Intrinsic value of Dixie Group - DXYN

Previous Close

$2.27

  Intrinsic Value

$3.27

stock screener

  Rating & Target

buy

+44%

Previous close

$2.27

 
Intrinsic value

$3.27

 
Up/down potential

+44%

 
Rating

buy

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
  3.80
  3.92
  4.03
  4.13
  4.21
  4.29
  4.36
  4.43
  4.48
  4.54
  4.58
  4.62
  4.66
  4.69
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
Revenue, $m
  397
  428
  444
  462
  481
  502
  523
  546
  570
  596
  623
  651
  681
  713
  747
  782
  819
  858
  899
  943
  988
  1,036
  1,087
  1,140
  1,196
  1,254
  1,316
  1,381
  1,449
  1,520
  1,595
Variable operating expenses, $m
 
  217
  225
  234
  244
  254
  265
  277
  289
  302
  315
  329
  344
  361
  377
  395
  414
  434
  455
  477
  500
  524
  549
  576
  604
  634
  665
  698
  732
  769
  807
Fixed operating expenses, $m
 
  207
  212
  217
  221
  226
  231
  236
  242
  247
  252
  258
  264
  269
  275
  281
  288
  294
  300
  307
  314
  321
  328
  335
  342
  350
  357
  365
  373
  382
  390
Total operating expenses, $m
  401
  424
  437
  451
  465
  480
  496
  513
  531
  549
  567
  587
  608
  630
  652
  676
  702
  728
  755
  784
  814
  845
  877
  911
  946
  984
  1,022
  1,063
  1,105
  1,151
  1,197
Operating income, $m
  -3
  3
  7
  11
  16
  21
  27
  33
  40
  47
  55
  64
  73
  83
  94
  105
  117
  130
  144
  159
  175
  192
  210
  229
  249
  270
  293
  317
  343
  370
  399
EBITDA, $m
  11
  14
  18
  23
  28
  34
  40
  47
  54
  62
  71
  80
  90
  100
  112
  124
  137
  151
  166
  182
  199
  217
  236
  256
  278
  301
  325
  351
  378
  407
  437
Interest expense (income), $m
  5
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
Earnings before tax, $m
  -9
  -4
  0
  3
  7
  12
  17
  23
  29
  36
  43
  51
  60
  69
  79
  89
  100
  112
  125
  139
  154
  169
  186
  204
  222
  242
  264
  286
  310
  335
  362
Tax expense, $m
  -4
  0
  0
  1
  2
  3
  5
  6
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  34
  38
  41
  46
  50
  55
  60
  65
  71
  77
  84
  91
  98
Net income, $m
  -5
  -4
  0
  2
  5
  9
  13
  17
  21
  26
  31
  37
  44
  50
  57
  65
  73
  82
  91
  102
  112
  124
  136
  149
  162
  177
  192
  209
  226
  245
  264

