Intrinsic value of Tailored Brands - TLRD

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$12.61

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$12.61

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of TLRD 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 0.6

 

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, %
  -3.35
  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
  3,379
  3,447
  3,526
  3,616
  3,718
  3,831
  3,955
  4,089
  4,235
  4,392
  4,561
  4,741
  4,933
  5,138
  5,356
  5,587
  5,832
  6,091
  6,365
  6,655
  6,961
  7,283
  7,623
  7,982
  8,360
  8,758
  9,177
  9,618
  10,082
  10,570
  11,084
Variable operating expenses, $m
 
  4,522
  4,625
  4,744
  4,877
  5,025
  5,186
  5,363
  5,553
  5,759
  5,980
  6,204
  6,456
  6,724
  7,009
  7,311
  7,631
  7,970
  8,329
  8,708
  9,108
  9,530
  9,976
  10,445
  10,939
  11,460
  12,008
  12,586
  13,193
  13,832
  14,504
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
  3,244
  4,522
  4,625
  4,744
  4,877
  5,025
  5,186
  5,363
  5,553
  5,759
  5,980
  6,204
  6,456
  6,724
  7,009
  7,311
  7,631
  7,970
  8,329
  8,708
  9,108
  9,530
  9,976
  10,445
  10,939
  11,460
  12,008
  12,586
  13,193
  13,832
  14,504
Operating income, $m
  135
  -1,075
  -1,100
  -1,128
  -1,159
  -1,194
  -1,232
  -1,273
  -1,318
  -1,367
  -1,419
  -1,463
  -1,522
  -1,585
  -1,653
  -1,724
  -1,799
  -1,879
  -1,964
  -2,053
  -2,148
  -2,247
  -2,352
  -2,463
  -2,579
  -2,702
  -2,831
  -2,968
  -3,111
  -3,261
  -3,420
EBITDA, $m
  250
  -963
  -985
  -1,010
  -1,039
  -1,070
  -1,105
  -1,143
  -1,183
  -1,227
  -1,274
  -1,325
  -1,378
  -1,436
  -1,497
  -1,561
  -1,629
  -1,702
  -1,778
  -1,859
  -1,945
  -2,035
  -2,130
  -2,230
  -2,336
  -2,447
  -2,564
  -2,687
  -2,817
  -2,953
  -3,097
Interest expense (income), $m
  96
  93
  74
  76
  79
  82
  86
  90
  94
  99
  104
  109
  115
  121
  128
  135
  142
  150
  158
  167
  176
  186
  196
  207
  218
  230
  243
  256
  270
  285
  301
Earnings before tax, $m
  32
  -1,168
  -1,173
  -1,204
  -1,238
  -1,276
  -1,318
  -1,363
  -1,413
  -1,466
  -1,523
  -1,572
  -1,637
  -1,707
  -1,780
  -1,858
  -1,941
  -2,029
  -2,122
  -2,220
  -2,324
  -2,433
  -2,548
  -2,670
  -2,798
  -2,932
  -3,074
  -3,224
  -3,381
  -3,547
  -3,721
Tax expense, $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
Net income, $m
  25
  -1,168
  -1,173
  -1,204
  -1,238
  -1,276
  -1,318
  -1,363
  -1,413
  -1,466
  -1,523
  -1,572
  -1,637
  -1,707
  -1,780
  -1,858
  -1,941
  -2,029
  -2,122
  -2,220
  -2,324
  -2,433
  -2,548
  -2,670
  -2,798
  -2,932
  -3,074
  -3,224
  -3,381
  -3,547
  -3,721

