Intrinsic value of Vince Holding - VNCE

Previous Close

$0.45

  Intrinsic Value

$0.45

stock screener

  Rating & Target

hold

-0%

  Value-price divergence*

+14%

Previous close

$0.45

 
Intrinsic value

$0.45

 
Up/down potential

-0%

 
Rating

hold

 
Value-price divergence*

+14%

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

We calculate the intrinsic value of VNCE 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, %
  -11.26
  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
  268
  273
  280
  287
  295
  304
  314
  324
  336
  348
  362
  376
  391
  408
  425
  443
  463
  483
  505
  528
  552
  578
  605
  633
  663
  695
  728
  763
  800
  838
  879
Variable operating expenses, $m
 
  260
  266
  272
  280
  288
  298
  308
  318
  330
  343
  352
  366
  381
  397
  415
  433
  452
  472
  494
  517
  541
  566
  592
  620
  650
  681
  714
  748
  784
  823
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
  333
  260
  266
  272
  280
  288
  298
  308
  318
  330
  343
  352
  366
  381
  397
  415
  433
  452
  472
  494
  517
  541
  566
  592
  620
  650
  681
  714
  748
  784
  823
Operating income, $m
  -65
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
EBITDA, $m
  -56
  24
  25
  25
  26
  27
  28
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  71
  74
  78
Interest expense (income), $m
  3
  3
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
  22
  23
  25
  27
Earnings before tax, $m
  -69
  11
  13
  13
  13
  14
  14
  14
  14
  15
  15
  19
  20
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  29
  30
Tax expense, $m
  94
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
  8
Net income, $m
  -163
  8
  10
  10
  10
  10
  10
  10
  10
  11
  11
  14
  14
  15
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  19
  19
  19
  20
  21
  21
  22

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  21
  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
  239
  244
  249
  256
  263
  271
  280
  289
  300
  311
  323
  335
  349
  364
  379
  395
  413
  431
  450
  471
  492
  515
  539
  565
  591
  620
  649
  681
  713
  748
  784
Adjusted assets (=assets-cash), $m
  218
  244
  249
  256
  263
  271
  280
  289
  300
  311
  323
  335
  349
  364
  379
  395
  413
  431
  450
  471
  492
  515
  539
  565
  591
  620
  649
  681
  713
  748
  784
Revenue / Adjusted assets
  1.229
  1.119
  1.124
  1.121
  1.122
  1.122
  1.121
  1.121
  1.120
  1.119
  1.121
  1.122
  1.120
  1.121
  1.121
  1.122
  1.121
  1.121
  1.122
  1.121
  1.122
  1.122
  1.122
  1.120
  1.122
  1.121
  1.122
  1.120
  1.122
  1.120
  1.121
Average production assets, $m
  134
  137
  140
  143
  147
  152
  157
  162
  168
  174
  181
  188
  196
  204
  212
  222
  231
  242
  252
  264
  276
  289
  302
  317
  332
  347
  364
  381
  400
  419
  440
Working capital, $m
  25
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
Total debt, $m
  48
  14
  20
  25
  32
  39
  47
  55
  65
  75
  85
  97
  109
  122
  136
  151
  166
  183
  200
  219
  238
  259
  280
  303
  327
  353
  379
  407
  437
  468
  501
Total liabilities, $m
  253
  219
  225
  230
  237
  244
  252
  260
  270
  280
  290
  302
  314
  327
  341
  356
  371
  388
  405
  424
  443
  464
  485
  508
  532
  558
  584
  612
  642
  673
  706
Total equity, $m
  -14
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  75
  78
Total liabilities and equity, $m
  239
  243
  250
  256
  263
  271
  280
  289
  300
  311
  322
  336
  349
  363
  379
  396
  412
  431
  450
  471
  492
  516
  539
  564
  591
  620
  649
  680
  713
  748
  784
Debt-to-equity ratio
  -3.429
  0.590
  0.780
  0.990
  1.210
  1.440
  1.670
  1.910
  2.160
  2.400
  2.650
  2.890
  3.130
  3.360
  3.590
  3.810
  4.030
  4.240
  4.450
  4.650
  4.840
  5.020
  5.200
  5.370
  5.530
  5.690
  5.840
  5.990
  6.130
  6.260
  6.390
Adjusted equity ratio
  -0.161
  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
  -163
  8
  10
  10
  10
  10
  10
  10
  10
  11
  11
  14
  14
  15
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  19
  19
  19
  20
  21
  21
  22
Depreciation, amort., depletion, $m
  9
  11
  11
  11
  11
  11
  12
  12
  12
  13
  13
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
Funds from operations, $m
  -58
  19
  20
  21
  21
  21
  22
  22
  23
  23
  24
  23
  24
  24
  25
  26
  27
  27
  28
  29
  30
  31
  32
  33
  35
  36
  37
  38
  40
  41
  43
Change in working capital, $m
  -28
  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
  1
  1
  1
  1
Cash from operations, $m
  -30
  18
  20
  21
  21
  21
  22
  22
  23
  23
  24
  23
  24
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  33
  34
  35
  37
  38
  39
  41
  42
Maintenance CAPEX, $m
  0
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
New CAPEX, $m
  -14
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
Cash from investing activities, $m
  -14
  -9
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -21
  -23
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -36
  -38
  -40
Free cash flow, $m
  -44
  9
  11
  10
  10
  10
  9
  9
  9
  9
  8
  7
  7
  7
  6
  6
  6
  6
  5
  5
  5
  5
  4
  4
  4
  3
  3
  3
  3
  2
  2
Issuance/(repayment) of debt, $m
  -10
  -34
  5
  6
  6
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
Issuance/(repurchase) of shares, $m
  69
  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 from financing (excl. dividends), $m  
  59
  -3
  5
  6
  6
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
Total cash flow (excl. dividends), $m
  15
  6
  16
  16
  16
  17
  17
  18
  18
  19
  19
  19
  19
  20
  20
  21
  21
  22
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  32
  33
  34
Retained Cash Flow (-), $m
  93
  -38
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
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
 
