Intrinsic value of Inter Parfums - IPAR

Previous Close

$59.81

  Intrinsic Value

$56.73

stock screener

  Rating & Target

hold

-5%

Previous close

$59.81

 
Intrinsic value

$56.73

 
Up/down potential

-5%

 
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 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 1.9

 

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, %
  15.70
  14.63
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.61
  6.45
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
Revenue, $m
  684
  784
  891
  1,005
  1,126
  1,254
  1,388
  1,528
  1,675
  1,828
  1,988
  2,154
  2,327
  2,506
  2,693
  2,887
  3,088
  3,298
  3,516
  3,742
  3,978
  4,224
  4,479
  4,746
  5,024
  5,313
  5,616
  5,932
  6,261
  6,606
Variable operating expenses, $m
  566
  646
  731
  822
  919
  1,021
  1,128
  1,240
  1,357
  1,479
  1,586
  1,719
  1,857
  2,000
  2,149
  2,304
  2,465
  2,632
  2,806
  2,987
  3,175
  3,371
  3,575
  3,788
  4,009
  4,241
  4,482
  4,734
  4,997
  5,272
Fixed operating expenses, $m
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  38
Total operating expenses, $m
  586
  667
  752
  844
  941
  1,044
  1,151
  1,264
  1,381
  1,504
  1,611
  1,745
  1,884
  2,027
  2,177
  2,332
  2,494
  2,662
  2,836
  3,018
  3,207
  3,403
  3,608
  3,822
  4,043
  4,276
  4,518
  4,771
  5,035
  5,310
Operating income, $m
  98
  117
  139
  161
  185
  210
  237
  265
  294
  324
  376
  409
  443
  479
  516
  555
  595
  636
  680
  725
  772
  821
  871
  925
  980
  1,038
  1,098
  1,161
  1,227
  1,295
EBITDA, $m
  125
  146
  168
  192
  217
  244
  272
  301
  332
  364
  397
  432
  468
  505
  545
  585
  627
  671
  717
  764
  814
  865
  919
  975
  1,033
  1,094
  1,157
  1,224
  1,293
  1,365
Interest expense (income), $m
  2
  3
  6
  9
  12
  15
  19
  23
  27
  31
  35
  39
  44
  49
  54
  59
  65
  70
  76
  82
  89
  95
  102
  109
  117
  125
  133
  141
  150
  159
  169
Earnings before tax, $m
  94
  111
  130
  149
  170
  191
  214
  238
  263
  289
  337
  365
  394
  425
  457
  490
  524
  560
  597
  636
  676
  718
  762
  808
  855
  905
  957
  1,011
  1,067
  1,126
Tax expense, $m
  25
  30
  35
  40
  46
  52
  58
  64
  71
  78
  91
  99
  106
  115
  123
  132
  142
  151
  161
  172
  183
  194
  206
  218
  231
  244
  258
  273
  288
  304
Net income, $m
  69
  81
  95
  109
  124
  140
  156
  174
  192
  211
  246
  266
  288
  310
  333
  358
  383
  409
  436
  464
  494
  524
  556
  590
  624
  661
  698
  738
  779
  822

