Intrinsic value of Chanticleer Holdings - HOTR

Previous Close

$2.10

  Intrinsic Value

$54.07

stock screener

  Rating & Target

str. buy

+999%

Previous close

$2.10

 
Intrinsic value

$54.07

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of HOTR 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 0.0

 

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, %
  20.00
  20.00
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
Revenue, $m
  42
  50
  60
  70
  81
  93
  106
  120
  134
  150
  166
  183
  201
  219
  239
  259
  280
  301
  324
  348
  372
  397
  424
  451
  480
  509
  540
  573
  606
  641
  678
Variable operating expenses, $m
 
  21
  25
  29
  34
  39
  44
  49
  55
  61
  68
  73
  80
  88
  96
  104
  112
  121
  130
  139
  149
  159
  170
  181
  192
  204
  216
  229
  243
  257
  271
Fixed operating expenses, $m
 
  28
  28
  29
  30
  31
  31
  32
  33
  34
  35
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  53
  54
  55
  57
Total operating expenses, $m
  44
  49
  53
  58
  64
  70
  75
  81
  88
  95
  103
  108
  116
  125
  134
  143
  152
  162
  172
  182
  193
  204
  216
  229
  241
  254
  267
  282
  297
  312
  328
Operating income, $m
  -3
  1
  6
  12
  18
  24
  31
  39
  46
  55
  64
  74
  84
  94
  105
  116
  128
  140
  152
  165
  179
  193
  208
  223
  239
  255
  273
  291
  310
  329
  350
EBITDA, $m
  -1
  3
  8
  14
  20
  27
  34
  42
  50
  59
  68
  77
  87
  98
  109
  120
  132
  145
  158
  171
  185
  200
  215
  231
  247
  264
  282
  301
  320
  340
  361
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
Earnings before tax, $m
  -4
  1
  6
  11
  17
  23
  30
  37
  45
  53
  62
  72
  81
  91
  102
  112
  124
  135
  147
  160
  173
  187
  201
  216
  232
  248
  265
  282
  300
  320
  340
Tax expense, $m
  0
  0
  2
  3
  5
  6
  8
  10
  12
  14
  17
  19
  22
  25
  27
  30
  33
  37
  40
  43
  47
  50
  54
  58
  63
  67
  71
  76
  81
  86
  92
Net income, $m
  -9
  1
  4
  8
  12
  17
  22
  27
  33
  39
  45
  52
  59
  67
  74
  82
  90
  99
  108
  117
  127
  137
  147
  158
  169
  181
  193
  206
  219
  233
  248

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
  33
  40
  47
  55
  64
  73
  83
  94
  106
  118
  130
  144
  158
  172
  187
  203
  220
  237
  255
  273
  292
  312
  333
  354
  377
  400
  425
  450
  476
  504
  533
Adjusted assets (=assets-cash), $m
  33
  40
  47
  55
  64
  73
  83
  94
  106
  118
  130
  144
  158
  172
  187
  203
  220
  237
  255
  273
  292
  312
  333
  354
  377
  400
  425
  450
  476
  504
  533
Revenue / Adjusted assets
  1.273
  1.250
  1.277
  1.273
  1.266
  1.274
  1.277
  1.277
  1.264
  1.271
  1.277
  1.271
  1.272
  1.273
  1.278
  1.276
  1.273
  1.270
  1.271
  1.275
  1.274
  1.272
  1.273
  1.274
  1.273
  1.273
  1.271
  1.273
  1.273
  1.272
  1.272
Average production assets, $m
  7
  8
  10
  12
  14
  16
  18
  20
  22
  25
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  71
  75
  80
  85
  90
  96
  101
  107
  113
Working capital, $m
  -10
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -16
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -58
  -61
  -64
Total debt, $m
  10
  14
  18
  23
  29
  34
  40
  47
  54
  61
  69
  77
  86
  94
  104
  113
  123
  133
  144
  155
  167
  179
  192
  205
  218
  233
  247
  263
  279
  295
  313
Total liabilities, $m
  21
  24
  28
  33
  39
  44
  50
  57
  64
  71
  79
  87
  96
  104
  114
  123
  133
  143
  154
  165
  177
  189
  202
  215
  228
  243
  257
  273
  289
  305
  323
Total equity, $m
  13
  16
  18
  22
  25
  29
  33
  37
  42
  46
  51
  57
  62
  68
  74
  80
  87
  93
  100
  108
  115
  123
  131
  140
  148
  158
  167
  177
  188
  199
  210
Total liabilities and equity, $m
  34
  40
  46
  55
  64
  73
  83
  94
  106
  117
  130
  144
  158
  172
  188
  203
  220
  236
  254
  273
  292
  312
  333
  355
  376
  401
  424
  450
  477
  504
  533
Debt-to-equity ratio
  0.769
  0.900
  1.000
  1.080
  1.140
  1.190
  1.230
  1.270
  1.300
  1.320
  1.340
  1.360
  1.380
  1.390
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.450
  1.460
  1.460
  1.470
  1.470
  1.470
  1.480
  1.480
  1.480
  1.490
  1.490
Adjusted equity ratio
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -9
  1
  4
  8
  12
  17
  22
  27
  33
  39
  45
  52
  59
  67
  74
  82
  90
  99
  108
  117
  127
  137
  147
  158
  169
  181
  193
  206
  219
  233
  248
Depreciation, amort., depletion, $m
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
Funds from operations, $m
  -1
  3
  6
  10
  15
  20
  25
  30
  36
  42
  49
  56
  63
  70
  78
  86
  95
  104
  113
  123
  133
  143
  154
  165
  177
  190
  202
  216
  230
  244
  259
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  -1
  4
  7
  11
  16
  21
  26
  32
  38
  44
  51
  57
  64
  72
  80
  88
  97
  106
  115
  125
  135
  146
  157
  168
  180
  192
  205
  219
  233
  248
  263
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -1
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -9
  -9
  -10
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -14
  -16
  -16
  -17
Free cash flow, $m
  -2
  1
  5
  9
  13
  17
  22
  28
  33
  39
  45
  52
  58
  66
  73
  81
  89
  98
  106
  116
  125
  135
  145
  156
  168
  179
  191
  204
  217
  231
  246
Issuance/(repayment) of debt, $m
  0
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
Issuance/(repurchase) of shares, $m
  0
  2
  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  
  1
  6
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
Total cash flow (excl. dividends), $m
  -1
  7
  9
  14
  18
  23
  28
  34
  40
  46
  53
  60
  67
  74
  82
  91
  99
  108
  117
  127
  137
  147
  158
  169
  181
  193
  206
  220
  233
  248
  263
Retained Cash Flow (-), $m
  8
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
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
 
