Intrinsic value of Acushnet Holdings - GOLF

Previous Close

$19.94

  Intrinsic Value

$12.39

stock screener

  Rating & Target

sell

-38%

Previous close

$19.94

 
Intrinsic value

$12.39

 
Up/down potential

-38%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of GOLF 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 2016), $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 1.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.59
  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
  1,572
  1,603
  1,640
  1,682
  1,730
  1,782
  1,840
  1,902
  1,970
  2,043
  2,122
  2,206
  2,295
  2,390
  2,492
  2,599
  2,713
  2,834
  2,961
  3,096
  3,238
  3,388
  3,547
  3,713
  3,889
  4,074
  4,269
  4,475
  4,691
  4,918
  5,157
Variable operating expenses, $m
 
  1,092
  1,116
  1,145
  1,176
  1,211
  1,250
  1,292
  1,337
  1,386
  1,439
  1,477
  1,537
  1,601
  1,669
  1,740
  1,817
  1,898
  1,983
  2,073
  2,168
  2,269
  2,375
  2,487
  2,604
  2,728
  2,859
  2,996
  3,141
  3,293
  3,453
Fixed operating expenses, $m
 
  376
  386
  395
  405
  415
  426
  436
  447
  458
  470
  482
  494
  506
  519
  532
  545
  558
  572
  587
  601
  616
  632
  648
  664
  680
  697
  715
  733
  751
  770
Total operating expenses, $m
  1,429
  1,468
  1,502
  1,540
  1,581
  1,626
  1,676
  1,728
  1,784
  1,844
  1,909
  1,959
  2,031
  2,107
  2,188
  2,272
  2,362
  2,456
  2,555
  2,660
  2,769
  2,885
  3,007
  3,135
  3,268
  3,408
  3,556
  3,711
  3,874
  4,044
  4,223
Operating income, $m
  143
  136
  138
  143
  149
  156
  164
  174
  186
  199
  213
  247
  265
  284
  305
  327
  352
  378
  406
  436
  468
  503
  540
  579
  621
  666
  713
  764
  817
  874
  934
EBITDA, $m
  184
  186
  189
  194
  201
  209
  219
  231
  243
  258
  274
  292
  311
  332
  355
  379
  406
  435
  466
  498
  534
  571
  611
  654
  699
  748
  799
  853
  911
  973
  1,038
Interest expense (income), $m
  64
  36
  38
  40
  42
  45
  48
  52
  56
  60
  64
  69
  74
  80
  86
  92
  98
  105
  113
  120
  129
  137
  146
  156
  166
  177
  188
  200
  213
  226
  240
Earnings before tax, $m
  89
  100
  101
  103
  106
  110
  116
  122
  130
  139
  149
  178
  190
  204
  219
  236
  253
  273
  293
  316
  340
  366
  394
  423
  455
  489
  525
  563
  604
  648
  694
Tax expense, $m
  39
  27
  27
  28
  29
  30
  31
  33
  35
  38
  40
  48
  51
  55
  59
  64
  68
  74
  79
  85
  92
  99
  106
  114
  123
  132
  142
  152
  163
  175
  187
Net income, $m
  45
  73
  74
  75
  77
  81
  85
  89
  95
  101
  109
  130
  139
  149
  160
  172
  185
  199
  214
  231
  248
  267
  287
  309
  332
  357
  383
  411
  441
  473
  507

