Intrinsic value of The Habit Restaurants, Inc. - HABT

Previous Close

$10.12

  Intrinsic Value

$7.93

stock screener

  Rating & Target

sell

-22%

Previous close

$10.12

 
Intrinsic value

$7.93

 
Up/down potential

-22%

 
Rating

sell

We calculate the intrinsic value of HABT 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, %
  21.00
  19.40
  17.96
  16.66
  15.50
  14.45
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
Revenue, $m
  486
  581
  685
  799
  923
  1,056
  1,199
  1,351
  1,511
  1,681
  1,859
  2,045
  2,239
  2,442
  2,654
  2,874
  3,103
  3,341
  3,588
  3,845
  4,112
  4,390
  4,679
  4,979
  5,291
  5,617
  5,956
  6,309
  6,677
  7,061
Variable operating expenses, $m
  475
  567
  668
  780
  900
  1,030
  1,168
  1,316
  1,472
  1,637
  1,807
  1,989
  2,178
  2,375
  2,581
  2,795
  3,018
  3,249
  3,490
  3,740
  3,999
  4,269
  4,550
  4,842
  5,146
  5,462
  5,792
  6,135
  6,494
  6,867
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
  475
  567
  668
  780
  900
  1,030
  1,168
  1,316
  1,472
  1,637
  1,807
  1,989
  2,178
  2,375
  2,581
  2,795
  3,018
  3,249
  3,490
  3,740
  3,999
  4,269
  4,550
  4,842
  5,146
  5,462
  5,792
  6,135
  6,494
  6,867
Operating income, $m
  11
  14
  17
  20
  23
  27
  31
  35
  39
  44
  51
  56
  62
  67
  73
  79
  85
  92
  99
  106
  113
  121
  129
  137
  145
  154
  164
  173
  183
  194
EBITDA, $m
  41
  49
  58
  67
  78
  89
  101
  114
  127
  141
  156
  172
  188
  205
  223
  242
  261
  281
  302
  323
  346
  369
  393
  419
  445
  472
  501
  531
  561
  594
Interest expense (income), $m
  1
  0
  2
  5
  7
  10
  13
  17
  20
  24
  28
  32
  37
  42
  47
  52
  57
  63
  68
  74
  81
  87
  94
  101
  108
  116
  124
  132
  141
  150
  159
Earnings before tax, $m
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  19
  19
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  28
  29
  30
  32
  33
  34
  35
Tax expense, $m
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  9
Net income, $m
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  14
  14
  15
  15
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26

