Intrinsic value of Bloomin' Brands, Inc. - BLMN

Previous Close

$19.91

  Intrinsic Value

$9.18

stock screener

  Rating & Target

str. sell

-54%

Previous close

$19.91

 
Intrinsic value

$9.18

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of BLMN 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 1.8

 

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
  4,209
  4,305
  4,416
  4,540
  4,678
  4,829
  4,993
  5,171
  5,363
  5,569
  5,789
  6,024
  6,274
  6,540
  6,822
  7,121
  7,438
  7,772
  8,126
  8,499
  8,893
  9,309
  9,747
  10,208
  10,694
  11,206
  11,744
  12,311
  12,907
  13,534
Variable operating expenses, $m
  4,067
  4,158
  4,262
  4,379
  4,509
  4,650
  4,805
  4,972
  5,153
  5,346
  5,441
  5,662
  5,897
  6,147
  6,413
  6,694
  6,991
  7,306
  7,638
  7,989
  8,359
  8,750
  9,161
  9,595
  10,052
  10,533
  11,039
  11,572
  12,132
  12,722
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
  4,067
  4,158
  4,262
  4,379
  4,509
  4,650
  4,805
  4,972
  5,153
  5,346
  5,441
  5,662
  5,897
  6,147
  6,413
  6,694
  6,991
  7,306
  7,638
  7,989
  8,359
  8,750
  9,161
  9,595
  10,052
  10,533
  11,039
  11,572
  12,132
  12,722
Operating income, $m
  141
  147
  154
  161
  169
  178
  188
  199
  210
  223
  348
  362
  377
  393
  410
  428
  447
  467
  488
  510
  534
  559
  585
  613
  642
  673
  705
  739
  775
  813
EBITDA, $m
  416
  425
  436
  449
  462
  477
  493
  511
  530
  550
  572
  595
  620
  646
  674
  704
  735
  768
  803
  840
  879
  920
  963
  1,009
  1,057
  1,107
  1,160
  1,216
  1,275
  1,337
Interest expense (income), $m
  42
  59
  51
  53
  57
  60
  64
  69
  73
  79
  84
  90
  97
  103
  111
  118
  127
  135
  144
  154
  164
  175
  187
  199
  211
  225
  239
  254
  269
  286
  303
Earnings before tax, $m
  82
  96
  100
  104
  109
  114
  120
  125
  132
  139
  257
  265
  273
  282
  291
  301
  311
  322
  334
  346
  359
  372
  387
  402
  417
  434
  451
  470
  489
  509
Tax expense, $m
  22
  26
  27
  28
  29
  31
  32
  34
  36
  37
  70
  72
  74
  76
  79
  81
  84
  87
  90
  93
  97
  101
  104
  108
  113
  117
  122
  127
  132
  138
Net income, $m
  60
  70
  73
  76
  80
  83
  87
  92
  96
  101
  188
  194
  200
  206
  213
  220
  227
  235
  244
  253
  262
  272
  282
  293
  305
  317
  330
  343
  357
  372

