Intrinsic value of Fox Factory Holding - FOXF

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$29.45

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$29.45

 
Intrinsic value

$39.78

 
Up/down potential

+35%

 
Rating

buy

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

We calculate the intrinsic value of FOXF 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 1.1

 

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, %
  9.81
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
Revenue, $m
  403
  470
  543
  622
  706
  796
  890
  990
  1,095
  1,205
  1,320
  1,440
  1,565
  1,695
  1,830
  1,970
  2,116
  2,268
  2,426
  2,590
  2,760
  2,937
  3,122
  3,314
  3,514
  3,722
  3,940
  4,166
  4,403
  4,650
  4,908
Variable operating expenses, $m
 
  351
  405
  463
  525
  590
  660
  733
  810
  891
  976
  1,058
  1,149
  1,245
  1,344
  1,447
  1,555
  1,666
  1,782
  1,902
  2,027
  2,158
  2,293
  2,434
  2,581
  2,734
  2,894
  3,061
  3,234
  3,416
  3,606
Fixed operating expenses, $m
 
  58
  60
  61
  63
  64
  66
  68
  69
  71
  73
  75
  77
  79
  81
  83
  85
  87
  89
  91
  93
  96
  98
  101
  103
  106
  108
  111
  114
  117
  120
Total operating expenses, $m
  358
  409
  465
  524
  588
  654
  726
  801
  879
  962
  1,049
  1,133
  1,226
  1,324
  1,425
  1,530
  1,640
  1,753
  1,871
  1,993
  2,120
  2,254
  2,391
  2,535
  2,684
  2,840
  3,002
  3,172
  3,348
  3,533
  3,726
Operating income, $m
  46
  61
  79
  98
  119
  141
  164
  189
  215
  243
  272
  307
  339
  371
  405
  440
  477
  515
  555
  596
  639
  684
  730
  779
  829
  882
  937
  995
  1,055
  1,117
  1,183
EBITDA, $m
  55
  73
  92
  112
  134
  157
  182
  208
  236
  265
  295
  327
  360
  394
  430
  467
  506
  546
  588
  631
  676
  724
  773
  824
  877
  933
  991
  1,051
  1,114
  1,181
  1,250
Interest expense (income), $m
  2
  2
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  45
  47
  50
  53
  56
Earnings before tax, $m
  43
  58
  75
  94
  114
  135
  157
  181
  206
  232
  259
  293
  323
  354
  386
  420
  455
  491
  529
  568
  609
  652
  696
  742
  790
  840
  893
  947
  1,005
  1,064
  1,127
Tax expense, $m
  7
  16
  20
  25
  31
  36
  42
  49
  56
  63
  70
  79
  87
  96
  104
  113
  123
  133
  143
  153
  164
  176
  188
  200
  213
  227
  241
  256
  271
  287
  304
Net income, $m
  36
  43
  55
  69
  83
  98
  115
  132
  150
  169
  189
  214
  236
  259
  282
  307
  332
  359
  386
  415
  445
  476
  508
  542
  577
  613
  652
  692
  733
  777
  822

