Intrinsic value of At Home Group Inc. - HOME

Previous Close

$6.02

  Intrinsic Value

$7.54

stock screener

  Rating & Target

buy

+25%

Previous close

$6.02

 
Intrinsic value

$7.54

 
Up/down potential

+25%

 
Rating

buy

We calculate the intrinsic value of HOME 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 0.4

 

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, %
  25.50
  23.45
  21.61
  19.94
  18.45
  17.11
  15.89
  14.81
  13.82
  12.94
  12.15
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.64
  6.47
  6.32
  6.19
  6.07
  5.97
Revenue, $m
  1,194
  1,473
  1,792
  2,149
  2,546
  2,981
  3,455
  3,966
  4,515
  5,099
  5,718
  6,372
  7,060
  7,780
  8,534
  9,321
  10,141
  10,995
  11,883
  12,807
  13,766
  14,763
  15,799
  16,876
  17,996
  19,161
  20,373
  21,634
  22,948
  24,317
Variable operating expenses, $m
  1,066
  1,302
  1,571
  1,873
  2,208
  2,576
  2,976
  3,408
  3,872
  4,365
  4,832
  5,384
  5,965
  6,574
  7,211
  7,876
  8,569
  9,290
  10,041
  10,821
  11,632
  12,474
  13,350
  14,260
  15,206
  16,190
  17,214
  18,280
  19,390
  20,547
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
  1,066
  1,302
  1,571
  1,873
  2,208
  2,576
  2,976
  3,408
  3,872
  4,365
  4,832
  5,384
  5,965
  6,574
  7,211
  7,876
  8,569
  9,290
  10,041
  10,821
  11,632
  12,474
  13,350
  14,260
  15,206
  16,190
  17,214
  18,280
  19,390
  20,547
Operating income, $m
  128
  171
  221
  276
  338
  405
  479
  558
  643
  733
  887
  988
  1,095
  1,206
  1,323
  1,445
  1,572
  1,705
  1,842
  1,986
  2,134
  2,289
  2,450
  2,617
  2,790
  2,971
  3,159
  3,354
  3,558
  3,770
EBITDA, $m
  228
  282
  343
  411
  487
  570
  661
  759
  863
  975
  1,094
  1,219
  1,350
  1,488
  1,632
  1,783
  1,939
  2,103
  2,273
  2,449
  2,633
  2,823
  3,021
  3,227
  3,442
  3,664
  3,896
  4,137
  4,389
  4,650
Interest expense (income), $m
  21
  26
  36
  49
  63
  79
  97
  116
  137
  160
  184
  210
  238
  267
  297
  329
  363
  398
  434
  472
  512
  553
  596
  640
  686
  734
  784
  836
  890
  946
  1,004
Earnings before tax, $m
  102
  135
  172
  213
  259
  308
  363
  421
  483
  549
  676
  750
  828
  909
  994
  1,082
  1,174
  1,270
  1,370
  1,474
  1,581
  1,693
  1,810
  1,930
  2,056
  2,187
  2,323
  2,465
  2,612
  2,766
Tax expense, $m
  28
  36
  46
  58
  70
  83
  98
  114
  130
  148
  183
  203
  223
  245
  268
  292
  317
  343
  370
  398
  427
  457
  489
  521
  555
  590
  627
  665
  705
  747
Net income, $m
  75
  98
  125
  156
  189
  225
  265
  307
  353
  401
  494
  548
  604
  664
  725
  790
  857
  927
  1,000
  1,076
  1,154
  1,236
  1,321
  1,409
  1,501
  1,596
  1,696
  1,799
  1,907
  2,019

