Intrinsic value of Acushnet Holdings - GOLF

Previous Close

$21.29

  Intrinsic Value

$13.07

stock screener

  Rating & Target

sell

-39%

Previous close

$21.29

 
Intrinsic value

$13.07

 
Up/down potential

-39%

 
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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Acushnet Holdings (GOLF) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  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
Revenue, $m
  1,572
  1,610
  1,653
  1,700
  1,753
  1,811
  1,874
  1,941
  2,014
  2,093
  2,176
  2,265
  2,360
  2,461
  2,567
  2,680
  2,800
  2,927
  3,060
  3,201
  3,350
  3,507
  3,673
  3,847
  4,030
  4,223
  4,427
  4,641
  4,866
  5,102
  5,351
Variable operating expenses, $m
 
  1,096
  1,124
  1,156
  1,192
  1,231
  1,273
  1,318
  1,367
  1,419
  1,475
  1,517
  1,580
  1,648
  1,719
  1,795
  1,875
  1,960
  2,049
  2,144
  2,243
  2,348
  2,459
  2,576
  2,699
  2,828
  2,964
  3,107
  3,258
  3,417
  3,583
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
  1,472
  1,510
  1,551
  1,597
  1,646
  1,699
  1,754
  1,814
  1,877
  1,945
  1,999
  2,074
  2,154
  2,238
  2,327
  2,420
  2,518
  2,621
  2,731
  2,844
  2,964
  3,091
  3,224
  3,363
  3,508
  3,661
  3,822
  3,991
  4,168
  4,353
Operating income, $m
  143
  138
  143
  149
  156
  165
  176
  187
  200
  215
  231
  267
  286
  307
  330
  354
  380
  409
  439
  471
  505
  542
  582
  623
  668
  715
  765
  818
  875
  935
  998
EBITDA, $m
  184
  188
  194
  201
  209
  219
  231
  244
  259
  275
  293
  312
  334
  357
  381
  408
  437
  467
  500
  535
  573
  613
  655
  701
  749
  800
  854
  912
  973
  1,037
  1,106
Interest expense (income), $m
  64
  36
  38
  41
  43
  47
  50
  54
  58
  63
  67
  72
  78
  84
  90
  96
  103
  111
  118
  126
  135
  144
  154
  164
  174
  186
  197
  210
  223
  236
  251
Earnings before tax, $m
  89
  102
  105
  108
  113
  118
  125
  133
  142
  152
  164
  194
  208
  223
  240
  258
  277
  298
  320
  345
  371
  398
  428
  460
  493
  529
  568
  609
  652
  698
  747
Tax expense, $m
  39
  28
  28
  29
  30
  32
  34
  36
  38
  41
  44
  52
  56
  60
  65
  70
  75
  80
  87
  93
  100
  108
  116
  124
  133
  143
  153
  164
  176
  189
  202
Net income, $m
  45
  75
  76
  79
  82
  86
  91
  97
  104
  111
  120
  142
  152
  163
  175
  188
  202
  218
  234
  252
  270
  291
  312
  336
  360
  386
  415
  444
  476
  510
  545

