Intrinsic value of Perfumania Holdings - PERF

Previous Close

$1.87

  Intrinsic Value

$0.34

stock screener

  Rating & Target

str. sell

-82%

  Value-price divergence*

0%

Previous close

$1.87

 
Intrinsic value

$0.34

 
Up/down potential

-82%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of PERF 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 2017), $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
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -13.47
  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
  469
  478
  489
  502
  516
  532
  549
  568
  588
  610
  633
  658
  685
  713
  743
  775
  809
  845
  883
  924
  966
  1,011
  1,058
  1,108
  1,160
  1,216
  1,274
  1,335
  1,399
  1,467
  1,538
Variable operating expenses, $m
 
  393
  402
  412
  423
  436
  450
  465
  482
  499
  518
  535
  556
  580
  604
  630
  658
  687
  718
  751
  785
  822
  860
  900
  943
  988
  1,035
  1,085
  1,137
  1,192
  1,250
Fixed operating expenses, $m
 
  107
  109
  112
  115
  118
  121
  124
  127
  130
  133
  136
  140
  143
  147
  151
  154
  158
  162
  166
  170
  175
  179
  184
  188
  193
  198
  203
  208
  213
  218
Total operating expenses, $m
  486
  500
  511
  524
  538
  554
  571
  589
  609
  629
  651
  671
  696
  723
  751
  781
  812
  845
  880
  917
  955
  997
  1,039
  1,084
  1,131
  1,181
  1,233
  1,288
  1,345
  1,405
  1,468
Operating income, $m
  -17
  -21
  -21
  -22
  -22
  -22
  -22
  -21
  -21
  -20
  -18
  -13
  -12
  -10
  -8
  -5
  -3
  0
  3
  7
  11
  15
  19
  24
  29
  35
  41
  47
  54
  62
  70
EBITDA, $m
  -8
  -12
  -13
  -13
  -13
  -13
  -13
  -12
  -11
  -10
  -9
  -7
  -5
  -3
  -1
  2
  5
  8
  12
  16
  20
  24
  29
  35
  40
  46
  53
  60
  68
  76
  85
Interest expense (income), $m
  1
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  21
  22
  23
Earnings before tax, $m
  -24
  -25
  -26
  -27
  -27
  -27
  -27
  -27
  -27
  -26
  -25
  -21
  -20
  -18
  -17
  -15
  -13
  -11
  -8
  -5
  -2
  1
  5
  9
  13
  18
  23
  28
  34
  40
  47
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  5
  6
  8
  9
  11
  13
Net income, $m
  -24
  -25
  -26
  -27
  -27
  -27
  -27
  -27
  -27
  -26
  -25
  -21
  -20
  -18
  -17
  -15
  -13
  -11
  -8
  -5
  -2
  1
  3
  6
  9
  13
  17
  21
  25
  29
  34