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
  1,725
  2,129
  2,589
  3,106
  3,679
  4,308
  4,992
  5,732
  6,524
  7,368
  8,263
  9,208
  10,202
  11,243
  12,333
  13,470
  14,655
  15,889
  17,172
  18,507
  19,893
  21,334
  22,831
  24,388
  26,006
  27,689
  29,440
  31,263
  33,162
  35,140
Adjusted assets (=assets-cash), $m
  1,725
  2,129
  2,589
  3,106
  3,679
  4,308
  4,992
  5,732
  6,524
  7,368
  8,263
  9,208
  10,202
  11,243
  12,333
  13,470
  14,655
  15,889
  17,172
  18,507
  19,893
  21,334
  22,831
  24,388
  26,006
  27,689
  29,440
  31,263
  33,162
  35,140
Revenue / Adjusted assets
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
Average production assets, $m
  864
  1,067
  1,297
  1,556
  1,843
  2,158
  2,501
  2,872
  3,269
  3,692
  4,140
  4,613
  5,111
  5,633
  6,179
  6,749
  7,342
  7,961
  8,603
  9,272
  9,967
  10,688
  11,439
  12,218
  13,029
  13,872
  14,750
  15,663
  16,614
  17,605
Working capital, $m
  143
  177
  215
  258
  305
  358
  415
  476
  542
  612
  686
  765
  847
  934
  1,024
  1,119
  1,217
  1,319
  1,426
  1,537
  1,652
  1,772
  1,896
  2,025
  2,160
  2,299
  2,445
  2,596
  2,754
  2,918
Total debt, $m
  675
  905
  1,168
  1,462
  1,788
  2,147
  2,537
  2,959
  3,410
  3,892
  4,402
  4,940
  5,507
  6,100
  6,721
  7,370
  8,045
  8,748
  9,480
  10,240
  11,031
  11,852
  12,706
  13,593
  14,515
  15,474
  16,473
  17,512
  18,594
  19,721
Total liabilities, $m
  983
  1,214
  1,476
  1,770
  2,097
  2,455
  2,846
  3,267
  3,719
  4,200
  4,710
  5,249
  5,815
  6,409
  7,030
  7,678
  8,353
  9,057
  9,788
  10,549
  11,339
  12,160
  13,014
  13,901
  14,823
  15,783
  16,781
  17,820
  18,902
  20,030
Total equity, $m
  742
  916
  1,113
  1,335
  1,582
  1,852
  2,147
  2,465
  2,805
  3,168
  3,553
  3,960
  4,387
  4,835
  5,303
  5,792
  6,302
  6,832
  7,384
  7,958
  8,554
  9,174
  9,817
  10,487
  11,183
  11,906
  12,659
  13,443
  14,260
  15,110
Total liabilities and equity, $m
  1,725
  2,130
  2,589
  3,105
  3,679
  4,307
  4,993
  5,732
  6,524
  7,368
  8,263
  9,209
  10,202
  11,244
  12,333
  13,470
  14,655
  15,889
  17,172
  18,507
  19,893
  21,334
  22,831
  24,388
  26,006
  27,689
  29,440
  31,263
  33,162
  35,140
Debt-to-equity ratio
  0.910
  0.990
  1.050
  1.090
  1.130
  1.160
  1.180
  1.200
  1.220
  1.230
  1.240
  1.250
  1.260
  1.260
  1.270
  1.270
  1.280
  1.280
  1.280
  1.290
  1.290
  1.290
  1.290
  1.300
  1.300
  1.300
  1.300
  1.300
  1.300
  1.310
Adjusted equity ratio
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  75
  98
  125
  156
  189
  225
  265
  307
  353
  401
  494
  548
  604
  664
  725
  790
  857
  927
  1,000
  1,076
  1,154
  1,236
  1,321
  1,409
  1,501
  1,596
  1,696
  1,799
  1,907
  2,019
Depreciation, amort., depletion, $m
  100
  110
  122
  135
  149
  165
  182
  201
  221
  242
  207
  231
  256
  282
  309
  337
  367
  398
  430
  464
  498
  534
  572
  611
  651
  694
  737
  783
  831
  880
Funds from operations, $m
  175
  209
  247
  290
  338
  390
  447
  508
  573
  643
  701
  778
  860
  945
  1,034
  1,127
  1,224
  1,325
  1,430
  1,539
  1,653
  1,770
  1,893
  2,020
  2,152
  2,290
  2,433
  2,582
  2,738
  2,899
Change in working capital, $m
  29
  34
  38
  43
  48
  52
  57
  61
  66
  70
  74
  78
  83
  87
  90
  94
  98
  102
  107
  111
  115
  120
  124
  129
  134
  140
  145
  151
  158
  164
Cash from operations, $m
  146
  175
  209
  248
  290
  338
  390
  446
  507
  573
  626
  700
  777
  859
  944
  1,033
  1,126
  1,223
  1,324
  1,429
  1,538
  1,651
  1,769
  1,891
  2,018
  2,150
  2,288
  2,431
  2,580
  2,735
Maintenance CAPEX, $m
  -34
  -43
  -53
  -65
  -78
  -92
  -108
  -125
  -144
  -163
  -185
  -207
  -231
  -256
  -282
  -309
  -337
  -367
  -398
  -430
  -464
  -498
  -534
  -572
  -611
  -651
  -694
  -737
  -783
  -831
New CAPEX, $m
  -175
  -203
  -230
  -259
  -287
  -315
  -343
  -370
  -397
  -423
  -448
  -473
  -498
  -522
  -546
  -570
  -594
  -618
  -643
  -668
  -695
  -722
  -750
  -780
  -811
  -843
  -877
  -913
  -951
  -991
Cash from investing activities, $m
  -209
  -246
  -283
  -324
  -365
  -407
  -451
  -495
  -541
  -586
  -633
  -680
  -729
  -778
  -828
  -879
  -931
  -985
  -1,041
  -1,098
  -1,159
  -1,220
  -1,284
  -1,352
  -1,422
  -1,494
  -1,571
  -1,650
  -1,734
  -1,822
Free cash flow, $m
  -64
  -71
  -75
  -76
  -74
  -69
  -61
  -49
  -33
  -14
  -7
  20
  49
  81
  116
  154
  195
  238
  283
  330
  379
  431
  484
  539
  596
  656
  717
  780
  846
  913
Issuance/(repayment) of debt, $m
  200
  231
  262
  294
  327
  359
  390
  421
  452
  481
  510
  539
  566
  594
  621
  648
  676
  703
  732
  760
  790
  821
  854
  887
  922
  959
  998
  1,039
  1,082
  1,128
Issuance/(repurchase) of shares, $m
  76
  75
  72
  67
  58
  45
  30
  11
  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  
  276
  306
  334
  361
  385
  404
  420
  432
  452
  481
  510
  539
  566
  594
  621
  648
  676
  703
  732
  760
  790
  821
  854
  887
  922
  959
  998
  1,039
  1,082
  1,128
Total cash flow (excl. dividends), $m
  212
  235
  260
  285
  310
  335
  359
  383
  418
  467
  504
  558
  615
  675
  737
  803
  870
  941
  1,014
  1,090
  1,170
  1,252
  1,337
  1,426
  1,519
  1,615
  1,715
  1,819
  1,928
  2,041
Retained Cash Flow (-), $m
  -151
  -174
  -198
  -222
  -246
  -271
  -294
  -318
  -341
  -363
  -385
  -406
  -427
  -448
  -468
  -489
  -510
  -531
  -552
  -574
  -596
  -620
  -644
  -669
  -696
  -724
  -753
  -784
  -816
  -851
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
  61
  62
  62
  63
  63
  64
  65
  65
  78
  104
  119
  152
  188
  227
  269
  314
  361
  410
  462
  517
  573
  632
  694
  757
  823
  891
  962
  1,035
  1,111
  1,190
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  57
  53
  50
  46
  42
  38
  35
  31
  32
  37
  36
  39
  40
  40
  38
  36
  32
  28
  24
  20
  16
  13
  10
  7
  5
  4
  2
  2
  1
  1
Current shareholders' claim on cash, %
  84.5
  73.7
  66.3
  61.1
  57.5
  55.2
  54.0
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6
  53.6

