Intrinsic value of Del Frisco's Restaurant Group, Inc. - DFRG

Previous Close

$6.50

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$6.50

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of DFRG 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 0.2

 

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, %
  23.30
  21.47
  19.82
  18.34
  17.01
  15.81
  14.73
  13.75
  12.88
  12.09
  11.38
  10.74
  10.17
  9.65
  9.19
  8.77
  8.39
  8.05
  7.75
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
Revenue, $m
  466
  566
  678
  803
  939
  1,088
  1,248
  1,420
  1,602
  1,796
  2,001
  2,215
  2,441
  2,676
  2,922
  3,178
  3,445
  3,722
  4,011
  4,310
  4,622
  4,946
  5,282
  5,632
  5,996
  6,374
  6,768
  7,179
  7,606
  8,052
Variable operating expenses, $m
  478
  574
  683
  803
  934
  1,077
  1,232
  1,397
  1,573
  1,760
  1,928
  2,135
  2,352
  2,579
  2,816
  3,063
  3,320
  3,588
  3,866
  4,155
  4,455
  4,767
  5,091
  5,428
  5,779
  6,143
  6,523
  6,919
  7,331
  7,761
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
  478
  574
  683
  803
  934
  1,077
  1,232
  1,397
  1,573
  1,760
  1,928
  2,135
  2,352
  2,579
  2,816
  3,063
  3,320
  3,588
  3,866
  4,155
  4,455
  4,767
  5,091
  5,428
  5,779
  6,143
  6,523
  6,919
  7,331
  7,761
Operating income, $m
  -12
  -8
  -4
  0
  5
  11
  16
  23
  29
  36
  72
  80
  88
  97
  106
  115
  125
  135
  145
  156
  167
  179
  191
  204
  217
  231
  245
  260
  275
  291
EBITDA, $m
  40
  48
  58
  69
  80
  93
  107
  121
  137
  153
  171
  189
  208
  229
  250
  271
  294
  318
  343
  368
  395
  422
  451
  481
  512
  544
  578
  613
  650
  688
Interest expense (income), $m
  0
  60
  81
  105
  132
  162
  195
  231
  270
  311
  355
  402
  451
  503
  558
  614
  674
  735
  800
  867
  936
  1,009
  1,084
  1,162
  1,243
  1,327
  1,415
  1,506
  1,601
  1,700
  1,804
Earnings before tax, $m
  -72
  -90
  -110
  -132
  -157
  -185
  -215
  -247
  -282
  -319
  -330
  -371
  -415
  -461
  -509
  -559
  -611
  -665
  -722
  -780
  -841
  -905
  -971
  -1,039
  -1,110
  -1,184
  -1,261
  -1,342
  -1,425
  -1,512
Tax expense, $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
Net income, $m
  -72
  -90
  -110
  -132
  -157
  -185
  -215
  -247
  -282
  -319
  -330
  -371
  -415
  -461
  -509
  -559
  -611
  -665
  -722
  -780
  -841
  -905
  -971
  -1,039
  -1,110
  -1,184
  -1,261
  -1,342
  -1,425
  -1,512