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
  2,514
  2,572
  2,638
  2,712
  2,794
  2,885
  2,983
  3,089
  3,204
  3,327
  3,458
  3,599
  3,748
  3,907
  4,075
  4,254
  4,443
  4,643
  4,854
  5,077
  5,313
  5,561
  5,822
  6,098
  6,388
  6,694
  7,016
  7,354
  7,710
  8,085
Adjusted assets (=assets-cash), $m
  2,514
  2,572
  2,638
  2,712
  2,794
  2,885
  2,983
  3,089
  3,204
  3,327
  3,458
  3,599
  3,748
  3,907
  4,075
  4,254
  4,443
  4,643
  4,854
  5,077
  5,313
  5,561
  5,822
  6,098
  6,388
  6,694
  7,016
  7,354
  7,710
  8,085
Revenue / Adjusted assets
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
  1.674
Average production assets, $m
  1,582
  1,619
  1,660
  1,707
  1,759
  1,816
  1,877
  1,944
  2,017
  2,094
  2,177
  2,265
  2,359
  2,459
  2,565
  2,678
  2,797
  2,922
  3,055
  3,196
  3,344
  3,500
  3,665
  3,838
  4,021
  4,213
  4,416
  4,629
  4,853
  5,089
Working capital, $m
  -509
  -521
  -534
  -549
  -566
  -584
  -604
  -626
  -649
  -674
  -700
  -729
  -759
  -791
  -825
  -862
  -900
  -940
  -983
  -1,028
  -1,076
  -1,126
  -1,179
  -1,235
  -1,294
  -1,356
  -1,421
  -1,490
  -1,562
  -1,638
Total debt, $m
  938
  990
  1,050
  1,117
  1,191
  1,272
  1,360
  1,456
  1,559
  1,670
  1,788
  1,914
  2,049
  2,192
  2,344
  2,504
  2,674
  2,854
  3,045
  3,245
  3,457
  3,680
  3,916
  4,164
  4,425
  4,700
  4,990
  5,295
  5,615
  5,952
Total liabilities, $m
  2,263
  2,315
  2,374
  2,441
  2,515
  2,596
  2,685
  2,780
  2,883
  2,994
  3,112
  3,239
  3,373
  3,516
  3,668
  3,829
  3,999
  4,179
  4,369
  4,570
  4,781
  5,005
  5,240
  5,488
  5,750
  6,025
  6,314
  6,619
  6,939
  7,277
Total equity, $m
  251
  257
  264
  271
  279
  288
  298
  309
  320
  333
  346
  360
  375
  391
  408
  425
  444
  464
  485
  508
  531
  556
  582
  610
  639
  669
  702
  735
  771
  809
Total liabilities and equity, $m
  2,514
  2,572
  2,638
  2,712
  2,794
  2,884
  2,983
  3,089
  3,203
  3,327
  3,458
  3,599
  3,748
  3,907
  4,076
  4,254
  4,443
  4,643
  4,854
  5,078
  5,312
  5,561
  5,822
  6,098
  6,389
  6,694
  7,016
  7,354
  7,710
  8,086
Debt-to-equity ratio
  3.730
  3.850
  3.980
  4.120
  4.260
  4.410
  4.560
  4.710
  4.870
  5.020
  5.170
  5.320
  5.470
  5.610
  5.750
  5.890
  6.020
  6.150
  6.270
  6.390
  6.510
  6.620
  6.730
  6.830
  6.930
  7.020
  7.110
  7.200
  7.280
  7.360
Adjusted equity ratio
  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
  60
  70
  73
  76
  80
  83
  87
  92
  96
  101
  188
  194
  200
  206
  213
  220
  227
  235
  244
  253
  262
  272
  282
  293
  305
  317
  330
  343
  357
  372
Depreciation, amort., depletion, $m
  275
  278
  283
  288
  293
  299
  305
  312
  319
  327
  224
  234
  243
  254
  264
  276
  288
  301
  315
  329
  345
  361
  378
  396
  415
  434
  455
  477
  500
  525
Funds from operations, $m
  335
  349
  356
  364
  372
  382
  392
  404
  416
  429
  412
  427
  443
  459
  477
  496
  516
  537
  559
  582
  607
  633
  660
  689
  719
  751
  785
  820
  857
  897
Change in working capital, $m
  -10
  -12
  -13
  -15
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -72
  -76
Cash from operations, $m
  345
  360
  369
  379
  389
  400
  412
  425
  439
  454
  439
  456
  473
  492
  511
  532
  554
  577
  601
  627
  654
  683
  713
  745
  778
  813
  850
  889
  930
  972
Maintenance CAPEX, $m
  -160
  -163
  -167
  -171
  -176
  -181
  -187
  -194
  -200
  -208
  -216
  -224
  -234
  -243
  -254
  -264
  -276
  -288
  -301
  -315
  -329
  -345
  -361
  -378
  -396
  -415
  -434
  -455
  -477
  -500
New CAPEX, $m
  -30
  -36
  -42
  -47
  -52
  -57
  -62
  -67
  -72
  -77
  -83
  -88
  -94
  -100
  -106
  -112
  -119
  -126
  -133
  -140
  -148
  -156
  -165
  -173
  -183
  -192
  -203
  -213
  -224
  -236
Cash from investing activities, $m
  -190
  -199
  -209
  -218
  -228
  -238
  -249
  -261
  -272
  -285
  -299
  -312
  -328
  -343
  -360
  -376
  -395
  -414
  -434
  -455
  -477
  -501
  -526
  -551
  -579
  -607
  -637
  -668
  -701
  -736
Free cash flow, $m
  155
  161
  161
  161
  161
  162
  163
  165
  166
  168
  140
  143
  145
  148
  152
  155
  159
  163
  167
  172
  177
  182
  187
  193
  200
  206
  213
  220
  228
  236
Issuance/(repayment) of debt, $m
  -156
  52
  59
  67
  74
  81
  88
  96
  103
  111
  118
  126
  134
  143
  152
  161
  170
  180
  190
  201
  212
  223
  235
  248
  261
  275
  290
  305
  321
  337
Issuance/(repurchase) of shares, $m
  146
  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  
  -10
  52
  59
  67
  74
  81
  88
  96
  103
  111
  118
  126
  134
  143
  152
  161
  170
  180
  190
  201
  212
  223
  235
  248
  261
  275
  290
  305
  321
  337
Total cash flow (excl. dividends), $m
  144
  213
  220
  228
  235
  243
  252
  260
  269
  279
  259
  269
  280
  291
  303
  316
  329
  343
  357
  373
  389
  405
  423
  441
  461
  481
  503
  525
  549
  573
Retained Cash Flow (-), $m
  -206
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -37
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
  -61
  207
  214
  220
  227
  234
  242
  250
  258
  267
  246
  255
  265
  275
  286
  298
  310
  323
  336
  350
  365
  380
  397
  414
  432
  451
  470
  491
  513
  536
Discount rate, %
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
  -56
  167
  152
  138
  123
  108
  94
  81
  68
  57
  41
  33
  26
  21
  16
  12
  8
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8
  75.8

