Intrinsic value of Inter Parfums - IPAR

Previous Close

$56.95

  Intrinsic Value

$47.55

stock screener

  Rating & Target

hold

-16%

Previous close

$56.95

 
Intrinsic value

$47.55

 
Up/down potential

-16%

 
Rating

hold

We calculate the intrinsic value of IPAR 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 1.8

 

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, %
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.94
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
Revenue, $m
  671
  756
  845
  940
  1,040
  1,144
  1,253
  1,366
  1,484
  1,607
  1,735
  1,869
  2,007
  2,151
  2,300
  2,455
  2,617
  2,784
  2,959
  3,141
  3,331
  3,528
  3,734
  3,949
  4,173
  4,407
  4,652
  4,908
  5,175
  5,454
Variable operating expenses, $m
  554
  622
  693
  768
  848
  931
  1,017
  1,108
  1,202
  1,300
  1,382
  1,488
  1,598
  1,712
  1,831
  1,955
  2,083
  2,217
  2,356
  2,501
  2,652
  2,809
  2,973
  3,144
  3,323
  3,509
  3,704
  3,907
  4,120
  4,342
Fixed operating expenses, $m
  22
  23
  23
  24
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  30
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
Total operating expenses, $m
  576
  645
  716
  792
  873
  956
  1,043
  1,134
  1,229
  1,327
  1,410
  1,517
  1,627
  1,742
  1,861
  1,986
  2,115
  2,250
  2,389
  2,535
  2,687
  2,845
  3,009
  3,181
  3,361
  3,548
  3,744
  3,947
  4,161
  4,384
Operating income, $m
  94
  111
  129
  148
  167
  188
  210
  232
  256
  280
  326
  352
  380
  409
  438
  469
  502
  535
  570
  606
  644
  684
  725
  768
  813
  860
  909
  960
  1,013
  1,070
EBITDA, $m
  137
  157
  178
  200
  223
  247
  273
  299
  327
  355
  385
  416
  449
  482
  517
  553
  591
  630
  671
  714
  758
  804
  853
  903
  955
  1,010
  1,068
  1,128
  1,190
  1,256
Interest expense (income), $m
  2
  2
  4
  7
  9
  12
  15
  18
  21
  25
  28
  32
  35
  39
  43
  47
  52
  56
  61
  66
  71
  76
  82
  88
  94
  100
  107
  113
  121
  128
  136
Earnings before tax, $m
  92
  107
  122
  138
  155
  173
  192
  211
  231
  252
  294
  317
  341
  365
  391
  417
  445
  474
  504
  535
  568
  602
  637
  674
  713
  753
  795
  839
  885
  934
Tax expense, $m
  25
  29
  33
  37
  42
  47
  52
  57
  62
  68
  79
  86
  92
  99
  106
  113
  120
  128
  136
  144
  153
  162
  172
  182
  192
  203
  215
  227
  239
  252
Net income, $m
  67
  78
  89
  101
  113
  126
  140
  154
  169
  184
  215
  231
  249
  267
  285
  305
  325
  346
  368
  391
  414
  439
  465
  492
  520
  550
  581
  613
  646
  682