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  71
  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
  2,098
  2,068
  2,115
  2,169
  2,230
  2,298
  2,372
  2,453
  2,541
  2,635
  2,736
  2,844
  2,959
  3,082
  3,213
  3,352
  3,498
  3,654
  3,818
  3,992
  4,175
  4,369
  4,573
  4,788
  5,015
  5,254
  5,505
  5,770
  6,048
  6,341
  6,649
Adjusted assets (=assets-cash), $m
  2,027
  2,068
  2,115
  2,169
  2,230
  2,298
  2,372
  2,453
  2,541
  2,635
  2,736
  2,844
  2,959
  3,082
  3,213
  3,352
  3,498
  3,654
  3,818
  3,992
  4,175
  4,369
  4,573
  4,788
  5,015
  5,254
  5,505
  5,770
  6,048
  6,341
  6,649
Revenue / Adjusted assets
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
  1.667
Average production assets, $m
  679
  693
  709
  727
  747
  770
  795
  822
  851
  883
  917
  953
  992
  1,033
  1,077
  1,123
  1,172
  1,224
  1,279
  1,338
  1,399
  1,464
  1,532
  1,604
  1,680
  1,760
  1,845
  1,933
  2,027
  2,125
  2,228
Working capital, $m
  706
  662
  677
  694
  714
  736
  759
  785
  813
  843
  876
  910
  947
  987
  1,028
  1,073
  1,120
  1,169
  1,222
  1,278
  1,336
  1,398
  1,464
  1,533
  1,605
  1,682
  1,762
  1,847
  1,936
  2,030
  2,128
Total debt, $m
  1,596
  1,251
  1,294
  1,343
  1,397
  1,458
  1,525
  1,598
  1,676
  1,761
  1,852
  1,950
  2,054
  2,164
  2,282
  2,406
  2,539
  2,679
  2,827
  2,983
  3,148
  3,322
  3,506
  3,699
  3,903
  4,118
  4,345
  4,583
  4,833
  5,097
  5,374
Total liabilities, $m
  2,205
  1,861
  1,904
  1,953
  2,007
  2,068
  2,135
  2,208
  2,286
  2,371
  2,462
  2,560
  2,664
  2,774
  2,892
  3,016
  3,149
  3,289
  3,437
  3,593
  3,758
  3,932
  4,116
  4,309
  4,513
  4,728
  4,955
  5,193
  5,443
  5,707
  5,984
Total equity, $m
  -108
  207
  212
  217
  223
  230
  237
  245
  254
  263
  274
  284
  296
  308
  321
  335
  350
  365
  382
  399
  418
  437
  457
  479
  501
  525
  551
  577
  605
  634
  665
Total liabilities and equity, $m
  2,097
  2,068
  2,116
  2,170
  2,230
  2,298
  2,372
  2,453
  2,540
  2,634
  2,736
  2,844
  2,960
  3,082
  3,213
  3,351
  3,499
  3,654
  3,819
  3,992
  4,176
  4,369
  4,573
  4,788
  5,014
  5,253
  5,506
  5,770
  6,048
  6,341
  6,649
Debt-to-equity ratio
  -14.778
  6.050
  6.120
  6.190
  6.270
  6.350
  6.430
  6.510
  6.600
  6.680
  6.770
  6.860
  6.940
  7.020
  7.100
  7.180
  7.260
  7.330
  7.400
  7.470
  7.540
  7.600
  7.670
  7.730
  7.780
  7.840
  7.890
  7.940
  7.990
  8.040
  8.080
Adjusted equity ratio
  -0.088
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  -1,168
  -1,173
  -1,204
  -1,238
  -1,276
  -1,318
  -1,363
  -1,413
  -1,466
  -1,523
  -1,572
  -1,637
  -1,707
  -1,780
  -1,858
  -1,941
  -2,029
  -2,122
  -2,220
  -2,324
  -2,433
  -2,548
  -2,670
  -2,798
  -2,932
  -3,074
  -3,224
  -3,381
  -3,547
  -3,721
Depreciation, amort., depletion, $m
  115
  112
  114
  117
  120
  123
  127
  131
  135
  140
  145