Bloomin' Brands, Inc. is a holding company. The Company owns and operates casual, upscale casual and fine dining restaurants. The Company operates through two segments: U.S. and International. The U.S. segment includes all brands operating in the United States. The International segment includes brands operating outside the United States. As of December 25, 2016, the Company had a portfolio of four restaurant concepts: Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar. OSI Restaurant Partners, LLC (OSI) is the Company's primary operating entity. New Private Restaurant Properties, LLC (PRP), an indirect subsidiary of the Company, leases the Company-owned restaurant properties to OSI's subsidiaries. As of December 25, 2016, the Company owned and operated 1,276 restaurants and franchised 240 restaurants across 48 states, Puerto Rico, Guam and 20 countries.

FINANCIAL RATIOS  of  Bloomin' Brands, Inc. (BLMN)

Valuation Ratios
P/E Ratio 49.3
Price to Sales 0.5
Price to Book 11.3
Price to Tangible Book
Price to Cash Flow 6.1
Price to Free Cash Flow 25.9
Growth Rates
Sales Growth Rate -2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 24.3%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 655.2%
Total Debt to Equity 674.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 2.5%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 14.2%
Return On Equity - 3 Yr. Avg. 19.5%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 68.1%
Gross Margin - 3 Yr. Avg. 67.8%
EBITDA Margin 6.9%
EBITDA Margin - 3 Yr. Avg. 8.2%
Operating Margin 2.4%
Oper. Margin - 3 Yr. Avg. 3.9%
Pre-Tax Margin 1.3%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate 17.9%
Eff/ Tax Rate - 3 Yr. Avg. 20.2%
Payout Ratio 73.8%

BLMN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BLMN stock intrinsic value calculation we used $4126 million for the last fiscal year's total revenue generated by Bloomin' Brands, Inc.. The default revenue input number comes from 0001 income statement of Bloomin' Brands, Inc.. 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 BLMN 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 10.8%, whose default value for BLMN is calculated based on our internal credit rating of Bloomin' Brands, Inc., 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 Bloomin' Brands, Inc..
    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 BLMN stock the variable cost ratio is equal to 96.7%.

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 BLMN 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 5.4% for Bloomin' Brands, Inc..

Corporate tax rate of 27% is the nominal tax rate for Bloomin' Brands, Inc.. 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 BLMN 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 BLMN are equal to 37.6%.

Life of production assets of 9.7 years is the average useful life of capital assets used in Bloomin' Brands, Inc. 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 BLMN 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 - $45.73 million for Bloomin' Brands, Inc. - 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 91.353 million for Bloomin' Brands, Inc. 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 Bloomin' Brands, Inc. at the current share price and the inputted number of shares is $1.8 billion.

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