Intrinsic value of Capri Holdings Limited - CPRI

Previous Close

$28.07

  Intrinsic Value

$62.62

stock screener

  Rating & Target

str. buy

+123%

Previous close

$28.07

 
Intrinsic value

$62.62

 
Up/down potential

+123%

 
Rating

str. buy

We calculate the intrinsic value of CPRI 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 4.2

 

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
  4,813
  4,924
  5,051
  5,193
  5,350
  5,523
  5,711
  5,915
  6,134
  6,369
  6,621
  6,890
  7,176
  7,480
  7,803
  8,145
  8,507
  8,889
  9,294
  9,721
  10,171
  10,647
  11,148
  11,675
  12,231
  12,816
  13,432
  14,080
  14,762
  15,480
Variable operating expenses, $m
  3,538
  3,615
  3,703
  3,801
  3,910
  4,029
  4,159
  4,300
  4,452
  4,615
  4,581
  4,767
  4,965
  5,175
  5,398
  5,635
  5,885
  6,150
  6,430
  6,725
  7,037
  7,366
  7,713
  8,078
  8,462
  8,867
  9,293
  9,742
  10,213
  10,710
Fixed operating expenses, $m
  521
  533
  544
  556
  569
  581
  594
  607
  620
  634
  648
  662
  677
  692
  707
  722
  738
  755
  771
  788
  805
  823
  841
  860
  879
  898
  918
  938
  959
  980
Total operating expenses, $m
  4,059
  4,148
  4,247
  4,357
  4,479
  4,610
  4,753
  4,907
  5,072
  5,249
  5,229
  5,429
  5,642
  5,867
  6,105
  6,357
  6,623
  6,905
  7,201
  7,513
  7,842
  8,189
  8,554
  8,938
  9,341
  9,765
  10,211
  10,680
  11,172
  11,690
Operating income, $m
  754
  776
  804
  835
  872
  912
  958
  1,007
  1,061
  1,120
  1,392
  1,461
  1,534
  1,613
  1,697
  1,787
  1,883
  1,985
  2,093
  2,207
  2,329
  2,457
  2,594
  2,738
  2,890
  3,051
  3,221
  3,401
  3,590
  3,790
EBITDA, $m
  1,101
  1,127
  1,158
  1,194
  1,235
  1,280
  1,331
  1,386
  1,447
  1,513
  1,584
  1,660
  1,742
  1,829
  1,923
  2,023
  2,129
  2,242
  2,361
  2,488
  2,623
  2,765
  2,916
  3,075
  3,244
  3,422
  3,609
  3,808
  4,017
  4,238
Interest expense (income), $m
  0
  47
  49
  52
  55
  58
  62
  66
  70
  75
  80
  86
  92
  98
  105
  112
  119
  127
  136
  145
  154
  164
  175
  186
  197
  210
  223
  236
  251
  266
  282
Earnings before tax, $m
  706
  727
  752
  780
  813
  850
  892
  937
  986
  1,040
  1,307
  1,369
  1,437
  1,509
  1,586
  1,668
  1,756
  1,849
  1,948
  2,053
  2,165
  2,283
  2,408
  2,540
  2,681
  2,829
  2,985
  3,150
  3,324
  3,508
Tax expense, $m
  191
  196
  203
  211
  220
  230
  241
  253
  266
  281
  353
  370
  388
  407
  428
  450
  474
  499
  526
  554
  584
  616
  650
  686
  724
  764
  806
  851
  898
  947
Net income, $m
  516
  531
  549
  570
  594
  621
  651
  684
  720
  759
  954
  1,000
  1,049
  1,101
  1,158
  1,218
  1,282
  1,350
  1,422
  1,499
  1,580
  1,667
  1,758
  1,855
  1,957
  2,065
  2,179
  2,300
  2,427
  2,561

