Intrinsic value of Dixie Group - DXYN

Previous Close

$3.98

  Intrinsic Value

$1.37

stock screener

  Rating & Target

str. sell

-66%

  Value-price divergence*

+9%

Previous close

$3.98

 
Intrinsic value

$1.37

 
Up/down potential

-66%

 
Rating

str. sell

 
Value-price divergence*

+9%

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

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

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, %
  -5.92
  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
  397
  405
  414
  425
  437
  450
  465
  480
  498
  516
  536
  557
  580
  604
  629
  656
  685
  716
  748
  782
  818
  856
  896
  938
  982
  1,029
  1,078
  1,130
  1,185
  1,242
  1,302
Variable operating expenses, $m
 
  308
  315
  323
  332
  342
  354
  366
  379
  393
  408
  423
  441
  459
  478
  499
  521
  544
  569
  594
  622
  651
  681
  713
  747
  782
  820
  859
  901
  944
  990
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
  412
  421
  432
  443
  456
  471
  486
  502
  519
  537
  556
  577
  598
  621
  645
  671
  698
  727
  755
  788
  821
  855
  891
  930
  969
  1,012
  1,056
  1,103
  1,151
  1,202
Operating income, $m
  -3
  -7
  -7
  -7
  -7
  -7
  -6
  -5
  -4
  -3
  -1
  1
  3
  6
  8
  11
  14
  18
  22
  26
  31
  36
  41
  47
  53
  59
  67
  74
  82
  91
  100
EBITDA, $m
  11
  7
  7
  8
  8
  9
  10
  11
  13
  15
  17
  20
  23
  26
  30
  33
  38
  42
  47
  53
  58
  65
  71
  79
  86
  94
  103
  113
  123
  133
  145
Interest expense (income), $m
  5
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
Earnings before tax, $m
  -9
  -11
  -12
  -12
  -12
  -12
  -12
  -11
  -10
  -9
  -8
  -6
  -5
  -3
  0
  2
  5
  8
  11
  15
  19
  23
  27
  32
  38
  44
  50
  56
  64
  71
  79
Tax expense, $m
  -4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  17
  19
  21
Net income, $m
  -5
  -11
  -12
  -12
  -12
  -12
  -12
  -11
  -10
  -9
  -8
  -6
  -5
  -3
  0
  1
  3
  6
  8
  11
  14
  17
  20
  24
  28
  32
  36
  41
  46
  52
  58