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
  756
  852
  953
  1,060
  1,172
  1,289
  1,412
  1,540
  1,673
  1,812
  1,957
  2,107
  2,263
  2,425
  2,593
  2,768
  2,950
  3,139
  3,336
  3,541
  3,755
  3,978
  4,210
  4,452
  4,705
  4,969
  5,245
  5,533
  5,834
  6,149
Adjusted assets (=assets-cash), $m
  756
  852
  953
  1,060
  1,172
  1,289
  1,412
  1,540
  1,673
  1,812
  1,957
  2,107
  2,263
  2,425
  2,593
  2,768
  2,950
  3,139
  3,336
  3,541
  3,755
  3,978
  4,210
  4,452
  4,705
  4,969
  5,245
  5,533
  5,834
  6,149
Revenue / Adjusted assets
  0.888
  0.887
  0.887
  0.887
  0.887
  0.888
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
Average production assets, $m
  229
  258
  289
  322
  356
  391
  428
  467
  508
  550
  594
  639
  686
  735
  787
  840
  895
  952
  1,012
  1,074
  1,139
  1,207
  1,277
  1,351
  1,427
  1,507
  1,591
  1,678
  1,770
  1,865
Working capital, $m
  96
  108
  121
  134
  149
  164
  179
  195
  212
  230
  248
  267
  287
  308
  329
  351
  374
  398
  423
  449
  476
  505
  534
  565
  597
  630
  665
  702
  740
  780
Total debt, $m
  79
  125
  173
  225
  278
  335
  394
  455
  519
  586
  655
  727
  802
  880
  960
  1,044
  1,132
  1,223
  1,317
  1,416
  1,518
  1,625
  1,737
  1,853
  1,974
  2,101
  2,233
  2,372
  2,516
  2,667
Total liabilities, $m
  363
  409
  458
  509
  563
  619
  678
  739
  803
  870
  939
  1,011
  1,086
  1,164
  1,245
  1,329
  1,416
  1,507
  1,601
  1,700
  1,802
  1,909
  2,021
  2,137
  2,258
  2,385
  2,517
  2,656
  2,800
  2,952
Total equity, $m
  393
  443
  496
  551
  609
  670
  734
  801
  870
  942
  1,017
  1,095
  1,177
  1,261
  1,348
  1,439
  1,534
  1,632
  1,735
  1,842
  1,953
  2,068
  2,189
  2,315
  2,447
  2,584
  2,727
  2,877
  3,034
  3,197
Total liabilities and equity, $m
  756
  852
  954
  1,060
  1,172
  1,289
  1,412
  1,540
  1,673
  1,812
  1,956
  2,106
  2,263
  2,425
  2,593
  2,768
  2,950
  3,139
  3,336
  3,542
  3,755
  3,977
  4,210
  4,452
  4,705
  4,969
  5,244
  5,533
  5,834
  6,149
Debt-to-equity ratio
  0.200
  0.280
  0.350
  0.410
  0.460
  0.500
  0.540
  0.570
  0.600
  0.620
  0.640
  0.660
  0.680
  0.700
  0.710
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.790
  0.800
  0.810
  0.810
  0.820
  0.820
  0.830
  0.830
Adjusted equity ratio
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  67
  78
  89
  101
  113
  126
  140
  154
  169
  184
  215
  231
  249
  267
  285
  305
  325
  346
  368
  391
  414
  439
  465
  492
  520
  550
  581
  613
  646
  682
Depreciation, amort., depletion, $m
  43
  46
  49
  52
  56
  59
  63
  67
  71
  75
  59
  64
  69
  74
  79
  84
  89
  95
  101
  107
  114
  121
  128
  135
  143
  151
  159
  168
  177
  187
Funds from operations, $m
  110
  124
  138
  153
  169
  185
  203
  221
  240
  259
  274
  295
  317
  340
  364
  389
  414
  441
  469
  498
  528
  560
  593
  627
  663
  700
  740
  781
  823
  868
Change in working capital, $m
  11
  12
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
Cash from operations, $m
  99
  112
  125
  140
  155
  171
  187
  205
  223
  242
  256
  276
  298
  320
  343
  366
  391
  417
  444
  472
  501
  532
  563
  596
  631
  667
  705
  744
  785
  828
Maintenance CAPEX, $m
  -20
  -23
  -26
  -29
  -32
  -36
  -39
  -43
  -47
  -51
  -55
  -59
  -64
  -69
  -74
  -79
  -84
  -89
  -95
  -101
  -107
  -114
  -121
  -128
  -135
  -143
  -151
  -159
  -168
  -177
New CAPEX, $m
  -27
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -70
  -73
  -77
  -80
  -84
  -87
  -91
  -96
Cash from investing activities, $m
  -47
  -52
  -57
  -61
  -66
  -72
  -76
  -82
  -87
  -93
  -99
  -105
  -111
  -118
  -125
  -132
  -139
  -146
  -155
  -163
  -172
  -182
  -191
  -201
  -212
  -223
  -235
  -246
  -259
  -273
Free cash flow, $m
  52
  60
  69
  78
  89
  99
  111
  123
  135
  149
  157
  171
  186
  202
  218
  235
  252
  270
  289
  309
  329
  350
  372
  395
  419
  444
  470
  497
  526
  556
Issuance/(repayment) of debt, $m
  43
  46
  49
  51
  54
  56
  59
  61
  64
  67
  69
  72
  75
  78
  81
  84
  87
  91
  95
  98
  103
  107
  111
  116
  121
  127
  132
  138
  145
  151
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  
  43
  46
  49
  51
  54
  56
  59
  61
  64
  67
  69
  72
  75
  78
  81
  84
  87
  91
  95
  98
  103
  107
  111
  116
  121
  127
  132
  138
  145
  151
Total cash flow (excl. dividends), $m
  94
  106
  117
  129
  142
  156
  170
  184
  199
  215
  226
  243
  261
  280
  299
  319
  340
  361
  384
  407
  432
  457
  484
  512
  541
  571
  603
  636
  670
  707
Retained Cash Flow (-), $m
  -47
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -98
  -102
  -107
  -111
  -116
  -121
  -126
  -131
  -137
  -143
  -150
  -157
  -164
Prev. year cash balance distribution, $m
  87
  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
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
Cash available for distribution, $m
  134
  56
  65
  74
  84
  95
  106
  118
  130
  143
  151
  165
  180
  195
  211
  228
  245
  263
  281
  300
  320
  341
  363
  386
  409
  434
  459
  486
  514
  543
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
  128
  51
  56
  61
  65
  69
  72
  74
  75
  75
  72
  71
  68
  66
  62
  58
  53
  48
  43
  38
  33
  28
  24
  20
  16
  13
  10
  8
  6
  4
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

