Intrinsic value of American Outdoor Brands - AOBC

Previous Close

$15.61

  Intrinsic Value

$9.42

stock screener

  Rating & Target

sell

-40%

Previous close

$15.61

 
Intrinsic value

$9.42

 
Up/down potential

-40%

 
Rating

sell

We calculate the intrinsic value of AOBC 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 0001), $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 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  619
  633
  649
  668
  688
  710
  734
  761
  789
  819
  851
  886
  923
  962
  1,003
  1,047
  1,094
  1,143
  1,195
  1,250
  1,308
  1,369
  1,434
  1,501
  1,573
  1,648
  1,727
  1,811
  1,898
  1,991
Variable operating expenses, $m
  258
  263
  269
  275
  283
  291
  300
  309
  320
  331
  312
  325
  339
  353
  368
  384
  401
  419
  439
  459
  480
  502
  526
  551
  577
  605
  634
  664
  697
  730
Fixed operating expenses, $m
  341
  349
  357
  364
  372
  381
  389
  398
  406
  415
  424
  434
  443
  453
  463
  473
  484
  494
  505
  516
  527
  539
  551
  563
  575
  588
  601
  614
  628
  642
Total operating expenses, $m
  599
  612
  626
  639
  655
  672
  689
  707
  726
  746
  736
  759
  782
  806
  831
  857
  885
  913
  944
  975
  1,007
  1,041
  1,077
  1,114
  1,152
  1,193
  1,235
  1,278
  1,325
  1,372
Operating income, $m
  20
  22
  24
  28
  33
  39
  46
  54
  63
  73
  115
  127
  141
  156
  172
  190
  209
  230
  252
  275
  301
  328
  357
  387
  420
  455
  493
  532
  574
  619
EBITDA, $m
  86
  88
  92
  96
  102
  110
  118
  127
  138
  150
  163
  178
  194
  211
  229
  250
  271
  295
  320
  347
  375
  406
  438
  473
  510
  549
  591
  635
  682
  732
Interest expense (income), $m
  8
  10
  11
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  31
  33
  34
  36
  38
  41
  43
  45
  48
Earnings before tax, $m
  10
  11
  13
  17
  21
  26
  32
  40
  48
  57
  98
  110
  123
  137
  152
  168
  186
  205
  226
  248
  272
  297
  324
  353
  384
  417
  452
  489
  529
  571
Tax expense, $m
  3
  3
  4
  4
  6
  7
  9
  11
  13
  15
  27
  30
  33
  37
  41
  45
  50
  55
  61
  67
  73
  80
  88
  95
  104
  113
  122
  132
  143
  154
Net income, $m
  7
  8
  10
  12
  15
  19
  24
  29
  35
  42
  72
  80
  90
  100
  111
  123
  136
  150
  165
  181
  198
  217
  237
  258
  280
  304
  330
  357
  386
  417

