Intrinsic value of Helen of Troy Limited - HELE

Previous Close

$136.74

  Intrinsic Value

$48.42

stock screener

  Rating & Target

str. sell

-65%

Previous close

$136.74

 
Intrinsic value

$48.42

 
Up/down potential

-65%

 
Rating

str. 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 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 3.5

 

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, %
  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
  1,526
  1,566
  1,612
  1,662
  1,716
  1,776
  1,840
  1,909
  1,983
  2,063
  2,147
  2,237
  2,332
  2,433
  2,541
  2,654
  2,774
  2,901
  3,034
  3,175
  3,324
  3,481
  3,646
  3,820
  4,003
  4,196
  4,398
  4,612
  4,836
  5,072
Variable operating expenses, $m
  1,341
  1,376
  1,416
  1,459
  1,507
  1,559
  1,615
  1,675
  1,739
  1,808
  1,869
  1,948
  2,031
  2,119
  2,212
  2,311
  2,415
  2,526
  2,642
  2,765
  2,894
  3,031
  3,175
  3,326
  3,485
  3,653
  3,830
  4,015
  4,211
  4,416
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
  1,341
  1,376
  1,416
  1,459
  1,507
  1,559
  1,615
  1,675
  1,739
  1,808
  1,869
  1,948
  2,031
  2,119
  2,212
  2,311
  2,415
  2,526
  2,642
  2,765
  2,894
  3,031
  3,175
  3,326
  3,485
  3,653
  3,830
  4,015
  4,211
  4,416
Operating income, $m
  185
  190
  196
  202
  210
  217
  226
  235
  244
  254
  278
  289
  302
  315
  329
  343
  359
  375
  392
  411
  430
  450
  472
  494
  518
  543
  569
  596
  625
  656
EBITDA, $m
  217
  223
  230
  237
  244
  253
  262
  272
  282
  294
  306
  319
  332
  347
  362
  378
  395
  413
  432
  452
  473
  496
  519
  544
  570
  598
  626
  657
  689
  722
Interest expense (income), $m
  13
  16
  16
  17
  18
  19
  21
  22
  23
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
Earnings before tax, $m
  169
  174
  179
  184
  190
  197
  204
  211
  219
  228
  249
  259
  270
  281
  292
  304
  317
  331
  346
  361
  377
  394
  412
  431
  451
  472
  494
  517
  541
  566
Tax expense, $m
  46
  47
  48
  50
  51
  53
  55
  57
  59
  62
  67
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
  127
  133
  139
  146
  153
Net income, $m
  124
  127
  130
  134
  139
  144
  149
  154
  160
  166
  182
  189
  197
  205
  213
  222
  232
  242
  252
  264
  275
  288
  301
  315
  329
  344
  360
  377
  395
  414