  138
  144
  150
  156
  163
  170
  177
  185
  194
  203
  212
  222
  233
  244
  255
  267
  280
  294
  308
  323
Funds from operations, $m
  280
  -1,056
  -1,059
  -1,087
  -1,118
  -1,153
  -1,191
  -1,233
  -1,278
  -1,326
  -1,378
  -1,434
  -1,493
  -1,557
  -1,624
  -1,696
  -1,771
  -1,852
  -1,937
  -2,026
  -2,121
  -2,221
  -2,326
  -2,437
  -2,554
  -2,677
  -2,807
  -2,944
  -3,087
  -3,239
  -3,398
Change in working capital, $m
  37
  13
  15
  17
  20
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  73
  76
  80
  85
  89
  94
  99
Cash from operations, $m
  243
  -1,092
  -1,074
  -1,104
  -1,138
  -1,174
  -1,215
  -1,258
  -1,306
  -1,356
  -1,411
  -1,469
  -1,530
  -1,596
  -1,666
  -1,740
  -1,818
  -1,901
  -1,989
  -2,082
  -2,180
  -2,283
  -2,391
  -2,506
  -2,627
  -2,754
  -2,888
  -3,028
  -3,177
  -3,332
  -3,496
Maintenance CAPEX, $m
  0
  -98
  -100
  -103
  -105
  -108
  -112
  -115
  -119
  -123
  -128
  -133
  -138
  -144
  -150
  -156
  -163
  -170
  -177
  -185
  -194
  -203
  -212
  -222
  -233
  -244
  -255
  -267
  -280
  -294
  -308
New CAPEX, $m
  -100
  -14
  -16
  -18
  -20
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
Cash from investing activities, $m
  -99
  -112
  -116
  -121
  -125
  -131
  -137
  -142
  -148
  -155
  -162
  -169
  -177
  -185
  -194
  -202
  -212
  -222
  -232
  -243
  -255
  -268
  -280
  -294
  -309
  -324
  -339
  -356
  -373
  -392
  -411
Free cash flow, $m
  144
  -1,204
  -1,190
  -1,225
  -1,263
  -1,305
  -1,351
  -1,401
  -1,454
  -1,511
  -1,572
  -1,638
  -1,707
  -1,781
  -1,859
  -1,943
  -2,030
  -2,123
  -2,222
  -2,325
  -2,435
  -2,550
  -2,672
  -2,800
  -2,935
  -3,077
  -3,227
  -3,384
  -3,550
  -3,724
  -3,907
Issuance/(repayment) of debt, $m
  -64
  -332
  43
  49
  55
  61
  67
  73
  79
  85
  91
  97
  104
  111
  118
  125
  132
  140
  148
  156
  165
  174
  184
  194
  204
  215
  226
  238
  251
  264
  277
Issuance/(repurchase) of shares, $m
  2
  1,851
  1,152
  1,182
  1,215
  1,251
  1,292
  1,336
  1,384
  1,436
  1,492
  1,551
  1,615
  1,683
  1,755
  1,832
  1,913
  1,999
  2,090
  2,186
  2,288
  2,395
  2,509
  2,628
  2,754
  2,886
  3,026
  3,173
  3,327
  3,490
  3,661
Cash from financing (excl. dividends), $m  
  -64
  1,519
  1,195
  1,231
  1,270
  1,312
  1,359
  1,409
  1,463
  1,521
  1,583
  1,648
  1,719
  1,794
  1,873
  1,957
  2,045
  2,139
  2,238
  2,342
  2,453
  2,569
  2,693
  2,822
  2,958
  3,101
  3,252
  3,411
  3,578
  3,754
  3,938
Total cash flow (excl. dividends), $m
  76
  -1,537
  -1,148
  -1,176
  -1,209
  -1,245
  -1,284
  -1,328
  -1,375
  -1,426
  -1,481
  -1,540
  -1,603
  -1,670
  -1,742
  -1,818
  -1,898
  -1,983
  -2,074
  -2,169
  -2,270
  -2,376
  -2,488
  -2,606
  -2,731
  -2,862
  -3,001
  -3,146
  -3,299
  -3,461
  -3,630
Retained Cash Flow (-), $m
  8
  -373
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
Prev. year cash balance distribution, $m
 
