Intrinsic value of Helen of Troy - HELE

Previous Close

$115.50

  Intrinsic Value

$60.43

stock screener

  Rating & Target

sell

-48%

Previous close

$115.50

 
Intrinsic value

$60.43

 
Up/down potential

-48%

 
Rating

sell

We calculate the intrinsic value of HELE 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 2017), $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 3.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

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
  1,568
  1,604
  1,645
  1,691
  1,743
  1,799
  1,860
  1,926
  1,998
  2,075
  2,157
  2,244
  2,337
  2,436
  2,541
  2,653
  2,771
  2,895
  3,027
  3,166
  3,313
  3,468
  3,631
  3,803
  3,984
  4,174
  4,375
  4,586
  4,808
  5,042
Variable operating expenses, $m
  1,432
  1,463
  1,497
  1,536
  1,579
  1,627
  1,678
  1,734
  1,795
  1,859
  1,816
  1,890
  1,969
  2,052
  2,141
  2,234
  2,334
  2,439
  2,550
  2,667
  2,790
  2,921
  3,058
  3,203
  3,355
  3,516
  3,685
  3,863
  4,050
  4,247
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
  1,432
  1,463
  1,497
  1,536
  1,579
  1,627
  1,678
  1,734
  1,795
  1,859
  1,816
  1,890
  1,969
  2,052
  2,141
  2,234
  2,334
  2,439
  2,550
  2,667
  2,790
  2,921
  3,058
  3,203
  3,355
  3,516
  3,685
  3,863
  4,050
  4,247
Operating income, $m
  135
  141
  148
  155
  163
  172
  182
  192
  203
  215
  340
  354
  369
  384
  401
  418
  437
  457
  477
  499
  523
  547
  573
  600
  628
  658
  690
  723
  758
  795
EBITDA, $m
  367
  375
  385
  396
  408
  421
  435
  451
  467
  485
  504
  525
  547
  570
  595
  621
  648
  677
  708
  741
  775
  811
  849
  890
  932
  977
  1,023
  1,073
  1,125
  1,179
Interest expense (income), $m
  13
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  94
  100
  105
  111
  117
Earnings before tax, $m
  109
  114
  120
  126
  133
  140
  148
  157
  166
  176
  299
  311
  323
  336
  350
  364
  380
  396
  413
  432
  451
  471
  493
  515
  539
  564
  590
  618
  647
  678
Tax expense, $m
  30
  31
  32
  34
  36
  38
  40
  42
  45
  48
  81
  84
  87
  91
  94
  98
  103
  107
  112
  117
  122
  127
  133
  139
  146
  152
  159
  167
  175
  183
Net income, $m
  80
  83
  87
  92
  97
  102
  108
  115
  121
  129
  218
  227
  236
  245
  255
  266
  277
  289
  302
  315
  329
  344
  360
  376
  394
  412
  431
  451
  473
  495