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
  336
  351
  406
  465
  527
  594
  665
  740
  818
  900
  986
  1,075
  1,169
  1,266
  1,367
  1,471
  1,581
  1,694
  1,812
  1,934
  2,061
  2,194
  2,331
  2,475
  2,624
  2,780
  2,942
  3,112
  3,288
  3,473
  3,666
Adjusted assets (=assets-cash), $m
  301
  351
  406
  465
  527
  594
  665
  740
  818
  900
  986
  1,075
  1,169
  1,266
  1,367
  1,471
  1,581
  1,694
  1,812
  1,934
  2,061
  2,194
  2,331
  2,475
  2,624
  2,780
  2,942
  3,112
  3,288
  3,473
  3,666
Revenue / Adjusted assets
  1.339
  1.339
  1.337
  1.338
  1.340
  1.340
  1.338
  1.338
  1.339
  1.339
  1.339
  1.340
  1.339
  1.339
  1.339
  1.339
  1.338
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
  1.339
Average production assets, $m
  89
  104
  120
  137
  156
  176
  197
  219
  242
  266
  292
  318
  346
  375
  404
  435
  468
  501
  536
  572
  610
  649
  690
  732
  777
  823
  871
  921
  973
  1,028
  1,085
Working capital, $m
  96
  76
  87
  100
  114
  128
  143
  159
  176
  194
  213
  232
  252
  273
  295
  317
  341
  365
  391
  417
  444
  473
  503
  534
  566
  599
  634
  671
  709
  749
  790
Total debt, $m
  67
  87
  114
  143
  173
  206
  241
  277
  315
  355
  397
  441
  486
  534
  583
  634
  687
  743
  800
  860
  922
  986
  1,054
  1,124
  1,197
  1,273
  1,352
  1,434
  1,521
  1,611
  1,705
Total liabilities, $m
  151
  171
  198
  227
  257
  290
  325
  361
  399
  439
  481
  525
  570
  618
  667
  718
  771
  827
  884
  944
  1,006
  1,070
  1,138
  1,208
  1,281
  1,357
  1,436
  1,518
  1,605
  1,695
  1,789
Total equity, $m
  185
  180
  208
  238
  270
  304
  340
  379
  419
  461
  505
  551
  598
  648
  700
  753
  809
  867
  928
  990
  1,055
  1,123
  1,194
  1,267
  1,344
  1,423
  1,506
  1,593
  1,684
  1,778
  1,877
Total liabilities and equity, $m
  336
  351
  406
  465
  527
  594
  665
  740
  818
  900
  986
  1,076
  1,168
  1,266
  1,367
  1,471
  1,580
  1,694
  1,812
  1,934
  2,061
  2,193
  2,332
  2,475
  2,625
  2,780
  2,942
  3,111
  3,289
  3,473
  3,666
Debt-to-equity ratio
  0.362
  0.490
  0.550
  0.600
  0.640
  0.680
  0.710
  0.730
  0.750
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
  0.860
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.910
  0.910
Adjusted equity ratio
  0.498
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  36
  43
  55
  69
  83
  98
  115
  132
  150
  169
  189
  214
  236
  259
  282
  307
  332
  359
  386
  415
  445
  476
  508
  542
  577
  613
  652
  692
  733
  777
  822
Depreciation, amort., depletion, $m
  9
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  20
  21
  23
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  48
  50
  53
  56
  60
  63
  67
Funds from operations, $m
  30
  55
  68
  83
  98
  115
  133
  151
  171
  191
  213
  234
  257
  282
  307
  333
  361
  389
  419
  450
  482
  515
  550
  587
  624
  664
  705
  748
  793
  840
  889
Change in working capital, $m
  -9
  11
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
Cash from operations, $m
  39
  46
  56
  70
  85
  101
  117
  135
  154
  174
  194
  214
  237
  261
  285
  311
  337
  365
  394
  423
  455
  487
  521
  556
  592
  630
  670
  712
  755
  800
  847
Maintenance CAPEX, $m
  0
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -13
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -45
  -48
  -50
  -53
  -56
  -60
  -63
New CAPEX, $m
  -12
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
Cash from investing activities, $m
  -12
  -20
  -22
  -24
  -27
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -48
  -50
  -53
  -56
  -59
  -63
  -66
  -69
  -73
  -76
  -81
  -84
  -89
  -94
  -98
  -103
  -108
  -115
  -120
Free cash flow, $m
  27
  26
  34
  45
  58
  71
  86
  101
  117
  135
  153
  170
  190
  211
  232
  255
  278
  303
  328
  354
  382
  410
  440
  471
  503
  537
  572
  608
  646
  686
  727
Issuance/(repayment) of debt, $m
  11
  24
  27
  29
  31
  33
  35
  36
  38
  40
  42
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
Issuance/(repurchase) of shares, $m
  -8
  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  
  2
  24
  27
  29
  31
  33
  35
  36
  38
  40
  42
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
Total cash flow (excl. dividends), $m
  28
  50
  61
  74
  88
  104
  120
  137
  156
  175
  195
  214
  235
  258
  282
  306
  331
  358
  385
  414
  444
  475
  507
  541
  576
  613
  651
  691
  732
  776
  821
Retained Cash Flow (-), $m
  -33
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -73
  -76
  -80
  -83
  -87
  -90
  -94
  -99
Prev. year cash balance distribution, $m
 