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
  1,700
  1,745
  1,796
  1,851
  1,912
  1,979
  2,050
  2,127
  2,210
  2,298
  2,392
  2,492
  2,598
  2,711
  2,831
  2,957
  3,090
  3,232
  3,381
  3,538
  3,703
  3,878
  4,062
  4,256
  4,460
  4,674
  4,900
  5,138
  5,388
  5,651
Adjusted assets (=assets-cash), $m
  1,660
  1,700
  1,745
  1,796
  1,851
  1,912
  1,979
  2,050
  2,127
  2,210
  2,298
  2,392
  2,492
  2,598
  2,711
  2,831
  2,957
  3,090
  3,232
  3,381
  3,538
  3,703
  3,878
  4,062
  4,256
  4,460
  4,674
  4,900
  5,138
  5,388
  5,651
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
  615
  631
  650
  670
  692
  716
  742
  769
  799
  831
  865
  902
  940
  981
  1,024
  1,070
  1,118
  1,169
  1,223
  1,280
  1,340
  1,403
  1,469
  1,540
  1,613
  1,691
  1,773
  1,859
  1,949
  2,044
Working capital, $m
  203
  193
  198
  204
  210
  217
  225
  233
  242
  251
  261
  272
  283
  295
  308
  322
  336
  351
  367
  384
  402
  421
  441
  462
  484
  507
  531
  557
  584
  612
  642
Total debt, $m
  410
  372
  398
  426
  458
  492
  530
  570
  614
  661
  711
  764
  820
  881
  944
  1,012
  1,084
  1,159
  1,239
  1,323
  1,412
  1,506
  1,605
  1,709
  1,819
  1,934
  2,056
  2,184
  2,318
  2,459
  2,608
Total liabilities, $m
  1,000
  962
  988
  1,016
  1,048
  1,082
  1,120
  1,160
  1,204
  1,251
  1,301
  1,354
  1,410
  1,471
  1,534
  1,602
  1,674
  1,749
  1,829
  1,913
  2,002
  2,096
  2,195
  2,299
  2,409
  2,524
  2,646
  2,774
  2,908
  3,049
  3,198
Total equity, $m
  736
  738
  757
  779
  803
  830
  859
  890
  923
  959
  997
  1,038
  1,082
  1,128
  1,177
  1,228
  1,283
  1,341
  1,403
  1,467
  1,535
  1,607
  1,683
  1,763
  1,847
  1,936
  2,029
  2,127
  2,230
  2,338
  2,452
Total liabilities and equity, $m
  1,736
  1,700
  1,745
  1,795
  1,851
  1,912
  1,979
  2,050
  2,127
  2,210
  2,298
  2,392
  2,492
  2,599
  2,711
  2,830
  2,957
  3,090
  3,232
  3,380
  3,537
  3,703
  3,878
  4,062
  4,256
  4,460
  4,675
  4,901
  5,138
  5,387
  5,650
Debt-to-equity ratio
  0.557
  0.500
  0.530
  0.550
  0.570
  0.590
  0.620
  0.640
  0.670
  0.690
  0.710
  0.740
  0.760
  0.780
  0.800
  0.820
  0.840
  0.860
  0.880
  0.900
  0.920
  0.940
  0.950
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.050
  1.060
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
  75
  76
  79
  82
  86
  91
  97
  104
  111
  120
  142
  152
  163
  175
  188
  202
  218
  234
  252
  270
  291
  312
  336
  360
  386
  415
  444
  476
  510
  545
Depreciation, amort., depletion, $m
  41
  50
  51
  52
  53
  54
  56
  57
  58
  60
  62
  46
  47
  49
  52
  54
  56
  59
  62
  64
  67
  71
  74
  77
  81
  85
  89
  93
  98
  103
  108
Funds from operations, $m
  86
  125
  127
  131
  135
  141
  147
  154
  162
  171
  181
  187
  199
  213
  227
  242
  259
  276
  295
  316
  338
  361
  386
  413
  441
  471
  504
  538
  574
  612
  653
Change in working capital, $m
  -19
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Cash from operations, $m
  105
  120
  122
  125
  129
  134
  140
  146
  154
  162
  171
  177
  188
  200
  214
  228
  244
  261
  279
  299
  320
  342
  366
  392
  419
  448
  479
  512
  547
  584
  623
Maintenance CAPEX, $m
  0
  -32
  -32
  -33
  -34
  -35
  -36
  -38
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -52
  -54
  -56
  -59
  -62
  -64
  -67
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -98
  -103
New CAPEX, $m
  -19
  -15
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -90
  -95
Cash from investing activities, $m
  -20
  -47
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -70
  -74
  -78
  -82
  -85
  -90
  -95
  -100
  -104
  -110
  -116
  -121
  -127
  -134
  -141
  -147
  -155
  -163
  -171
  -179
  -188
  -198
Free cash flow, $m
  85
  74
  74
  74
  75
  77
  79
  82
  87
  92
  97
  99
  106
  115
  124
  134
  145
  157
  170
  184
  199
  215
  233
  252
  272
  293
  317
  341
  368
  396
  426
Issuance/(repayment) of debt, $m
  -68
  23
  26
  29
  32
  35
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  110
  115
  121
  128
  134
  141
  149
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
  23
  26
  29
  32
  35
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  110
  115
  121
  128
  134
  141
  149
Total cash flow (excl. dividends), $m
  20
  97
  99
  102
  106
  111
  117
  123
  130
  138
  147
  152
  163
  175
  187
  201
  216
  232
  249
  268
  288
  309
  332
  356
  381
  409
  438
  469
  502
  537
  574
Retained Cash Flow (-), $m
  -445
  -17
  -20
  -22
  -24
  -26
  -29
  -31
  -33
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -108
  -114
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
 
  95
  80
  80
  82
  85
  88
  92
  97
  102
  109
  111
  120
  129
  139
  149
  161
  174
  188
  203
  219
  237
  256
  276
  297
  320
  345
  371
  399
  429
  460
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
 
  90
  71
  67
  64
  61
  58
  56
  53
  51
  48
  43
  41
  38
  35
  32
  29
  25
  22
  19
  16
  14
  11
  9
  7
  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 35.1
Price to Sales 1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 18.3
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 2.4% 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 74.953 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 $1.6 billion.

COMPANY NEWS

▶ Acushnet Sees RS Rating Rise To 73   [Jan-16-18 03:00AM  Investor's Business Daily]
▶ 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
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