Intrinsic value of Ollie's Bargain Outlet Holdings, Inc - OLLI

Previous Close

$79.43

  Intrinsic Value

$42.34

stock screener

  Rating & Target

sell

-47%

Previous close

$79.43

 
Intrinsic value

$42.34

 
Up/down potential

-47%

 
Rating

sell

We calculate the intrinsic value of OLLI 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 5.0

 

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, %
  19.10
  17.69
  16.42
  15.28
  14.25
  13.33
  12.49
  11.74
  11.07
  10.46
  9.92
  9.42
  8.98
  8.58
  8.23
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
Revenue, $m
  1,283
  1,510
  1,758
  2,026
  2,315
  2,623
  2,951
  3,298
  3,663
  4,046
  4,447
  4,866
  5,303
  5,758
  6,232
  6,725
  7,236
  7,768
  8,321
  8,896
  9,493
  10,114
  10,760
  11,433
  12,133
  12,863
  13,623
  14,416
  15,243
  16,106
Variable operating expenses, $m
  1,040
  1,212
  1,400
  1,604
  1,823
  2,056
  2,305
  2,568
  2,844
  3,135
  3,371
  3,689
  4,021
  4,366
  4,725
  5,098
  5,486
  5,890
  6,309
  6,744
  7,197
  7,668
  8,158
  8,668
  9,199
  9,752
  10,328
  10,929
  11,556
  12,211
Fixed operating expenses, $m
  60
  62
  63
  64
  66
  67
  69
  70
  72
  73
  75
  77
  78
  80
  82
  84
  85
  87
  89
  91
  93
  95
  97
  99
  102
  104
  106
  109
  111
  113
Total operating expenses, $m
  1,100
  1,274
  1,463
  1,668
  1,889
  2,123
  2,374
  2,638
  2,916
  3,208
  3,446
  3,766
  4,099
  4,446
  4,807
  5,182
  5,571
  5,977
  6,398
  6,835
  7,290
  7,763
  8,255
  8,767
  9,301
  9,856
  10,434
  11,038
  11,667
  12,324
Operating income, $m
  182
  236
  294
  358
  426
  500
  577
  660
  746
  837
  1,001
  1,100
  1,204
  1,313
  1,426
  1,543
  1,665
  1,792
  1,923
  2,060
  2,203
  2,351
  2,505
  2,666
  2,833
  3,007
  3,189
  3,378
  3,576
  3,782
EBITDA, $m
  265
  322
  383
  450
  522
  599
  681
  767
  858
  954
  1,054
  1,159
  1,268
  1,382
  1,501
  1,624
  1,752
  1,885
  2,024
  2,168
  2,317
  2,473
  2,635
  2,804
  2,979
  3,162
  3,353
  3,552
  3,760
  3,976
Interest expense (income), $m
  5
  3
  5
  8
  11
  14
  18
  21
  25
  30
  34
  39
  44
  49
  54
  59
  65
  71
  77
  84
  91
  98
  105
  112
  120
  128
  137
  146
  155
  164
  175
Earnings before tax, $m
  180
  231
  286
  347
  412
  482
  556
  634
  717
  803
  962
  1,057
  1,156
  1,259
  1,366
  1,478
  1,594
  1,714
  1,840
  1,970
  2,105
  2,246
  2,393
  2,546
  2,705
  2,870
  3,043
  3,223
  3,411
  3,608
Tax expense, $m
  48
  62
  77
  94
  111
  130
  150
  171
  194
  217
  260
  285
  312
  340
  369
  399
  430
  463
  497
  532
  568
  606
  646
  687
  730
  775
  822
  870
  921
  974
Net income, $m
  131
  168
  209
  253
  301
  352
  406
  463
  523
  587
  702
  771
  844
  919
  997
  1,079
  1,163
  1,251
  1,343
  1,438
  1,537
  1,640
  1,747
  1,858
  1,974
  2,095
  2,221
  2,353
  2,490
  2,634

