Intrinsic value of Good Times Restaurants Inc. - GTIM

Previous Close

$2.59

  Intrinsic Value

$3.42

stock screener

  Rating & Target

buy

+32%

Previous close

$2.59

 
Intrinsic value

$3.42

 
Up/down potential

+32%

 
Rating

buy

We calculate the intrinsic value of GTIM 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 0.0

 

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, %
  11.00
  10.40
  9.86
  9.37
  8.94
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
Revenue, $m
  110
  121
  133
  146
  159
  172
  186
  201
  216
  232
  249
  266
  284
  302
  321
  341
  362
  384
  407
  430
  455
  481
  508
  536
  565
  596
  628
  661
  697
  733
Variable operating expenses, $m
  101
  111
  121
  132
  144
  156
  168
  181
  195
  209
  220
  235
  251
  267
  284
  302
  320
  339
  359
  380
  402
  425
  449
  473
  499
  526
  555
  584
  616
  648
Fixed operating expenses, $m
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
Total operating expenses, $m
  109
  119
  130
  141
  153
  165
  177
  191
  205
  219
  230
  245
  262
  278
  295
  313
  332
  351
  371
  392
  415
  438
  462
  486
  513
  540
  569
  599
  631
  663
Operating income, $m
  1
  2
  3
  5
  6
  7
  9
  10
  12
  14
  19
  21
  22
  24
  26
  28
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
EBITDA, $m
  8
  10
  11
  13
  15
  17
  18
  20
  22
  25
  27
  29
  32
  34
  37
  39
  42
  45
  48
  52
  55
  59
  62
  66
  70
  75
  79
  84
  89
  94
Interest expense (income), $m
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
Earnings before tax, $m
  1
  2
  3
  4
  5
  6
  7
  8
  10
  11
  16
  18
  19
  21
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
  56
  60
Tax expense, $m
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
Net income, $m
  0
  1
  2
  3
  4
  4
  5
  6
  7
  8
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  27
  29
  30
  32
  34
  36
  39
  41
  43

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
  68
  75
  82
  90
  98
  106
  115
  124
  133
  143
  153
  164
  175
  186
  198
  210
  223
  236
  250
  265
  280
  296
  313
  330
  348
  367
  387
  407
  429
  452
Adjusted assets (=assets-cash), $m
  68
  75
  82
  90
  98
  106
  115
  124
  133
  143
  153
  164
  175
  186
  198
  210
  223
  236
  250
  265
  280
  296
  313
  330
  348
  367
  387
  407
  429
  452
Revenue / Adjusted assets
  1.618
  1.613
  1.622
  1.622
  1.622
  1.623
  1.617
  1.621
  1.624
  1.622
  1.627
  1.622
  1.623
  1.624
  1.621
  1.624
  1.623
  1.627
  1.628
  1.623
  1.625
  1.625
  1.623
  1.624
  1.624
  1.624
  1.623
  1.624
  1.625
  1.622
Average production assets, $m
  46
  51
  56
  61
  66
  72
  78
  84
  90
  97
  104
  111
  119
  126
  134
  143
  151
  161
  170
  180
  190
  201
  212
  224
  236
  249
  262
  276
  291
  307
Working capital, $m
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -40
Total debt, $m
  10
  14
  17
  20
  24
  27
  31
  35
  39
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  98
  104
  111
  119
  126
  134
  143
  151
  161
  170
  180
Total liabilities, $m
  30
  33
  36
  40
  43
  47
  51
  55
  59
  63
  68
  72
  77
  82
  87
  93
  99
  105
  111
  117
  124
  131
  138
  146
  154
  162
  171
  180
  190
  200
Total equity, $m
  38
  42
  46
  50
  55
  59
  64
  69
  74
  80
  85
  91
  97
  104
  110
  117
  124
  132
  140
  148
  156
  165
  174
  184
  194
  205
  216
  227
  239
  252
Total liabilities and equity, $m
  68
  75
  82
  90
  98
  106
  115
  124
  133
  143
  153
  163
  174
  186
  197
  210
  223
  237
  251
  265
  280
  296
  312
  330
  348
  367
  387
  407
  429
  452
Debt-to-equity ratio
  0.280
  0.320
  0.370
  0.400
  0.440
  0.460
  0.490
  0.510
  0.530
  0.550
  0.560
  0.580
  0.590
  0.600
  0.620
  0.630
  0.640
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.710
Adjusted equity ratio
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  1
  2
  3
  4
  4
  5
  6
  7
  8
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  27
  29
  30
  32
  34
  36
  39
  41
  43
Depreciation, amort., depletion, $m
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
Funds from operations, $m
  8
  9
  10
  11
  12
  13
  15
  16
  18
  19
  20
  21
  23
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
  64
  67
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  8
  9
  10
  12
  13
  14
  16
  17
  19
  20
  21
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  59
  62
  66
  69
Maintenance CAPEX, $m
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -23
New CAPEX, $m
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
Cash from investing activities, $m
  -8
  -9
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -20
  -21
  -21
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
Free cash flow, $m
  0
  1
  1
  2
  3
  3
  4
  5
  6
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  26
  28
  29
  31
Issuance/(repayment) of debt, $m
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
Issuance/(repurchase) of shares, $m
  3
  3
  2
  2
  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
Cash from financing (excl. dividends), $m  
  6
  6
  5
  5
  5
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  7
  7
  7
  7
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
Retained Cash Flow (-), $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
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
  3
  3
  3
  3
  3
  3
  3
  4
  5
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
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
  3
  3
  2
  2
  2
  2
  2
  2
  3
  3
  2
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  90.8
  84.4
  80.0
  77.2
  75.7
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2
  75.2