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
  4,139
  4,234
  4,343
  4,465
  4,600
  4,749
  4,911
  5,086
  5,274
  5,477
  5,693
  5,924
  6,170
  6,432
  6,709
  7,003
  7,314
  7,644
  7,991
  8,358
  8,746
  9,154
  9,585
  10,039
  10,517
  11,020
  11,550
  12,107
  12,693
  13,310
Adjusted assets (=assets-cash), $m
  4,139
  4,234
  4,343
  4,465
  4,600
  4,749
  4,911
  5,086
  5,274
  5,477
  5,693
  5,924
  6,170
  6,432
  6,709
  7,003
  7,314
  7,644
  7,991
  8,358
  8,746
  9,154
  9,585
  10,039
  10,517
  11,020
  11,550
  12,107
  12,693
  13,310
Revenue / Adjusted assets
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
  1.163
Average production assets, $m
  1,266
  1,295
  1,328
  1,366
  1,407
  1,453
  1,502
  1,556
  1,613
  1,675
  1,741
  1,812
  1,887
  1,967
  2,052
  2,142
  2,237
  2,338
  2,444
  2,557
  2,675
  2,800
  2,932
  3,071
  3,217
  3,371
  3,533
  3,703
  3,883
  4,071
Working capital, $m
  347
  355
  364
  374
  385
  398
  411
  426
  442
  459
  477
  496
  517
  539
  562
  586
  612
  640
  669
  700
  732
  767
  803
  841
  881
  923
  967
  1,014
  1,063
  1,115
Total debt, $m
  915
  963
  1,018
  1,079
  1,147
  1,222
  1,303
  1,391
  1,486
  1,588
  1,697
  1,813
  1,937
  2,068
  2,208
  2,356
  2,512
  2,678
  2,853
  3,037
  3,232
  3,438
  3,654
  3,883
  4,123
  4,376
  4,643
  4,923
  5,218
  5,528
Total liabilities, $m
  2,082
  2,130
  2,184
  2,246
  2,314
  2,389
  2,470
  2,558
  2,653
  2,755
  2,864
  2,980
  3,104
  3,235
  3,375
  3,523
  3,679
  3,845
  4,020
  4,204
  4,399
  4,605
  4,821
  5,050
  5,290
  5,543
  5,809
  6,090
  6,385
  6,695
Total equity, $m
  2,057
  2,104
  2,158
  2,219
  2,286
  2,360
  2,441
  2,528
  2,621
  2,722
  2,830
  2,944
  3,067
  3,197
  3,334
  3,481
  3,635
  3,799
  3,972
  4,154
  4,347
  4,550
  4,764
  4,989
  5,227
  5,477
  5,740
  6,017
  6,309
  6,615
Total liabilities and equity, $m
  4,139
  4,234
  4,342
  4,465
  4,600
  4,749
  4,911
  5,086
  5,274
  5,477
  5,694
  5,924
  6,171
  6,432
  6,709
  7,004
  7,314
  7,644
  7,992
  8,358
  8,746
  9,155
  9,585
  10,039
  10,517
  11,020
  11,549
  12,107
  12,694
  13,310
Debt-to-equity ratio
  0.440
  0.460
  0.470
  0.490
  0.500
  0.520
  0.530
  0.550
  0.570
  0.580
  0.600
  0.620
  0.630
  0.650
  0.660
  0.680
  0.690
  0.700
  0.720
  0.730
  0.740
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
Adjusted equity ratio
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  516
  531
  549
  570
  594
  621
  651
  684
  720
  759
  954
  1,000
  1,049
  1,101
  1,158
  1,218
  1,282
  1,350
  1,422
  1,499
  1,580
  1,667
  1,758
  1,855
  1,957
  2,065
  2,179
  2,300
  2,427
  2,561
Depreciation, amort., depletion, $m
  347
  351
  354
  358
  363
  368
  373
  379
  386
  392
  191
  199
  207
  216
  226
  235
  246
  257
  269
  281
  294
  308
  322
  337
  353
  370
  388
  407
  427
  447
Funds from operations, $m
  863
  881
  903
  928
  957
  989
  1,024
  1,063
  1,106
  1,152
  1,145
  1,199
  1,256
  1,318
  1,383
  1,453
  1,528
  1,607
  1,691
  1,780
  1,874
  1,974
  2,080
  2,192
  2,310
  2,435
  2,567
  2,707
  2,853
  3,009
Change in working capital, $m
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
Cash from operations, $m
  856
  873
  894
  918
  945
  976
  1,011
  1,048
  1,090
  1,135
  1,127
  1,179
  1,235
  1,296
  1,360
  1,428
  1,501
  1,579
  1,662
  1,749
  1,842
  1,940
  2,044
  2,154
  2,270
  2,393
  2,523
  2,660
  2,804
  2,957
Maintenance CAPEX, $m
  -137
  -139
  -142
  -146
  -150
  -155
  -160
  -165
  -171
  -177
  -184
  -191
  -199
  -207
  -216
  -226
  -235
  -246
  -257
  -269
  -281
  -294
  -308
  -322
  -337
  -353
  -370
  -388
  -407
  -427
New CAPEX, $m
  -23
  -29
  -33
  -37
  -41
  -45
  -49
  -54
  -58
  -62
  -66
  -71
  -75
  -80