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
  1,237
  1,456
  1,695
  1,954
  2,232
  2,530
  2,846
  3,180
  3,532
  3,901
  4,288
  4,692
  5,114
  5,553
  6,010
  6,485
  6,978
  7,491
  8,024
  8,578
  9,154
  9,753
  10,376
  11,025
  11,700
  12,404
  13,137
  13,901
  14,699
  15,532
Adjusted assets (=assets-cash), $m
  1,237
  1,456
  1,695
  1,954
  2,232
  2,530
  2,846
  3,180
  3,532
  3,901
  4,288
  4,692
  5,114
  5,553
  6,010
  6,485
  6,978
  7,491
  8,024
  8,578
  9,154
  9,753
  10,376
  11,025
  11,700
  12,404
  13,137
  13,901
  14,699
  15,532
Revenue / Adjusted assets
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
  1.037
Average production assets, $m
  464
  546
  636
  733
  838
  950
  1,068
  1,194
  1,326
  1,465
  1,610
  1,762
  1,920
  2,085
  2,256
  2,434
  2,620
  2,812
  3,012
  3,220
  3,437
  3,661
  3,895
  4,139
  4,392
  4,656
  4,931
  5,218
  5,518
  5,830
Working capital, $m
  164
  193
  225
  259
  296
  336
  378
  422
  469
  518
  569
  623
  679
  737
  798
  861
  926
  994
  1,065
  1,139
  1,215
  1,295
  1,377
  1,463
  1,553
  1,646
  1,744
  1,845
  1,951
  2,062
Total debt, $m
  95
  146
  202
  262
  327
  397
  470
  548
  630
  716
  806
  901
  999
  1,101
  1,208
  1,318
  1,433
  1,553
  1,677
  1,806
  1,940
  2,080
  2,225
  2,376
  2,533
  2,697
  2,868
  3,046
  3,232
  3,426
Total liabilities, $m
  288
  339
  395
  455
  520
  589
  663
  741
  823
  909
  999
  1,093
  1,192
  1,294
  1,400
  1,511
  1,626
  1,745
  1,870
  1,999
  2,133
  2,273
  2,418
  2,569
  2,726
  2,890
  3,061
  3,239
  3,425
  3,619
Total equity, $m
  949
  1,117
  1,300
  1,499
  1,712
  1,940
  2,183
  2,439
  2,709
  2,992
  3,289
  3,599
  3,922
  4,259
  4,609
  4,974
  5,352
  5,746
  6,155
  6,580
  7,021
  7,481
  7,959
  8,456
  8,974
  9,514
  10,076
  10,662
  11,274
  11,913
Total liabilities and equity, $m
  1,237
  1,456
  1,695
  1,954
  2,232
  2,529
  2,846
  3,180
  3,532
  3,901
  4,288
  4,692
  5,114
  5,553
  6,009
  6,485
  6,978
  7,491
  8,025
  8,579
  9,154
  9,754
  10,377
  11,025
  11,700
  12,404
  13,137
  13,901
  14,699
  15,532
Debt-to-equity ratio
  0.100
  0.130
  0.160
  0.180
  0.190
  0.200
  0.220
  0.220
  0.230
  0.240
  0.250
  0.250
  0.250
  0.260
  0.260
  0.270
  0.270
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.290
  0.290
  0.290
Adjusted equity ratio
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767
  0.767

