Intrinsic value of GNC Holdings, Inc. - GNC

Previous Close

$1.50

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$1.50

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of GNC 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 0.1

 

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
  2,401
  2,456
  2,519
  2,590
  2,669
  2,755
  2,849
  2,950
  3,060
  3,177
  3,303
  3,437
  3,580
  3,731
  3,892
  4,063
  4,243
  4,434
  4,636
  4,849
  5,074
  5,311
  5,561
  5,824
  6,101
  6,393
  6,700
  7,024
  7,364
  7,722
Variable operating expenses, $m
  2,650
  2,709
  2,778
  2,854
  2,939
  3,032
  3,134
  3,244
  3,362
  3,489
  3,571
  3,716
  3,871
  4,035
  4,209
  4,393
  4,588
  4,795
  5,013
  5,243
  5,486
  5,743
  6,013
  6,298
  6,597
  6,913
  7,245
  7,595
  7,963
  8,350
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
  2,650
  2,709
  2,778
  2,854
  2,939
  3,032
  3,134
  3,244
  3,362
  3,489
  3,571
  3,716
  3,871
  4,035
  4,209
  4,393
  4,588
  4,795
  5,013
  5,243
  5,486
  5,743
  6,013
  6,298
  6,597
  6,913
  7,245
  7,595
  7,963
  8,350
Operating income, $m
  -249
  -253
  -258
  -264
  -270
  -277
  -285
  -293
  -302
  -312
  -269
  -279
  -291
  -303
  -317
  -330
  -345
  -361
  -377
  -394
  -413
  -432
  -452
  -474
  -496
  -520
  -545
  -571
  -599
  -628
EBITDA, $m
  -166
  -169
  -174
  -179
  -184
  -190
  -196
  -203
  -211
  -219
  -228
  -237
  -247
  -257
  -268
  -280
  -293
  -306
  -320
  -334
  -350
  -366
  -383
  -402
  -421
  -441
  -462
  -484
  -508
  -533
Interest expense (income), $m
  48
  120
  95
  98
  102
  106
  111
  116
  122
  128
  135
  142
  150
  158
  166
  176
  185
  196
  207
  218
  231
  244
  257
  272
  287
  303
  320
  337
  356
  376
  396
Earnings before tax, $m
  -368
  -348
  -357
  -366
  -377
  -389
  -401
  -415
  -430
  -447
  -411
  -429
  -449
  -470
  -492
  -516
  -541
  -567
  -595
  -625
  -656
  -689
  -724
  -760
  -799
  -840
  -882
  -927
  -974
  -1,024
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
  -368
  -348
  -357
  -366
  -377
  -389
  -401
  -415
  -430
  -447
  -411
  -429
  -449
  -470
  -492
  -516
  -541
  -567
  -595
  -625
  -656
  -689
  -724
  -760
  -799
  -840
  -882
  -927
  -974
  -1,024