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  76
  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
  1,736
  1,693
  1,732
  1,777
  1,827
  1,882
  1,943
  2,009
  2,081
  2,158
  2,241
  2,329
  2,424
  2,524
  2,631
  2,745
  2,865
  2,992
  3,127
  3,269
  3,419
  3,578
  3,745
  3,921
  4,107
  4,302
  4,508
  4,725
  4,953
  5,193
  5,445
Adjusted assets (=assets-cash), $m
  1,660
  1,693
  1,732
  1,777
  1,827
  1,882
  1,943
  2,009
  2,081
  2,158
  2,241
  2,329
  2,424
  2,524
  2,631
  2,745
  2,865
  2,992
  3,127
  3,269
  3,419
  3,578
  3,745
  3,921
  4,107
  4,302
  4,508
  4,725
  4,953
  5,193
  5,445
Revenue / Adjusted assets
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
  0.947
Average production assets, $m
  600
  613
  627
  643
  661
  681
  703
  727
  753
  781
  811
  843
  877
  913
  952
  993
  1,036
  1,082
  1,131
  1,183
  1,237
  1,294
  1,355
  1,419
  1,486
  1,556
  1,631
  1,709
  1,792
  1,879
  1,970
Working capital, $m
  203
  192
  197
  202
  208
  214
  221
  228
  236
  245
  255
  265
  275
  287
  299
  312
  326
  340
  355
  372
  389
  407
  426
  446
  467
  489
  512
  537
  563
  590
  619
Total debt, $m
  410
  368
  390
  416
  444
  475
  510
  547
  588
  631
  678
  728
  782
  839
  899
  964
  1,032
  1,104
  1,180
  1,260
  1,345
  1,435
  1,530
  1,629
  1,735
  1,845
  1,962
  2,084
  2,213
  2,349
  2,492
Total liabilities, $m
  1,000
  958
  980
  1,006
  1,034
  1,065
  1,100
  1,137
  1,178
  1,221
  1,268
  1,318
  1,372
  1,429
  1,489
  1,554
  1,622
  1,694
  1,770
  1,850
  1,935
  2,025
  2,120
  2,219
  2,325
  2,435
  2,552
  2,674
  2,803
  2,939
  3,082
Total equity, $m
  736
  735
  752
  771
  793
  817
  843
  872
  903
  936
  972
  1,011
  1,052
  1,096
  1,142
  1,191
  1,243
  1,299
  1,357
  1,419
  1,484
  1,553
  1,625
  1,702
  1,782
  1,867
  1,957
  2,051
  2,150
  2,254
  2,363
Total liabilities and equity, $m
  1,736
  1,693
  1,732
  1,777
  1,827
  1,882
  1,943
  2,009
  2,081
  2,157
  2,240
  2,329
  2,424
  2,525
  2,631
  2,745
  2,865
  2,993
  3,127
  3,269
  3,419
  3,578
  3,745
  3,921
  4,107
  4,302
  4,509
  4,725
  4,953
  5,193
  5,445
Debt-to-equity ratio
  0.557
  0.500
  0.520
  0.540
  0.560
  0.580
  0.600
  0.630
  0.650
  0.670
  0.700
  0.720
  0.740
  0.770
  0.790
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.920
  0.940
  0.960
  0.970
  0.990
  1.000
  1.020
  1.030
  1.040
  1.050
Adjusted equity ratio
  0.423
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  45
  73
  74
  75
  77
  81
  85
  89
  95
  101
  109
  130
  139
  149
  160
  172
  185
  199
  214
  231
  248
  267
  287
  309
  332
  357
  383
  411
  441
  473
  507
Depreciation, amort., depletion, $m
  41
  50
  51
  52
  53
  54
  55
  56
  58
  59
  61
  44
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
  104
Funds from operations, $m
  86
  123
  125
  127
  130
  134
  139
  146
  152
  160
  169
  174
  185
  197
  210
  224
  239
  256
  274
  293
  313
  335
  359
  384
  410
  439
  469
  501
  535
  572
  610
Change in working capital, $m
  -19
  4
  4
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
Cash from operations, $m
  105
  119
  120
  122
  124
  128
  133
  138
  144
  152
  160
  164
  174
  186
  198
  211
  226
  241
  258
  277
  296
  317
  340
  364
  389
  417
  446
  477
  510
  545
  582
Maintenance CAPEX, $m
  0
  -32
  -32
  -33
  -34
  -35
  -36
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
New CAPEX, $m
  -19
  -13
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
  -82
  -87
  -91
Cash from investing activities, $m
  -20
  -45
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -111
  -116
  -122
  -128
  -135
  -142
  -149
  -156
  -164
  -172
  -181
  -190
Free cash flow, $m
  85
  75
  74
  73
  73
  73
  75
  77
  80
  84
  89
  90
  96
  103
  111
  120
  130
  141
  153
  166
  180
  195
  211
  229
  247
  268
  289
  312
  337
  364
  392
Issuance/(repayment) of debt, $m
  -68
  19
  22
  25
  28
  31
  34
  37
  41
  44
  47
  50
  54
  57
  61
  64
  68
  72
  76
  81
  85
  90
  95
  100
  105
  111
  117
  123
  129
  136
  143
Issuance/(repurchase) of shares, $m
  35
  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  
  -63
  19
  22
  25
  28
  31
  34
  37
  41
  44
  47
  50
  54
  57
  61
  64
  68
  72
  76
  81
  85
  90
  95
  100
  105
  111
  117
  123
  129
  136
  143
Total cash flow (excl. dividends), $m
  20
  95
  96
  98
  101
  105
  109
  115
  121
  128
  136
  140
  149
  160
  172
  184
  198
  213
  229
  246
  265
  284
  306
  328
  352
  378
  406
  435
  466
  499
  534
Retained Cash Flow (-), $m
  -445
  -14
  -17
  -19
  -22
  -24
  -26
  -29
  -31
  -33
  -36
  -38
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -73
  -76
  -81
  -85
  -89
  -94
  -99
  -104
  -110
Prev. year cash balance distribution, $m
 
