Intrinsic value of Iconix Brand Group, Inc. - ICON

Previous Close

$0.92

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$0.92

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of ICON 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 0.0

 

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, %
  2.00
  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
  231
  236
  242
  249
  256
  264
  274
  283
  294
  305
  317
  330
  344
  358
  374
  390
  407
  426
  445
  466
  487
  510
  534
  559
  586
  614
  643
  674
  707
  741
Variable operating expenses, $m
  480
  491
  504
  518
  534
  551
  570
  590
  612
  635
  660
  687
  715
  746
  778
  812
  848
  886
  926
  969
  1,014
  1,061
  1,111
  1,164
  1,219
  1,278
  1,339
  1,404
  1,471
  1,543
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
  480
  491
  504
  518
  534
  551
  570
  590
  612
  635
  660
  687
  715
  746
  778
  812
  848
  886
  926
  969
  1,014
  1,061
  1,111
  1,164
  1,219
  1,278
  1,339
  1,404
  1,471
  1,543
Operating income, $m
  -250
  -256
  -262
  -270
  -278
  -287
  -296
  -307
  -318
  -330
  -343
  -357
  -372
  -387
  -404
  -422
  -441
  -460
  -481
  -503
  -527
  -551
  -577
  -605
  -633
  -664
  -696
  -729
  -765
  -802
EBITDA, $m
  -235
  -240
  -246
  -253
  -261
  -269
  -278
  -288
  -299
  -310
  -323
  -336
  -350
  -365
  -380
  -397
  -415
  -433
  -453
  -474
  -496
  -519
  -543
  -569
  -596
  -625
  -655
  -686
  -719
  -754
Interest expense (income), $m
  60
  53
  43
  45
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  82
  86
  90
  94
  99
  104
  109
  115
  120
  126
  133
  140
  147
Earnings before tax, $m
  -303
  -299
  -307
  -315
  -325
  -336
  -347
  -360
  -373
  -388
  -402
  -419
  -437
  -455
  -475
  -496
  -519
  -542
  -567
  -593
  -621
  -650
  -681
  -714
  -748
  -784
  -822
  -862
  -904
  -948
Tax expense, $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
Net income, $m
  -303
  -299
  -307
  -315
  -325
  -336
  -347
  -360
  -373
  -388
  -402
  -419
  -437
  -455
  -475
  -496
  -519
  -542
  -567
  -593
  -621
  -650
  -681
  -714
  -748
  -784
  -822
  -862
  -904
  -948