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
  378
  452
  533
  622
  718
  822
  932
  1,050
  1,175
  1,307
  1,445
  1,590
  1,741
  1,899
  2,064
  2,235
  2,413
  2,598
  2,790
  2,990
  3,198
  3,414
  3,638
  3,872
  4,115
  4,368
  4,631
  4,906
  5,192
  5,491
Adjusted assets (=assets-cash), $m
  378
  452
  533
  622
  718
  822
  932
  1,050
  1,175
  1,307
  1,445
  1,590
  1,741
  1,899
  2,064
  2,235
  2,413
  2,598
  2,790
  2,990
  3,198
  3,414
  3,638
  3,872
  4,115
  4,368
  4,631
  4,906
  5,192
  5,491
Revenue / Adjusted assets
  1.286
  1.285
  1.285
  1.285
  1.286
  1.285
  1.286
  1.287
  1.286
  1.286
  1.287
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
  1.286
Average production assets, $m
  196
  233
  275
  321
  371
  425
  482
  543
  608
  676
  747
  822
  900
  982
  1,067
  1,155
  1,247
  1,343
  1,442
  1,546
  1,653
  1,765
  1,881
  2,001
  2,127
  2,258
  2,394
  2,536
  2,684
  2,839
Working capital, $m
  -32
  -38
  -45
  -52
  -60
  -69
  -78
  -88
  -98
  -109
  -121
  -133
  -146
  -159
  -173
  -187
  -202
  -217
  -233
  -250
  -267
  -285
  -304
  -324
  -344
  -365
  -387
  -410
  -434
  -459
Total debt, $m
  40
  84
  133
  186
  244
  307
  374
  445
  520
  600
  683
  770
  862
  957
  1,056
  1,159
  1,267
  1,378
  1,494
  1,615
  1,740
  1,870
  2,005
  2,146
  2,293
  2,445
  2,604
  2,770
  2,942
  3,123
Total liabilities, $m
  228
  272
  321
  375
  433
  495
  562
  633
  709
  788
  871
  959
  1,050
  1,145
  1,244
  1,348
  1,455
  1,567
  1,683
  1,803
  1,928
  2,058
  2,194
  2,335
  2,481
  2,634
  2,793
  2,958
  3,131
  3,311
Total equity, $m
  150
  179
  211
  247
  285
  326
  370
  417
  467
  519
  574
  631
  691
  754
  819
  887
  958
  1,031
  1,108
  1,187
  1,270
  1,355
  1,444
  1,537
  1,633
  1,734
  1,839
  1,948
  2,061
  2,180
Total liabilities and equity, $m
  378
  451
  532
  622
  718
  821
  932
  1,050
  1,176
  1,307
  1,445
  1,590
  1,741
  1,899
  2,063
  2,235
  2,413
  2,598
  2,791
  2,990
  3,198
  3,413
  3,638
  3,872
  4,114
  4,368
  4,632
  4,906
  5,192
  5,491
Debt-to-equity ratio
  0.260
  0.470
  0.630
  0.760
  0.860
  0.940
  1.010
  1.070
  1.120
  1.160
  1.190
  1.220
  1.250
  1.270
  1.290
  1.310
  1.320
  1.340
  1.350
  1.360
  1.370
  1.380
  1.390
  1.400
  1.400
  1.410
  1.420
  1.420
  1.430
  1.430
Adjusted equity ratio
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  14
  14
  15
  15
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
Depreciation, amort., depletion, $m
  30
  35
  41
  47
  54
  62
  70
  79
  88
  97
  105
  116
  127
  138
  150
  163
  176
  189
  203
  218
  233
  249
  265
  282
  300
  318
  337
  357
  378
  400
Funds from operations, $m
  38
  44
  50
  57
  64
  72
  80
  89
  99
  109
  119
  130
  141
  153
  166
  179
  192
  206
  221
  236
  252
  268
  285
  303
  321
  340
  360
  381
  403
  425
Change in working capital, $m
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
Cash from operations, $m
  43
  50
  57
  64
  72
  81
  90
  99
  109
  120
  130
  142
  154
  167
  180
  193
  207
  222
  237
  253
  269
  286
  304
  322
  341
  361
  382
  404
  427
  450
Maintenance CAPEX, $m
  -23
  -28
  -33
  -39
  -45
  -52
  -60
  -68
  -76
  -86
  -95
  -105
  -116
  -127
  -138
  -150
  -163
  -176
  -189
  -203
  -218
  -233
  -249
  -265
  -282
  -300
  -318
  -337
  -357
  -378
New CAPEX, $m
  -34
  -38
  -42
  -46
  -50
  -54
  -57
  -61
  -65
  -68
  -71
  -75
  -78
  -82
  -85
  -88
  -92
  -96
  -99
  -103
  -107
  -112
  -116
  -121
  -126
  -131
  -136
  -142
  -148
  -154
Cash from investing activities, $m
  -57
  -66
  -75
  -85
  -95
  -106
  -117
  -129
  -141
  -154
  -166
  -180
  -194
  -209
  -223
  -238
  -255
  -272
  -288
  -306
  -325
  -345
  -365
  -386
  -408
  -431
  -454
  -479
  -505
  -532
Free cash flow, $m
  -13
  -16
  -18
  -21
  -23
  -25
  -27
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -79
  -82
Issuance/(repayment) of debt, $m
  40
  44
  49
  54
  58
  63
  67
  71
  75
  79
  83
  87
  91
  95
  99
  103
  107
  112
  116
  120
  125
  130
  135
  141
  147
  153
  159
  166
  173
  180
Issuance/(repurchase) of shares, $m
  18
  21
  23
  26
  29
  31
  34
  36
  38
  41
  41
  43
  46
  48
  50
  52
  54
  56
  59
  61
  64
  66
  69
  72
  75
  78
  82
  85
  89
  93
Cash from financing (excl. dividends), $m  
  58
  65
  72
  80
  87
  94
  101
  107
  113
  120
  124
  130
  137
  143
  149
  155
  161
  168
  175
  181
  189
  196
  204
  213
  222
  231
  241
  251
  262
  273
Total cash flow (excl. dividends), $m
  44
  49
  54
  59
  64
  69
  73
  78
  82
  86
  88
  93
  97
  101
  105
  109
  114
  118
  123
  128
  133
  138
  144
  149
  155
  162
  169
  176
  183
  191
Retained Cash Flow (-), $m
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -65
  -68
  -71
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -96
  -100
  -105
  -109
  -114
  -119
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
  18
  20
  22
  24
  26
  27
  29
  31
  32
  34
  34
  35
  37
  38
  40
  41
  43
  45
  47
  48
  50
  52
  54
  57
  59
  61
  64
  67
  69
  72
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
  17
  18
  19
  20
  20
  20
  20
  19
  19
  18
  16
  15
  14
  13
  12
  11
  9
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  1
Current shareholders' claim on cash, %
  93.7
  88.0
  82.9
  78.3
  74.3
  70.6
  67.3
  64.4
  61.7
  59.3
  57.1
  55.2
  53.4
  51.7
  50.1
  48.7
  47.3
  46.0
  44.8
  43.7
  42.6
  41.6
  40.6
  39.7
  38.8
  37.9
  37.1
  36.3
  35.6
  34.8