Good Times Restaurants Inc. operates and franchises Good Times Burgers & Frozen Custard (Good Times) restaurants and Bad Daddy's Burger Bar concept (Bad Daddy's). The Company operates through two segments: Good Times Burgers and Frozen Custard restaurants, and Bad Daddy's Burger Bar restaurants. Good Times is a quick service restaurant concept. The menu of a Good Times restaurant includes hamburgers, cheeseburgers, chicken sandwiches, French fries, onion rings, soft drinks and frozen custard products. Its breakfast menu includes breakfast burritos, orange juice and coffee. Bad Daddy's operates in the burger casual dining sector and is chef driven, full service, full bar concept. Its menu consists of burgers, salads, sandwiches and appetizers. Its bar focuses on local, craft microbrew beers and specialty cocktails. The Company operates through its subsidiaries, Good Times Drive Thru, Inc., BD of Colorado, LLC, Bad Daddy's Franchise Development, LLC and Bad Daddy's International, LLC.

FINANCIAL RATIOS  of  Good Times Restaurants Inc. (GTIM)

Valuation Ratios
P/E Ratio -16.1
Price to Sales 0.4
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 6.4
Price to Free Cash Flow -3.2
Growth Rates
Sales Growth Rate 23.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 66.7%
Cap. Spend. - 3 Yr. Gr. Rate 38%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 14.3%
Total Debt to Equity 14.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -3.9%
Ret/ On Assets - 3 Yr. Avg. -3%
Return On Total Capital -5.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity -5.6%
Return On Equity - 3 Yr. Avg. -4.1%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 20.3%
Gross Margin - 3 Yr. Avg. 23.1%
EBITDA Margin 1.3%
EBITDA Margin - 3 Yr. Avg. 2.2%
Operating Margin -2.5%
Oper. Margin - 3 Yr. Avg. -1.4%
Pre-Tax Margin -2.5%
Pre-Tax Margin - 3 Yr. Avg. -0.8%
Net Profit Margin -2.5%
Net Profit Margin - 3 Yr. Avg. -2.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

GTIM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GTIM stock intrinsic value calculation we used $99 million for the last fiscal year's total revenue generated by Good Times Restaurants Inc.. The default revenue input number comes from 0001 income statement of Good Times Restaurants 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 GTIM stock valuation model: a) initial revenue growth rate of 11% 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 GTIM is calculated based on our internal credit rating of Good Times Restaurants 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 Good Times Restaurants 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 GTIM stock the variable cost ratio is equal to 91.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $8 million in the base year in the intrinsic value calculation for GTIM 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 6.1% for Good Times Restaurants Inc..

Corporate tax rate of 27% is the nominal tax rate for Good Times Restaurants 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 GTIM 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 GTIM are equal to 41.8%.

Life of production assets of 12.9 years is the average useful life of capital assets used in Good Times Restaurants 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 GTIM is equal to -5.5%. 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 - $33.983 million for Good Times Restaurants 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 12.522 million for Good Times Restaurants 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 Good Times Restaurants Inc. at the current share price and the inputted number of shares is $0.0 billion.

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