Intrinsic value of Columbia Sportswear Company - COLM

Previous Close

$98.72

  Intrinsic Value

$148.38

stock screener

  Rating & Target

str. buy

+50%

Previous close

$98.72

 
Intrinsic value

$148.38

 
Up/down potential

+50%

 
Rating

str. buy

We calculate the intrinsic value of COLM 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 6.7

 

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, %
  18.20
  16.88
  15.69
  14.62
  13.66
  12.79
  12.02
  11.31
  10.68
  10.11
  9.60
  9.14
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
Revenue, $m
  3,312
  3,871
  4,478
  5,133
  5,835
  6,581
  7,372
  8,206
  9,082
  10,001
  10,961
  11,963
  13,008
  14,094
  15,225
  16,400
  17,621
  18,890
  20,209
  21,579
  23,005
  24,487
  26,030
  27,636
  29,309
  31,052
  32,869
  34,765
  36,743
  38,809
Variable operating expenses, $m
  2,442
  2,850
  3,292
  3,769
  4,280
  4,824
  5,400
  6,008
  6,646
  7,316
  7,986
  8,716
  9,477
  10,269
  11,092
  11,949
  12,838
  13,763
  14,724
  15,722
  16,761
  17,841
  18,965
  20,135
  21,354
  22,624
  23,948
  25,329
  26,770
  28,275
Fixed operating expenses, $m
  398
  406
  415
  424
  434
  443
  453
  463
  473
  484
  494
  505
  516
  528
  539
  551
  563
  576
  588
  601
  614
  628
  642
  656
  670
  685
  700
  715
  731
  747
Total operating expenses, $m
  2,840
  3,256
  3,707
  4,193
  4,714
  5,267
  5,853
  6,471
  7,119
  7,800
  8,480
  9,221
  9,993
  10,797
  11,631
  12,500
  13,401
  14,339
  15,312
  16,323
  17,375
  18,469
  19,607
  20,791
  22,024
  23,309
  24,648
  26,044
  27,501
  29,022
Operating income, $m
  472
  615
  771
  940
  1,121
  1,314
  1,519
  1,735
  1,963
  2,202
  2,481
  2,742
  3,014
  3,298
  3,593
  3,900
  4,220
  4,552
  4,897
  5,256
  5,630
  6,018
  6,423
  6,845
  7,285
  7,743
  8,221
  8,720
  9,242
  9,786
EBITDA, $m
  556
  708
  874
  1,054
  1,246
  1,452
  1,670
  1,900
  2,142
  2,396
  2,662
  2,940
  3,229
  3,531
  3,844
  4,171
  4,510
  4,863
  5,230
  5,612
  6,009
  6,423
  6,853
  7,301
  7,769
  8,256
  8,764
  9,294
  9,848
  10,427
Interest expense (income), $m
  1
  0
  7
  14
  22
  31
  41
  51
  61
  72
  84
  96
  109
  123
  137
  151
  166
  182
  198
  215
  233
  251
  271
  290
  311
  333
  355
  378
  403
  428
  455
Earnings before tax, $m
  472
  608
  757
  917
  1,089
  1,273
  1,468
  1,674
  1,890
  2,118
  2,385
  2,633
  2,892
  3,161
  3,442
  3,734
  4,037
  4,353
  4,681
  5,023
  5,378
  5,748
  6,133
  6,534
  6,952
  7,388
  7,843
  8,318
  8,814
  9,332
Tax expense, $m
  127
  164
  204
  248
  294
  344
  396
  452
  510
  572
  644
  711
  781
  854
  929
  1,008
  1,090
  1,175
  1,264
  1,356
  1,452
  1,552
  1,656
  1,764
  1,877
  1,995
  2,118
  2,246
  2,380
  2,520
Net income, $m
  345
  444
  552
  670
  795
  929
  1,072
  1,222
  1,380
  1,546
  1,741
  1,922
  2,111
  2,308
  2,513
  2,726
  2,947
  3,178
  3,417
  3,667
  3,926
  4,196
  4,477
  4,770
  5,075
  5,393
  5,725
  6,072
  6,434
  6,812

