Intrinsic value of Fox Factory Holding - FOXF

Previous Close

$38.65

  Intrinsic Value

$38.63

stock screener

  Rating & Target

hold

-0%

Previous close

$38.65

 
Intrinsic value

$38.63

 
Up/down potential

-0%

 
Rating

hold

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

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, %
  9.81
  16.50
  15.35
  14.32
  13.38
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
Revenue, $m
  403
  469
  542
  619
  702
  790
  883
  981
  1,084
  1,192
  1,305
  1,423
  1,545
  1,672
  1,805
  1,943
  2,086
  2,235
  2,389
  2,550
  2,717
  2,891
  3,072
  3,260
  3,456
  3,661
  3,874
  4,096
  4,329
  4,571
  4,824
Variable operating expenses, $m
 
  351
  404
  461
  521
  586
  655
  727
  802
  882
  964
  1,045
  1,135
  1,229
  1,326
  1,427
  1,532
  1,641
  1,755
  1,873
  1,996
  2,124
  2,256
  2,395
  2,539
  2,689
  2,846
  3,009
  3,180
  3,358
  3,544
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
  464
  522
  584
  650
  721
  795
  871
  953
  1,037
  1,120
  1,212
  1,308
  1,407
  1,510
  1,617
  1,728
  1,844
  1,964
  2,089
  2,220
  2,354
  2,496
  2,642
  2,795
  2,954
  3,120
  3,294
  3,475
  3,664
Operating income, $m
  46
  60
  78
  97
  118
  139
  162
  187
  213
  239
  268
  303
  333
  365
  398
  433
  469
  506
  545
  586
  628
  671
  717
  765
  814
  866
  920
  976
  1,035
  1,097
  1,161
EBITDA, $m
  55
  73
  91
  111
  133
  156
  180
  206
  233
  261
  291
  322
  354
  388
  423
  459
  497
  537
  578
  620
  664
  711
  759
  809
  861
  915
  972
  1,032
  1,094
  1,158
  1,226
Interest expense (income), $m
  2
  2
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
Earnings before tax, $m
  43
  58
  75
  93
  113
  133
  155
  179
  203
  229
  255
  289
  318
  349
  380
  413
  447
  483
  520
  558
  598
  640
  683
  728
  776
  825
  876
  930
  986
  1,044
  1,105
Tax expense, $m
  7
  16
  20
  25
  30
  36
  42
  48
  55
  62
  69
  78
  86
  94
  103
  111
  121
  130
  140
  151
  161
  173
  184
  197
  209
  223
  237
  251
  266
  282
  298
Net income, $m
  36
  42
  55
  68
  82
  97
  113
  130
  148
  167
  186
  211
  232
  254
  277
  301
  326
  352
  379
  407
  437
  467
  499
  532
  566
  602
  640
  679
  720
  762
  807

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
  404
  462
  524
  590
  660
  733
  810
  890
  975
  1,062
  1,154
  1,249
  1,348
  1,451
  1,558
  1,669
  1,784
  1,904
  2,029
  2,159
  2,294
  2,435
  2,581
  2,734
  2,893
  3,059
  3,233
  3,414
  3,603
Adjusted assets (=assets-cash), $m
  301
  351
  404
  462
  524
  590
  660
  733
  810
  890
  975
  1,062
  1,154
  1,249
  1,348
  1,451
  1,558
  1,669
  1,784
  1,904
  2,029
  2,159
  2,294
  2,435
  2,581
  2,734
  2,893
  3,059
  3,233
  3,414
  3,603
Revenue / Adjusted assets
  1.339
  1.336
  1.342
  1.340
  1.340
  1.339
  1.338
  1.338
  1.338
  1.339
  1.338
  1.340
  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
  1.339
  1.339
  1.339
  1.339
  1.339
Average production assets, $m
  89
  104
  120
  137
  155
  175
  195
  217
  240
  263
  288
  314
  341
  370
  399
  429
  461
  494
  528
  564
  600
  639
  679
  720
  764
  809
  856
  905
  957
  1,010
  1,066
Working capital, $m
  96
  76
  87
  100
  113
  127
  142
  158
  175
  192
  210
  229
  249
  269
  291
  313
  336
  360
  385
  411
  437
  465
  495
  525
  556
  589
  624
  660
  697
  736
  777
Total debt, $m
  67
  87
  113
  142
  172
  204
  238
  274
  311
  351
  392
  434
  479
  526
  574
  624
  676
  730
  787
  845
  906
  970
  1,035
  1,104
  1,176
  1,250
  1,328
  1,409
  1,494
  1,582
  1,674
Total liabilities, $m
  151
  171
  197
  226
  256
  288
  322
  358
  395
  435
  476
  518
  563
  610
  658
  708
  760
  814
  871
  929
  990
  1,054
  1,119
  1,188
  1,260
  1,334
  1,412
  1,493
  1,578
  1,666
  1,758
Total equity, $m
  185
  180
  207
  237
  268
  302
  338
  375
  415
  456
  499
  544
  591
  639
  690
  743
  798
  854
  914
  975
  1,039
  1,105
  1,175
  1,247
  1,322
  1,400
  1,481
  1,566
  1,655
  1,748
  1,845
Total liabilities and equity, $m
  336
  351
  404
  463
  524
  590
  660
  733
  810
  891
  975
  1,062
  1,154
  1,249
  1,348
  1,451
  1,558
  1,668
  1,785
  1,904
  2,029
  2,159
  2,294
  2,435
  2,582
  2,734
  2,893
  3,059
  3,233
  3,414
  3,603
Debt-to-equity ratio
  0.362
  0.490
  0.550
  0.600
  0.640
  0.680
  0.700
  0.730
  0.750
  0.770
  0.780
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.850
  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
  42
  55
  68
  82
  97
  113
  130
  148
  167
  186
  211
  232
  254
  277
  301
  326
  352
  379
  407
  437
  467
  499
  532
  566
  602
  640
  679
  720
  762
  807
Depreciation, amort., depletion, $m
  9
  12
  13
  14
  15
  17
  18
  19
  21
  22
  23
  19
  21
  23
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
Funds from operations, $m
  30
  55
  68
  82
  98
  114
  131
  149
  169
  189
  210
  230
  253
  277
  302
  328
  355
  383
  412
  442
  473
  506
  540
  576
  613
  652
  692
  734
  778
  824
  872
Change in working capital, $m
  -9
  11
  12
  12
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
Cash from operations, $m
  39
  44
  56
  70
  84
  100
  116
  134
  152
  171
  192
  211
  233
  257
  281
  306
  332
  359
  387
  416
  447
  478
  511
  546
  581
  619
  658
  698
  741
  785
  832
Maintenance CAPEX, $m
  0
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
New CAPEX, $m
  -12
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -54
  -56
Cash from investing activities, $m
  -12
  -20
  -22
  -24
  -26
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -58
  -61
  -64
  -68
  -72
  -75
  -79
  -84
  -87
  -92
  -97
  -102
  -107
  -113
  -118
Free cash flow, $m
  27
  24
  34
  45
  57
  71
  85
  100
  116
  133
  151
  168
  187
  207
  229
  251
  274
  298
  322
  348
  375
  403
  432
  462
  494
  527
  561
  597
  634
  673
  714
Issuance/(repayment) of debt, $m
  18
  24
  26
  28
  30
  32
  34
  36
  38
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
  72
  75
  78
  81
  85
  88
  92
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
  26
  28
  30
  32
  34
  36
  38
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
  72
  75
  78
  81
  85
  88
  92
Total cash flow (excl. dividends), $m
  28
  48
  60
  73
  88
  103
  119
  136
  154
  172
  192
  211
  232
  254
  277
  301
  326
  352
  379
  407
  436
  466
  498
  531
  565
  601
  639
  678
  719
  761
  806
Retained Cash Flow (-), $m
  -33
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -97
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
 
