Intrinsic value of Dixie Group - DXYN

Previous Close

$0.97

  Intrinsic Value

$1.18

stock screener

  Rating & Target

buy

+22%

Previous close

$0.97

 
Intrinsic value

$1.18

 
Up/down potential

+22%

 
Rating

buy

We calculate the intrinsic value of DXYN 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
  421
  430
  441
  454
  468
  483
  499
  517
  536
  557
  579
  602
  627
  654
  682
  712
  744
  777
  812
  850
  889
  931
  974
  1,020
  1,069
  1,120
  1,174
  1,231
  1,290
  1,353
Variable operating expenses, $m
  220
  225
  231
  238
  245
  253
  261
  271
  281
  292
  302
  315
  328
  342
  356
  372
  389
  406
  425
  444
  465
  486
  509
  533
  559
  585
  614
  643
  674
  707
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
  421
  431
  441
  453
  465
  477
  490
  505
  521
  537
  552
  571
  589
  609
  629
  651
  674
  697
  723
  748
  776
  804
  834
  865
  898
  932
  969
  1,005
  1,044
  1,085
Operating income, $m
  -1
  -1
  0
  1
  3
  5
  8
  12
  16
  20
  26
  32
  38
  45
  53
  61
  70
  79
  90
  101
  113
  126
  140
  155
  171
  188
  206
  225
  246
  268
EBITDA, $m
  12
  13
  14
  16
  18
  21
  24
  28
  33
  38
  44
  50
  57
  65
  73
  82
  92
  103
  115
  127
  140
  155
  170
  186
  203
  222
  242
  263
  285
  309
Interest expense (income), $m
  5
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
Earnings before tax, $m
  -8
  -8
  -8
  -7
  -5
  -3
  -1
  2
  6
  10
  15
  20
  26
  32
  39
  46
  55
  63
  73
  83
  94
  106
  119
  133
  147
  163
  180
  198
  217
  237
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  4
  5
  7
  9
  10
  13
  15
  17
  20
  22
  25
  29
  32
  36
  40
  44
  49
  53
  58
  64
Net income, $m
  -8
  -8
  -8
  -7
  -5
  -3
  -1
  2
  4
  7
  11
  15
  19
  23
  28
  34
  40
  46
  53
  61
  69
  78
  87
  97
  108
  119
  131
  144
  158
  173

