Intrinsic value of Fiesta Restaurant Group, Inc. - FRGI

Previous Close

$12.83

  Intrinsic Value

$0.08

stock screener

  Rating & Target

str. sell

-99%

Previous close

$12.83

 
Intrinsic value

$0.08

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of FRGI 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 0.3

 

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, %
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
Revenue, $m
  712
  736
  763
  792
  823
  855
  890
  928
  967
  1,009
  1,054
  1,101
  1,151
  1,203
  1,259
  1,317
  1,379
  1,444
  1,513
  1,585
  1,661
  1,741
  1,825
  1,913
  2,006
  2,104
  2,207
  2,315
  2,429
  2,548
Variable operating expenses, $m
  754
  780
  807
  837
  868
  902
  938
  976
  1,017
  1,060
  1,083
  1,131
  1,182
  1,236
  1,293
  1,353
  1,417
  1,484
  1,554
  1,628
  1,706
  1,788
  1,875
  1,966
  2,061
  2,162
  2,268
  2,379
  2,496
  2,618
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
  754
  780
  807
  837
  868
  902
  938
  976
  1,017
  1,060
  1,083
  1,131
  1,182
  1,236
  1,293
  1,353
  1,417
  1,484
  1,554
  1,628
  1,706
  1,788
  1,875
  1,966
  2,061
  2,162
  2,268
  2,379
  2,496
  2,618
Operating income, $m
  -43
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
EBITDA, $m
  13
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
Interest expense (income), $m
  2
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
Earnings before tax, $m
  -47
  -48
  -49
  -50
  -51
  -53
  -54
  -56
  -57
  -59
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -99
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
  -47
  -48
  -49
  -50
  -51
  -53
  -54
  -56
  -57
  -59
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -99

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
  432
  447
  464
  481
  500
  520
  541
  564
  588
  613
  640
  669
  699
  731
  765
  800
  838
  877
  919
  963
  1,009
  1,057
  1,109
  1,162
  1,219
  1,278
  1,341
  1,407
  1,476
  1,548
Adjusted assets (=assets-cash), $m
  432
  447
  464
  481
  500
  520
  541
  564
  588
  613
  640
  669
  699
  731
  765
  800
  838
  877
  919
  963
  1,009
  1,057
  1,109
  1,162
  1,219
  1,278
  1,341
  1,407
  1,476
  1,548
Revenue / Adjusted assets
  1.648
  1.647
  1.644
  1.647
  1.646
  1.644
  1.645
  1.645
  1.645
  1.646
  1.647
  1.646
  1.647
  1.646
  1.646
  1.646
  1.646
  1.647
  1.646
  1.646
  1.646
  1.647
  1.646
  1.646
  1.646
  1.646
  1.646
  1.645
  1.646
  1.646
Average production assets, $m
  305
  315
  327
  339
  352
  366
  381
  397
  414
  432
  451
  471
  492
  515
  539
  564
  590
  618
  647
  678
  711
  745
  781
  819
  859
  901
  945
  991
  1,040
  1,091
Working capital, $m
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
Total debt, $m
  86
  92
  99
  107
  115
  123
  132
  142
  152
  163
  175
  187
  200
  213
  228
  243
  259
  276
  294
  312
  332
  353
  375
  397
  422
  447
  474
  502
  531
  562
Total liabilities, $m
  185
  191
  198
  205
  213
  222
  231
  241
  251
  262
  273
  286
  299
  312
  327
  342
  358
  375
  392
  411
  431
  452
  473
  496
  520
  546
  573
  601
  630
  661
Total equity, $m
  248
  256
  266
  276
  286
  298
  310
  323
  337
  351
  367
  383
  401
  419
  438
  459
  480
  503
  527
  552
  578
  606
  635
  666
  698
  732
  768
  806
  846
  887
Total liabilities and equity, $m
  433
  447
  464
  481
  499
  520
  541
  564
  588
  613
  640
  669
  700
  731
  765
  801
  838
  878
  919
  963
  1,009
  1,058
  1,108
  1,162
  1,218
  1,278
  1,341
  1,407
  1,476
  1,548
Debt-to-equity ratio
  0.350
  0.360
  0.370
  0.390
  0.400
  0.410
  0.430
  0.440
  0.450
  0.460
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.570
  0.580
  0.590
  0.600
  0.600
  0.610
  0.620
  0.620
  0.630
  0.630
Adjusted equity ratio
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -47
  -48
  -49
  -50
  -51
  -53
  -54
  -56
  -57
  -59
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -99
Depreciation, amort., depletion, $m
  55
  56
  57
  59
  60
  62
  63
  65
  67
  69
  47
  50
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
  95
  99
  104
  109
  115
Funds from operations, $m
  8
  8
  8
  9
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  16
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  8
  9
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  12
  13
  13
  14
  14
  14
  15
  15
  16
  16
  17
  17
Maintenance CAPEX, $m
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -109
New CAPEX, $m
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
Cash from investing activities, $m
  -41
  -43
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -64
  -67
  -71
  -74
  -78
  -82
  -85
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -132
  -139
  -145
  -153
  -160
Free cash flow, $m
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -52
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -106
  -111
  -117
  -123
  -129
  -136
  -143
Issuance/(repayment) of debt, $m
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
Issuance/(repurchase) of shares, $m
  55
  57
  58
  60
  62
  64
  66
  69
  71
  74
  53
  56
  59
  62
  65
  69
  72
  76
  80
  85
  89
  94
  98
  104
  109
  115
  121
  127
  133
  140
Cash from financing (excl. dividends), $m  
  61
  63
  65
  67
  70
  73
  75
  79
  81
  85
  65
  68
  72
  76
  79
  84
  88
  93
  98
  104
  109
  115
  120
  127
  133
  140
  148
  155
  162
  171
Total cash flow (excl. dividends), $m
  28
  29
  29
  30
  30
  31
  31
  32
  32
  33
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
Retained Cash Flow (-), $m
  -55
  -57
  -58
  -60
  -62
  -64
  -66
  -69
  -71
  -74
  -53
  -56
  -59
  -62
  -65
  -69
  -72
  -76
  -80
  -85
  -89
  -94
  -98
  -104
  -109
  -115
  -121
  -127
  -133
  -140
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
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -107
  -112
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
  -25
  -25
  -25
  -25
  -25
  -24
  -24
  -23
  -22
  -21
  -20
  -19
  -18
  -17
  -15
  -14
  -13
  -11
  -10
  -9
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  86.5
  74.7
  64.6
  55.9
  48.4
  42.0
  36.4
  31.6
  27.4
  23.8
  21.6
  19.5
  17.7
  16.0
  14.4
  13.0
  11.7
  10.6
  9.5
  8.6
  7.7
  7.0
  6.3
  5.6
  5.1
  4.6
  4.1
  3.7
  3.3
  3.0