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
  1,558
  1,594
  1,635
  1,681
  1,732
  1,788
  1,849
  1,915
  1,986
  2,062
  2,143
  2,230
  2,323
  2,421
  2,526
  2,637
  2,754
  2,878
  3,008
  3,147
  3,293
  3,446
  3,609
  3,779
  3,959
  4,149
  4,348
  4,558
  4,779
  5,011
Adjusted assets (=assets-cash), $m
  1,558
  1,594
  1,635
  1,681
  1,732
  1,788
  1,849
  1,915
  1,986
  2,062
  2,143
  2,230
  2,323
  2,421
  2,526
  2,637
  2,754
  2,878
  3,008
  3,147
  3,293
  3,446
  3,609
  3,779
  3,959
  4,149
  4,348
  4,558
  4,779
  5,011
Revenue / Adjusted assets
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.540
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
  1.541
Average production assets, $m
  454
  464
  476
  490
  504
  521
  538
  558
  578
  600
  624
  650
  677
  705
  736
  768
  802
  838
  876
  916
  959
  1,004
  1,051
  1,101
  1,153
  1,208
  1,266
  1,328
  1,392
  1,459
Working capital, $m
  478
  489
  501
  515
  531
  548
  567
  587
  609
  632
  657
  684
  712
  743
  775
  809
  844
  882
  923
  965
  1,010
  1,057
  1,107
  1,159
  1,214
  1,272
  1,333
  1,398
  1,465
  1,537
Total debt, $m
  912
  945
  982
  1,023
  1,069
  1,119
  1,174
  1,233
  1,297
  1,366
  1,439
  1,517
  1,601
  1,689
  1,783
  1,883
  1,988
  2,100
  2,218
  2,342
  2,473
  2,612
  2,758
  2,912
  3,074
  3,244
  3,423
  3,612
  3,811
  4,020
Total liabilities, $m
  1,402
  1,435
  1,471
  1,513
  1,559
  1,609
  1,664
  1,723
  1,787
  1,856
  1,929
  2,007
  2,091
  2,179
  2,273
  2,373
  2,478
  2,590
  2,708
  2,832
  2,963
  3,102
  3,248
  3,401
  3,563
  3,734
  3,913
  4,102
  4,301
  4,510
Total equity, $m
  156
  159
  163
  168
  173
  179
  185
  191
  199
  206
  214
  223
  232
  242
  253
  264
  275
  288
  301
  315
  329
  345
  361
  378
  396
  415
  435
  456
  478
  501
Total liabilities and equity, $m
  1,558
  1,594
  1,634
  1,681
  1,732
  1,788
  1,849
  1,914
  1,986
  2,062
  2,143
  2,230
  2,323
  2,421
  2,526
  2,637
  2,753
  2,878
  3,009
  3,147
  3,292
  3,447
  3,609
  3,779
  3,959
  4,149
  4,348
  4,558
  4,779
  5,011
Debt-to-equity ratio
  5.860
  5.930
  6.000
  6.090
  6.170
  6.260
  6.350
  6.440
  6.530
  6.620
  6.710
  6.800
  6.890
  6.980
  7.060
  7.140
  7.220
  7.300
  7.370
  7.440
  7.510
  7.580
  7.640
  7.700
  7.760
  7.820
  7.870
  7.930
  7.970
  8.020
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -368
  -348
  -357
  -366
  -377
  -389
  -401
  -415
  -430
  -447
  -411
  -429
  -449
  -470
  -492
  -516
  -541
  -567
  -595
  -625
  -656
  -689
  -724
  -760
  -799
  -840
  -882
  -927
  -974
  -1,024
Depreciation, amort., depletion, $m
  83
  84
  85
  85
  86
  87
  89
  90
  91
  93
  41
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  95
Funds from operations, $m
  -285
  -264
  -272
  -281
  -290
  -301
  -313
  -326
  -339
  -354
  -370
  -387
  -405
  -424
  -444
  -466
  -488
  -513
  -538
  -565
  -593
  -623
  -655
  -688
  -724
  -761
  -799
  -840
  -884
  -929
Change in working capital, $m
  9
  11
  13
  14
  16
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  52
  55
  58
  61
  64
  68
  71
Cash from operations, $m
  -295
  -275
  -285
  -295
  -306
  -318
  -332
  -346
  -361
  -377
  -395
  -413
  -433
  -454
  -476
  -500
  -524
  -551
  -578
  -607
  -638
  -671
  -705
  -741
  -779
  -819
  -861
  -905
  -951
  -1,000
Maintenance CAPEX, $m
  -29
  -30
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
New CAPEX, $m
  -8
  -10
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
Cash from investing activities, $m
  -37
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -108
  -113
  -119
  -124
  -130
  -137
  -144
  -151
  -159
Free cash flow, $m
  -332
  -315
  -327
  -339
  -353
  -368
  -383
  -400
  -418
  -437
  -458
  -479
  -503
  -527
  -553
  -580
  -609
  -639
  -671
  -705
  -741
  -778
  -818
  -859
  -903
  -949
  -998
  -1,049
  -1,102
  -1,159
Issuance/(repayment) of debt, $m
  -240
  32
  37
  41
  46
  50
  55
  59
  64
  69
  73
  78
  83
  89
  94
  100
  105
  112
  118
  124
  131
  138
  146
  154
  162
  170
  179
  189
  199
  209
Issuance/(repurchase) of shares, $m
  639
  352
  361
  371
  382
  394
  408
  422
  438
  454
  419
  438
  458
  480
  503
  527
  553
  580
  608
  639
  671
  704
  740
  777
  817
  858
  902
  948
  997
  1,047
Cash from financing (excl. dividends), $m  
  399
  384
  398
  412
  428
  444
  463
  481
  502
  523
  492
  516
  541
  569
  597
  627
  658
  692
  726
  763
  802
  842
  886
  931
  979
  1,028
  1,081
  1,137
  1,196
  1,256
Total cash flow (excl. dividends), $m
  67
  68
  71
  73
  75
  77
  79
  81
  83
  85
  34
  37
  39
  41
  44
  47
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  98
Retained Cash Flow (-), $m
  -639
  -352
  -361
  -371
  -382
  -394
  -408
  -422
  -438
  -454
  -419
  -438
  -458
  -480
  -503
  -527
  -553
  -580
  -608
  -639
  -671
  -704
  -740
  -777
  -817
  -858
  -902
  -948
  -997
  -1,047
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
  -572
  -283
  -290
  -298
  -307
  -317
  -328
  -341
  -354
  -369
  -384
  -401
  -419
  -438
  -459
  -480
  -503
  -528
  -553
  -581
  -609
  -640
  -672
  -706
  -741
  -779
  -818
  -860
  -904
  -950
Discount rate, %
  14.50
  15.23
  15.99
  16.79
  17.62
  18.51
  19.43
  20.40
  21.42
  22.49
  23.62
  24.80
  26.04
  27.34
  28.71
  30.14
  31.65
  33.23
  34.90
  36.64
  38.47
  40.40
  42.42
  44.54
  46.76
  49.10
  51.56
  54.14
  56.84
  59.68
PV of cash for distribution, $m
  -499
  -213
  -186
  -160
  -136
  -115
  -95
  -77
  -62
  -48
  -37
  -28
  -21
  -15
  -10
  -7
  -5
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  15.4
  4.7
  1.4
  0.4
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company's operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.

