Intrinsic value of MarineMax, Inc. - HZO

Previous Close

$14.43

  Intrinsic Value

$14.71

stock screener

  Rating & Target

hold

+2%

Previous close

$14.43

 
Intrinsic value

$14.71

 
Up/down potential

+2%

 
Rating

hold

We calculate the intrinsic value of HZO 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, %
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  1,202
  1,230
  1,263
  1,300
  1,340
  1,384
  1,432
  1,483
  1,539
  1,599
  1,662
  1,730
  1,803
  1,880
  1,961
  2,048
  2,139
  2,236
  2,338
  2,445
  2,559
  2,679
  2,805
  2,938
  3,078
  3,226
  3,381
  3,544
  3,716
  3,897
Variable operating expenses, $m
  1,033
  1,058
  1,086
  1,117
  1,152
  1,189
  1,231
  1,275
  1,323
  1,374
  1,425
  1,483
  1,545
  1,611
  1,681
  1,755
  1,833
  1,916
  2,004
  2,096
  2,193
  2,296
  2,404
  2,519
  2,639
  2,765
  2,898
  3,038
  3,185
  3,340
Fixed operating expenses, $m
  107
  110
  112
  115
  117
  120
  122
  125
  128
  131
  133
  136
  139
  142
  146
  149
  152
  155
  159
  162
  166
  169
  173
  177
  181
  185
  189
  193
  197
  202
Total operating expenses, $m
  1,140
  1,168
  1,198
  1,232
  1,269
  1,309
  1,353
  1,400
  1,451
  1,505
  1,558
  1,619
  1,684
  1,753
  1,827
  1,904
  1,985
  2,071
  2,163
  2,258
  2,359
  2,465
  2,577
  2,696
  2,820
  2,950
  3,087
  3,231
  3,382
  3,542
Operating income, $m
  61
  63
  65
  68
  71
  75
  79
  84
  89
  94
  104
  111
  118
  126
  135
  144
  153
  164
  175
  187
  200
  213
  227
  243
  259
  276
  294
  313
  333
  355
EBITDA, $m
  74
  76
  79
  82
  85
  89
  94
  99
  105
  111
  118
  125
  133
  141
  151
  160
  171
  182
  194
  207
  221
  235
  250
  267
  284
  302
  322
  342
  364
  387
Interest expense (income), $m
  8
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
Earnings before tax, $m
  50
  51
  53
  55
  58
  61
  65
  69
  73
  78
  87
  93
  99
  106
  114
  122
  130
  140
  150
  160
  171
  183
  196
  210
  224
  239
  255
  272
  291
  310
Tax expense, $m
  13
  14
  14
  15
  16
  16
  17
  19
  20
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  53
  57
  60
  65
  69
  74
  78
  84
Net income, $m
  36
  37
  39
  40
  42
  45
  47
  50
  53
  57
  63
  68
  72
  78
  83
  89
  95
  102
  109
  117
  125
  134
  143
  153
  163
  175
  186
  199
  212
  226