  -32
  15
  15
  16
  16
  16
  17
  17
  18
  18
  17
  18
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
Discount rate, %
 
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.71
  24.89
  26.14
  27.44
  28.81
  30.25
  31.77
  33.36
  35.02
  36.77
  38.61
  40.54
  42.57
  44.70
  46.93
  49.28
  51.75
  54.33
PV of cash for distribution, $m
 
  -28
  12
  10
  9
  8
  6
  5
  4
  4
  3
  2
  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
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
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Vince Holding Corp. engages in the design, merchandise, and sale of various contemporary fashion brand products in the United States and internationally. It operates through two segments, Wholesale and Direct-To-Consumer. The company offers a range of women’s products, such as cashmere sweaters, silk blouses, leather and suede leggings and jackets, dresses, denims, tanks, T-shirts, pants, handbags, and outerwear under Vince brand; and men’s products comprising T-shirts, knit and woven tops, sweaters, denim, pants, blazers, outerwear, and leather jackets under Vince brand. It also provides women’s and men’s footwear, and children’s apparel products. The company sells its products directly to consumers through its branded specialty retail stores and outlet stores, as well as through Vince.com, an e-commerce platform; and to department stores and specialty stores. As of January 30, 2016, it operated 48 retail stores, including 34 company-operated full price stores and 14 company-operated outlet stores, as well as VINCE.com and e-commerce sites; and sold its products to consumers at approximately 2,500 distribution locations in 38 countries. The company was formerly known as Apparel Holding Corp. and changed its name to Vince Holding Corp. in November 2013. Vince Holding Corp. was founded in 2002 and is based in New York, New York.

FINANCIAL RATIOS  of  Vince Holding (VNCE)

Valuation Ratios
P/E Ratio -0.1
Price to Sales 0.1
Price to Book -1.6
Price to Tangible Book
Price to Cash Flow -0.7
Price to Free Cash Flow -0.5
Growth Rates
Sales Growth Rate -11.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.2%
Cap. Spend. - 3 Yr. Gr. Rate 7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -342.9%
Total Debt to Equity -342.9%
Interest Coverage -22
Management Effectiveness
Return On Assets -51.7%
Ret/ On Assets - 3 Yr. Avg. -13.5%
Return On Total Capital -190.6%
Ret/ On T. Cap. - 3 Yr. Avg. -55.7%
Return On Equity -501.5%
Return On Equity - 3 Yr. Avg. -142.3%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 45.9%
Gross Margin - 3 Yr. Avg. 46.4%
EBITDA Margin -21.3%
EBITDA Margin - 3 Yr. Avg. 1.7%
Operating Margin -24.3%
Oper. Margin - 3 Yr. Avg. 0.4%
Pre-Tax Margin -25.7%
Pre-Tax Margin - 3 Yr. Avg. -1.8%
Net Profit Margin -60.8%
Net Profit Margin - 3 Yr. Avg. -16.2%
Effective Tax Rate -136.2%
Eff/ Tax Rate - 3 Yr. Avg. -19.6%
Payout Ratio 0%

VNCE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VNCE stock intrinsic value calculation we used $268 million for the last fiscal year's total revenue generated by Vince Holding. The default revenue input number comes from 2017 income statement of Vince 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 VNCE 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 13.2%, whose default value for VNCE is calculated based on our internal credit rating of Vince 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 Vince 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 VNCE stock the variable cost ratio is equal to 95.1%.

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 VNCE 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 5.7% for Vince Holding.

Corporate tax rate of 27% is the nominal tax rate for Vince 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 VNCE 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 VNCE are equal to 50%.

Life of production assets of 20.7 years is the average useful life of capital assets used in Vince 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 VNCE is equal to 1.5%. 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 - $-14 million for Vince 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 44.35 million for Vince 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 Vince Holding at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Vince Holding reports 1Q loss   [07:34AM  Associated Press]
▶ Retail And E-Commerce News And Stocks To Watch   [04:10PM  Investor's Business Daily]
▶ Why This Retail Stock Is Up Over 50% Friday   [04:04PM  Investor's Business Daily]
Stock chart of VNCE Financial statements of VNCE
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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