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
  1,849
  1,891
  1,940
  1,994
  2,055
  2,121
  2,193
  2,272
  2,356
  2,446
  2,543
  2,646
  2,756
  2,873
  2,997
  3,128
  3,267
  3,414
  3,570
  3,734
  3,907
  4,089
  4,282
  4,484
  4,698
  4,923
  5,159
  5,408
  5,670
  5,946
Adjusted assets (=assets-cash), $m
  1,849
  1,891
  1,940
  1,994
  2,055
  2,121
  2,193
  2,272
  2,356
  2,446
  2,543
  2,646
  2,756
  2,873
  2,997
  3,128
  3,267
  3,414
  3,570
  3,734
  3,907
  4,089
  4,282
  4,484
  4,698
  4,923
  5,159
  5,408
  5,670
  5,946
Revenue / Adjusted assets
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
Average production assets, $m
  1,195
  1,222
  1,254
  1,289
  1,328
  1,371
  1,417
  1,468
  1,522
  1,581
  1,643
  1,710
  1,781
  1,856
  1,937
  2,021
  2,111
  2,206
  2,307
  2,413
  2,524
  2,642
  2,767
  2,898
  3,036
  3,181
  3,334
  3,495
  3,664
  3,842
Working capital, $m
  180
  184
  189
  194
  200
  207
  214
  222
  230
  239
  248
  258
  269
  280
  292
  305
  319
  333
  348
  364
  381
  399
  418
  437
  458
  480
  503
  527
  553
  580
Total debt, $m
  501
  520
  541
  565
  592
  621
  652
  686
  723
  763
  805
  850
  898
  949
  1,003
  1,061
  1,121
  1,186
  1,253
  1,325
  1,401
  1,481
  1,565
  1,653
  1,746
  1,845
  1,948
  2,057
  2,171
  2,292
Total liabilities, $m
  808
  826
  848
  872
  898
  927
  959
  993
  1,030
  1,069
  1,111
  1,156
  1,204
  1,255
  1,310
  1,367
  1,428
  1,492
  1,560
  1,632
  1,707
  1,787
  1,871
  1,960
  2,053
  2,151
  2,255
  2,363
  2,478
  2,598
Total equity, $m
  1,041
  1,065
  1,092
  1,123
  1,157
  1,194
  1,235
  1,279
  1,326
  1,377
  1,432
  1,490
  1,552
  1,617
  1,687
  1,761
  1,839
  1,922
  2,010
  2,102
  2,199
  2,302
  2,411
  2,525
  2,645
  2,771
  2,905
  3,045
  3,192
  3,347
Total liabilities and equity, $m
  1,849
  1,891
  1,940
  1,995
  2,055
  2,121
  2,194
  2,272
  2,356
  2,446
  2,543
  2,646
  2,756
  2,872
  2,997
  3,128
  3,267
  3,414
  3,570
  3,734
  3,906
  4,089
  4,282
  4,485
  4,698
  4,922
  5,160
  5,408
  5,670
  5,945
Debt-to-equity ratio
  0.480
  0.490
  0.500
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.550
  0.560
  0.570
  0.580
  0.590
  0.590
  0.600
  0.610
  0.620
  0.620
  0.630
  0.640
  0.640
  0.650
  0.650
  0.660
  0.670
  0.670
  0.680
  0.680
  0.680
Adjusted equity ratio
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  80
  83
  87
  92
  97
  102
  108
  115
  121
  129
  218
  227
  236
  245
  255
  266
  277
  289
  302
  315
  329
  344
  360
  376
  394
  412
  431
  451
  473
  495
Depreciation, amort., depletion, $m
  231
  234
  237
  241
  245
  249
  254
  259
  264
  270
  164
  171
  178
  186
  194
  202
  211
  221
  231
  241
  252
  264
  277
  290
  304
  318
  333
  349
  366
  384
Funds from operations, $m
  311
  317
  324
  332
  341
  351
  362
  373
  385
  399
  383
  398
  414
  431
  449
  468
  488
  510
  532
  556
  582
  608
  636
  666
  697
  730
  764
  801
  839
  879
Change in working capital, $m
  4
  4
  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
Cash from operations, $m
  307
  313
  320
  327
  335
  345
  355
  365
  377
  390
  373
  388
  403
  419
  437
  455
  475
  495
  517
  540
  565
  591
  618
  646
  676
  708
  741
  776
  813
  852
Maintenance CAPEX, $m
  -117
  -119
  -122
  -125
  -129
  -133
  -137
  -142
  -147
  -152
  -158
  -164
  -171
  -178
  -186
  -194
  -202
  -211
  -221
  -231
  -241
  -252
  -264
  -277
  -290
  -304
  -318
  -333
  -349
  -366
New CAPEX, $m
  -23
  -27
  -31
  -35
  -39
  -43
  -47
  -51
  -54
  -58
  -63
  -67
  -71
  -75
  -80
  -85
  -90
  -95
  -100
  -106
  -112
  -118
  -124
  -131
  -138
  -145
  -153
  -161
  -169
  -178
Cash from investing activities, $m
  -140
  -146
  -153
  -160
  -168
  -176
  -184
  -193
  -201
  -210
  -221
  -231
  -242
  -253
  -266
  -279
  -292
  -306
  -321
  -337
  -353
  -370
  -388
  -408
  -428
  -449
  -471
  -494
  -518
  -544
Free cash flow, $m
  167
  166
  166
  167
  168
  169
  171
  173
  176
  179
  153
  157
  161
  166
  171
  177
  183
  189
  196
  204
  212
  220
  229
  239
  249
  259
  270
  282
  295
  308
Issuance/(repayment) of debt, $m
  16
  19
  21
  24
  26
  29
  32
  34
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  16
  19
  21
  24
  26
  29
  32
  34
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
Total cash flow (excl. dividends), $m
  183
  185
  187
  190
  194
  198
  202
  207
  213
  219
  195
  202
  209
  217
  225
  234
  244
  254
  264
  275
  287
  300
  313
  327
  342
  357
  374
  391
  409
  428
Retained Cash Flow (-), $m
  -20
  -24
  -27
  -31
  -34
  -37
  -41
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -103
  -108
  -114
  -120
  -127
  -133
  -140
  -147
  -155
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
  15
  16
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
Cash available for distribution, $m
  163
  161
  160
  160
  160
  161
  162
  163
  165
  168
  140
  144
  147
  151
  155
  160
  165
  171
  177
  183
  190
  197
  205
  213
  222
  231
  241
  251
  262
  273
Discount rate, %
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
  156
  147
  138
  130
  123
  115
  107
  100
  93
  85
  64
  59
  54
  48
  43
  38
  34
  29
  25
  21
  18
  15
  12
  10
  7
  6
  4
  3
  2
  2
Current shareholders' claim on cash, %
  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

