Intrinsic value of 1-800 FLOWERS.COM, Inc. - FLWS

Previous Close

$19.78

  Intrinsic Value

$16.09

stock screener

  Rating & Target

hold

-19%

Previous close

$19.78

 
Intrinsic value

$16.09

 
Up/down potential

-19%

 
Rating

hold

We calculate the intrinsic value of FLWS 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 1.3

 

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, %
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
Revenue, $m
  1,251
  1,354
  1,461
  1,573
  1,689
  1,809
  1,934
  2,064
  2,199
  2,340
  2,486
  2,638
  2,797
  2,963
  3,135
  3,315
  3,503
  3,699
  3,904
  4,118
  4,342
  4,577
  4,822
  5,078
  5,347
  5,628
  5,922
  6,231
  6,554
  6,893
Variable operating expenses, $m
  1,092
  1,181
  1,273
  1,369
  1,468
  1,572
  1,679
  1,791
  1,907
  2,028
  2,138
  2,269
  2,405
  2,547
  2,696
  2,851
  3,012
  3,181
  3,357
  3,541
  3,734
  3,935
  4,146
  4,366
  4,597
  4,839
  5,092
  5,358
  5,636
  5,927
Fixed operating expenses, $m
  107
  110
  112
  115
  117
  120
  122
  125
  128
  131
  133
  136
  139
  142
  146
  149
  152
  155
  159
  162
  166
  169
  173
  177
  181
  185
  189
  193
  197
  202
Total operating expenses, $m
  1,199
  1,291
  1,385
  1,484
  1,585
  1,692
  1,801
  1,916
  2,035
  2,159
  2,271
  2,405
  2,544
  2,689
  2,842
  3,000
  3,164
  3,336
  3,516
  3,703
  3,900
  4,104
  4,319
  4,543
  4,778
  5,024
  5,281
  5,551
  5,833
  6,129
Operating income, $m
  52
  64
  76
  90
  103
  118
  132
  148
  164
  181
  215
  233
  253
  273
  294
  316
  339
  363
  388
  415
  443
  472
  503
  535
  568
  604
  641
  680
  721
  764
EBITDA, $m
  96
  110
  125
  141
  157
  174
  191
  210
  229
  249
  270
  292
  314
  338
  363
  389
  416
  445
  474
  506
  538
  573
  609
  647
  686
  728
  772
  817
  866
  916
Interest expense (income), $m
  4
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  19
  21
  23
  25
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
Earnings before tax, $m
  46
  57
  69
  80
  93
  106
  119
  133
  148
  163
  196
  213
  230
  248
  267
  287
  308
  330
  354
  378
  403
  430
  458
  487
  518
  550
  584
  620
  657
  697
Tax expense, $m
  12
  15
  19
  22
  25
  29
  32
  36
  40
  44
  53
  57
  62
  67
  72
  78
  83
  89
  95
  102
  109
  116
  124
  131
  140
  148
  158
  167
  177
  188
Net income, $m
  34
  42
  50
  59
  68
  77
  87
  97
  108
  119
  143
  155
  168
  181
  195
  210
  225
  241
  258
  276
  294
  314
  334
  355
  378
  401
  426
  452
  480
  508