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
  290
  297
  304
  313
  322
  333
  344
  356
  369
  384
  399
  415
  432
  451
  470
  491
  512
  535
  560
  586
  613
  641
  671
  703
  737
  772
  809
  848
  889
  932
Adjusted assets (=assets-cash), $m
  290
  297
  304
  313
  322
  333
  344
  356
  369
  384
  399
  415
  432
  451
  470
  491
  512
  535
  560
  586
  613
  641
  671
  703
  737
  772
  809
  848
  889
  932
Revenue / Adjusted assets
  1.452
  1.448
  1.451
  1.450
  1.453
  1.450
  1.451
  1.452
  1.453
  1.451
  1.451
  1.451
  1.451
  1.450
  1.451
  1.450
  1.453
  1.452
  1.450
  1.451
  1.450
  1.452
  1.452
  1.451
  1.450
  1.451
  1.451
  1.452
  1.451
  1.452
Average production assets, $m
  98
  101
  103
  106
  109
  113
  117
  121
  125
  130
  135
  141
  147
  153
  160
  167
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  275
  288
  302
  317
Working capital, $m
  117
  120
  123
  127
  130
  135
  139
  144
  150
  155
  161
  168
  175
  182
  190
  199
  207
  217
  227
  237
  248
  260
  272
  285
  298
  313
  328
  343
  360
  377
Total debt, $m
  138
  142
  148
  154
  161
  168
  177
  185
  195
  205
  216
  228
  240
  253
  267
  282
  298
  315
  332
  351
  370
  391
  413
  436
  460
  485
  512
  540
  570
  601
Total liabilities, $m
  209
  214
  219
  226
  232
  240
  248
  257
  266
  277
  288
  299
  312
  325
  339
  354
  369
  386
  404
  422
  442
  462
  484
  507
  531
  557
  583
  612
  641
  672
Total equity, $m
  81
  83
  85
  87
  90
  93
  96
  99
  103
  107
  111
  116
  121
  126
  131
  137
  143
  149
  156
  163
  171
  179
  187
  196
  206
  215
  226
  237
  248
  260
Total liabilities and equity, $m
  290
  297
  304
  313
  322
  333
  344
  356
  369
  384
  399
  415
  433
  451
  470
  491
  512
  535
  560
  585
  613
  641
  671
  703
  737
  772
  809
  849
  889
  932
Debt-to-equity ratio
  1.700
  1.720
  1.740
  1.770
  1.790
  1.820
  1.840
  1.870
  1.890
  1.920
  1.940
  1.970
  1.990
  2.020
  2.040
  2.060
  2.080
  2.110
  2.130
  2.150
  2.170
  2.190
  2.200
  2.220
  2.240
  2.250
  2.270
  2.280
  2.300
  2.310
Adjusted equity ratio
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -8
  -8
  -8
  -7
  -5
  -3
  -1
  2
  4
  7
  11
  15
  19
  23
  28
  34
  40
  46
  53
  61
  69
  78
  87
  97
  108
  119
  131
  144
  158
  173
Depreciation, amort., depletion, $m
  13
  14
  14
  14
  15
  15
  16
  16
  17
  18
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
Funds from operations, $m
  5
  5
  6
  8
  9
  12
  15
  18
  21
  25
  28
  33
  38
  43
  49
  55
  62
  70
  78
  87
  96
  106
  117
  128
  140
  153
  167
  182
  197
  214
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
Cash from operations, $m
  3
  3
  3
  4
  6
  8
  10
  13
  16
  19
  22
  26
  31
  36
  41
  47
  54
  61
  68
  76
  85
  94
  104
  115
  127
  139
  152
  166
  181
  196
Maintenance CAPEX, $m
  -13
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
New CAPEX, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
Cash from investing activities, $m
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -38
  -41
  -42
  -44
  -47
  -49
  -51
  -54
Free cash flow, $m
  -12
  -12
  -13
  -12
  -11
  -10
  -8
  -6
  -4
  -2
  0
  3
  7
  11
  15
  19
  25
  30
  36
  43
  50
  58
  66
  75
  84
  94
  105
  117
  129
  143
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
Issuance/(repurchase) of shares, $m
  10
  10
  10
  9
  8
  6
  4
  2
  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  
  14
  15
  15
  15
  15
  14
  12
  11
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
Total cash flow (excl. dividends), $m
  2
  3
  3
  3
  3
  4
  4
  4
  5
  8
  11
  15
  19
  24
  29
  34
  40
  47
  54
  61
  69
  78
  88
  98
  108
  120
  132
  145
  159
  174
Retained Cash Flow (-), $m
  -10
  -10
  -10
  -9
  -8
  -6
  -4
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
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
  -7
  -8
  -7
  -6
  -5
  -2
  0
  1
  1
  4
  7
  10
  14
  19
  23
  29
  34
  40
  47
  54
  62
  70
  79
  89
  99
  110
  122
  134
  147
  162
Discount rate, %
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
  -7
  -6
  -5
  -4
  -2
  -1
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  84.9
  72.0
  61.4
  53.2
  47.1
  42.8
  40.4
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3

The Dixie Group, Inc. is engaged in marketing, manufacturing and selling of carpet and rugs. The Company offers its products to various residential and commercial customers through its various sales forces and brands. The Company operates through the carpet and rug manufacturing segment. The Company also provides carpet and yarn related services to other manufacturers. The Company's brands include Fabrica, Masland Residential, Dixie Home, Atlas Carpet Mills, Masland Contract and Masland Hospitality. Dixie International sells its brands outside of the North American market. Fabrica markets and manufactures various residential carpet and custom rugs. Masland Contract markets and manufactures broadloom and modular carpet tile for the specified commercial marketplace. Masland Residential markets and manufactures design-driven specialty carpets and rugs for the residential marketplace. Dixie Home markets a range of tufted broadloom residential and commercial carpets.

