Intrinsic value of Destination Maternity Corporation - DEST

Previous Close

$2.19

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.19

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of DEST 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 0.0

 

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
  414
  424
  435
  447
  460
  475
  491
  509
  528
  548
  570
  593
  617
  644
  671
  701
  732
  765
  800
  836
  875
  916
  959
  1,004
  1,052
  1,103
  1,156
  1,211
  1,270
  1,332
Variable operating expenses, $m
  233
  239
  245
  251
  259
  267
  276
  285
  296
  307
  312
  325
  338
  353
  368
  384
  401
  419
  438
  458
  479
  502
  525
  550
  576
  604
  633
  664
  696
  729
Fixed operating expenses, $m
  201
  206
  210
  215
  220
  224
  229
  234
  240
  245
  250
  256
  261
  267
  273
  279
  285
  291
  298
  304
  311
  318
  325
  332
  339
  347
  355
  362
  370
  378
Total operating expenses, $m
  434
  445
  455
  466
  479
  491
  505
  519
  536
  552
  562
  581
  599
  620
  641
  663
  686
  710
  736
  762
  790
  820
  850
  882
  915
  951
  988
  1,026
  1,066
  1,107
Operating income, $m
  -21
  -21
  -20
  -19
  -18
  -16
  -14
  -11
  -8
  -4
  7
  12
  18
  24
  31
  38
  46
  54
  64
  74
  85
  96
  109
  122
  136
  152
  168
  186
  204
  224
EBITDA, $m
  1
  2
  2
  4
  6
  8
  11
  15
  19
  23
  28
  34
  41
  48
  55
  64
  73
  83
  93
  105
  117
  130
  144
  159
  175
  193
  211
  230
  251
  273
Interest expense (income), $m
  0
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
Earnings before tax, $m
  -24
  -25
  -25
  -24
  -23
  -22
  -20
  -17
  -14
  -11
  -1
  4
  8
  14
  20
  26
  33
  41
  49
  58
  68
  78
  89
  101
  114
  128
  143
  159
  176
  194
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  4
  5
  7
  9
  11
  13
  16
  18
  21
  24
  27
  31
  35
  39
  43
  47
  52
Net income, $m
  -24
  -25
  -25
  -24
  -23
  -22
  -20
  -17
  -14
  -11
  -1
  3
  6
  10
  14
  19
  24
  30
  36
  42
  49
  57
  65
  74
  84
  94
  104
  116
  128
  141

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
  166
  170
  174
  179
  184
  190
  197
  204
  211
  219
  228
  237
  247
  258
  269
  281
  293
  306
  320
  335
  350
  367
  384
  402
  421
  442
  463
  485
  509
  533
Adjusted assets (=assets-cash), $m
  166
  170
  174
  179
  184
  190
  197
  204
  211
  219
  228
  237
  247
  258
  269
  281
  293
  306
  320
  335
  350
  367
  384
  402
  421
  442
  463
  485
  509
  533
Revenue / Adjusted assets
  2.494
  2.494
  2.500
  2.497
  2.500
  2.500
  2.492
  2.495
  2.502
  2.502
  2.500
  2.502
  2.498
  2.496
  2.494
  2.495
  2.498
  2.500
  2.500
  2.496
  2.500
  2.496
  2.497
  2.498
  2.499
  2.495
  2.497
  2.497
  2.495
  2.499
Average production assets, $m
  77
  78
  80
  83
  85
  88
  91
  94
  98
  101
  105
  110
  114
  119
  124
  130
  135
  141
  148
  155
  162
  169
  177
  186
  195
  204
  214
  224
  235
  246
Working capital, $m
  27
  28
  29
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
Total debt, $m
  39
  42
  45
  49
  53
  57
  62
  68
  73
  79
  86
  93
  100
  108
  116
  125
  134
  144
  155
  166
  178
  190
  203
  216
  231
  246
  262
  279
  296
  315
Total liabilities, $m
  124
  127
  131
  134
  138
  143
  148
  153
  159
  165
  171
  178
  185
  193
  202
  210
  220
  230
  240
  251
  263
  275
  288
  302
  316
  331
  347
  364
  381
  400
Total equity, $m
  41
  42
  44
  45
  46
  48
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  96
  101
  105
  110
  116
  121
  127
  133
Total liabilities and equity, $m
  165
  169
  175
  179
  184
  191
  197
  204
  212
  220
  228
  237
  247
  257
  269
  280
  293
  307
  320
  335
  351
  367
  384
  403
  421
  441
  463
  485
  508
  533
Debt-to-equity ratio
  0.940
  0.990
  1.040
  1.090
  1.150
  1.210
  1.270
  1.330
  1.390
  1.440
  1.500
  1.560
  1.620
  1.680
  1.730
  1.780
  1.840
  1.890
  1.930
  1.980
  2.030
  2.070
  2.110
  2.150
  2.190
  2.230
  2.260
  2.300
  2.330
  2.360
Adjusted equity ratio
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -24
  -25
  -25
  -24
  -23
  -22
  -20
  -17
  -14
  -11
  -1
  3
  6
  10
  14
  19
  24
  30
  36
  42
  49
  57
  65
  74
  84
  94
  104
  116
  128
  141
Depreciation, amort., depletion, $m
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
Funds from operations, $m
  -2
  -2
  -2
  -1
  1
  3
  5
  8
  12
  16
  20
  25
  29
  34
  39
  45
  51
  58
  65
  73
  82
  91
  101
  111
  122
  134
  147
  161
  175
  191
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
Cash from operations, $m
  -3
  -3
  -3
  -2
  0
  2
  4
  7
  10
  14
  19
  23
  27
  32
  37
  43
  49
  56
  63
  71
  79
  88
  98
  108
  119
  131
  144
  157
  171
  187
Maintenance CAPEX, $m
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
New CAPEX, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
Cash from investing activities, $m
  -17
  -17
  -18
  -18
  -20
  -20
  -21
  -21
  -22
  -24
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -37
  -38
  -40
  -42
  -43
  -46
  -48
  -51
  -53
  -56
  -58
Free cash flow, $m
  -20
  -20
  -20
  -20
  -19
  -18
  -17
  -14
  -12
  -9
  -5
  -2
  1
  4
  8
  13
  17
  23
  28
  34
  41
  48
  56
  64
  73
  83
  93
  104
  116
  128
Issuance/(repayment) of debt, $m
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
Issuance/(repurchase) of shares, $m
  25
  26
  26
  25
  24
  23
  21
  19
  16
  13
  3
  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  
  27
  29
  29
  29
  28
  27
  26
  24
  22
  19
  10
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
Total cash flow (excl. dividends), $m
  8
  8
  9
  9
  9
  9
  10
  10
  10
  10
  4
  5
  8
  12
  17
  22
  27
  33
  39
  46
  53
  61
  69
  78
  88
  98
  109
  121
  133
  147
Retained Cash Flow (-), $m
  -25
  -26
  -26
  -25
  -24
  -23
  -21
  -19
  -16
  -13
  -3
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
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
  -17
  -17
  -17
  -16
  -15
  -14
  -12
  -9
  -6
  -3
  1
  2
  6
  10
  14
  19
  24
  29
  35
  42
  49
  57
  65
  73
  83
  93
  104
  115
  127
  141
Discount rate, %
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
  -16
  -15
  -14
  -12
  -10
  -8
  -6
  -4
  -3
  -1
  0
  1
  1
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  55.7
  31.0
  17.4
  10.0
  5.9
  3.6
  2.3
  1.5
  1.1
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8
  0.8