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
  841
  861
  883
  908
  935
  965
  998
  1,034
  1,072
  1,113
  1,157
  1,204
  1,254
  1,307
  1,364
  1,424
  1,487
  1,554
  1,624
  1,699
  1,778
  1,861
  1,948
  2,041
  2,138
  2,240
  2,348
  2,461
  2,580
  2,706
Adjusted assets (=assets-cash), $m
  841
  861
  883
  908
  935
  965
  998
  1,034
  1,072
  1,113
  1,157
  1,204
  1,254
  1,307
  1,364
  1,424
  1,487
  1,554
  1,624
  1,699
  1,778
  1,861
  1,948
  2,041
  2,138
  2,240
  2,348
  2,461
  2,580
  2,706
Revenue / Adjusted assets
  0.275
  0.274
  0.274
  0.274
  0.274
  0.274
  0.275
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  441
  451
  463
  476
  490
  506
  523
  542
  562
  584
  607
  632
  658
  686
  715
  747
  780
  815
  852
  891
  932
  976
  1,022
  1,070
  1,121
  1,175
  1,231
  1,291
  1,353
  1,419
Working capital, $m
  51
  52
  54
  55
  57
  59
  61
  63
  65
  68
  70
  73
  76
  80
  83
  87
  90
  95
  99
  103
  108
  113
  119
  124
  130
  136
  143
  150
  157
  165
Total debt, $m
  657
  675
  695
  717
  742
  769
  799
  831
  865
  902
  942
  984
  1,029
  1,077
  1,128
  1,181
  1,238
  1,299
  1,362
  1,429
  1,500
  1,575
  1,654
  1,737
  1,824
  1,916
  2,013
  2,115
  2,222
  2,335
Total liabilities, $m
  757
  775
  795
  817
  842
  869
  898
  930
  965
  1,002
  1,042
  1,084
  1,129
  1,177
  1,227
  1,281
  1,338
  1,398
  1,462
  1,529
  1,600
  1,675
  1,754
  1,837
  1,924
  2,016
  2,113
  2,215
  2,322
  2,435
Total equity, $m
  84
  86
  88
  91
  94
  97
  100
  103
  107
  111
  116
  120
  125
  131
  136
  142
  149
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
  271
Total liabilities and equity, $m
  841
  861
  883
  908
  936
  966
  998
  1,033
  1,072
  1,113
  1,158
  1,204
  1,254
  1,308
  1,363
  1,423
  1,487
  1,553
  1,624
  1,699
  1,778
  1,861
  1,949
  2,041
  2,138
  2,240
  2,348
  2,461
  2,580
  2,706
Debt-to-equity ratio
  7.810
  7.840
  7.870
  7.900
  7.930
  7.970
  8.000
  8.040
  8.070
  8.100
  8.140
  8.170
  8.200
  8.240
  8.270
  8.300
  8.330
  8.360
  8.390
  8.410
  8.440
  8.460
  8.490
  8.510
  8.530
  8.550
  8.580
  8.590
  8.610
  8.630
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -303
  -299
  -307
  -315
  -325
  -336
  -347
  -360
  -373
  -388
  -402
  -419
  -437
  -455
  -475
  -496
  -519
  -542
  -567
  -593
  -621
  -650
  -681
  -714
  -748
  -784
  -822
  -862
  -904
  -948
Depreciation, amort., depletion, $m
  15
  16
  16
  16
  17
  17
  18
  19
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
Funds from operations, $m
  -287
  -283
  -291
  -299
  -308
  -318
  -329
  -341
  -354
  -367
  -382
  -398
  -415
  -432
  -451
  -471
  -493
  -515
  -539
  -564
  -590
  -618
  -647
  -678
  -711
  -745
  -781
  -819
  -859
  -901
Change in working capital, $m
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Cash from operations, $m
  -288
  -285
  -292
  -300
  -310
  -320
  -331
  -343
  -356
  -370
  -385
  -401
  -418
  -436
  -455
  -475
  -496
  -519
  -543
  -568
  -595
  -623
  -653
  -684
  -717
  -751
  -788
  -826
  -866
  -909
Maintenance CAPEX, $m
  -14
  -15
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
New CAPEX, $m
  -9
  -10
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -63
  -66
Cash from investing activities, $m
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -42
  -45
  -47
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -71
  -75
  -79
  -82
  -87
  -91
  -95
  -100
  -106
  -111
Free cash flow, $m
  -311
  -309
  -319
  -329
  -340
  -352
  -365
  -379
  -394
  -410
  -427
  -446
  -465
  -485
  -507
  -530
  -554
  -580
  -607
  -636
  -666
  -698
  -731
  -766
  -803
  -842
  -883
  -926
  -972
  -1,020
Issuance/(repayment) of debt, $m
  -143
  17
  20
  22
  25
  27
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  113
Issuance/(repurchase) of shares, $m
  463
  301
  309
  318
  328
  339
  350
  363
  377
  392
  407
  424
  442
  461
  481
  502
  525
  549
  574
  601
  629
  659
  690
  723
  758
  794
  833
  873
  916
  961
Cash from financing (excl. dividends), $m  
  320
  318
  329
  340
  353
  366
  380
  395
  412
  429
  447
  466
  487
  509
  532
  556
  582
  609
  638
  668
  700
  734
  769
  806
  845
  886
  930
  975
  1,023
  1,074
Total cash flow (excl. dividends), $m
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
Retained Cash Flow (-), $m
  -463
  -301
  -309
  -318
  -328
  -339
  -350
  -363
  -377
  -392
  -407
  -424
  -442
  -461
  -481
  -502
  -525
  -549
  -574
  -601
  -629
  -659
  -690
  -723
  -758
  -794
  -833
  -873
  -916
  -961
Prev. year cash balance distribution, $m
  2
  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
  -453
  -292
  -299
  -307
  -315
  -325
  -336
  -347
  -360
  -373
  -388
  -403
  -420
  -438
  -456
  -476
  -497
  -520
  -544
  -569
  -595
  -623
  -652
  -683
  -716
  -750
  -786
  -824
  -865
  -907
Discount rate, %
  15.00
  15.75
  16.54
  17.36
  18.23
  19.14
  20.10
  21.11
  22.16
  23.27
  24.43
  25.66
  26.94
  28.28
  29.70
  31.18
  32.74
  34.38
  36.10
  37.90
  39.80
  41.79
  43.88
  46.07
  48.38
  50.80
  53.34
  56.00
  58.80
  61.74
PV of cash for distribution, $m
  -394
  -218
  -189
  -162
  -136
  -114
  -93
  -75
  -59
  -46
  -35
  -26
  -19
  -13
  -9
  -6
  -4
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  10.9
  2.4
  0.5
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Iconix Brand Group, Inc. is a brand management company. As of December 31, 2016, the Company owned a portfolio of over 30 global consumer brands across women's, men's, and home categories. The Company operates through segments: men's, women's, home and international. The Company's brand portfolio includes brands, such as Candie's, Bongo, Joe Boxer, Rampage, Mudd, London Fog, Mossimo, Ocean Pacific/OP, Danskin/Danskin Now, Rocawear/Roc Nation, Cannon, Royal Velvet, Fieldcrest, Charisma, Starter, Waverly, Ecko Unltd/Mark Ecko Cut & Sew, Zoo York, Sharper Image, Umbro, Lee Cooper and Artful Dodger, and interests in Material Girl, Ed Hardy, Truth or Dare, Modern Amusement, Buffalo, Nick Graham Hydraulic and PONY brands. It operates in various geographic regions, including the United States, Japan and Other (which principally represent Latin America and Europe).