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
  895
  1,087
  1,302
  1,541
  1,803
  2,088
  2,395
  2,725
  3,076
  3,447
  3,840
  4,252
  4,685
  5,137
  5,609
  6,100
  6,612
  7,145
  7,698
  8,274
  8,871
  9,492
  10,138
  10,809
  11,508
  12,234
  12,991
  13,778
  14,599
  15,455
Adjusted assets (=assets-cash), $m
  895
  1,087
  1,302
  1,541
  1,803
  2,088
  2,395
  2,725
  3,076
  3,447
  3,840
  4,252
  4,685
  5,137
  5,609
  6,100
  6,612
  7,145
  7,698
  8,274
  8,871
  9,492
  10,138
  10,809
  11,508
  12,234
  12,991
  13,778
  14,599
  15,455
Revenue / Adjusted assets
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
Average production assets, $m
  404
  490
  587
  695
  813
  942
  1,081
  1,229
  1,388
  1,555
  1,732
  1,919
  2,114
  2,318
  2,531
  2,752
  2,983
  3,224
  3,473
  3,733
  4,003
  4,283
  4,574
  4,877
  5,192
  5,520
  5,861
  6,217
  6,587
  6,973
Working capital, $m
  -44
  -53
  -64
  -75
  -88
  -102
  -117
  -133
  -151
  -169
  -188
  -208
  -229
  -252
  -275
  -299
  -324
  -350
  -377
  -405
  -434
  -465
  -497
  -529
  -564
  -599
  -636
  -675
  -715
  -757
Total debt, $m
  456
  592
  744
  913
  1,098
  1,299
  1,516
  1,749
  1,996
  2,259
  2,536
  2,827
  3,132
  3,452
  3,785
  4,132
  4,493
  4,869
  5,260
  5,666
  6,088
  6,527
  6,982
  7,456
  7,949
  8,462
  8,996
  9,553
  10,132
  10,736
Total liabilities, $m
  632
  767
  919
  1,088
  1,273
  1,474
  1,691
  1,924
  2,171
  2,434
  2,711
  3,002
  3,307
  3,627
  3,960
  4,307
  4,668
  5,044
  5,435
  5,841
  6,263
  6,702
  7,158
  7,631
  8,124
  8,637
  9,171
  9,728
  10,307
  10,911
Total equity, $m
  263
  319
  383
  453
  530
  614
  704
  801
  904
  1,014
  1,129
  1,250
  1,377
  1,510
  1,649
  1,794
  1,944
  2,101
  2,263
  2,432
  2,608
  2,791
  2,981
  3,178
  3,383
  3,597
  3,819
  4,051
  4,292
  4,544
Total liabilities and equity, $m
  895
  1,086
  1,302
  1,541
  1,803
  2,088
  2,395
  2,725
  3,075
  3,448
  3,840
  4,252
  4,684
  5,137
  5,609
  6,101
  6,612
  7,145
  7,698
  8,273
  8,871
  9,493
  10,139
  10,809
  11,507
  12,234
  12,990
  13,779
  14,599
  15,455
Debt-to-equity ratio
  1.740
  1.850
  1.940
  2.010
  2.070
  2.120
  2.150
  2.180
  2.210
  2.230
  2.250
  2.260
  2.270
  2.290
  2.300
  2.300
  2.310
  2.320
  2.320
  2.330
  2.330
  2.340
  2.340
  2.350
  2.350
  2.350
  2.360
  2.360
  2.360
  2.360
Adjusted equity ratio
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -72
  -90
  -110
  -132
  -157
  -185
  -215
  -247
  -282
  -319
  -330
  -371
  -415
  -461
  -509
  -559
  -611
  -665
  -722
  -780
  -841
  -905
  -971
  -1,039
  -1,110
  -1,184
  -1,261
  -1,342
  -1,425
  -1,512
Depreciation, amort., depletion, $m
  52
  57
  62
  68
  75
  82
  90
  99
  108
  117
  98
  109
  120
  132
  144
  156
  170
  183
  197
  212
  227
  243
  260
  277
  295
  314
  333
  353
  374
  396
Funds from operations, $m
  -20
  -33
  -47
  -64
  -82
  -103
  -125
  -149
  -174
  -202
  -231
  -262
  -295
  -329
  -365
  -402
  -441
  -482
  -524
  -568
  -614
  -661
  -711
  -762
  -815
  -871
  -928
  -988
  -1,051
  -1,116
Change in working capital, $m
  -8
  -9
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
Cash from operations, $m
  -12
  -24
  -37
  -52
  -69
  -89
  -110
  -132
  -157
  -184
  -212
  -242
  -274
  -307
  -342
  -378
  -416
  -456
  -497
  -540
  -585
  -631
  -679
  -729
  -781
  -835
  -891
  -950
  -1,011
  -1,074
Maintenance CAPEX, $m
  -19
  -23
  -28
  -33
  -40
  -46
  -54
  -61
  -70
  -79
  -88
  -98
  -109
  -120
  -132
  -144
  -156
  -170
  -183
  -197
  -212
  -227
  -243
  -260
  -277
  -295
  -314
  -333
  -353
  -374
New CAPEX, $m
  -76
  -87
  -97
  -108
  -118
  -129
  -139
  -149
  -158
  -168
  -177
  -186
  -195
  -204
  -213
  -222
  -231
  -240
  -250
  -260
  -270
  -280
  -291
  -303
  -315
  -328
  -341
  -355
  -370
  -386
Cash from investing activities, $m
  -95
  -110
  -125
  -141
  -158
  -175
  -193
  -210
  -228
  -247
  -265
  -284
  -304
  -324
  -345
  -366
  -387
  -410
  -433
  -457
  -482
  -507
  -534
  -563
  -592
  -623
  -655
  -688
  -723
  -760
Free cash flow, $m
  -107
  -133
  -162
  -193
  -227
  -263
  -302
  -343
  -385
  -430
  -477
  -527
  -578
  -631
  -686
  -744
  -804
  -866
  -930
  -997
  -1,066
  -1,139
  -1,214
  -1,292
  -1,373
  -1,458
  -1,546
  -1,638
  -1,734
  -1,834
Issuance/(repayment) of debt, $m
  119
  136
  152
  169
  185
  201
  217
  233
  248
  263
  277
  291
  305
  319
  333
  347
  361
  376
  391
  406
  422
  439
  456
  474
  493
  513
  534
  556
  580
  604
Issuance/(repurchase) of shares, $m
  121
  146
  173
  202
  234
  269
  305
  344
  385
  428
  445
  492
  542
  594
  647
  703
  761
  822
  884
  949
  1,017
  1,087
  1,160
  1,236
  1,316
  1,398
  1,484
  1,573
  1,666
  1,764
Cash from financing (excl. dividends), $m  
  240
  282
  325
  371
  419
  470
  522
  577
  633
  691
  722
  783
  847
  913
  980
  1,050
  1,122
  1,198
  1,275
  1,355
  1,439
  1,526
  1,616
  1,710
  1,809
  1,911
  2,018
  2,129
  2,246
  2,368
Total cash flow (excl. dividends), $m
  134
  149
  163
  178
  192
  206
  220
  234
  248
  261
  245
  257
  270
  282
  294
  307
  319
  332
  345
  359
  373
  387
  403
  419
  435
  453
  472
  491
  512
  534
Retained Cash Flow (-), $m
  -121
  -146
  -173
  -202
  -234
  -269
  -305
  -344
  -385
  -428
  -445
  -492
  -542
  -594
  -647
  -703
  -761
  -822
  -884
  -949
  -1,017
  -1,087
  -1,160
  -1,236
  -1,316
  -1,398
  -1,484
  -1,573
  -1,666
  -1,764
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
  12
  3
  -10
  -25
  -42
  -62
  -85
  -110
  -138
  -168
  -200
  -235
  -272
  -312
  -353
  -397
  -442
  -490
  -539
  -591
  -644
  -700
  -758
  -818
  -880
  -945
  -1,012
  -1,082
  -1,155
  -1,230
Discount rate, %
  10.20
  10.71
  11.25
  11.81
  12.40
  13.02
  13.67
  14.35
  15.07
  15.82
  16.61
  17.45
  18.32
  19.23
  20.20
  21.21
  22.27
  23.38
  24.55
  25.77
  27.06
  28.42
  29.84
  31.33
  32.90
  34.54
  36.27
  38.08
  39.99
  41.98
PV of cash for distribution, $m
  11
  2
  -7
  -16
  -23
  -30
  -35
  -38
  -39
  -39
  -37
  -34
  -31
  -27
  -22
  -18
  -15
  -11
  -8
  -6
  -4
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  64.1
  41.4
  27.0
  17.8
  11.8
  7.9
  5.3
  3.6
  2.4
  1.6
  1.1
  0.8
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Del Frisco's Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco's Double Eagle Steak House (Del Frisco's), Sullivan's Steakhouse (Sullivan's) and Del Frisco's Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company's segments include Del Frisco's, Sullivan's and the Grille. Del Frisco's is a steakhouse concept in the United States. The Del Frisco's brand's menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco's steakhouses in nine states and the District of Columbia. Sullivan's is a complementary concept to Del Frisco's.

