Intrinsic value of Xcel Brands - XELB

Previous Close

$2.50

  Intrinsic Value

$1.27

stock screener

  Rating & Target

sell

-49%

Previous close

$2.50

 
Intrinsic value

$1.27

 
Up/down potential

-49%

 
Rating

sell

We calculate the intrinsic value of XELB 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, %
  17.86
  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
  33
  34
  34
  35
  36
  37
  39
  40
  41
  43
  45
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
  94
  98
  103
  108
Variable operating expenses, $m
 
  28
  28
  29
  30
  30
  31
  32
  34
  35
  36
  36
  38
  39
  41
  43
  45
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  81
  85
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
  28
  28
  28
  29
  30
  30
  31
  32
  34
  35
  36
  36
  38
  39
  41
  43
  45
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  81
  85
Operating income, $m
  5
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
EBITDA, $m
  7
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
Interest expense (income), $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
Earnings before tax, $m
  3
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Tax expense, $m
  0
  1
  1
  1
  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
Net income, $m
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  14
  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
  151
  140
  143
  147
  151
  155
  160
  166
  172
  178
  185
  192
  200
  208
  217
  226
  236
  247
  258
  270
  282
  295
  309
  323
  339
  355
  372
  390
  409
  428
  449
Adjusted assets (=assets-cash), $m
  137
  140
  143
  147
  151
  155
  160
  166
  172
  178
  185
  192
  200
  208
  217
  226
  236
  247
  258
  270
  282
  295
  309
  323
  339
  355
  372
  390
  409
  428
  449
Revenue / Adjusted assets
  0.241
  0.243
  0.238
  0.238
  0.238
  0.239
  0.244
  0.241
  0.238
  0.242
  0.243
  0.240
  0.240
  0.240
  0.240
  0.243
  0.242
  0.239
  0.240
  0.241
  0.241
  0.241
  0.239
  0.241
  0.242
  0.242
  0.242
  0.241
  0.240
  0.241
  0.241
Average production assets, $m
  112
  114
  116
  119
  123
  126
  131
  135
  140
  145
  151
  156
  163
  170
  177
  184
  192
  201
  210
  220
  230
  240
  252
  263
  276
  289
  303
  317
  333
  349
  366
Working capital, $m
  12
  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
  12
  13
Total debt, $m
  32
  27
  28
  29
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  49
  52
  54
  57
  61
  64
  67
  71
  75
  79
  84
  88
  93
  98
  103
  109
  115
Total liabilities, $m
  45
  40
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  57
  59
  62
  65
  67
  70
  74
  77
  80
  84
  88
  92
  97
  101
  106
  111
  116
  122
  128
Total equity, $m
  106
  100
  102
  105
  108
  111
  115
  118
  123
  127
  132
  137
  143
  149
  155
  162
  169
  176
  184
  193
  202
  211
  221
  231
  242
  254
  266
  279
  292
  306
  321
Total liabilities and equity, $m
  151
  140
  143
  147
  151
  155
  161
  165
  172
  178
  185
  192
  200
  208
  217
  227
  236
  246
  258
  270
  282
  295
  309
  323
  339
  355
  372
  390
  408
  428
  449
Debt-to-equity ratio
  0.302
  0.270
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.360
  0.360
Adjusted equity ratio
  0.672
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
Depreciation, amort., depletion, $m
  2
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Funds from operations, $m
  9
  9
  9
  9
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
Change in working capital, $m
  1
  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
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Maintenance CAPEX, $m
  0
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
New CAPEX, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
Cash from investing activities, $m
  -3
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
Free cash flow, $m
  5
  3
  3
  2
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
Issuance/(repayment) of debt, $m
  -6
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Issuance/(repurchase) of shares, $m
  -1
  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 from financing (excl. dividends), $m  
  -7
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Total cash flow (excl. dividends), $m
  -2
  4
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
Retained Cash Flow (-), $m
  -6
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
Prev. year cash balance distribution, $m
 
  8
  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
 
  10
  1
  1
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -11
  -11
Discount rate, %
 
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
 
  9
  1
  1
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  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
  99.9
  99.8
  99.7
  99.5
  99.3

Xcel Brands, Inc. is a brand development and media company. The Company is engaged in the design, production, licensing, marketing, and direct to consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of consumer lifestyle brands. The Company's brand portfolio consists of the Isaac Mizrahi, Judith Ripka, H Halston, C Wonder and Highline Collective brands. The Company also manages and designs the Liz Claiborne New York brand (LCNY Brand). Isaac Mizrahi has over 150 different product categories, including sportswear, footwear, handbags, watches, eyewear, fragrance, tech accessories, intimates, bridal gowns and accessories, pet products, home and other merchandise. The Company's Judith Ripka is a luxury jewelry brand. Wonder brand offers women's clothing, footwear, jewelry and accessories; housewares, and home decor and gifts. The Liz Claiborne New York includes women's apparel, footwear, outerwear and accessories.

