Intrinsic value of Perry Ellis International - PERY

Previous Close

$18.84

  Intrinsic Value

$4.94

stock screener

  Rating & Target

str. sell

-74%

  Value-price divergence*

-25%

Previous close

$18.84

 
Intrinsic value

$4.94

 
Up/down potential

-74%

 
Rating

str. sell

 
Value-price divergence*

-25%

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

We calculate the intrinsic value of PERY 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 0.3

 

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, %
  -4.33
  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
  861
  878
  898
  922
  947
  976
  1,008
  1,042
  1,079
  1,119
  1,162
  1,208
  1,257
  1,309
  1,365
  1,424
  1,486
  1,552
  1,622
  1,696
  1,774
  1,856
  1,943
  2,034
  2,130
  2,232
  2,338
  2,451
  2,569
  2,693
  2,824
Variable operating expenses, $m
 
  876
  897
  920
  946
  974
  1,006
  1,040
  1,077
  1,117
  1,160
  1,206
  1,255
  1,307
  1,362
  1,421
  1,483
  1,549
  1,619
  1,692
  1,770
  1,852
  1,939
  2,030
  2,126
  2,227
  2,334
  2,446
  2,564
  2,688
  2,819
Fixed operating expenses, $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
Total operating expenses, $m
  839
  876
  897
  920
  946
  974
  1,006
  1,040
  1,077
  1,117
  1,160
  1,206
  1,255
  1,307
  1,362
  1,421
  1,483
  1,549
  1,619
  1,692
  1,770
  1,852
  1,939
  2,030
  2,126
  2,227
  2,334
  2,446
  2,564
  2,688
  2,819
Operating income, $m
  22
  2
  2
  2
  2
  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
  6
EBITDA, $m
  37
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  23
  24
  25
  27
  28
  29
  30
  32
  33
  34
  36
  38
  40
  41
  43
  45
  48
  50
  52
  55
Interest expense (income), $m
  7
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
Earnings before tax, $m
  15
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
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
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  15
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  42
  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
  593
  562
  575
  590
  606
  625
  645
  667
  690
  716
  744
  773
  804
  838
  873
  911
  951
  993
  1,038
  1,085
  1,135
  1,187
  1,243
  1,301
  1,363
  1,428
  1,496
  1,568
  1,644
  1,723
  1,807
Adjusted assets (=assets-cash), $m
  551
  562
  575
  590
  606
  625
  645
  667
  690
  716
  744
  773
  804
  838
  873
  911
  951
  993
  1,038
  1,085
  1,135
  1,187
  1,243
  1,301
  1,363
  1,428
  1,496
  1,568
  1,644
  1,723
  1,807
Revenue / Adjusted assets
  1.563
  1.562
  1.562
  1.563
  1.563
  1.562
  1.563
  1.562
  1.564
  1.563
  1.562
  1.563
  1.563
  1.562
  1.564
  1.563
  1.563
  1.563
  1.563
  1.563
  1.563
  1.564
  1.563
  1.563
  1.563
  1.563
  1.563
  1.563
  1.563
  1.563
  1.563
Average production assets, $m
  251
  256
  261
  268
  276
  284
  293
  303
  314
  326
  338
  352
  366
  381
  397
  414
  432
  452
  472
  493
  516
  540
  565
  592
  620
  649
  680
  713
  748
  784
  822
Working capital, $m
  223
  185
  190
  194
  200
  206
  213
  220
  228
  236
  245
  255
  265
  276
  288
  300
  314
  327
  342
  358
  374
  392
  410
  429
  449
  471
  493
  517
  542
  568
  596
Total debt, $m
  107
  112
  118
  126
  134
  143
  154
  165
  177
  190
  203
  218
  234
  251
  269
  288
  308
  329
  352
  376
  401
  428
  456
  485
  516
  549
  584
  620
  658
  698
  741
Total liabilities, $m
  279
  284
  290
  298
  306
  315
  326
  337
  349
  362
  375
  390
  406
  423
  441
  460
  480
  501
  524
  548
  573
  600
  628
  657
  688
  721
  756
  792
  830
  870
  913
Total equity, $m
  314
  278
  285
  292
  300
  309
  319
  330
  342
  354
  368
  383
  398
  415
  432
  451
  471
  492
  514
  537
  562
  588
  615
  644
  675
  707
  741
  776
  814
  853
  894
Total liabilities and equity, $m
  593
  562
  575
  590
  606
  624
  645
  667
  691
  716
  743
  773
  804
  838
  873
  911
  951
  993
  1,038
  1,085
  1,135
  1,188
  1,243
  1,301
  1,363
  1,428
  1,497
  1,568
  1,644
  1,723
  1,807
Debt-to-equity ratio
  0.341
  0.400
  0.420
  0.430
  0.450
  0.460
  0.480
  0.500
  0.520
  0.530
  0.550
  0.570
  0.590
  0.610
  0.620
  0.640
  0.650
  0.670
  0.690
  0.700
  0.710
  0.730
  0.740
  0.750
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
Adjusted equity ratio
  0.494
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
Depreciation, amort., depletion, $m
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
Funds from operations, $m
  36
  11
  11
  11
  11
  11
  11
  11
  11
  11
  12
  12
  12
  12
  12
  12
  12
  12
  12
  13
  13
  13
  13
  13
  13
  13
  14
  14
  14
  14
  14
Change in working capital, $m
  -6
  4
  4
  5
  5
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
Cash from operations, $m
  42
  6
  7
  6
  6
  5
  5
  4
  4
  3
  3
  2
  1
  1
  0
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
Maintenance CAPEX, $m
  0
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
New CAPEX, $m
  -13
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
Cash from investing activities, $m
  -14
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -53
  -55
  -57
  -61
  -63
  -67
  -70
  -74
  -77
  -81
  -85
Free cash flow, $m
  28
  -14
  -14
  -16
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -59
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -93
  -98
Issuance/(repayment) of debt, $m
  -51
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
Issuance/(repurchase) of shares, $m
  -2
  0
  14
  16
  18
  20
  21
  23
  25
  27
  29
  31
  34
  36
  38
  41
  44
  46
  49
  52
  56
  59
  62
  66
  70
  74
  78
  83
  87
  92
  97
Cash from financing (excl. dividends), $m  
  -30
  6
  21
  23
  26
  29
  31
  34
  37
  40
  43
  46
  50
  53
  56
  60
  64
  67
  72
  76
  81
  86
  90
  96
  101
  107
  112
  119
  125
  132
  139
Total cash flow (excl. dividends), $m
  -1
  -9
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
Retained Cash Flow (-), $m
  -23
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
Prev. year cash balance distribution, $m
 