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
  2,633
  3,077
  3,560
  4,081
  4,638
  5,231
  5,860
  6,523
  7,220
  7,950
  8,713
  9,510
  10,340
  11,204
  12,102
  13,036
  14,007
  15,016
  16,064
  17,154
  18,287
  19,465
  20,691
  21,968
  23,298
  24,683
  26,128
  27,635
  29,208
  30,850
Adjusted assets (=assets-cash), $m
  2,633
  3,077
  3,560
  4,081
  4,638
  5,231
  5,860
  6,523
  7,220
  7,950
  8,713
  9,510
  10,340
  11,204
  12,102
  13,036
  14,007
  15,016
  16,064
  17,154
  18,287
  19,465
  20,691
  21,968
  23,298
  24,683
  26,128
  27,635
  29,208
  30,850
Revenue / Adjusted assets
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
  1.258
Average production assets, $m
  454
  530
  614
  703
  799
  902
  1,010
  1,124
  1,244
  1,370
  1,502
  1,639
  1,782
  1,931
  2,086
  2,247
  2,414
  2,588
  2,769
  2,956
  3,152
  3,355
  3,566
  3,786
  4,015
  4,254
  4,503
  4,763
  5,034
  5,317
Working capital, $m
  566
  662
  766
  878
  998
  1,125
  1,261
  1,403
  1,553
  1,710
  1,874
  2,046
  2,224
  2,410
  2,603
  2,804
  3,013
  3,230
  3,456
  3,690
  3,934
  4,187
  4,451
  4,726
  5,012
  5,310
  5,621
  5,945
  6,283
  6,636
Total debt, $m
  127
  265
  416
  578
  752
  937
  1,133
  1,340
  1,558
  1,786
  2,024
  2,272
  2,531
  2,801
  3,081
  3,372
  3,675
  3,990
  4,317
  4,657
  5,011
  5,378
  5,761
  6,159
  6,574
  7,006
  7,457
  7,927
  8,418
  8,930
Total liabilities, $m
  821
  960
  1,111
  1,273
  1,447
  1,632
  1,828
  2,035
  2,253
  2,480
  2,719
  2,967
  3,226
  3,496
  3,776
  4,067
  4,370
  4,685
  5,012
  5,352
  5,705
  6,073
  6,456
  6,854
  7,269
  7,701
  8,152
  8,622
  9,113
  9,625
Total equity, $m
  1,811
  2,117
  2,449
  2,807
  3,191
  3,599
  4,032
  4,488
  4,967
  5,470
  5,995
  6,543
  7,114
  7,708
  8,326
  8,969
  9,637
  10,331
  11,052
  11,802
  12,581
  13,392
  14,236
  15,114
  16,029
  16,982
  17,976
  19,013
  20,095
  21,225
Total liabilities and equity, $m
  2,632
  3,077
  3,560
  4,080
  4,638
  5,231
  5,860
  6,523
  7,220
  7,950
  8,714
  9,510
  10,340
  11,204
  12,102
  13,036
  14,007
  15,016
  16,064
  17,154
  18,286
  19,465
  20,692
  21,968
  23,298
  24,683
  26,128
  27,635
  29,208
  30,850
Debt-to-equity ratio
  0.070
  0.130
  0.170
  0.210
  0.240
  0.260
  0.280
  0.300
  0.310
  0.330
  0.340
  0.350
  0.360
  0.360
  0.370
  0.380
  0.380
  0.390
  0.390
  0.390
  0.400
  0.400
  0.400
  0.410
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
Adjusted equity ratio
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  345
  444
  552
  670
  795
  929
  1,072
  1,222
  1,380
  1,546
  1,741
  1,922
  2,111
  2,308
  2,513
  2,726
  2,947
  3,178
  3,417
  3,667
  3,926
  4,196
  4,477
  4,770
  5,075
  5,393
  5,725
  6,072
  6,434
  6,812
Depreciation, amort., depletion, $m
  84
  93
  103
  114
  126
  138
  151
  165
  179
  194
  181
  197
  215
  233
  251
  271
  291
  312
  334
  356
  380
  404
  430
  456
  484
  513
  543
  574
  606
  641
Funds from operations, $m
  429
  537
  656
  784
  921
  1,067
  1,223
  1,387
  1,559
  1,740
  1,922
  2,119
  2,326
  2,540
  2,764
  2,996
  3,238
  3,490
  3,751
  4,023
  4,306
  4,600
  4,907
  5,226
  5,559
  5,906
  6,268
  6,646
  7,040
  7,453
Change in working capital, $m
  87
  96
  104
  112
  120
  128
  135
  143
  150
  157
  164
  171
  179
  186
  193
  201
  209
  217
  226
  234
  244
  254
  264
  275
  286
  298
  311
  324
  338
  353
Cash from operations, $m
  341
  442
  552
  672
  801
  940
  1,087
  1,244
  1,409
  1,583
  1,757
  1,948
  2,147
  2,355
  2,571
  2,795
  3,029
  3,273
  3,525
  3,788
  4,062
  4,347
  4,643
  4,951
  5,273
  5,608
  5,957
  6,322
  6,702
  7,100
Maintenance CAPEX, $m
  -46
  -55
  -64
  -74
  -85
  -96
  -109
  -122
  -135
  -150
  -165
  -181
  -197
  -215
  -233
  -251
  -271
  -291
  -312
  -334
  -356
  -380
  -404
  -430
  -456
  -484
  -513
  -543
  -574
  -606
New CAPEX, $m
  -69
  -77
  -83
  -90
  -96
  -102
  -108
  -114
  -120
  -126
  -132
  -137
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -195
  -203
  -211
  -220
  -229
  -239
  -249
  -260
  -271
  -283
Cash from investing activities, $m
  -115
  -132
  -147
  -164
  -181
  -198
  -217
  -236
  -255
  -276
  -297
  -318
  -340
  -364
  -388
  -412
  -438
  -465
  -493
  -522
  -551
  -583
  -615
  -650
  -685
  -723
  -762
  -803
  -845
  -889
Free cash flow, $m
  226
  310
  405
  508
  620
  741
  870
  1,008
  1,154
  1,307
  1,461
  1,630
  1,807
  1,991
  2,183
  2,383
  2,591
  2,808
  3,033
  3,267
  3,511
  3,764
  4,027
  4,302
  4,587
  4,885
  5,196
  5,519
  5,857
  6,210
Issuance/(repayment) of debt, $m
  127
  139
  151
  162
  174
  185
  196
  207
  217
  228
  238
  249
  259
  270
  280
  291
  303
  315
  327
  340
  353
  368
  383
  398
  415
  432
  451
  470
  491
  512
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  127
  139
  151
  162
  174
  185
  196
  207
  217
  228
  238
  249
  259
  270
  280
  291
  303
  315
  327
  340
  353
  368
  383
  398
  415
  432
  451
  470
  491
  512
Total cash flow (excl. dividends), $m
  352
  449
  555
  670
  794
  926
  1,066
  1,215
  1,371
  1,535
  1,699
  1,878
  2,065
  2,260
  2,463
  2,675
  2,894
  3,123
  3,360
  3,607
  3,864
  4,131
  4,410
  4,700
  5,002
  5,318
  5,646
  5,990
  6,348
  6,722
Retained Cash Flow (-), $m
  -279
  -306
  -332
  -358
  -384
  -408
  -432
  -456
  -479
  -502
  -525
  -548
  -571
  -594
  -618
  -643
  -668
  -694
  -721
  -750
  -779
  -811
  -844
  -878
  -915
  -953
  -994
  -1,037
  -1,082
  -1,130
Prev. year cash balance distribution, $m
  142
  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
  215
  143
  223
  312
  411
  518
  634
  759
  892
  1,033
  1,174
  1,330
  1,494
  1,666
  1,845
  2,032
  2,226
  2,429
  2,639
  2,857
  3,085
  3,321
  3,566
  3,822
  4,087
  4,364
  4,652
  4,953
  5,266
  5,593
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  206
  131
  194
  257
  318
  376
  428
  474
  512
  541
  557
  568
  568
  559
  542
  516
  484
  447
  406
  363
  319
  276
  234
  195
  159
  127
  100
  77
  57
  42
Current shareholders' claim on cash, %
  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
  100.0