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  759
  777
  797
  819
  844
  871
  901
  933
  968
  1,005
  1,045
  1,087
  1,132
  1,180
  1,231
  1,285
  1,342
  1,403
  1,466
  1,534
  1,605
  1,680
  1,759
  1,842
  1,930
  2,022
  2,119
  2,222
  2,329
  2,443
Adjusted assets (=assets-cash), $m
  759
  777
  797
  819
  844
  871
  901
  933
  968
  1,005
  1,045
  1,087
  1,132
  1,180
  1,231
  1,285
  1,342
  1,403
  1,466
  1,534
  1,605
  1,680
  1,759
  1,842
  1,930
  2,022
  2,119
  2,222
  2,329
  2,443
Revenue / Adjusted assets
  0.816
  0.815
  0.814
  0.816
  0.815
  0.815
  0.815
  0.816
  0.815
  0.815
  0.814
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
  0.815
Average production assets, $m
  314
  321
  329
  339
  349
  360
  372
  386
  400
  415
  432
  449
  468
  488
  509
  531
  555
  580
  606
  634
  663
  694
  727
  761
  797
  836
  876
  918
  962
  1,009
Working capital, $m
  129
  132
  136
  140
  144
  148
  153
  159
  165
  171
  178
  185
  193
  201
  210
  219
  229
  239
  250
  261
  273
  286
  300
  314
  329
  344
  361
  378
  397
  416
Total debt, $m
  193
  200
  209
  218
  229
  241
  254
  268
  283
  299
  316
  334
  354
  375
  397
  420
  445
  471
  499
  528
  559
  591
  625
  661
  699
  739
  781
  826
  872
  921
Total liabilities, $m
  329
  336
  345
  355
  366
  377
  390
  404
  419
  435
  452
  471
  490
  511
  533
  556
  581
  607
  635
  664
  695
  727
  762
  798
  836
  876
  918
  962
  1,009
  1,058
Total equity, $m
  431
  441
  452
  465
  479
  494
  511
  529
  549
  570
  592
  616
  642
  669
  698
  729
  761
  795
  831
  870
  910
  953
  997
  1,045
  1,094
  1,147
  1,202
  1,260
  1,321
  1,385
Total liabilities and equity, $m
  760
  777
  797
  820
  845
  871
  901
  933
  968
  1,005
  1,044
  1,087
  1,132
  1,180
  1,231
  1,285
  1,342
  1,402
  1,466
  1,534
  1,605
  1,680
  1,759
  1,843
  1,930
  2,023
  2,120
  2,222
  2,330
  2,443
Debt-to-equity ratio
  0.450
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.580
  0.590
  0.600
  0.610
  0.610
  0.620
  0.630
  0.630
  0.640
  0.640
  0.650
  0.660
  0.660
  0.670
Adjusted equity ratio
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  8
  10
  12
  15
  19
  24
  29
  35
  42
  72
  80
  90
  100
  111
  123
  136
  150
  165
  181
  198
  217
  237
  258
  280
  304
  330
  357
  386
  417
Depreciation, amort., depletion, $m
  66
  66
  67
  68
  70
  71
  72
  74
  75
  77
  49
  50
  53
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
Funds from operations, $m
  73
  75
  77
  80
  85
  90
  96
  103
  110
  119
  120
  131
  142
  154
  168
  182
  198
  215
  233
  252
  273
  295
  318
  343
  370
  398
  428
  460
  494
  530
Change in working capital, $m
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
Cash from operations, $m
  70
  72
  74
  77
  81
  85
  91
  97
  104
  113
  113
  123
  134
  146
  159
  173
  188
  205
  222
  241
  261
  282
  305
  329
  355
  382
  412
  443
  476
  511
Maintenance CAPEX, $m
  -35
  -35
  -36
  -37
  -38
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -50
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -98
  -103
  -108
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -47
Cash from investing activities, $m
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -67
  -69
  -73
  -76
  -79
  -84
  -87
  -91
  -96
  -100
  -106
  -111
  -116
  -122
  -128
  -134
  -140
  -147
  -155
Free cash flow, $m
  30
  29
  29
  30
  32
  35
  38
  42
  47
  52
  50
  57
  65
  74
  83
  94
  105
  117
  131
  145
  160
  177
  194
  213
  233
  255
  278
  302
  328
  356
Issuance/(repayment) of debt, $m
  6
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
Issuance/(repurchase) of shares, $m
  1
  2
  2
  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
Cash from financing (excl. dividends), $m  
  7
  10
  11
  11
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
Total cash flow (excl. dividends), $m
  37
  38
  40
  41
  43
  47
  51
  56
  62
  68
  68
  76
  85
  95
  105
  117
  130
  143
  158
  174
  191
  209
  228
  249
  271
  295
  320
  346
  375
  405
Retained Cash Flow (-), $m
  -8
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
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
  29
  29
  28
  28
  29
  31
  34
  38
  42
  47
  45
  52
  59
  67
  77
  87
  97
  109
  122
  136
  151
  166
  184
  202
  221
  242
  265
  288
  314
  341
Discount rate, %
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
  27
  26
  24
  23
  22
  22
  23
  23
  24
  24
  21
  21
  22
  22
  21
  21
  20
  19
  17
  16
  14
  12
  11
  9
  7
  6
  5
  4
  3
  2
Current shareholders' claim on cash, %
  99.8
  99.6
  99.5
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4

American Outdoor Brands Corporation, formerly Smith & Wesson Holding Corporation, is a manufacturer of firearms and a provider of accessory products for the shooting, hunting and outdoor enthusiast. The Company operates through two segments. The Firearms segment manufactures handgun and long gun products sold under the Smith & Wesson, M&P and Thompson/Center Arms brands, as well as providing forging, machining and precision plastic injection molding services. The Outdoor Products & Accessories segment provides shooting, hunting and outdoor accessories, including reloading, gunsmithing, gun cleaning supplies, tree saws, vault accessories, knives, laser sighting systems and tactical lighting products. Brands in Outdoor Products & Accessories include Crimson Trace, Caldwell Shooting Supplies, Wheeler Engineering, Lockdown Vault Accessories, BOG POD and Golden Rod Moisture Control, as well as knives and specialty tools under Schrade, Old Timer, Uncle Henry and Imperial.