  15
  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
 
  96
  79
  79
  79
  81
  83
  86
  90
  94
  100
  101
  108
  116
  125
  135
  146
  158
  171
  184
  199
  216
  233
  252
  272
  293
  316
  341
  367
  395
  425
Discount rate, %
 
  5.50
  5.78
  6.06
  6.37
  6.69
  7.02
  7.37
  7.74
  8.13
  8.53
  8.96
  9.41
  9.88
  10.37
  10.89
  11.43
  12.01
  12.61
  13.24
  13.90
  14.59
  15.32
  16.09
  16.89
  17.74
  18.62
  19.56
  20.53
  21.56
  22.64
PV of cash for distribution, $m
 
  91
  71
  66
  62
  58
  55
  52
  49
  47
  44
  39
  37
  34
  31
  29
  26
  23
  20
  17
  15
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  100
  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

Acushnet Holdings Corp. is engaged in the design, development, manufacture and distribution of golf products. The Company is engaged in various product categories, such as golf clubs, wedges, putters, golf gloves, golf gear and golf wear. The Company operates in four segments: Titleist Golf Balls, Titleist Golf Clubs, Titleist Golf Gear and FootJoy Golf Wear. The company's Titleist golf ball segment is engaged in designing and manufacturing a golf ball. It sells Titleist Pro V1. The Company also designs, manufactures and sells other golf balls under the Titleist brand, such as NXT Tour, Velocity and DT TruSoft, as well as under the Pinnacle brand. The Company designs, assembles and sells golf clubs (drivers, fairways, hybrids and irons) under the Titleist brand, wedges under the Vokey Design brand, and putters under the Scotty Cameron brand. Titleist golf clubs, Vokey Design wedges and Scotty Cameron putters are used by the players.

FINANCIAL RATIOS  of  Acushnet Holdings (GOLF)

Valuation Ratios
P/E Ratio 32.8
Price to Sales 0.9
Price to Book 2
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow 17.2
Growth Rates
Sales Growth Rate 4.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.4%
Cap. Spend. - 3 Yr. Gr. Rate -16.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 47.4%
Total Debt to Equity 55.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.6%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.5%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 50.8%
Gross Margin - 3 Yr. Avg. 50.6%
EBITDA Margin 12.3%
EBITDA Margin - 3 Yr. Avg. 10%
Operating Margin 9.1%
Oper. Margin - 3 Yr. Avg. 7.9%
Pre-Tax Margin 5.7%
Pre-Tax Margin - 3 Yr. Avg. 3.5%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 1.4%
Effective Tax Rate 43.8%
Eff/ Tax Rate - 3 Yr. Avg. 57.3%
Payout Ratio 0%

GOLF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GOLF stock intrinsic value calculation we used $1572 million for the last fiscal year's total revenue generated by Acushnet Holdings. The default revenue input number comes from 2016 income statement of Acushnet Holdings. 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 GOLF 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 5.5%, whose default value for GOLF is calculated based on our internal credit rating of Acushnet Holdings, 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 Acushnet Holdings.
    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 GOLF stock the variable cost ratio is equal to 68.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $367 million in the base year in the intrinsic value calculation for GOLF 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 10.2% for Acushnet Holdings.

Corporate tax rate of 27% is the nominal tax rate for Acushnet Holdings. 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 GOLF 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 GOLF are equal to 38.2%.

Life of production assets of 19 years is the average useful life of capital assets used in Acushnet Holdings 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 GOLF is equal to 12%. 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 - $736 million for Acushnet Holdings - 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 74.276 million for Acushnet Holdings 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 Acushnet Holdings at the current share price and the inputted number of shares is $1.5 billion.

COMPANY NEWS

▶ Acushnet beats Street 3Q forecasts   [Nov-08-17 07:29PM  Associated Press]
▶ Wally Uihlein to retire after 41 years at Acushnet   [Sep-25-17 12:09PM  Associated Press]
▶ [$$] CEO Switch at Maker of Titleist Golf Balls   [11:12AM  The Wall Street Journal]
▶ Acushnet misses Street 2Q forecasts   [Aug-11-17 08:57PM  Associated Press]
▶ 3 Dividend Stocks for Sharp Investors   [May-18-17 11:25AM  Motley Fool]
▶ Adidas Finally Sells Golf Business For $425 Million   [May-10-17 02:19PM  Benzinga]
▶ Why Costco Is Teeing Off on Titleist   [Mar-21-17 10:00AM  24/7 Wall St.]
▶ Deloitte leads the way in Massachusetts IPO auditing work in 2016   [Jan-04-17 02:55PM  at bizjournals.com]
Financial statements of GOLF
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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