Destination Maternity Corporation, formerly Mothers Work, Inc. is a designer and retailer of maternity apparel in the United States. The Company operates a chain of maternity apparel specialty stores. The Company operates through the design, manufacture, and sale of maternity apparel and related accessories segment. It operates approximately 1,815 retail locations, including over 540 stores in the United States, Canada and Puerto Rico, and approximately 1,280 leased departments located within department stores and baby specialty stores throughout the United States, in Puerto Rico and, in England. The Company sells merchandise on the Internet, primarily through its Motherhood.com, APeaInThePod.com and DestinationMaternity.com Websites. The Company also sells its merchandise through its Canadian Website, MotherhoodCanada.ca, through Amazon.com in the United States, and through Websites of certain of its retail partners.

FINANCIAL RATIOS  of  Destination Maternity Corporation (DEST)

Valuation Ratios
P/E Ratio -0.9
Price to Sales 0.1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow -15.3
Growth Rates
Sales Growth Rate -13%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -55.2%
Cap. Spend. - 3 Yr. Gr. Rate -20.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 50.8%
Total Debt to Equity 70.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -16.7%
Ret/ On Assets - 3 Yr. Avg. -8.7%
Return On Total Capital -27.7%
Ret/ On T. Cap. - 3 Yr. Avg. -14.9%
Return On Equity -42.9%
Return On Equity - 3 Yr. Avg. -20.5%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 52.3%
Gross Margin - 3 Yr. Avg. 47.7%
EBITDA Margin 2.3%
EBITDA Margin - 3 Yr. Avg. -3.2%
Operating Margin -0.9%
Oper. Margin - 3 Yr. Avg. -6.1%
Pre-Tax Margin -1.8%
Pre-Tax Margin - 3 Yr. Avg. -6.7%
Net Profit Margin -7.6%
Net Profit Margin - 3 Yr. Avg. -6.2%
Effective Tax Rate -312.5%
Eff/ Tax Rate - 3 Yr. Avg. -76.8%
Payout Ratio 0%

DEST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DEST stock intrinsic value calculation we used $406 million for the last fiscal year's total revenue generated by Destination Maternity Corporation. The default revenue input number comes from 0001 income statement of Destination Maternity Corporation. 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 DEST 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 6.9%, whose default value for DEST is calculated based on our internal credit rating of Destination Maternity Corporation, 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 Destination Maternity Corporation.
    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 DEST stock the variable cost ratio is equal to 56.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $197 million in the base year in the intrinsic value calculation for DEST 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 10.2% for Destination Maternity Corporation.

Corporate tax rate of 27% is the nominal tax rate for Destination Maternity Corporation. 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 DEST 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 DEST are equal to 18.5%.

Life of production assets of 4.3 years is the average useful life of capital assets used in Destination Maternity Corporation 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 DEST is equal to 6.6%. 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 - $40.668 million for Destination Maternity Corporation - 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 14.450 million for Destination Maternity Corporation 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 Destination Maternity Corporation at the current share price and the inputted number of shares is $0.0 billion.

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