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7
  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
  310
  309
  316
  324
  333
  343
  355
  367
  380
  394
  409
  425
  442
  461
  480
  501
  523
  546
  571
  597
  624
  653
  684
  716
  750
  785
  823
  862
  904
  948
  994
Adjusted assets (=assets-cash), $m
  303
  309
  316
  324
  333
  343
  355
  367
  380
  394
  409
  425
  442
  461
  480
  501
  523
  546
  571
  597
  624
  653
  684
  716
  750
  785
  823
  862
  904
  948
  994
Revenue / Adjusted assets
  1.548
  1.547
  1.547
  1.549
  1.550
  1.551
  1.546
  1.548
  1.547
  1.548
  1.548
  1.548
  1.550
  1.547
  1.548
  1.547
  1.547
  1.548
  1.546
  1.548
  1.548
  1.548
  1.547
  1.547
  1.547
  1.549
  1.548
  1.549
  1.548
  1.547
  1.547
Average production assets, $m
  39
  39
  40
  41
  42
  44
  45
  47
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  104
  109
  115
  120
  126
Working capital, $m
  180
  177
  182
  186
  191
  197
  204
  211
  218
  226
  235
  244
  254
  265
  276
  288
  300
  314
  328
  343
  358
  375
  393
  411
  430
  451
  473
  495
  519
  544
  571
Total debt, $m
  127
  131
  137
  144
  151
  159
  168
  178
  189
  201
  213
  226
  241
  256
  272
  289
  307
  326
  346
  367
  390
  414
  439
  465
  493
  522
  553
  586
  620
  656
  694
Total liabilities, $m
  250
  254
  260
  267
  274
  282
  291
  301
  312
  324
  336
  349
  364
  379
  395
  412
  430
  449
  469
  490
  513
  537
  562
  588
  616
  645
  676
  709
  743
  779
  817
Total equity, $m
  60
  55
  56
  58
  59
  61
  63
  65
  68
  70
  73
  76
  79
  82
  85
  89
  93
  97
  102
  106
  111
  116
  122
  127
  133
  140
  146
  154
  161
  169
  177
Total liabilities and equity, $m
  310
  309
  316
  325
  333
  343
  354
  366
  380
  394
  409
  425
  443
  461
  480
  501
  523
  546
  571
  596
  624
  653
  684
  715
  749
  785
  822
  863
  904
  948
  994
Debt-to-equity ratio
  2.117
  2.380
  2.430
  2.490
  2.550
  2.610
  2.670
  2.730
  2.800
  2.860
  2.930
  2.990
  3.060
  3.120
  3.180
  3.240
  3.300
  3.350
  3.410
  3.460
  3.510
  3.560
  3.610
  3.650
  3.700
  3.740
  3.780
  3.820
  3.850
  3.890
  3.920
Adjusted equity ratio
  0.175
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -24
  -25
  -26
  -27
  -27
  -27
  -27
  -27
  -27
  -26
  -25
  -21
  -20
  -18
  -17
  -15
  -13
  -11
  -8
  -5
  -2
  1
  3
  6
  9
  13
  17
  21
  25
  29
  34
Depreciation, amort., depletion, $m
  9
  8
  9
  9
  9
  9
  9
  9
  10
  10
  10
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
Funds from operations, $m
  44
  -17
  -18
  -18
  -18
  -18
  -18
  -18
  -17
  -16
  -16
  -14
  -13
  -11
  -10
  -7
  -5
  -3
  0
  3
  7
  10
  14
  17
  21
  24
  29
  33
  38
  43
  49
Change in working capital, $m
  25
  3
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  18
  19
  20
  22
  23
  24
  25
  26
Cash from operations, $m
  19
  -20
  -22
  -23
  -23
  -24
  -25
  -25
  -25
  -25
  -24
  -24
  -23
  -22
  -21
  -19
  -18
  -16
  -14
  -11
  -9
  -6
  -4
  -2
  1
  4
  7
  11
  14
  18
  23
Maintenance CAPEX, $m
  0
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
New CAPEX, $m
  -3
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from investing activities, $m
  -3
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
Free cash flow, $m
  16
  -26
  -27
  -28
  -29
  -30
  -31
  -31
  -32
  -32
  -32
  -32
  -31
  -31
  -30
  -29
  -28
  -27
  -25
  -23
  -21
  -19
  -18
  -16
  -14
  -12
  -9
  -7
  -4
  -1
  3
Issuance/(repayment) of debt, $m
  -14
  5
  6
  7
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
Issuance/(repurchase) of shares, $m
  0
  26
  27
  28
  29
  29
  29
  29
  29
  29
  28
  24
  23
  21
  20
  19
  17
  15
  12
  10
  7
  4
  2
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -14
  31
  33
  35
  36
  37
  38
  39
  40
  41
  40
  37
  37
  36
  36
  36
  35
  34
  32
  31
  30
  28
  27
  26
  28
  29
  31
  33
  34
  36
  38
Total cash flow (excl. dividends), $m
  2
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  14
  18
  22
  26
  30
  35
  41
Retained Cash Flow (-), $m
  24
  -26
  -27
  -28
  -29
  -29
  -29
  -29
  -29
  -29
  -28
  -24
  -23
  -21
  -20
  -19
  -17
  -15
  -12
  -10
  -7
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
Prev. year cash balance distribution, $m
 