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
  654
  669
  687
  707
  729
  753
  779
  807
  837
  870
  905
  941
  981
  1,023
  1,067
  1,114
  1,164
  1,216
  1,272
  1,330
  1,392
  1,457
  1,526
  1,599
  1,675
  1,755
  1,839
  1,928
  2,022
  2,120
Adjusted assets (=assets-cash), $m
  654
  669
  687
  707
  729
  753
  779
  807
  837
  870
  905
  941
  981
  1,023
  1,067
  1,114
  1,164
  1,216
  1,272
  1,330
  1,392
  1,457
  1,526
  1,599
  1,675
  1,755
  1,839
  1,928
  2,022
  2,120
Revenue / Adjusted assets
  1.838
  1.839
  1.838
  1.839
  1.838
  1.838
  1.838
  1.838
  1.839
  1.838
  1.836
  1.838
  1.838
  1.838
  1.838
  1.838
  1.838
  1.839
  1.838
  1.838
  1.838
  1.839
  1.838
  1.837
  1.838
  1.838
  1.838
  1.838
  1.838
  1.838
Average production assets, $m
  151
  155
  159
  164
  169
  174
  180
  187
  194
  201
  209
  218
  227
  237
  247
  258
  270
  282
  295
  308
  322
  338
  353
  370
  388
  406
  426
  447
  468
  491
Working capital, $m
  351
  359
  369
  379
  391
  404
  418
  433
  449
  467
  485
  505
  526
  549
  573
  598
  625
  653
  683
  714
  747
  782
  819
  858
  899
  942
  987
  1,035
  1,085
  1,138
Total debt, $m
  219
  226
  234
  243
  253
  264
  275
  288
  301
  316
  332
  348
  366
  385
  405
  426
  448
  472
  497
  523
  551
  580
  611
  643
  677
  713
  751
  791
  833
  877
Total liabilities, $m
  294
  301
  309
  317
  327
  338
  350
  362
  376
  391
  406
  423
  440
  459
  479
  500
  523
  546
  571
  597
  625
  654
  685
  718
  752
  788
  826
  866
  908
  952
Total equity, $m
  360
  369
  379
  390
  402
  415
  429
  445
  461
  479
  498
  519
  540
  563
  588
  614
  641
  670
  701
  733
  767
  803
  841
  881
  923
  967
  1,014
  1,063
  1,114
  1,168
Total liabilities and equity, $m
  654
  670
  688
  707
  729
  753
  779
  807
  837
  870
  904
  942
  980
  1,022
  1,067
  1,114
  1,164
  1,216
  1,272
  1,330
  1,392
  1,457
  1,526
  1,599
  1,675
  1,755
  1,840
  1,929
  2,022
  2,120
Debt-to-equity ratio
  0.610
  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
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.720
  0.720
  0.730
  0.730
  0.730
  0.740
  0.740
  0.740
  0.750
  0.750
Adjusted equity ratio
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  36
  37
  39
  40
  42
  45
  47
  50
  53
  57
  63
  68
  72
  78
  83
  89
  95
  102
  109
  117
  125
  134
  143
  153
  163
  175
  186
  199
  212
  226
Depreciation, amort., depletion, $m
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
Funds from operations, $m
  49
  51
  52
  54
  56
  59
  62
  66
  69
  73
  77
  82
  87
  93
  99
  106
  113
  120
  128
  137
  146
  156
  166
  177
  189
  201
  214
  228
  243
  258
Change in working capital, $m
  7
  8
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
Cash from operations, $m
  42
  42
  43
  44
  45
  46
  48
  50
  53
  56
  58
  62
  66
  71
  75
  80
  86
  92
  99
  105
  113
  121
  129
  138
  148
  158
  169
  180
  192
  205
Maintenance CAPEX, $m
  -10
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
New CAPEX, $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Cash from investing activities, $m
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -21
  -23
  -23
  -25
  -25
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
Free cash flow, $m
  30
  29
  28
  29
  29
  30
  31
  32
  34
  36
  37
  40
  43
  46
  50
  54
  58
  62
  67
  73
  79
  85
  91
  98
  106
  114
  123
  132
  142
  152
Issuance/(repayment) of debt, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
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  
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
Total cash flow (excl. dividends), $m
  36
  36
  36
  37
  39
  41
  43
  45
  48
  51
  53
  57
  61
  65
  70
  75
  80
  86
  92
  99
  106
  114
  122
  131
  140
  150
  161
  172
  184
  196
Retained Cash Flow (-), $m
  -7
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
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
  29
  27
  27
  27
  27
  27
  28
  29
  31
  33
  34
  36
  39
  42
  45
  49
  53
  57
  62
  67
  72
  78
  84
  91
  98
  106
  114
  123
  132
  142
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  27
  25
  23
  21
  20
  19
  18
  17
  16
  16
  15
  14
  13
  12
  11
  10
  9
  8
  7
  6
  6
  5
  4
  3
  3
  2
  1
  1
  1
  1
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
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MarineMax, Inc. is a recreational boat and yacht dealer in the United States. Through 56 retail locations in Alabama, California, Connecticut, Florida, Georgia, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, and Texas, the Company sold new and used recreational boats, including pleasure and fishing boats, as of September 30, 2016. The Company also sells related marine products, including engines, trailers, parts and accessories. In addition, it provides repair, maintenance, and slip and storage services; arranges related boat financing, insurance, and extended service contracts; offers boat and yacht brokerage sales, and operates a yacht charter business. The Company primarily sells recreational boats, including pleasure boats and fishing boats. The Company offers marine engines and equipment and sells marine engines and propellers primarily to retail customers as replacements for their existing engines or propellers.

FINANCIAL RATIOS  of  MarineMax, Inc. (HZO)

Valuation Ratios
P/E Ratio 13.2
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow 63.2
Price to Free Cash Flow -35.1
Growth Rates
Sales Growth Rate 11.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.7%
Cap. Spend. - 3 Yr. Gr. Rate 9.2%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 84.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 8%
Return On Total Capital 4.6%
Ret/ On T. Cap. - 3 Yr. Avg. 7.3%
Return On Equity 7.8%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 25.2%
Gross Margin - 3 Yr. Avg. 24.6%
EBITDA Margin 5.2%
EBITDA Margin - 3 Yr. Avg. 5%
Operating Margin 4.3%
Oper. Margin - 3 Yr. Avg. 4%
Pre-Tax Margin 3.6%
Pre-Tax Margin - 3 Yr. Avg. 3.4%
Net Profit Margin 2.3%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 36.8%
Eff/ Tax Rate - 3 Yr. Avg. -19.1%
Payout Ratio 0%

HZO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HZO stock intrinsic value calculation we used $1177 million for the last fiscal year's total revenue generated by MarineMax, Inc.. The default revenue input number comes from 0001 income statement of MarineMax, 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 HZO stock valuation model: a) initial revenue growth rate of 2.1% 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 4.9%, whose default value for HZO is calculated based on our internal credit rating of MarineMax, 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 MarineMax, 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 HZO stock the variable cost ratio is equal to 86%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $105 million in the base year in the intrinsic value calculation for HZO 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 MarineMax, Inc..

Corporate tax rate of 27% is the nominal tax rate for MarineMax, 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 HZO 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 HZO are equal to 12.6%.

Life of production assets of 15.4 years is the average useful life of capital assets used in MarineMax, 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 HZO is equal to 29.2%. 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 - $353.092 million for MarineMax, 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 22.837 million for MarineMax, 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 MarineMax, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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