Helen Of Troy Limited is a global consumer products company that offers a range of solutions for its customers through a range of brands. The Company is a global designer, developer, importer, marketer and distributor of a portfolio of brand-name consumer products. The Company has three segments. The Housewares segment provides a range of consumer products for the home. The Health & Home segment focuses on healthcare devices, such as thermometers, humidifiers, blood pressure monitors and heating pads; water filtration systems, and small home appliances, such as portable heaters, fans, air purifiers, and insect control devices. The Beauty segment's products include electric hair care, beauty care and wellness appliances; grooming tools and accessories, and liquid-, solid- and powder-based personal care and grooming products.

FINANCIAL RATIOS  of  Helen of Troy (HELE)

Valuation Ratios
P/E Ratio 22.1
Price to Sales 2
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 15
Growth Rates
Sales Growth Rate -0.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -12.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 45.2%
Total Debt to Equity 47.6%
Interest Coverage 13
Management Effectiveness
Return On Assets 8.4%
Ret/ On Assets - 3 Yr. Avg. 7.9%
Return On Total Capital 9.2%
Ret/ On T. Cap. - 3 Yr. Avg. 8.8%
Return On Equity 14.5%
Return On Equity - 3 Yr. Avg. 13%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 43.9%
Gross Margin - 3 Yr. Avg. 42.2%
EBITDA Margin 13.5%
EBITDA Margin - 3 Yr. Avg. 12.9%
Operating Margin 10.7%
Oper. Margin - 3 Yr. Avg. 10.1%
Pre-Tax Margin 9.8%
Pre-Tax Margin - 3 Yr. Avg. 9.2%
Net Profit Margin 9.2%
Net Profit Margin - 3 Yr. Avg. 8.3%
Effective Tax Rate 6%
Eff/ Tax Rate - 3 Yr. Avg. 10.9%
Payout Ratio 0%

HELE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HELE stock intrinsic value calculation we used $1537 million for the last fiscal year's total revenue generated by Helen of Troy. The default revenue input number comes from 2017 income statement of Helen of Troy. 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 HELE 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 4.5%, whose default value for HELE is calculated based on our internal credit rating of Helen of Troy, 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 Helen of Troy.
    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 HELE stock the variable cost ratio is equal to 91.5%.

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 HELE 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 Helen of Troy.

Corporate tax rate of 27% is the nominal tax rate for Helen of Troy. 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 HELE stock is equal to 1%.

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 HELE are equal to 76.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Helen of Troy 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 HELE is equal to 11.5%. 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 - $1021 million for Helen of Troy - 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 28 million for Helen of Troy 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 Helen of Troy at the current share price and the inputted number of shares is $3.2 billion.

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COMPANY NEWS

▶ Great Earnings Boost Helen of Troy Stock to New Heights   [Jul-19-18 12:04PM  InvestorPlace]
▶ Top Stock Picks for the Week of July 16, 2018   [Jul-16-18 07:36PM  Zacks]
▶ Company News For Jul 10, 2018   [10:01AM  Zacks]
▶ Why Helen of Troy Limited Stock Popped Today   [Jul-09-18 08:40PM  Motley Fool]
▶ What Happened in the Stock Market Today   [04:42PM  Motley Fool]
▶ This Top Consumer Stock Is Booming On Big Earnings Beat   [04:01PM  Investor's Business Daily]
▶ Helen of Troy: Fiscal 1Q Earnings Snapshot   [07:02AM  Associated Press]
▶ Top Ranked Value Stocks to Buy for June 21st   [Jun-21-18 07:35AM  Zacks]
▶ Top Ranked Value Stocks to Buy for May 30th   [May-30-18 09:02AM  Zacks]
▶ Helen of Troy: Fiscal 4Q Earnings Snapshot   [Apr-26-18 08:53AM  Associated Press]
▶ Helen of Troy reports 3Q loss   [07:04AM  Associated Press]
▶ Helen of Troy Announces the Sale of Healthy Directions LLC   [Dec-20-17 04:32PM  Business Wire]
▶ PUR Selects Brandgenuity to Drive Licensing Efforts   [Nov-06-17 06:45AM  Business Wire]
▶ Helen of Troy posts 2Q profit   [Oct-05-17 04:28PM  Associated Press]
▶ The 5 Best Earnings Charts This Week   [Oct-02-17 06:07PM  Zacks]
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