At Home Group, Inc. is a home decor superstore. The Company is focused on providing a range of assortment of products for any room, in any style, for any budget. As of July 30, 2016, the Company offered over 50,000 stock keeping units (SKUs) throughout its stores. As of July 30, 2016, the Company's store base is consisted of 115 format stores across 29 states and 65 markets, averaging approximately 120,000 square feet per store.

FINANCIAL RATIOS  of  At Home Group Inc. (HOME)

Valuation Ratios
P/E Ratio 13.5
Price to Sales 0.5
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow -4.5
Growth Rates
Sales Growth Rate 23.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 21.4%
Cap. Spend. - 3 Yr. Gr. Rate 21.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 59.6%
Total Debt to Equity 79.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 0.8%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 2.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 32.2%
Gross Margin - 3 Yr. Avg. 32.3%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 12.1%
Operating Margin 9.1%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 1.5%
Net Profit Margin 3.5%
Net Profit Margin - 3 Yr. Avg. 1.4%
Effective Tax Rate 37.2%
Eff/ Tax Rate - 3 Yr. Avg. 91.2%
Payout Ratio 0%

HOME stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HOME stock intrinsic value calculation we used $951 million for the last fiscal year's total revenue generated by At Home Group Inc.. The default revenue input number comes from 0001 income statement of At Home Group 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 HOME stock valuation model: a) initial revenue growth rate of 25.5% 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 7%, whose default value for HOME is calculated based on our internal credit rating of At Home Group 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 At Home Group 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 HOME stock the variable cost ratio is equal to 90.5%.

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 HOME 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 At Home Group Inc..

Corporate tax rate of 27% is the nominal tax rate for At Home Group 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 HOME 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 HOME are equal to 72.4%.

Life of production assets of 20 years is the average useful life of capital assets used in At Home Group 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 HOME 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 - $590.879 million for At Home Group 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 63.348 million for At Home Group 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 At Home Group Inc. at the current share price and the inputted number of shares is $0.4 billion.

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