  31
  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
 
  55
  33
  44
  56
  70
  84
  99
  115
  133
  151
  168
  188
  208
  230
  252
  276
  300
  325
  351
  379
  407
  437
  467
  499
  533
  568
  604
  642
  681
  723
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
 
  53
  30
  38
  46
  54
  61
  67
  72
  76
  79
  80
  80
  79
  77
  74
  70
  65
  60
  54
  48
  42
  36
  31
  25
  21
  17
  13
  10
  7
  5
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

Fox Factory Holding Corp. designs, engineers, manufactures, and markets ride dynamics products worldwide. The company offers front fork and rear suspension products for mountain bikes and road bikes; and powered vehicle products for side-by-side vehicles, on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles. It also provides mountain and road bike wheels, and other performance cycling components, including cranks, bars, stems, and seat posts, as well as aftermarket products to retailers and distributors. Fox Factory Holding Corp. was incorporated in 2007 and is headquartered in Scotts Valley, California.

FINANCIAL RATIOS  of  Fox Factory Holding (FOXF)

Valuation Ratios
P/E Ratio 30.2
Price to Sales 2.7
Price to Book 5.9
Price to Tangible Book
Price to Cash Flow 27.9
Price to Free Cash Flow 40.2
Growth Rates
Sales Growth Rate 9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.1%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 34.1%
Total Debt to Equity 36.2%
Interest Coverage 23
Management Effectiveness
Return On Assets 12.3%
Ret/ On Assets - 3 Yr. Avg. 11.9%
Return On Total Capital 15.9%
Ret/ On T. Cap. - 3 Yr. Avg. 16.4%
Return On Equity 21.4%
Return On Equity - 3 Yr. Avg. 21.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 31.3%
Gross Margin - 3 Yr. Avg. 30.8%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 13.7%
Operating Margin 11.2%
Oper. Margin - 3 Yr. Avg. 10.8%
Pre-Tax Margin 10.7%
Pre-Tax Margin - 3 Yr. Avg. 10.3%
Net Profit Margin 8.9%
Net Profit Margin - 3 Yr. Avg. 8.3%
Effective Tax Rate 16.3%
Eff/ Tax Rate - 3 Yr. Avg. 20.1%
Payout Ratio 0%

FOXF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FOXF stock intrinsic value calculation we used $403 million for the last fiscal year's total revenue generated by Fox Factory Holding. The default revenue input number comes from 2016 income statement of Fox Factory Holding. 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 FOXF stock valuation model: a) initial revenue growth rate of 16.7% 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 FOXF is calculated based on our internal credit rating of Fox Factory Holding, 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 Fox Factory Holding.
    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 FOXF stock the variable cost ratio is equal to 74.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $57 million in the base year in the intrinsic value calculation for FOXF 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 Fox Factory Holding.

Corporate tax rate of 27% is the nominal tax rate for Fox Factory Holding. 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 FOXF 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 FOXF are equal to 22.1%.

Life of production assets of 16.3 years is the average useful life of capital assets used in Fox Factory Holding 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 FOXF is equal to 16.1%. 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 - $185 million for Fox Factory Holding - 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 37.282 million for Fox Factory Holding 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 Fox Factory Holding at the current share price and the inputted number of shares is $1.1 billion.


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Stock chart of FOXF Financial statements of FOXF
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