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
  293
  305
  317
  330
  344
  359
  375
  391
  409
  427
  447
  467
  489
  512
  536
  562
  589
  617
  647
  678
  711
  745
  782
  820
  860
  903
  947
  994
  1,043
  1,094
Adjusted assets (=assets-cash), $m
  269
  293
  305
  317
  330
  344
  359
  375
  391
  409
  427
  447
  467
  489
  512
  536
  562
  589
  617
  647
  678
  711
  745
  782
  820
  860
  903
  947
  994
  1,043
  1,094
Revenue / Adjusted assets
  1.476
  1.461
  1.456
  1.457
  1.458
  1.459
  1.457
  1.456
  1.458
  1.457
  1.459
  1.456
  1.458
  1.458
  1.459
  1.459
  1.457
  1.457
  1.457
  1.457
  1.457
  1.457
  1.459
  1.458
  1.459
  1.458
  1.457
  1.458
  1.458
  1.457
  1.458
Average production assets, $m
  100
  103
  107
  111
  116
  121
  126
  132
  137
  144
  150
  157
  164
  172
  180
  188
  197
  207
  217
  227
  238
  250
  262
  275
  288
  302
  317
  333
  349
  366
  385
Working capital, $m
  81
  99
  103
  107
  111
  116
  121
  126
  132
  138
  144
  150
  157
  165
  172
  181
  189
  198
  208
  218
  228
  239
  251
  263
  276
  290
  304
  319
  335
  351
  369
Total debt, $m
  110
  141
  149
  158
  167
  177
  188
  199
  211
  224
  237
  251
  266
  282
  298
  316
  334
  353
  374
  395
  418
  441
  466
  492
  520
  549
  579
  611
  645
  680
  717
Total liabilities, $m
  182
  211
  219
  228
  238
  248
  258
  270
  282
  294
  308
  322
  337
  352
  369
  386
  405
  424
  444
  466
  488
  512
  537
  563
  590
  619
  650
  682
  715
  751
  788
Total equity, $m
  87
  82
  85
  89
  92
  96
  100
  105
  110
  114
  120
  125
  131
  137
  143
  150
  157
  165
  173
  181
  190
  199
  209
  219
  230
  241
  253
  265
  278
  292
  306
Total liabilities and equity, $m
  269
  293
  304
  317
  330
  344
  358
  375
  392
  408
  428
  447
  468
  489
  512
  536
  562
  589
  617
  647
  678
  711
  746
  782
  820
  860
  903
  947
  993
  1,043
  1,094
Debt-to-equity ratio
  1.264
  1.710
  1.740
  1.780
  1.810
  1.840
  1.870
  1.900
  1.930
  1.950
  1.980
  2.010
  2.030
  2.060
  2.080
  2.100
  2.120
  2.140
  2.160
  2.180
  2.200
  2.220
  2.230
  2.250
  2.260
  2.280
  2.290
  2.310
  2.320
  2.330
  2.340
Adjusted equity ratio
  0.323
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  -4
  0
  2
  5
  9
  13
  17
  21
  26
  31
  37
  44
  50
  57
  65
  73
  82
  91
  102
  112
  124
  136
  149
  162
  177
  192
  209
  226
  245
  264
Depreciation, amort., depletion, $m
  14
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
  38
Funds from operations, $m
  41
  7
  11
  14
  18
  22
  26
  30
  35
  41
  47
  53
  60
  67
  75
  84
  93
  103
  113
  124
  136
  149
  162
  176
  191
  207
  224
  242
  261
  281
  303
Change in working capital, $m
  17
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
Cash from operations, $m
  24
  3
  7
  10
  13
  17
  21
  25
  30
  35
  41
  47
  53
  60
  68
  76
  84
  94
  104
  114
  125
  137
  150
  164
  178
  194
  210
  227
  245
  265
  286
Maintenance CAPEX, $m
  0
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
New CAPEX, $m
  -5
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
Cash from investing activities, $m
  -5
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -40
  -43
  -45
  -48
  -49
  -52
  -55
Free cash flow, $m
  19
  -10
  -7
  -5
  -3
  0
  4
  7
  11
  15
  20
  25
  30
  36
  42
  49
  57
  65
  73
  82
  92
  102
  113
  125
  137
  151
  165
  180
  196
  213
  231
Issuance/(repayment) of debt, $m
  -19
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
Issuance/(repurchase) of shares, $m
  0
  7
  4
  1
  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  
  -19
  14
  12
  10
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
Total cash flow (excl. dividends), $m
  0
  4
  5
  5
  7
  10
  14
  18
  23
  28
  33
  39
  45
  52
  59
  67
  75
  84
  93
  103
  114
  126
  138
  151
  165
  180
  195
  212
  229
  248
  268
Retained Cash Flow (-), $m
  4
  -7
  -4
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
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
 
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
Cash available for distribution, $m
 
  -3
  1
  1
  3
  6
  10
  14
  18
  23
  28
  33
  39
  46
  53
  60
  68
  76
  85
  95
  106
  117
  128
  141
  154
  168
  183
  199
  216
  234
  253
Discount rate, %
 
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
 
  -3
  1
  1
  2
  3
  5
  5
  6
  6
  6
  6
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  88.9
  83.5
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0

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 -7.3
Price to Sales 0.1
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 1.5
Price to Free Cash Flow 1.9
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 $412 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 3.8% 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 10.9%, 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 50.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $203 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 5.4% 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 0.2%.

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 24.1%.

Life of production assets of 10 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 23.1%. 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 - $79 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 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 $0.0 billion.

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COMPANY NEWS

▶ The Dixie Group Incs (NASDAQ:DXYN) Profit Outlook   [May-15-18 06:35PM  Simply Wall St.]
▶ Dixie Group: 1Q Earnings Snapshot   [May-03-18 05:03AM  Associated Press]
▶ New Strong Sell Stocks for March 5th   [Mar-05-18 08:48AM  Zacks]
▶ Dixie Group reports 4Q loss   [Mar-01-18 05:51AM  Associated Press]
▶ The Dixie Group Reports 2017 Results   [05:00AM  GlobeNewswire]
▶ 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]
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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