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
  274
  281
  288
  296
  305
  315
  326
  337
  350
  363
  377
  393
  409
  426
  445
  464
  485
  507
  530
  554
  580
  607
  635
  665
  697
  730
  766
  803
  841
  882
Adjusted assets (=assets-cash), $m
  269
  274
  281
  288
  296
  305
  315
  326
  337
  350
  363
  377
  393
  409
  426
  445
  464
  485
  507
  530
  554
  580
  607
  635
  665
  697
  730
  766
  803
  841
  882
Revenue / Adjusted assets
  1.476
  1.478
  1.473
  1.476
  1.476
  1.475
  1.476
  1.472
  1.478
  1.474
  1.477
  1.477
  1.476
  1.477
  1.477
  1.474
  1.476
  1.476
  1.475
  1.475
  1.477
  1.476
  1.476
  1.477
  1.477
  1.476
  1.477
  1.475
  1.476
  1.477
  1.476
Average production assets, $m
  100
  102
  104
  107
  110
  113
  117
  121
  125
  130
  135
  140
  146
  152
  159
  165
  173
  180
  188
  197
  206
  216
  226
  236
  248
  259
  272
  285
  299
  313
  328
Working capital, $m
  81
  95
  97
  99
  102
  105
  109
  112
  116
  121
  125
  130
  136
  141
  147
  154
  160
  167
  175
  183
  191
  200
  210
  219
  230
  241
  252
  264
  277
  291
  305
Total debt, $m
  110
  114
  118
  123
  128
  134
  141
  148
  156
  165
  174
  183
  194
  205
  217
  229
  242
  256
  271
  287
  303
  320
  339
  358
  379
  400
  423
  446
  471
  498
  525
Total liabilities, $m
  182
  186
  190
  195
  200
  206
  213
  220
  228
  237
  246
  255
  266
  277
  289
  301
  314
  328
  343
  359
  375
  392
  411
  430
  451
  472
  495
  518
  543
  570
  597
Total equity, $m
  87
  89
  91
  93
  96
  98
  102
  105
  109
  113
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  187
  196
  205
  215
  225
  236
  247
  259
  272
  285
Total liabilities and equity, $m
  269
  275
  281
  288
  296
  304
  315
  325
  337
  350
  363
  377
  393
  409
  427
  445
  464
  485
  507
  530
  554
  579
  607
  635
  666
  697
  731
  765
  802
  842
  882
Debt-to-equity ratio
  1.264
  1.280
  1.300
  1.320
  1.340
  1.360
  1.390
  1.410
  1.430
  1.460
  1.480
  1.510
  1.530
  1.550
  1.570
  1.590
  1.620
  1.640
  1.660
  1.680
  1.690
  1.710
  1.730
  1.750
  1.760
  1.780
  1.790
  1.800
  1.820
  1.830
  1.840
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
  -11
  -12
  -12
  -12
  -12
  -12
  -11
  -10
  -9
  -8
  -6
  -5
  -3
  0
  1
  3
  6
  8
  11
  14
  17
  20
  24
  28
  32
  36
  41
  46
  52
  58
Depreciation, amort., depletion, $m
  14
  14
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
Funds from operations, $m
  41
  3
  3
  3
  3
  4
  4
  6
  7
  9
  11
  13
  15
  18
  21
  24
  27
  30
  34
  37
  41
  46
  51
  56
  61
  67
  73
  80
  87
  94
  102
Change in working capital, $m
  17
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
Cash from operations, $m
  24
  1
  0
  0
  0
  0
  1
  2
  3
  4
  6
  8
  10
  12
  15
  17
  20
  23
  26
  29
  33
  37
  41
  46
  51
  56
  62
  68
  74
  81
  88
Maintenance CAPEX, $m
  0
  -14
  -14
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
New CAPEX, $m
  -5
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
Cash from investing activities, $m
  -5
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -22
  -23
  -23
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -39
  -42
  -43
  -45
  -47
  -50
  -52
  -54
  -57
Free cash flow, $m
  19
  -15
  -16
  -17
  -17
  -18
  -18
  -18
  -18
  -17
  -17
  -16
  -15
  -14
  -12
  -11
  -10
  -8
  -7
  -5
  -3
  0
  2
  5
  8
  11
  14
  18
  22
  26
  31
Issuance/(repayment) of debt, $m
  -19
  4
  4
  5
  5
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
Issuance/(repurchase) of shares, $m
  0
  13
  14
  14
  15
  15
  15
  15
  14
  13
  12
  11
  10
  8
  6
  4
  3
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -19
  17
  18
  19
  20
  21
  22
  22
  22
  21
  21
  21
  20
  19
  18
  16
  16
  15
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
Total cash flow (excl. dividends), $m
  0
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  8
  11
  14
  17
  20
  24
  28
  32
  37
  42
  47
  52
  58
Retained Cash Flow (-), $m
  4
  -13
  -14
  -14
  -15
  -15
  -15
  -15
  -14
  -13
  -12
  -11
  -10
  -8
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
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
 
  -11
  -12
  -12
  -12
  -12
  -11
  -11
  -10
  -9
  -8
  -6
  -4
  -2
  0
  0
  0
  0
  1
  3
  6
  9
  12
  15
  18
  22
  26
  30
  35
  40
  45
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
 
  -10
  -9
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  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
  67.5
  55.0
  44.8
  36.7
  30.2
  25.1
  21.1
  18.0
  15.6
  13.7
  12.4
  11.4
  10.7
  10.2
  9.9
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8
  9.8

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 -12.8
Price to Sales 0.2
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 2.7
Price to Free Cash Flow 3.4
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 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 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 15.386 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.

RELATED COMPANIES Price Int.Val. Rating
TILE Interface 21.95 20.55  hold
MHK Mohawk Industr 260.00 280.09  hold
LOW Lowe's 80.75 68.03  hold
KNL Knoll Inc. 19.85 31.15  str.buy
ETH Ethan Allen In 31.00 24.97  hold
TPX Tempur Sealy I 66.13 10.43  str.sell

COMPANY NEWS

▶ 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]
▶ Dixie Group Inc (DXYN): Are Hedge Funds Right About This Stock?   [Dec-09  01:49AM  at Insider Monkey]
▶ Is SL Industries, Inc. (SLI) A Good Stock To Buy?   [Nov-24  05:41PM  at Insider Monkey]
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.