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
  585
  633
  683
  735
  789
  845
  904
  964
  1,028
  1,093
  1,162
  1,233
  1,307
  1,384
  1,465
  1,549
  1,637
  1,729
  1,824
  1,925
  2,029
  2,139
  2,253
  2,373
  2,498
  2,630
  2,767
  2,912
  3,063
  3,221
Adjusted assets (=assets-cash), $m
  585
  633
  683
  735
  789
  845
  904
  964
  1,028
  1,093
  1,162
  1,233
  1,307
  1,384
  1,465
  1,549
  1,637
  1,729
  1,824
  1,925
  2,029
  2,139
  2,253
  2,373
  2,498
  2,630
  2,767
  2,912
  3,063
  3,221
Revenue / Adjusted assets
  2.138
  2.139
  2.139
  2.140
  2.141
  2.141
  2.139
  2.141
  2.139
  2.141
  2.139
  2.139
  2.140
  2.141
  2.140
  2.140
  2.140
  2.139
  2.140
  2.139
  2.140
  2.140
  2.140
  2.140
  2.141
  2.140
  2.140
  2.140
  2.140
  2.140
Average production assets, $m
  243
  263
  284
  305
  328
  351
  375
  400
  427
  454
  482
  512
  543
  575
  608
  643
  680
  718
  757
  799
  842
  888
  935
  985
  1,037
  1,092
  1,149
  1,209
  1,271
  1,337
Working capital, $m
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  66
  69
Total debt, $m
  124
  146
  168
  192
  217
  243
  269
  297
  326
  356
  387
  420
  454
  489
  526
  564
  605
  646
  690
  736
  784
  834
  886
  941
  998
  1,058
  1,121
  1,187
  1,256
  1,328
Total liabilities, $m
  267
  289
  312
  336
  361
  386
  413
  441
  470
  500
  531
  563
  597
  633
  670
  708
  748
  790
  834
  880
  927
  977
  1,030
  1,084
  1,142
  1,202
  1,265
  1,331
  1,400
  1,472
Total equity, $m
  317
  344
  371
  399
  428
  459
  491
  524
  558
  594
  631
  669
  710
  752
  796
  841
  889
  939
  991
  1,045
  1,102
  1,161
  1,223
  1,289
  1,357
  1,428
  1,503
  1,581
  1,663
  1,749
Total liabilities and equity, $m
  584
  633
  683
  735
  789
  845
  904
  965
  1,028
  1,094
  1,162
  1,232
  1,307
  1,385
  1,466
  1,549
  1,637
  1,729
  1,825
  1,925
  2,029
  2,138
  2,253
  2,373
  2,499
  2,630
  2,768
  2,912
  3,063
  3,221
Debt-to-equity ratio
  0.390
  0.420
  0.450
  0.480
  0.510
  0.530
  0.550
  0.570
  0.580
  0.600
  0.610
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.690
  0.700
  0.700
  0.710
  0.720
  0.720
  0.730
  0.740
  0.740
  0.750
  0.750
  0.760
  0.760
Adjusted equity ratio
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  42
  50
  59
  68
  77
  87
  97
  108
  119
  143
  155
  168
  181
  195
  210
  225
  241
  258
  276
  294
  314
  334
  355
  378
  401
  426
  452
  480
  508
Depreciation, amort., depletion, $m
  44
  46
  49
  51
  54
  56
  59
  62
  65
  68
  55
  58
  62
  65
  69
  73
  77
  82
  86
  91
  96
  101
  106
  112
  118
  124
  131
  137
  144
  152
Funds from operations, $m
  78
  88
  99
  110
  121
  133
  146
  159
  173
  187
  198
  213
  230
  247
  264
  283
  302
  323
  344
  366
  390
  415
  440
  467
  496
  526
  557
  590
  624
  660
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
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
Cash from operations, $m
  77
  87
  97
  109
  120
  132
  145
  158
  172
  186
  196
  212
  228
  245
  263
  281
  301
  321
  342
  364
  388
  412
  438
  465
  493
  523
  554
  587
  621
  657
Maintenance CAPEX, $m
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -48
  -52
  -55
  -58
  -62
  -65
  -69
  -73
  -77
  -82
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -131
  -137
  -144
New CAPEX, $m
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -43
  -45
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
Cash from investing activities, $m
  -44
  -48
  -51
  -54
  -57
  -60
  -64
  -68
  -72
  -75
  -80
  -85
  -89
  -94
  -98
  -104
  -109
  -115
  -122
  -128
  -134
  -141
  -149
  -156
  -164
  -173
  -181
  -191
  -200
  -210
Free cash flow, $m
  32
  39
  47
  55
  63
  72
  81
  90
  100
  110
  116
  127
  139
  151
  164
  177
  191
  206
  221
  237
  253
  271
  289
  309
  329
  350
  373
  396
  421
  447
Issuance/(repayment) of debt, $m
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
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  
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
Total cash flow (excl. dividends), $m
  54
  61
  70
  79
  88
  97
  107
  118
  129
  140
  148
  160
  173
  187
  201
  216
  231
  247
  265
  282
  301
  321
  342
  363
  386
  410
  436
  462
  490
  519
Retained Cash Flow (-), $m
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
Prev. year cash balance distribution, $m
  22
  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
  51
  35
  43
  50
  58
  67
  76
  85
  94
  104
  110
  121
  133
  145
  157
  170
  183
  198
  213
  228
  244
  262
  280
  298
  318
  339
  361
  384
  408
  433
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
  49
  32
  37
  41
  45
  49
  51
  53
  54
  55
  52
  52
  50
  49
  46
  43
  40
  36
  33
  29
  25
  22
  18
  15
  12
  10
  8
  6
  4
  3
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