FINANCIAL RATIOS  of  Iconix Brand Group, Inc. (ICON)

Valuation Ratios
P/E Ratio -0.2
Price to Sales 0.1
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 0.4
Price to Free Cash Flow 0.5
Growth Rates
Sales Growth Rate -2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 1
Current Ratio 1.9
LT Debt to Equity 291.7%
Total Debt to Equity 334.4%
Interest Coverage -4
Management Effectiveness
Return On Assets -9.1%
Ret/ On Assets - 3 Yr. Avg. -3.4%
Return On Total Capital -13.7%
Ret/ On T. Cap. - 3 Yr. Avg. -6%
Return On Equity -52.2%
Return On Equity - 3 Yr. Avg. -22.5%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -71.2%
EBITDA Margin - 3 Yr. Avg. -25%
Operating Margin -67.7%
Oper. Margin - 3 Yr. Avg. -27.9%
Pre-Tax Margin -88.6%
Pre-Tax Margin - 3 Yr. Avg. -40.3%
Net Profit Margin -68.5%
Net Profit Margin - 3 Yr. Avg. -30.6%
Effective Tax Rate 23.3%
Eff/ Tax Rate - 3 Yr. Avg. 28.5%
Payout Ratio 0%

ICON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ICON stock intrinsic value calculation we used $226 million for the last fiscal year's total revenue generated by Iconix Brand Group, Inc.. The default revenue input number comes from 0001 income statement of Iconix Brand 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 ICON 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 15%, whose default value for ICON is calculated based on our internal credit rating of Iconix Brand 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 Iconix Brand 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 ICON stock the variable cost ratio is equal to 208.4%.

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 ICON 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 6.6% for Iconix Brand Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Iconix Brand 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 ICON 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 ICON are equal to 191.4%.

Life of production assets of 349.8 years is the average useful life of capital assets used in Iconix Brand 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 ICON is equal to 22.2%. 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 - $-74.42 million for Iconix Brand 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 7.520 million for Iconix Brand 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 Iconix Brand Group, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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