FINANCIAL RATIOS  of  Dixie Group (DXYN)

Valuation Ratios
P/E Ratio -3.1
Price to Sales 0
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 0.7
Price to Free Cash Flow 0.8
Growth Rates
Sales Growth Rate -5.9%
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 -14.6%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 112.6%
Total Debt to Equity 126.4%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.8%
Ret/ On Assets - 3 Yr. Avg. -0.1%
Return On Total Capital -2.4%
Ret/ On T. Cap. - 3 Yr. Avg. -1.3%
Return On Equity -5.6%
Return On Equity - 3 Yr. Avg. -3%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 23.9%
Gross Margin - 3 Yr. Avg. 24.2%
EBITDA Margin 2.5%
EBITDA Margin - 3 Yr. Avg. 3.6%
Operating Margin -1%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin -2.3%
Pre-Tax Margin - 3 Yr. Avg. -0.8%
Net Profit Margin -1.3%
Net Profit Margin - 3 Yr. Avg. -0.7%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 42.6%
Payout Ratio 0%

DXYN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DXYN stock intrinsic value calculation we used $412.462 million for the last fiscal year's total revenue generated by Dixie Group. The default revenue input number comes from 0001 income statement of Dixie Group. 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 DXYN 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 10.9%, whose default value for DXYN is calculated based on our internal credit rating of Dixie Group, 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 Dixie Group.
    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 DXYN stock the variable cost ratio is equal to 52.4%.

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 DXYN 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 Dixie Group.

Corporate tax rate of 27% is the nominal tax rate for Dixie Group. 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 DXYN 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 DXYN are equal to 23.4%.

Life of production assets of 7.7 years is the average useful life of capital assets used in Dixie Group 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 DXYN is equal to 27.9%. 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 - $79.263 million for Dixie Group - 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 15.515 million for Dixie Group 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 Dixie Group at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Dixie Group: 3Q Earnings Snapshot   [Nov-08-18 05:19AM  Associated Press]
▶ Dixie Group: 2Q Earnings Snapshot   [05:17AM  Associated Press]
▶ The Dixie Group Incs (NASDAQ:DXYN) Profit Outlook   [May-15-18 06:35PM  Simply Wall St.]
▶ Dixie Group: 1Q Earnings Snapshot   [May-03-18 05:03AM  Associated Press]
▶ New Strong Sell Stocks for March 5th   [Mar-05-18 08:48AM  Zacks]
▶ Dixie Group reports 4Q loss   [Mar-01-18 05:51AM  Associated Press]
▶ The Dixie Group Reports 2017 Results   [05:00AM  GlobeNewswire]
▶ Why The Dixie Group Inc (DXYN) Could Be A Buy   [Nov-21-17 07:09PM  Simply Wall St.]
▶ Dixie Group reports 3Q loss   [Nov-09-17 05:01AM  Associated Press]
▶ Dixie Group posts 2Q profit   [Aug-04-17 03:11AM  Associated Press]
▶ The Dixie Group Reports Second Quarter 2017 Results   [Aug-03-17 05:00AM  GlobeNewswire]
▶ Top Ranked Momentum Stocks to Buy for June 23rd   [Jun-23-17 12:11PM  Zacks]
▶ Dixie Group reports 1Q loss   [May-04-17 05:12AM  Associated Press]
▶ New Strong Sell Stocks for April 3rd   [Apr-03-17 10:06AM  Zacks]
▶ Dixie Group reports 4Q loss   [05:03AM  Associated Press]
▶ The Dixie Group Reports 2016 Results   [02:00AM  GlobeNewswire]
▶ Ice Cream At 5% Alcohol By Volume   [Feb-24-17 08:35AM  Forbes]
▶ The Dixie Group Announces Masland Contract President   [Sep-15-16 06:42PM  GlobeNewswire]

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