  -85
  -90
  -95
  -101
  -106
  -112
  -119
  -125
  -132
  -139
  -146
  -154
  -162
  -170
  -179
  -189
Cash from investing activities, $m
  -160
  -168
  -175
  -183
  -191
  -200
  -209
  -219
  -229
  -239
  -250
  -262
  -274
  -287
  -301
  -316
  -330
  -347
  -363
  -381
  -400
  -419
  -440
  -461
  -483
  -507
  -532
  -558
  -586
  -616
Free cash flow, $m
  697
  705
  718
  735
  754
  776
  802
  830
  861
  896
  877
  917
  961
  1,008
  1,059
  1,113
  1,171
  1,233
  1,298
  1,368
  1,442
  1,521
  1,605
  1,693
  1,787
  1,886
  1,990
  2,101
  2,218
  2,342
Issuance/(repayment) of debt, $m
  40
  48
  55
  61
  68
  75
  81
  88
  95
  102
  109
  116
  124
  132
  140
  148
  157
  166
  175
  185
  195
  206
  217
  228
  240
  253
  266
  280
  295
  310
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  
  40
  48
  55
  61
  68
  75
  81
  88
  95
  102
  109
  116
  124
  132
  140
  148
  157
  166
  175
  185
  195
  206
  217
  228
  240
  253
  266
  280
  295
  310
Total cash flow (excl. dividends), $m
  737
  753
  773
  796
  822
  851
  883
  918
  956
  997
  986
  1,034
  1,085
  1,140
  1,198
  1,261
  1,327
  1,398
  1,473
  1,553
  1,637
  1,727
  1,821
  1,921
  2,027
  2,139
  2,257
  2,381
  2,513
  2,652
Retained Cash Flow (-), $m
  -39
  -47
  -54
  -61
  -67
  -74
  -80
  -87
  -94
  -101
  -108
  -115
  -122
  -130
  -138
  -146
  -155
  -164
  -173
  -182
  -193
  -203
  -214
  -226
  -238
  -250
  -263
  -277
  -291
  -307
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
  698
  706
  719
  735
  755
  777
  803
  831
  862
  897
  878
  919
  963
  1,010
  1,061
  1,115
  1,173
  1,235
  1,300
  1,370
  1,445
  1,524
  1,607
  1,696
  1,790
  1,889
  1,994
  2,104
  2,222
  2,345
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
  669
  646
  626
  605
  585
  564
  542
  519
  495
  470
  417
  392
  366
  339
  311
  283
  255
  227
  200
  174
  149
  126
  105
  86
  70
  55
  43
  33
  24
  18
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

FINANCIAL RATIOS  of  Capri Holdings Limited (CPRI)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CPRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPRI stock intrinsic value calculation we used $4719 million for the last fiscal year's total revenue generated by Capri Holdings Limited. The default revenue input number comes from 0001 income statement of Capri Holdings Limited. 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 CPRI 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 4.3%, whose default value for CPRI is calculated based on our internal credit rating of Capri Holdings Limited, 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 Capri Holdings Limited.
    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 CPRI stock the variable cost ratio is equal to 73.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $510 million in the base year in the intrinsic value calculation for CPRI 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 Capri Holdings Limited.

Corporate tax rate of 27% is the nominal tax rate for Capri Holdings Limited. 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 CPRI 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 CPRI are equal to 26.3%.

Life of production assets of 9.1 years is the average useful life of capital assets used in Capri Holdings Limited 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 CPRI is equal to 7.2%. 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 - $2017.7 million for Capri Holdings Limited - 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 150.664 million for Capri Holdings Limited 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 Capri Holdings Limited at the current share price and the inputted number of shares is $4.2 billion.

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