The Habit Restaurants, Inc. (Habit Burger Grill) is a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. It operates a range of restaurant formats, including end-cap, free-standing, inline, end-cap drive-thru and traditional stand-alone drive-in, primarily within suburban shopping centers and retail settings. As of December 27, 2016, the Company had 172 locations in 15 markets in 10 states and the United Arab Emirates, including franchised/licensed locations (excluding six licensed locations in Santa Barbara County, California).

FINANCIAL RATIOS  of  The Habit Restaurants, Inc. (HABT)

Valuation Ratios
P/E Ratio 52.6
Price to Sales 0.9
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow 263.1
Growth Rates
Sales Growth Rate 22.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.9%
Cap. Spend. - 3 Yr. Gr. Rate 10.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 5.1%
Total Debt to Equity 5.1%
Interest Coverage 14
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 5.2%
Return On Equity - 3 Yr. Avg. 3.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 70.1%
Gross Margin - 3 Yr. Avg. 68.1%
EBITDA Margin 10.2%
EBITDA Margin - 3 Yr. Avg. 9.8%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 5.1%
Pre-Tax Margin 4.6%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin 1.8%
Net Profit Margin - 3 Yr. Avg. 1%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 16.3%
Payout Ratio 0%

HABT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HABT stock intrinsic value calculation we used $402 million for the last fiscal year's total revenue generated by The Habit Restaurants, Inc.. The default revenue input number comes from 0001 income statement of The Habit 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 HABT stock valuation model: a) initial revenue growth rate of 21% 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 HABT is calculated based on our internal credit rating of The Habit 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 The Habit 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 HABT stock the variable cost ratio is equal to 97.8%.

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 HABT 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 The Habit Restaurants, Inc..

Corporate tax rate of 27% is the nominal tax rate for The Habit 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 HABT 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 HABT are equal to 40.2%.

Life of production assets of 7.1 years is the average useful life of capital assets used in The Habit 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 HABT is equal to -6.5%. 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 - $124.235 million for The Habit 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 26.056 million for The Habit 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 The Habit Restaurants, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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