FINANCIAL RATIOS  of  GNC Holdings, Inc. (GNC)

Valuation Ratios
P/E Ratio -0.4
Price to Sales 0
Price to Book -1.1
Price to Tangible Book
Price to Cash Flow 0.5
Price to Free Cash Flow 0.7
Growth Rates
Sales Growth Rate -5.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30.4%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity -1607.4%
Total Debt to Equity -1621.1%
Interest Coverage -4
Management Effectiveness
Return On Assets -9.9%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital -17%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity -152.9%
Return On Equity - 3 Yr. Avg. -28.2%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 33.9%
Gross Margin - 3 Yr. Avg. 35.8%
EBITDA Margin -4.9%
EBITDA Margin - 3 Yr. Avg. 10.1%
Operating Margin -7.6%
Oper. Margin - 3 Yr. Avg. 7.7%
Pre-Tax Margin -9.2%
Pre-Tax Margin - 3 Yr. Avg. 6.1%
Net Profit Margin -11.3%
Net Profit Margin - 3 Yr. Avg. 2.2%
Effective Tax Rate -22.7%
Eff/ Tax Rate - 3 Yr. Avg. 16%
Payout Ratio -19.2%

GNC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GNC stock intrinsic value calculation we used $2354 million for the last fiscal year's total revenue generated by GNC Holdings, Inc.. The default revenue input number comes from 0001 income statement of GNC Holdings, 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 GNC 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 14.5%, whose default value for GNC is calculated based on our internal credit rating of GNC Holdings, 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 GNC Holdings, 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 GNC stock the variable cost ratio is equal to 110.4%.

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 GNC 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 10.4% for GNC Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for GNC Holdings, 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 GNC 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 GNC are equal to 18.9%.

Life of production assets of 15.3 years is the average useful life of capital assets used in GNC Holdings, 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 GNC is equal to 19.9%. 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 - $-114.31 million for GNC Holdings, 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 83.884 million for GNC Holdings, 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 GNC Holdings, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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