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
  1,662
  1,706
  1,756
  1,810
  1,870
  1,935
  2,005
  2,080
  2,161
  2,247
  2,339
  2,437
  2,541
  2,651
  2,768
  2,891
  3,022
  3,160
  3,305
  3,459
  3,621
  3,792
  3,972
  4,161
  4,361
  4,571
  4,791
  5,024
  5,268
  5,525
Adjusted assets (=assets-cash), $m
  1,662
  1,706
  1,756
  1,810
  1,870
  1,935
  2,005
  2,080
  2,161
  2,247
  2,339
  2,437
  2,541
  2,651
  2,768
  2,891
  3,022
  3,160
  3,305
  3,459
  3,621
  3,792
  3,972
  4,161
  4,361
  4,571
  4,791
  5,024
  5,268
  5,525
Revenue / Adjusted assets
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
  0.918
Average production assets, $m
  600
  616
  633
  653
  675
  698
  723
  750
  779
  811
  844
  879
  917
  956
  998
  1,043
  1,090
  1,140
  1,193
  1,248
  1,306
  1,368
  1,433
  1,501
  1,573
  1,649
  1,729
  1,812
  1,901
  1,993
Working capital, $m
  246
  252
  259
  268
  276
  286
  296
  307
  319
  332
  346
  360
  375
  392
  409
  427
  447
  467
  489
  511
  535
  560
  587
  615
  644
  676
  708
  742
  779
  817
Total debt, $m
  304
  320
  339
  359
  382
  406
  432
  461
  491
  523
  558
  594
  633
  675
  718
  765
  814
  866
  920
  978
  1,039
  1,103
  1,170
  1,241
  1,316
  1,395
  1,477
  1,565
  1,656
  1,752
Total liabilities, $m
  623
  640
  658
  679
  701
  725
  752
  780
  810
  843
  877
  914
  953
  994
  1,038
  1,084
  1,133
  1,185
  1,240
  1,297
  1,358
  1,422
  1,489
  1,560
  1,635
  1,714
  1,797
  1,884
  1,976
  2,072
Total equity, $m
  1,039
  1,066
  1,097
  1,131
  1,169
  1,209
  1,253
  1,300
  1,350
  1,404
  1,462
  1,523
  1,588
  1,657
  1,730
  1,807
  1,889
  1,975
  2,066
  2,162
  2,263
  2,370
  2,482
  2,601
  2,725
  2,857
  2,995
  3,140
  3,293
  3,453
Total liabilities and equity, $m
  1,662
  1,706
  1,755
  1,810
  1,870
  1,934
  2,005
  2,080
  2,160
  2,247
  2,339
  2,437
  2,541
  2,651
  2,768
  2,891
  3,022
  3,160
  3,306
  3,459
  3,621
  3,792
  3,971
  4,161
  4,360
  4,571
  4,792
  5,024
  5,269
  5,525
Debt-to-equity ratio
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.350
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
  0.470
  0.480
  0.480
  0.490
  0.490
  0.500
  0.500
  0.510
Adjusted equity ratio
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  124
  127
  130
  134
  139
  144
  149
  154
  160
  166
  182
  189
  197
  205
  213
  222
  232
  242
  252
  264
  275
  288
  301
  315
  329
  344
  360
  377
  395
  414
Depreciation, amort., depletion, $m
  32
  33
  34
  34
  35
  36
  37
  37
  38
  39
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  52
  55
  58
  60
  63
  66
Funds from operations, $m
  156
  160
  164
  169
  174
  179
  185
  192
  198
  206
  210
  218
  227
  237
  247
  257
  268
  280
  292
  305
  319
  333
  349
  365
  381
  399
  418
  438
  458
  480
Change in working capital, $m
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  29
  31
  33
  34
  36
  38
Cash from operations, $m
  150
  153
  157
  161
  165
  170
  175
  180
  186
  193
  197
  204
  212
  220
  229
  239
  249
  259
  271
  282
  295
  308
  322
  337
  352
  368
  385
  403
  422
  442
Maintenance CAPEX, $m
  -20
  -20
  -21
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -58
  -60
  -63
New CAPEX, $m
  -14
  -16
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -55
  -58
  -62
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
Cash from investing activities, $m
  -34
  -36
  -39
  -41
  -44
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -71
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -106
  -111
  -116
  -122
  -128
  -135
  -142
  -148
  -156
Free cash flow, $m
  117
  117
  118
  120
  122
  124
  126
  129
  132
  136
  136
  141
  145
  150
  155
  161
  167
  173
  180
  187
  195
  203
  211
  220
  230
  240
  251
  262
  274
  286
Issuance/(repayment) of debt, $m
  14
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  67
  71
  75
  79
  83
  87
  92
  96
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  
  14
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  67
  71
  75
  79
  83
  87
  92
  96
Total cash flow (excl. dividends), $m
  131
  134
  137
  140
  144
  148
  153
  157
  163
  168
  171
  177
  184
  191
  199
  207
  216
  225
  235
  245
  256
  267
  279
  291
  305
  319
  333
  349
  365
  382
Retained Cash Flow (-), $m
  -24
  -28
  -31
  -34
  -37
  -40
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -73
  -77
  -82
  -86
  -91
  -96
  -101
  -107
  -112
  -118
  -125
  -131
  -138
  -145
  -153
  -161
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
  107
  106
  106
  106
  107
  108
  109
  110
  112
  114
  113
  116
  119
  122
  126
  130
  134
  139
  144
  149
  154
  160
  166
  173
  180
  188
  195
  204
  212
  222
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
  102
  97
  92
  87
  83
  78
  74
  69
  64
  60
  54
  50
  45
  41
  37
  33
  29
  26
  22
  19
  16
  13
  11
  9
  7
  5
  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 Limited (HELE)

Valuation Ratios
P/E Ratio 26.2
Price to Sales 2.4
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 16.1
Price to Free Cash Flow 17.8
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 $1490 million for the last fiscal year's total revenue generated by Helen of Troy Limited. The default revenue input number comes from 0001 income statement of Helen of Troy Limited. 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 2.4% 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 4.3%, whose default value for HELE is calculated based on our internal credit rating of Helen of Troy Limited, 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 Limited.
    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 87.9%.

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 Limited.

Corporate tax rate of 27% is the nominal tax rate for Helen of Troy Limited. 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 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 HELE are equal to 39.3%.

Life of production assets of 31 years is the average useful life of capital assets used in Helen of Troy Limited 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 16.1%. 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 - $1014.459 million for Helen of Troy Limited - 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 25.581 million for Helen of Troy Limited 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 Limited at the current share price and the inputted number of shares is $3.5 billion.

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