FINANCIAL RATIOS  of  Xcel Brands (XELB)

Valuation Ratios
P/E Ratio 15.5
Price to Sales 1.4
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 5.8
Price to Free Cash Flow 7.8
Growth Rates
Sales Growth Rate 17.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 24.5%
Total Debt to Equity 30.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 2.9%
Return On Equity - 3 Yr. Avg. 1.5%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 100%
Gross Margin - 3 Yr. Avg. 98.8%
EBITDA Margin 18.2%
EBITDA Margin - 3 Yr. Avg. 15.2%
Operating Margin 15.2%
Oper. Margin - 3 Yr. Avg. 14.2%
Pre-Tax Margin 9.1%
Pre-Tax Margin - 3 Yr. Avg. 6.6%
Net Profit Margin 9.1%
Net Profit Margin - 3 Yr. Avg. 5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

XELB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XELB stock intrinsic value calculation we used $33 million for the last fiscal year's total revenue generated by Xcel Brands. The default revenue input number comes from 2016 income statement of Xcel 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 XELB 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 4.7%, whose default value for XELB is calculated based on our internal credit rating of Xcel 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 Xcel 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 XELB stock the variable cost ratio is equal to 81.8%.

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 XELB 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 Xcel Brands.

Corporate tax rate of 27% is the nominal tax rate for Xcel 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 XELB 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 XELB are equal to 337.9%.

Life of production assets of 61.8 years is the average useful life of capital assets used in Xcel 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 XELB is equal to 12.1%. 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 - $106 million for Xcel 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 18.47 million for Xcel 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 Xcel Brands at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Is Xcel Brands Inc (XELB) A Financially Sound Company?   [Dec-06-17 05:51PM  Simply Wall St.]
▶ Judith Ripka Debuts RIPKA, a New Casual Fine Jewelry Line   [Dec-04-17 02:00PM  GlobeNewswire]
▶ Xcel Brands Announces Third Quarter 2017 Financial Results   [Nov-09-17 04:45PM  GlobeNewswire]
▶ XCel Brands, Inc. to Host Earnings Call   [03:00PM  ACCESSWIRE]
▶ Xcel Brands Announces Second Quarter 2017 Financial Results   [Aug-09-17 04:30PM  GlobeNewswire]
▶ Xcel Brands Announces First Quarter 2017 Financial Results   [May-09-17 04:20PM  GlobeNewswire]
▶ Xcel Brands to Present at the 2017 ICR Conference   [Jan-03-17 09:00AM  GlobeNewswire]
▶ Does Affimed NV (AFMD) Stack Up Against Its Peers?   [Dec-13-16 04:19AM  Insider Monkey]
▶ Does Affimed NV (AFMD) Stack Up Against Its Peers?   [04:19AM  at Insider Monkey]
▶ Xcel Brands Announces Third Quarter 2016 Financial Results   [Nov-10-16 04:05PM  GlobeNewswire]
▶ Today's Top Supply Chain and Logistics News From WSJ   [Sep-30-16 06:46AM  at The Wall Street Journal]
▶ Xcel Brands Announces Second Quarter 2016 Financial Results   [Aug-09-16 04:05PM  GlobeNewswire]
▶ Xcel Brands Added to Russell Microcap Index   [Jun-27-16 08:30AM  GlobeNewswire]
▶ Xcel Brands Announces First Quarter 2016 Financial Results   [May-09-16 04:05PM  GlobeNewswire]
▶ Something Wonderful Is Coming To QVC   [Feb-24-16 12:13PM  PR Newswire]
▶ Xcel Brands to Present at the 2016 ICR Conference   [Jan-05-16 08:46AM  GlobeNewswire]
▶ Here is What Hedge Funds Think About Xcel Brands Inc (XELB)   [Dec-02  05:45PM  at Insider Monkey]
Financial statements of XELB
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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