  53
  33
  44
  56
  69
  83
  98
  114
  131
  149
  166
  185
  205
  226
  248
  271
  295
  320
  345
  372
  400
  429
  459
  490
  523
  557
  593
  630
  669
  709
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
 
  51
  30
  38
  46
  54
  60
  66
  71
  75
  78
  79
  79
  78
  76
  73
  69
  64
  59
  53
  47
  41
  36
  30
  25
  20
  16
  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. is engaged in the manufacturing, sale and service of ride dynamics products. The Company's products fall into two categories: bikes, and powered vehicles, including side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles (ATVs), snowmobiles, specialty vehicles and applications, and motorcycles. The Company's brands include FOX, FOX RACING SHOX and RACE FACE. The Company's products include 34 Factory Series FLOAT FIT4, which provides external adjustability with its fourth-generation FOX Isolated Technology and closed-cartridge damper, and includes a self-adjusting negative chamber air spring; X2 technology, utilized in its Factory Series FLOAT and DH rear shocks; PODIUM Internal Bypass, and X2 technology utilized in its 2.5 PODIUM shocks for side-by-sides that feature high and low speed rebound adjustment, high and low speed compression adjustment, and a dual-rate spring for the rear shocks.

FINANCIAL RATIOS  of  Fox Factory Holding (FOXF)

Valuation Ratios
P/E Ratio 39.6
Price to Sales 3.5
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 36.6
Price to Free Cash Flow 52.8
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 16.5% 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 37.838 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 $1.5 billion.

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COMPANY NEWS

▶ Fox Factory Earns Technical Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Fox Factory Holding Corp. Recognizes Director Contributions   [Dec-21-17 04:05PM  GlobeNewswire]
▶ Fox Factory Holding tops Street 3Q forecasts   [Nov-01-17 06:57PM  Associated Press]
▶ Auto Industry Stock Outlook - Sept. 2017   [Aug-31-17 02:27PM  Zacks]
▶ Stock Indexes Up, As Market Shows A Different Face   [Aug-04-17 12:06PM  Investor's Business Daily]
▶ Fox Factory Holding tops Street 2Q forecasts   [03:15AM  Associated Press]
▶ New Strong Buy Stocks for July 17th   [Jul-17-17 09:15AM  Zacks]
▶ Winning Mutual Fund Focuses On Leading Stocks Like Autohome, MarketAxess   [Jul-07-17 02:43PM  Investor's Business Daily]
▶ Top Fund Managers Are Buying This Breakout 'Shock' Stock   [Jun-30-17 04:19PM  Investor's Business Daily]
▶ Leisure Industry Leader Racks Up New Breakout   [Jun-27-17 12:04PM  Investor's Business Daily]
▶ Stocks Climb Off Lows; Nvidia Sees Unusually Heavy Volume Again   [Jun-26-17 01:26PM  Investor's Business Daily]
▶ Auto Industry Stock Outlook - May 2017   [May-08-17 03:52PM  Zacks]
▶ Fox Factory Sees Its Composite Rating Rise To 98   [11:28AM  Investor's Business Daily]
▶ Fox Factory Holding beats Street 1Q forecasts   [May-03-17 07:51PM  Associated Press]
Financial statements of FOXF
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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