  6
  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
 
  -15
  -21
  -22
  -22
  -22
  -22
  -22
  -21
  -20
  -20
  -18
  -17
  -16
  -14
  -12
  -10
  -7
  -5
  -2
  1
  4
  4
  5
  8
  11
  15
  19
  23
  28
  32
Discount rate, %
 
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.84
  17.69
  18.57
  19.50
  20.47
  21.50
  22.57
  23.70
  24.88
  26.13
  27.44
  28.81
  30.25
  31.76
  33.35
  35.02
  36.77
  38.60
  40.53
  42.56
  44.69
  46.92
PV of cash for distribution, $m
 
  -13
  -17
  -15
  -13
  -11
  -10
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  59.0
  34.5
  20.1
  11.8
  6.9
  4.1
  2.5
  1.5
  0.9
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Perfumania Holdings, Inc. is a wholesale distributor and retailer of perfumes and fragrances. The Company conducts its business its subsidiaries, Perfumania, Inc. (Perfumania), Quality King Fragrance, Inc. (QFG), Scents of Worth, Inc. (SOW), Perfumania.com, Inc. (Perfumania.com), Five Star Fragrance Company, Inc. (Five Star) and Parlux Fragrances, LLC (Parlux). The Company operates in two segments: wholesale distribution and specialty retail sales of designer fragrance and related products. Its wholesale business includes QFG, Parlux and Five Star. Its retail business is conducted through Perfumania, SOW and Perfumania.com. QFG distributes designer fragrances to mass market retailers, drug and other chain stores, retail wholesale clubs, traditional wholesalers, and other distributors throughout the United States. Perfumania is a retailer and distributor of a range of brand name and designer fragrances and operates a line of bath and body products under the name Jerome Privee.

FINANCIAL RATIOS  of  Perfumania Holdings (PERF)

Valuation Ratios
P/E Ratio -1.2
Price to Sales 0.1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 1.5
Price to Free Cash Flow 1.8
Growth Rates
Sales Growth Rate -13.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.5%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 210%
Total Debt to Equity 211.7%
Interest Coverage -23
Management Effectiveness
Return On Assets -7%
Ret/ On Assets - 3 Yr. Avg. -2.7%
Return On Total Capital -11.7%
Ret/ On T. Cap. - 3 Yr. Avg. -5.2%
Return On Equity -33.3%
Return On Equity - 3 Yr. Avg. -14.5%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 47.1%
Gross Margin - 3 Yr. Avg. 47%
EBITDA Margin -3%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin -3.6%
Oper. Margin - 3 Yr. Avg. -0.7%
Pre-Tax Margin -5.1%
Pre-Tax Margin - 3 Yr. Avg. -2.2%
Net Profit Margin -5.1%
Net Profit Margin - 3 Yr. Avg. -2.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -3%
Payout Ratio 0%

PERF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PERF stock intrinsic value calculation we used $469 million for the last fiscal year's total revenue generated by Perfumania Holdings. The default revenue input number comes from 2017 income statement of Perfumania 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 PERF 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 11.4%, whose default value for PERF is calculated based on our internal credit rating of Perfumania 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 Perfumania 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 PERF stock the variable cost ratio is equal to 82.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $104 million in the base year in the intrinsic value calculation for PERF 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 Perfumania Holdings.

Corporate tax rate of 27% is the nominal tax rate for Perfumania 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 PERF 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 PERF are equal to 8.2%.

Life of production assets of 8.6 years is the average useful life of capital assets used in Perfumania 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 PERF is equal to 37.1%. 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 - $60 million for Perfumania 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 15.263 million for Perfumania 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 Perfumania Holdings at the current share price and the inputted number of shares is $0.0 billion.

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Financial statements of PERF
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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