FINANCIAL RATIOS  of  Del Frisco's Restaurant Group, Inc. (DFRG)

Valuation Ratios
P/E Ratio 8.4
Price to Sales 0.4
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 3
Price to Free Cash Flow 11.6
Growth Rates
Sales Growth Rate 6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.6%
Cap. Spend. - 3 Yr. Gr. Rate 3.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.7%
Return On Equity 7.6%
Return On Equity - 3 Yr. Avg. 7.7%
Asset Turnover 1
Profitability Ratios
Gross Margin 71.9%
Gross Margin - 3 Yr. Avg. 70.9%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 12.3%
Operating Margin 7.4%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 7.1%
Pre-Tax Margin - 3 Yr. Avg. 7.2%
Net Profit Margin 5.1%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 28.1%
Payout Ratio 0%

DFRG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DFRG stock intrinsic value calculation we used $378 million for the last fiscal year's total revenue generated by Del Frisco's Restaurant Group, Inc.. The default revenue input number comes from 0001 income statement of Del Frisco's Restaurant Group, 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 DFRG stock valuation model: a) initial revenue growth rate of 23.3% 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 10.2%, whose default value for DFRG is calculated based on our internal credit rating of Del Frisco's Restaurant Group, 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 Del Frisco's Restaurant Group, 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 DFRG stock the variable cost ratio is equal to 104%.

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 DFRG 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 17.8% for Del Frisco's Restaurant Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Del Frisco's Restaurant Group, 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 DFRG 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 DFRG are equal to 86.6%.

Life of production assets of 17.6 years is the average useful life of capital assets used in Del Frisco's Restaurant Group, 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 DFRG is equal to -9.4%. 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 - $213.582 million for Del Frisco's Restaurant Group, 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 33.358 million for Del Frisco's Restaurant Group, 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 Del Frisco's Restaurant Group, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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