Columbia Sportswear Company is an apparel and footwear company. The Company designs, sources, markets and distributes outdoor lifestyle apparel, footwear, accessories and equipment under the Columbia, Mountain Hardwear, Sorel, prAna and other brands. Its geographic segments are the United States, Latin America and Asia Pacific (LAAP), Europe, Middle East and Africa (EMEA), and Canada. The Company develops and manages its merchandise in categories, including apparel, accessories and equipment, and footwear. It distributes its products through a mix of wholesale distribution channels, its own direct-to-consumer channels (retail stores and e-commerce), independent distributors and licensees. As of December 31, 2016, its products were sold in approximately 90 countries. In 59 of those countries, it sells to independent distributors to whom it has granted distribution rights. Contract manufacturers located outside the United States manufacture all of its products.

FINANCIAL RATIOS  of  Columbia Sportswear Company (COLM)

Valuation Ratios
P/E Ratio 35.9
Price to Sales 2.9
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 25.1
Price to Free Cash Flow 30.7
Growth Rates
Sales Growth Rate 2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.6%
Cap. Spend. - 3 Yr. Gr. Rate -6.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 258
Management Effectiveness
Return On Assets 10%
Ret/ On Assets - 3 Yr. Avg. 9.2%
Return On Total Capital 13%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 13%
Return On Equity - 3 Yr. Avg. 12.1%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 46.7%
Gross Margin - 3 Yr. Avg. 46.1%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 12.8%
Operating Margin 10.8%
Oper. Margin - 3 Yr. Avg. 10.3%
Pre-Tax Margin 10.8%
Pre-Tax Margin - 3 Yr. Avg. 10.3%
Net Profit Margin 8.1%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 23%
Eff/ Tax Rate - 3 Yr. Avg. 26.2%
Payout Ratio 25%

COLM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COLM stock intrinsic value calculation we used $2802 million for the last fiscal year's total revenue generated by Columbia Sportswear Company. The default revenue input number comes from 0001 income statement of Columbia Sportswear Company. 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 COLM stock valuation model: a) initial revenue growth rate of 18.2% 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 4.3%, whose default value for COLM is calculated based on our internal credit rating of Columbia Sportswear Company, 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 Columbia Sportswear Company.
    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 COLM stock the variable cost ratio is equal to 73.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $389 million in the base year in the intrinsic value calculation for COLM 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 Columbia Sportswear Company.

Corporate tax rate of 27% is the nominal tax rate for Columbia Sportswear Company. 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 COLM 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 COLM are equal to 13.7%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Columbia Sportswear Company 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 COLM is equal to 17.1%. 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 - $1673.857 million for Columbia Sportswear Company - 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 68.241 million for Columbia Sportswear Company 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 Columbia Sportswear Company at the current share price and the inputted number of shares is $6.7 billion.

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