  -23
  -25
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -38
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -54
  -57
  -60
  -63
Free cash flow, $m
  19
  -16
  -16
  -16
  -16
  -15
  -15
  -14
  -13
  -12
  -10
  -9
  -8
  -7
  -6
  -4
  -2
  0
  2
  4
  7
  10
  13
  16
  20
  24
  28
  33
  37
  43
  48
Issuance/(repayment) of debt, $m
  -19
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
Issuance/(repurchase) of shares, $m
  0
  13
  13
  13
  12
  12
  11
  10
  8
  7
  5
  4
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -19
  19
  19
  20
  19
  20
  19
  19
  17
  17
  16
  15
  14
  14
  13
  14
  15
  16
  17
  18
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
Total cash flow (excl. dividends), $m
  0
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  8
  10
  13
  16
  19
  22
  26
  29
  33
  38
  43
  48
  53
  59
  65
  72
  79
Retained Cash Flow (-), $m
  4
  -13
  -13
  -13
  -12
  -12
  -11
  -10
  -8
  -7
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
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
 
  -10
  -10
  -9
  -8
  -8
  -6
  -5
  -4
  -2
  0
  0
  0
  0
  1
  3
  6
  8
  11
  14
  17
  20
  24
  28
  32
  36
  41
  46
  52
  58
  64
Discount rate, %
 
  9.80
  10.29
  10.80
  11.34
  11.91
  12.51
  13.13
  13.79
  14.48
  15.20
  15.96
  16.76
  17.60
  18.48
  19.40
  20.37
  21.39
  22.46
  23.58
  24.76
  26.00
  27.30
  28.67
  30.10
  31.61
  33.19
  34.85
  36.59
  38.42
  40.34
PV of cash for distribution, $m
 
  -9
  -8
  -7
  -6
  -4
  -3
  -2
  -1
  -1
  0
  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
  82.5
  68.4
  57.2
  48.3
  41.4
  36.0
  31.8
  28.7
  26.4
  24.8
  23.8
  23.2
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1
  23.1

The Dixie Group, Inc. is engaged in marketing, manufacturing and selling of carpet and rugs. The Company offers its products to various residential and commercial customers through its various sales forces and brands. The Company operates through the carpet and rug manufacturing segment. The Company also provides carpet and yarn related services to other manufacturers. The Company's brands include Fabrica, Masland Residential, Dixie Home, Atlas Carpet Mills, Masland Contract and Masland Hospitality. Dixie International sells its brands outside of the North American market. Fabrica markets and manufactures various residential carpet and custom rugs. Masland Contract markets and manufactures broadloom and modular carpet tile for the specified commercial marketplace. Masland Residential markets and manufactures design-driven specialty carpets and rugs for the residential marketplace. Dixie Home markets a range of tufted broadloom residential and commercial carpets.

FINANCIAL RATIOS  of  Dixie Group (DXYN)

Valuation Ratios
P/E Ratio -10.3
Price to Sales 0.1
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 2.7
Growth Rates
Sales Growth Rate -5.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.6%
Cap. Spend. - 3 Yr. Gr. Rate -14.6%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 112.6%
Total Debt to Equity 126.4%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.8%
Ret/ On Assets - 3 Yr. Avg. -0.1%
Return On Total Capital -2.4%
Ret/ On T. Cap. - 3 Yr. Avg. -1.3%
Return On Equity -5.6%
Return On Equity - 3 Yr. Avg. -3%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 23.9%
Gross Margin - 3 Yr. Avg. 24.2%
EBITDA Margin 2.5%
EBITDA Margin - 3 Yr. Avg. 3.6%
Operating Margin -1%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin -2.3%
Pre-Tax Margin - 3 Yr. Avg. -0.8%
Net Profit Margin -1.3%
Net Profit Margin - 3 Yr. Avg. -0.7%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 42.6%
Payout Ratio 0%

DXYN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DXYN stock intrinsic value calculation we used $397 million for the last fiscal year's total revenue generated by Dixie Group. The default revenue input number comes from 2016 income statement of Dixie 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 DXYN stock valuation model: a) initial revenue growth rate of 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 9.8%, whose default value for DXYN is calculated based on our internal credit rating of Dixie 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 Dixie 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 DXYN stock the variable cost ratio is equal to 76.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $101 million in the base year in the intrinsic value calculation for DXYN 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 Dixie Group.

Corporate tax rate of 27% is the nominal tax rate for Dixie 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 DXYN 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 DXYN are equal to 25.2%.

Life of production assets of 7.4 years is the average useful life of capital assets used in Dixie 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 DXYN is equal to 23.4%. 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 - $87 million for Dixie 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 16.351 million for Dixie 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 Dixie Group at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Why The Dixie Group Inc (DXYN) Could Be A Buy   [Nov-21-17 07:09PM  Simply Wall St.]
▶ Dixie Group reports 3Q loss   [Nov-09-17 05:01AM  Associated Press]
▶ Dixie Group posts 2Q profit   [Aug-04-17 03:11AM  Associated Press]
▶ The Dixie Group Reports Second Quarter 2017 Results   [Aug-03-17 05:00AM  GlobeNewswire]
▶ Top Ranked Momentum Stocks to Buy for June 23rd   [Jun-23-17 12:11PM  Zacks]
▶ Dixie Group reports 1Q loss   [May-04-17 05:12AM  Associated Press]
▶ New Strong Sell Stocks for April 3rd   [Apr-03-17 10:06AM  Zacks]
▶ Dixie Group reports 4Q loss   [05:03AM  Associated Press]
▶ The Dixie Group Reports 2016 Results   [02:00AM  GlobeNewswire]
▶ Ice Cream At 5% Alcohol By Volume   [Feb-24-17 08:35AM  Forbes]
▶ The Dixie Group Announces Masland Contract President   [Sep-15-16 06:42PM  GlobeNewswire]
▶ The Dixie Group Reports First Quarter 2016 Results   [May-03-16 06:52PM  GlobeNewswire]
▶ The Dixie Group Reports 2015 Results   [Feb-26-16 10:40AM  GlobeNewswire]
Financial statements of DXYN
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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