Fiesta Restaurant Group, Inc. owns, operates and franchises two fast-casual restaurant brands, Pollo Tropical and Taco Cabana through its subsidiaries Pollo Operations, Inc., and its subsidiaries, and Pollo Franchise, Inc., (collectively Pollo Tropical) and Taco Cabana, Inc. and its subsidiaries (collectively Taco Cabana). The Company operates through the Pollo Tropical and Taco Cabana segments. The Company's Pollo Tropical restaurants offer Caribbean menu items, featuring its bone-in chicken marinated in blend of tropical fruit juices and grilled over an open flame. The Company also offers catering for parties and corporate events. The Company's Taco Cabana restaurants serves Mexican food, including flame-grilled steak and chicken fajitas served on sizzling iron skillets, quesadillas, hand-rolled flautas, enchiladas, burritos, tacos, fresh-made flour tortillas, customizable salads served in its Cabana Bowl, and its breakfast tacos.

FINANCIAL RATIOS  of  Fiesta Restaurant Group, Inc. (FRGI)

Valuation Ratios
P/E Ratio 20.2
Price to Sales 0.5
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 4.2
Price to Free Cash Flow -85.8
Growth Rates
Sales Growth Rate 3.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.4%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 27.7%
Total Debt to Equity 27.7%
Interest Coverage 14
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 8.6%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 11%
Return On Equity 6.7%
Return On Equity - 3 Yr. Avg. 14.8%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 69.8%
Gross Margin - 3 Yr. Avg. 68.9%
EBITDA Margin 9%
EBITDA Margin - 3 Yr. Avg. 12%
Operating Margin 3.8%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin 3.5%
Pre-Tax Margin - 3 Yr. Avg. 7.2%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 4.7%
Effective Tax Rate 32%
Eff/ Tax Rate - 3 Yr. Avg. 35%
Payout Ratio 0%

FRGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FRGI stock intrinsic value calculation we used $689 million for the last fiscal year's total revenue generated by Fiesta Restaurant Group, Inc.. The default revenue input number comes from 0001 income statement of Fiesta 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 FRGI stock valuation model: a) initial revenue growth rate of 3.3% 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 4.3%, whose default value for FRGI is calculated based on our internal credit rating of Fiesta 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 Fiesta 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 FRGI stock the variable cost ratio is equal to 106.1%.

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 FRGI 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 Fiesta Restaurant Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Fiesta 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 FRGI 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 FRGI are equal to 42.8%.

Life of production assets of 9.5 years is the average useful life of capital assets used in Fiesta 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 FRGI is equal to -1.1%. 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 - $240.059 million for Fiesta 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 27.235 million for Fiesta 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 Fiesta Restaurant Group, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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