  5
  6
  10
  15
  19
  24
  30
  36
  42
  48
  54
  61
  69
  76
  84
  93
  101
  110
  120
  129
  139
  150
  161
  172
  184
  197
  210
  223
  237
  252
Discount rate, %
 
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
 
  4
  5
  8
  10
  11
  13
  13
  13
  13
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9
  82.9

Chanticleer Holdings, Inc. is engaged in the business of owning, operating and franchising fast casual dining concepts domestically and internationally. The Company's brands include Hooters, American Burger Company (ABC), BGR: the Burger Joint (BGR), BT's Burger Joint (BT), Little Big Burger (LBB) and Just Fresh. Hooters restaurants are casual beach-themed establishments featuring music, sports on large flat screens, and a menu that includes seafood, burgers, salads and Hooters original chicken wings. ABC is a fast casual dining chain located in North Carolina, South Carolina and New York. BGR consists of approximately 10 Company-owned locations in the United States and over 13 franchisee-operated locations in the United States and the Middle East. LBB consists of approximately eight locations in Oregon. Just Fresh consists of approximately seven Company owned locations in Charlotte, North Carolina.

FINANCIAL RATIOS  of  Chanticleer Holdings (HOTR)

Valuation Ratios
P/E Ratio -0.5
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -4.5
Price to Free Cash Flow -2.2
Growth Rates
Sales Growth Rate 20%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate -24.2%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 30.8%
Total Debt to Equity 76.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -24%
Ret/ On Assets - 3 Yr. Avg. -25.4%
Return On Total Capital -34%
Ret/ On T. Cap. - 3 Yr. Avg. -40.1%
Return On Equity -52.9%
Return On Equity - 3 Yr. Avg. -62.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 14.3%
Gross Margin - 3 Yr. Avg. 11.9%
EBITDA Margin -4.8%
EBITDA Margin - 3 Yr. Avg. -11.7%
Operating Margin -4.8%
Oper. Margin - 3 Yr. Avg. -12.9%
Pre-Tax Margin -9.5%
Pre-Tax Margin - 3 Yr. Avg. -17.5%
Net Profit Margin -21.4%
Net Profit Margin - 3 Yr. Avg. -25.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

HOTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HOTR stock intrinsic value calculation we used $42 million for the last fiscal year's total revenue generated by Chanticleer Holdings. The default revenue input number comes from 2016 income statement of Chanticleer Holdings. 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 HOTR stock valuation model: a) initial revenue growth rate of 20% 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 9.2%, whose default value for HOTR is calculated based on our internal credit rating of Chanticleer Holdings, 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 Chanticleer Holdings.
    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 HOTR stock the variable cost ratio is equal to 42.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for HOTR 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 Chanticleer Holdings.

Corporate tax rate of 27% is the nominal tax rate for Chanticleer Holdings. 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 HOTR 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 HOTR are equal to 16.7%.

Life of production assets of 9.8 years is the average useful life of capital assets used in Chanticleer Holdings 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 HOTR is equal to -9.5%. 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 - $13 million for Chanticleer Holdings - 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 2.653 million for Chanticleer Holdings 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 Chanticleer Holdings at the current share price and the inputted number of shares is $0.0 billion.

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Financial statements of HOTR
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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