  58
  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
 
  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
Discount rate, %
 
  14.20
  14.91
  15.66
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
  25.50
  26.78
  28.12
  29.52
  31.00
  32.55
  34.17
  35.88
  37.68
  39.56
  41.54
  43.62
  45.80
  48.09
  50.49
  53.02
  55.67
  58.45
PV of cash for 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
Current shareholders' claim on cash, %
  100
  50.0
  7.6
  1.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Tailored Brands, Inc. operates as a specialty apparel retailer in the United States, Puerto Rico, and Canada. The company operates in two segments, Retail and Corporate Apparel. The Retail segment offers suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, dress pants, ties, shoes, and accessories for men in classic, modern, and slim fits in various sizes; and a selection of tuxedo rental products. It also offers women's career apparel, sportswear, shoes, and accessories; children's apparel; alteration services; and retail dry cleaning, laundry, and heirlooming services. As of January 30, 2016, this segment operated 1,724 stores under the Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank, Joseph Abboud, Moores, and K&G brands; menswearhouse.com, josbank.com, and josephabboud.com Internet sites; and 35 retail dry cleaning, laundry, and heirlooming facilities. The Corporate Apparel segment provides corporate clothing uniforms and work wear to workforces under the Twin Hill, Dimensions, Alexandra, and Yaffy brands through various channels, including managed corporate accounts and catalogs, as well as through twinhill.com, dimensions.co.uk, and alexandra.co.uk Internet sites. This segment serves companies and organizations in the airline, retail grocery, retail, banking, distribution, travel and leisure, postal, security, healthcare, and public sectors. The company was formerly known as The Men’s Wearhouse, Inc. and changed its name to Tailored Brands, Inc. in February 2016. Tailored Brands, Inc. was founded in 1973 and is based in Houston, Texas.

FINANCIAL RATIOS  of  Tailored Brands (TLRD)

Valuation Ratios
P/E Ratio 24.5
Price to Sales 0.2
Price to Book -5.7
Price to Tangible Book
Price to Cash Flow 2.5
Price to Free Cash Flow 4.3
Growth Rates
Sales Growth Rate -3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.8%
Cap. Spend. - 3 Yr. Gr. Rate -1.5%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity -1465.7%
Total Debt to Equity -1477.8%
Interest Coverage 1
Management Effectiveness
Return On Assets 4.6%
Ret/ On Assets - 3 Yr. Avg. -9.4%
Return On Total Capital 1.6%
Ret/ On T. Cap. - 3 Yr. Avg. -15.9%
Return On Equity -24%
Return On Equity - 3 Yr. Avg. -86.7%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 42.6%
Gross Margin - 3 Yr. Avg. 42.3%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. -5.2%
Operating Margin 4%
Oper. Margin - 3 Yr. Avg. -8.3%
Pre-Tax Margin 0.9%
Pre-Tax Margin - 3 Yr. Avg. -11%
Net Profit Margin 0.7%
Net Profit Margin - 3 Yr. Avg. -9.5%
Effective Tax Rate 21.9%
Eff/ Tax Rate - 3 Yr. Avg. 45.3%
Payout Ratio 140%

TLRD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TLRD stock intrinsic value calculation we used $3379 million for the last fiscal year's total revenue generated by Tailored Brands. The default revenue input number comes from 2017 income statement of Tailored Brands. 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 TLRD 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 14.2%, whose default value for TLRD is calculated based on our internal credit rating of Tailored Brands, 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 Tailored Brands.
    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 TLRD stock the variable cost ratio is equal to 131.2%.

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 TLRD 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 5.9% for Tailored Brands.

Corporate tax rate of 27% is the nominal tax rate for Tailored Brands. 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 TLRD 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 TLRD are equal to 20.1%.

Life of production assets of 6.9 years is the average useful life of capital assets used in Tailored Brands 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 TLRD is equal to 19.2%. 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 - $-108 million for Tailored Brands - 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 47.604 million for Tailored Brands 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 Tailored Brands at the current share price and the inputted number of shares is $0.6 billion.


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Stock chart of TLRD Financial statements of TLRD
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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