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
  744
  852
  969
  1,093
  1,224
  1,363
  1,508
  1,661
  1,821
  1,987
  2,161
  2,341
  2,529
  2,724
  2,927
  3,138
  3,357
  3,585
  3,822
  4,068
  4,324
  4,591
  4,869
  5,159
  5,461
  5,776
  6,104
  6,447
  6,806
  7,181
Adjusted assets (=assets-cash), $m
  744
  852
  969
  1,093
  1,224
  1,363
  1,508
  1,661
  1,821
  1,987
  2,161
  2,341
  2,529
  2,724
  2,927
  3,138
  3,357
  3,585
  3,822
  4,068
  4,324
  4,591
  4,869
  5,159
  5,461
  5,776
  6,104
  6,447
  6,806
  7,181
Revenue / Adjusted assets
  0.919
  0.920
  0.920
  0.919
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
Average production assets, $m
  123
  141
  160
  181
  203
  226
  250
  275
  301
  329
  358
  388
  419
  451
  485
  520
  556
  594
  633
  674
  716
  760
  806
  854
  904
  956
  1,011
  1,068
  1,127
  1,189
Working capital, $m
  148
  170
  193
  218
  244
  272
  301
  332
  363
  397
  431
  467
  505
  544
  584
  626
  670
  716
  763
  812
  863
  917
  972
  1,030
  1,090
  1,153
  1,219
  1,287
  1,359
  1,434
Total debt, $m
  111
  165
  223
  285
  350
  419
  492
  568
  647
  730
  816
  906
  1,000
  1,097
  1,198
  1,303
  1,412
  1,526
  1,644
  1,766
  1,894
  2,027
  2,165
  2,309
  2,460
  2,617
  2,780
  2,951
  3,130
  3,316
Total liabilities, $m
  370
  424
  482
  544
  610
  679
  751
  827
  907
  990
  1,076
  1,166
  1,259
  1,357
  1,458
  1,563
  1,672
  1,785
  1,903
  2,026
  2,153
  2,286
  2,425
  2,569
  2,719
  2,876
  3,040
  3,211
  3,389
  3,576
Total equity, $m
  373
  428
  486
  549
  615
  684
  757
  834
  914
  998
  1,085
  1,175
  1,270
  1,368
  1,469
  1,575
  1,685
  1,800
  1,918
  2,042
  2,171
  2,305
  2,444
  2,590
  2,741
  2,899
  3,064
  3,237
  3,417
  3,605
Total liabilities and equity, $m
  743
  852
  968
  1,093
  1,225
  1,363
  1,508
  1,661
  1,821
  1,988
  2,161
  2,341
  2,529
  2,725
  2,927
  3,138
  3,357
  3,585
  3,821
  4,068
  4,324
  4,591
  4,869
  5,159
  5,460
  5,775
  6,104
  6,448
  6,806
  7,181
Debt-to-equity ratio
  0.300
  0.390
  0.460
  0.520
  0.570
  0.610
  0.650
  0.680
  0.710
  0.730
  0.750
  0.770
  0.790
  0.800
  0.820
  0.830
  0.840
  0.850
  0.860
  0.860
  0.870
  0.880
  0.890
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
Adjusted equity ratio
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  69
  81
  95
  109
  124
  140
  156
  174
  192
  211
  246
  266
  288
  310
  333
  358
  383
  409
  436
  464
  494
  524
  556
  590
  624
  661
  698
  738
  779
  822
Depreciation, amort., depletion, $m
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
  21
  23
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  47
  50
  53
  56
  59
  63
  66
  70
Funds from operations, $m
  96
  110
  124
  140
  156
  173
  191
  210
  230
  251
  267
  289
  312
  337
  362
  388
  415
  444
  473
  504
  536
  569
  604
  640
  677
  717
  758
  801
  845
  892
Change in working capital, $m
  20
  22
  23
  25
  26
  28
  29
  30
  32
  33
  35
  36
  37
  39
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
Cash from operations, $m
  76
  88
  101
  115
  130
  145
  162
  180
  198
  217
  232
  253
  275
  298
  321
  346
  372
  398
  426
  455
  485
  516
  548
  582
  617
  654
  692
  732
  774
  817
Maintenance CAPEX, $m
  -6
  -7
  -8
  -9
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -63
  -66
New CAPEX, $m
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
Cash from investing activities, $m
  -23
  -25
  -27
  -30
  -33
  -35
  -37
  -40
  -42
  -46
  -48
  -51
  -54
  -57
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
  -122
  -128
Free cash flow, $m
  53
  63
  73
  85
  97
  111
  125
  140
  155
  172
  184
  202
  221
  241
  261
  283
  305
  328
  352
  377
  403
  429
  457
  487
  517
  549
  581
  616
  652
  689
Issuance/(repayment) of debt, $m
  50
  54
  58
  62
  65
  69
  73
  76
  79
  83
  86
  90
  94
  97
  101
  105
  109
  113
  118
  123
  128
  133
  138
  144
  150
  157
  164
  171
  179
  187
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  
  50
  54
  58
  62
  65
  69
  73
  76
  79
  83
  86
  90
  94
  97
  101
  105
  109
  113
  118
  123
  128
  133
  138
  144
  150
  157
  164
  171
  179
  187
Total cash flow (excl. dividends), $m
  103
  117
  131
  147
  163
  180
  197
  216
  235
  255
  270
  292
  315
  338
  362
  388
  414
  441
  470
  499
  530
  562
  596
  631
  667
  705
  745
  787
  830
  876
Retained Cash Flow (-), $m
  -51
  -55
  -58
  -62
  -66
  -70
  -73
  -77
  -80
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -145
  -152
  -158
  -165
  -172
  -180
  -188
Prev. year cash balance distribution, $m
  111
  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
  163
  62
  73
  84
  97
  110
  124
  139
  155
  171
  183
  201
  220
  240
  260
  282
  304
  327
  351
  376
  402
  428
  456
  485
  516
  547
  580
  614
  650
  688
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
  156
  57
  63
  69
  75
  80
  84
  87
  89
  90
  87
  86
  84
  81
  76
  72
  66
  60
  54
  48
  42
  36
  30
  25
  20
  16
  12
  10
  7
  5
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 56.4
Price to Sales 3.6
Price to Book 5
Price to Tangible Book
Price to Cash Flow 33.9
Price to Free Cash Flow 38
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 $591.251 million for the last fiscal year's total revenue generated by Inter Parfums. The default revenue input number comes from 0001 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 15.7% 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 83.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20 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%.

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 18%.

Life of production assets of 17 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 21.7%. 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 - $433.298 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 31.321 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 $1.9 billion.

RELATED COMPANIES Price Int.Val. Rating
AVP Avon Products 2.16 0.44  str.sell
EL Estee Lauder C 144.85 203.54  str.buy
REV Revlon Cl A 27.91 0.02  str.sell
COTY Coty Cl A 8.71 24.06  str.buy
ANF Abercrombie&Fi 17.53 114.56  str.buy

COMPANY NEWS

▶ Inter Parfums: 3Q Earnings Snapshot   [05:44PM  Associated Press]
▶ Will Estee Lauder Stock Keep Shining On?   [Oct-05-18 09:56AM  InvestorPlace]
▶ Inter Parfums, Inc. to Host Earnings Call   [Aug-08-18 09:00AM  ACCESSWIRE]
▶ Inter Parfums: 2Q Earnings Snapshot   [05:49PM  Associated Press]
▶ 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]

CONTACT US       ASSET ALLOCATION

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

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