  41
  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
 
  27
  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
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
 
  26
  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
Current shareholders' claim on cash, %
  100
  100.0
  94.9
  89.6
  84.2
  78.8
  73.5
  68.2
  63.2
  58.3
  53.7
  49.3
  45.1
  41.2
  37.6
  34.2
  31.0
  28.1
  25.4
  23.0
  20.7
  18.7
  16.8
  15.1
  13.6
  12.2
  10.9
  9.7
  8.7
  7.8
  7.0

Perry Ellis International, Inc. designs, sources, markets, and licenses apparel products. It offers men’s wear, such as career and casual sportswear, golf apparel, sports apparel, swimwear, activewear, and accessories; and women’s wear, including dresses, sportswear, swimwear, activewear, and accessories, as well as leather accessories. The company provides its products under various brands comprising Ben Hogan, Cubavera, Farah, Grand Slam, Jantzen, Laundry by Shelli Segal, Original Penguin by Munsingwear, Perry Ellis, Rafaella, and Savane. It also licenses the Callaway Golf, PGA Tour, and Jack Nicklaus brands for golf apparel; the Jag brand for swimwear and cover-ups; and the Nike brand for swimwear and accessories, as well as Pro Player, John Henry, and Gotcha brands. The company distributes its products to wholesale customers, including luxury stores, department stores, national and regional chain stores, mass merchants, specialty stores, sporting goods stores, the corporate wear market, and e-commerce, as well as clubs and independent retailers. As of April 1, 2016, it operated 41 Perry Ellis, 12 Original Penguin, and 2 multi-brand retail outlet stores located primarily in upscale retail outlet malls in the United States, the United Kingdom, and Puerto Rico; and 3 Perry Ellis, 2 Cubavera, 16 Original Penguin, and 1 multi-brand full price retail stores located in upscale demographic markets in the United States and the United Kingdom. The company was formerly known as Supreme International Corporation and changed its name to Perry Ellis International, Inc. in 1999. Perry Ellis International, Inc. was founded in 1967 and is headquartered in Miami, Florida.

FINANCIAL RATIOS  of  Perry Ellis International (PERY)

Valuation Ratios
P/E Ratio 19.5
Price to Sales 0.3
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 7
Price to Free Cash Flow 10.1
Growth Rates
Sales Growth Rate -4.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.8%
Cap. Spend. - 3 Yr. Gr. Rate -10%
Financial Strength
Quick Ratio 42
Current Ratio 0
LT Debt to Equity 33.8%
Total Debt to Equity 34.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. -3%
Return On Total Capital 3.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity 5%
Return On Equity - 3 Yr. Avg. -2.9%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 37%
Gross Margin - 3 Yr. Avg. 35.5%
EBITDA Margin 4.3%
EBITDA Margin - 3 Yr. Avg. 3.4%
Operating Margin 2.6%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin 1.7%
Pre-Tax Margin - 3 Yr. Avg. 0.6%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. -1.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 174.5%
Payout Ratio 0%

PERY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PERY stock intrinsic value calculation we used $861 million for the last fiscal year's total revenue generated by Perry Ellis International. The default revenue input number comes from 2017 income statement of Perry Ellis International. 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 PERY 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 4.3%, whose default value for PERY is calculated based on our internal credit rating of Perry Ellis International, 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 Perry Ellis International.
    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 PERY stock the variable cost ratio is equal to 99.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PERY 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 5.8% for Perry Ellis International.

Corporate tax rate of 27% is the nominal tax rate for Perry Ellis International. 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 PERY 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 PERY are equal to 29.1%.

Life of production assets of 16.7 years is the average useful life of capital assets used in Perry Ellis International 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 PERY is equal to 21.1%. 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 - $314 million for Perry Ellis International - 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 15.877 million for Perry Ellis International 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 Perry Ellis International at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Perry Ellis posts 1Q profit   [06:50AM  Associated Press]
▶ Perry Ellis posts 4Q profit   [07:17AM  Associated Press]
▶ Is Perry Ellis International, Inc. (PERY) A Good Stock To Buy?   [Dec-11-16 07:48AM  at Insider Monkey]
Stock chart of PERY Financial statements of PERY Annual reports of PERY
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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