1-800-FLOWERS.COM, Inc. is a provider of gourmet food and floral gifts for all occasions. The Company offers gifts for every occasion, including fresh flowers and a selection of plants, gift baskets, gourmet foods, confections, candles, balloons and stuffed animals. The Company operates through three business segments: Consumer Floral, Gourmet Food and Gift Baskets, and BloomNet Wire Service. The Consumer Floral segment includes the operations of the Company's flagship brand, 1-800-Flowers.com, FruitBouquets.com and Flowerama. The Gourmet Food and Gift Baskets segment includes the operations of Harry & David (which includes Wolferman's, Moose Munch and Stockyards.com), Cheryl's (which includes Mrs. Beasley's), The Popcorn Factory, DesignPac and 1-800-Baskets. The BloomNet Wire Service segment includes the operations of BloomNet and Napco.

FINANCIAL RATIOS  of  1-800 FLOWERS.COM, Inc. (FLWS)

Valuation Ratios
P/E Ratio 29.3
Price to Sales 1.1
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 21.1
Price to Free Cash Flow 47.7
Growth Rates
Sales Growth Rate 1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 8.1%
Financial Strength
Quick Ratio 21
Current Ratio 0
LT Debt to Equity 36.2%
Total Debt to Equity 38.7%
Interest Coverage 15
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 13.3%
Ret/ On T. Cap. - 3 Yr. Avg. 11%
Return On Equity 16.8%
Return On Equity - 3 Yr. Avg. 14.5%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 43.6%
Gross Margin - 3 Yr. Avg. 43.7%
EBITDA Margin 7.8%
EBITDA Margin - 3 Yr. Avg. 7%
Operating Margin 3.9%
Oper. Margin - 3 Yr. Avg. 3.7%
Pre-Tax Margin 4.7%
Pre-Tax Margin - 3 Yr. Avg. 3.9%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 2.9%
Effective Tax Rate 21.4%
Eff/ Tax Rate - 3 Yr. Avg. 29.2%
Payout Ratio 0%

FLWS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FLWS stock intrinsic value calculation we used $1152 million for the last fiscal year's total revenue generated by 1-800 FLOWERS.COM, Inc.. The default revenue input number comes from 0001 income statement of 1-800 FLOWERS.COM, 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 FLWS stock valuation model: a) initial revenue growth rate of 8.6% 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 FLWS is calculated based on our internal credit rating of 1-800 FLOWERS.COM, 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 1-800 FLOWERS.COM, 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 FLWS stock the variable cost ratio is equal to 87.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $105 million in the base year in the intrinsic value calculation for FLWS 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 1-800 FLOWERS.COM, Inc..

Corporate tax rate of 27% is the nominal tax rate for 1-800 FLOWERS.COM, 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 FLWS 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 FLWS are equal to 19.4%.

Life of production assets of 8.8 years is the average useful life of capital assets used in 1-800 FLOWERS.COM, 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 FLWS is equal to 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 - $314.904 million for 1-800 FLOWERS.COM, 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 63.889 million for 1-800 FLOWERS.COM, 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 1-800 FLOWERS.COM, Inc. at the current share price and the inputted number of shares is $1.3 billion.

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