Inter Parfums, Inc. operates in the fragrance business. The Company manufactures, markets and distributes an array of fragrance and fragrance related products. It operates through two segments: European based operations and United States based operations. The European Operations segment produces and distributes its fragrance products under license agreements with brand owners. It has a portfolio of prestige brands, which include Balmain, Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Lanvin, Paul Smith, S.T. Dupont, Repetto, Rochas, and Van Cleef & Arpels. Its prestige brand fragrance products are also marketed through its United States operations. These fragrance products are sold under various names, which include Abercrombie & Fitch, Agent Provocateur, Anna Sui, bebe, Dunhill, French Connection, Oscar de la Rent and Shanghai Tang brands. The Company sells its products to department stores, perfumeries, specialty stores, and domestic and international wholesalers and distributors.

FINANCIAL RATIOS  of  Inter Parfums (IPAR)

Valuation Ratios
P/E Ratio 53.7
Price to Sales 3.4
Price to Book 4.8
Price to Tangible Book
Price to Cash Flow 32.2
Price to Free Cash Flow 36.2
Growth Rates
Sales Growth Rate 11.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -95.2%
Cap. Spend. - 3 Yr. Gr. Rate -14.3%
Financial Strength
Quick Ratio 12
Current Ratio 0
LT Debt to Equity 14.3%
Total Debt to Equity 20.3%
Interest Coverage 35
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.2%
Return On Equity 9%
Return On Equity - 3 Yr. Avg. 8.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 62.6%
Gross Margin - 3 Yr. Avg. 60.6%
EBITDA Margin 16.1%
EBITDA Margin - 3 Yr. Avg. 15.1%
Operating Margin 12.9%
Oper. Margin - 3 Yr. Avg. 12.2%
Pre-Tax Margin 12.9%
Pre-Tax Margin - 3 Yr. Avg. 12.4%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 6.2%
Effective Tax Rate 35.8%
Eff/ Tax Rate - 3 Yr. Avg. 35.7%
Payout Ratio 54.5%

IPAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IPAR stock intrinsic value calculation we used $591 million for the last fiscal year's total revenue generated by Inter Parfums. The default revenue input number comes from 2017 income statement of Inter Parfums. 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 IPAR stock valuation model: a) initial revenue growth rate of 13.5% 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 4.3%, whose default value for IPAR is calculated based on our internal credit rating of Inter Parfums, 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 Inter Parfums.
    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 IPAR stock the variable cost ratio is equal to 83%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $22 million in the base year in the intrinsic value calculation for IPAR 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 Inter Parfums.

Corporate tax rate of 27% is the nominal tax rate for Inter Parfums. 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 IPAR stock is equal to 0.4%.

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 IPAR are equal to 34.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Inter Parfums 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 IPAR is equal to 14.3%. 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 - $433 million for Inter Parfums - 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 31 million for Inter Parfums 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 Inter Parfums at the current share price and the inputted number of shares is $1.8 billion.

RELATED COMPANIES Price Int.Val. Rating
EL Estee Lauder C 141.08 58.11  str.sell
COTY Coty Cl A 13.95 36.78  str.buy
ANF Abercrombie&Fi 26.16 4.57  str.sell

COMPANY NEWS

▶ Tariff losers: Whiskey, Motorcycles and Makeup   [Jun-01-18 01:02PM  Yahoo Finance Video]
▶ Inter Parfums: 1Q Earnings Snapshot   [May-08-18 05:29PM  Associated Press]
▶ Top 4 Cosmetics Stocks of 2018   [Apr-08-18 02:40PM  Investopedia]
▶ Inter Parfums tops 4Q profit forecasts   [Mar-13-18 04:29PM  Associated Press]
▶ 5 Consumer Staples Stocks Set to Beat Earnings This Season   [Jan-22-18 11:40AM  InvestorPlace]
▶ The Jimmy Choo Inter Parfums Partnership Extended to 2031   [Dec-04-17 04:05PM  Business Wire]
▶ Inter Parfums, Inc. Provides Initial 2018 Guidance   [Nov-13-17 04:05PM  Business Wire]
▶ Top 4 Cosmetics Stocks of 2017   [10:59AM  Investopedia]
▶ Inter Parfums beats 3Q profit forecasts   [Nov-08-17 05:39PM  Associated Press]
▶ Inter Parfums beats 2Q profit forecasts   [Aug-07-17 11:58PM  Associated Press]
▶ ETFs with exposure to Inter Parfums, Inc. : July 5, 2017   [Jul-05-17 12:49PM  Capital Cube]
▶ The 3 Best Dividend Stocks in Beauty Products   [May-20-17 10:00AM  Motley Fool]
▶ Inter Parfums beats Street 1Q forecasts   [May-09-17 07:16PM  Associated Press]
▶ Inter Parfums Beats Q4 Estimates as Rivals Decline   [Mar-14-17 05:52PM  Investopedia]
▶ Inter Parfums tops Street 4Q forecasts   [04:24PM  Associated Press]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.