FINANCIAL RATIOS  of  American Outdoor Brands (AOBC)

Valuation Ratios
P/E Ratio 6.6
Price to Sales 0.9
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 6.8
Price to Free Cash Flow 9.6
Growth Rates
Sales Growth Rate 24.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate -10.6%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 53.7%
Total Debt to Equity 55.5%
Interest Coverage 25
Management Effectiveness
Return On Assets 18.9%
Ret/ On Assets - 3 Yr. Avg. 16.7%
Return On Total Capital 23.4%
Ret/ On T. Cap. - 3 Yr. Avg. 20.5%
Return On Equity 36.5%
Return On Equity - 3 Yr. Avg. 33.9%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 41.5%
Gross Margin - 3 Yr. Avg. 39.2%
EBITDA Margin 27.6%
EBITDA Margin - 3 Yr. Avg. 25.6%
Operating Margin 22.1%
Oper. Margin - 3 Yr. Avg. 20.1%
Pre-Tax Margin 21.2%
Pre-Tax Margin - 3 Yr. Avg. 18.5%
Net Profit Margin 14.2%
Net Profit Margin - 3 Yr. Avg. 12.1%
Effective Tax Rate 33%
Eff/ Tax Rate - 3 Yr. Avg. 35%
Payout Ratio 0%

AOBC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AOBC stock intrinsic value calculation we used $606.85 million for the last fiscal year's total revenue generated by American Outdoor Brands. The default revenue input number comes from 0001 income statement of American Outdoor 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 AOBC 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 4.5%, whose default value for AOBC is calculated based on our internal credit rating of American Outdoor 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 American Outdoor 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 AOBC stock the variable cost ratio is equal to 41.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $334 million in the base year in the intrinsic value calculation for AOBC 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 5.5% for American Outdoor Brands.

Corporate tax rate of 27% is the nominal tax rate for American Outdoor 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 AOBC 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 AOBC are equal to 50.7%.

Life of production assets of 8.9 years is the average useful life of capital assets used in American Outdoor 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 AOBC is equal to 20.9%. 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 - $422.148 million for American Outdoor 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 54.368 million for American Outdoor 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 American Outdoor Brands at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
AOBC American Outdo 15.61 10.83  hold
RGR Sturm Ruger 68.50 43.16  sell
NPK National Prest 125.90 78.63  sell
GD General Dynami 204.61 416.37  str.buy

COMPANY NEWS

▶ Stocks Rebound Enough to Snap Losing Skid   [Sep-11-18 09:15AM  Zacks]
▶ 3 Reasons Firearms Stocks Are Soaring Again   [Sep-08-18 07:20AM  Motley Fool]
▶ After-hours buzz: AOBC, LULU & more   [Aug-30-18 05:27PM  CNBC]
▶ 3 Growth Stocks for Forward-Looking Investors   [Jul-25-18 06:00AM  Motley Fool]
▶ 7 Small-Cap Stocks to Consider for the Second Half of 2018   [Jul-09-18 11:01AM  InvestorPlace]
▶ [$$] Smith & Wesson Parent Company Sees Another Year of Falling Sales   [Jun-20-18 09:39PM  The Wall Street Journal]
▶ Best-In-Class NasdaqCM Undervalued Stocks   [Jun-12-18 10:02AM  Simply Wall St.]
▶ Is American Outdoors Brand Corp a Buy?   [May-30-18 10:40AM  Motley Fool]
▶ How I Set Off The Alarm At NRA Headquarters   [May-28-18 03:40PM  Forbes]
▶ Gun vendors frustrated at slumping sales   [01:51PM  CNBC Videos]
▶ Top 10 Rifle Manufacturers in 2018   [Apr-30-18 11:47PM  Insider Monkey]
▶ 3 Stocks That Could Double Your Money   [09:00AM  Motley Fool]
▶ BlackRock to offer gun-free funds   [Apr-06-18 01:34PM  Yahoo Finance Video]
▶ Yahoo Finance Live: Market Movers - Apr 6th, 2018   [11:53AM  Yahoo Finance Video]
▶ Is American Outdoors Brand Corp a Buy?   [Apr-04-18 07:06PM  Motley Fool]
▶ Is Sturm, Ruger & Company, Inc. a Buy?   [Mar-31-18 08:01PM  Motley Fool]
▶ U.S. gunmaker Remington files for bankruptcy protection   [Mar-26-18 01:25PM  Yahoo Finance Video]
▶ Is Sturm, Ruger Still the Biggest Gunmaker in the U.S.?   [Mar-24-18 11:20AM  Motley Fool]
▶ Yahoo Finance Live: Market Movers - Mar 12th, 2018   [Mar-12-18 01:15PM  Yahoo Finance Video]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.