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  131
  168
  209
  253
  301
  352
  406
  463
  523
  587
  702
  771
  844
  919
  997
  1,079
  1,163
  1,251
  1,343
  1,438
  1,537
  1,640
  1,747
  1,858
  1,974
  2,095
  2,221
  2,353
  2,490
  2,634
Depreciation, amort., depletion, $m
  83
  86
  89
  92
  96
  99
  103
  107
  112
  117
  54
  59
  64
  69
  75
  81
  87
  94
  100
  107
  115
  122
  130
  138
  146
  155
  164
  174
  184
  194
Funds from operations, $m
  214
  254
  298
  345
  397
  451
  509
  570
  635
  703
  756
  830
  908
  988
  1,072
  1,160
  1,251
  1,345
  1,443
  1,545
  1,651
  1,762
  1,877
  1,996
  2,121
  2,250
  2,386
  2,527
  2,674
  2,828
Change in working capital, $m
  26
  29
  32
  34
  37
  39
  42
  44
  47
  49
  51
  54
  56
  58
  61
  63
  66
  68
  71
  74
  76
  80
  83
  86
  90
  93
  97
  101
  106
  111
Cash from operations, $m
  188
  225
  266
  311
  360
  412
  467
  526
  588
  654
  704
  776
  852
  930
  1,012
  1,097
  1,185
  1,277
  1,373
  1,472
  1,575
  1,682
  1,794
  1,910
  2,031
  2,157
  2,288
  2,425
  2,568
  2,717
Maintenance CAPEX, $m
  -13
  -15
  -18
  -21
  -24
  -28
  -32
  -36
  -40
  -44
  -49
  -54
  -59
  -64
  -69
  -75
  -81
  -87
  -94
  -100
  -107
  -115
  -122
  -130
  -138
  -146
  -155
  -164
  -174
  -184
New CAPEX, $m
  -75
  -82
  -90
  -97
  -105
  -112
  -119
  -125
  -132
  -139
  -145
  -152
  -158
  -165
  -171
  -178
  -185
  -193
  -200
  -208
  -216
  -225
  -234
  -243
  -253
  -264
  -275
  -287
  -299
  -313
Cash from investing activities, $m
  -88
  -97
  -108
  -118
  -129
  -140
  -151
  -161
  -172
  -183
  -194
  -206
  -217
  -229
  -240
  -253
  -266
  -280
  -294
  -308
  -323
  -340
  -356
  -373
  -391
  -410
  -430
  -451
  -473
  -497
Free cash flow, $m
  100
  128
  158
  193
  231
  272
  317
  365
  416
  471
  510
  571
  635
  701
  771
  843
  919
  997
  1,079
  1,163
  1,251
  1,343
  1,438
  1,537
  1,640
  1,747
  1,858
  1,974
  2,095
  2,221
Issuance/(repayment) of debt, $m
  46
  51
  56
  60
  65
  69
  74
  78
  82
  86
  90
  94
  98
  102
  106
  111
  115
  120
  124
  129
  134
  140
  145
  151
  157
  164
  171
  178
  186
  194
Issuance/(repurchase) of shares, $m
  21
  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  
  67
  51
  56
  60
  65
  69
  74
  78
  82
  86
  90
  94
  98
  102
  106
  111
  115
  120
  124
  129
  134
  140
  145
  151
  157
  164
  171
  178
  186
  194
Total cash flow (excl. dividends), $m
  168
  179
  214
  253
  295
  341
  391
  443
  498
  557
  601
  665
  733
  804
  877
  954
  1,034
  1,117
  1,203
  1,292
  1,386
  1,482
  1,583
  1,688
  1,797
  1,911
  2,029
  2,152
  2,281
  2,415
Retained Cash Flow (-), $m
  -152
  -168
  -183
  -199
  -214
  -228
  -242
  -256
  -270
  -283
  -297
  -310
  -323
  -337
  -350
  -364
  -379
  -393
  -409
  -425
  -442
  -459
  -478
  -497
  -518
  -540
  -562
  -586
  -612
  -639
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
  15
  11
  31
  54
  82
  113
  148
  187
  229
  274
  304
  355
  410
  467
  527
  590
  655
  723
  794
  867
  944
  1,023
  1,105
  1,191
  1,279
  1,371
  1,466
  1,566
  1,669
  1,776
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
  15
  10
  27
  45
  64
  82
  100
  117
  131
  144
  144
  152
  156
  157
  155
  150
  143
  133
  122
  110
  98
  85
  72
  61
  50
  40
  31
  24
  18
  13
Current shareholders' claim on cash, %
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6

Ollie's Bargain Outlet Holdings, Inc. is a retailer of brand name merchandise. The Company offers customers a selection of brand name products, including food, housewares, books and stationery, bed and bath, floor coverings, electronics and toys. Its warehouse format stores feature a range of products, including hardware, personal healthcare, candy, clothing, sporting goods, pet and lawn and garden products. It offers cooking utensils, dishes, appliances, plastic containers, coffee, bottled non-carbonated beverages, coffee, bottled non-carbonated beverages, bedding, towels, curtains, laminate flooring, commercial and residential carpeting, air conditioners, home electronics, cellular accessories, dolls, action figures, puzzles, action figures, puzzles, educational toys, board games, luggage, automotive, seasonal, furniture, summer furniture and lawn and garden. As of January 28, 2017, it had operated 234 stores across 19 contiguous states in the Eastern half of the United States.

FINANCIAL RATIOS  of  Ollie's Bargain Outlet Holdings, Inc (OLLI)

Valuation Ratios
P/E Ratio 80.4
Price to Sales 5.4
Price to Book 7.4
Price to Tangible Book
Price to Cash Flow 72
Price to Free Cash Flow 94.6
Growth Rates
Sales Growth Rate 16.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.3%
Cap. Spend. - 3 Yr. Gr. Rate 9.9%
Financial Strength
Quick Ratio 20
Current Ratio 0
LT Debt to Equity 29%
Total Debt to Equity 29.8%
Interest Coverage 20
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 9.9%
Return On Equity - 3 Yr. Avg. 7.8%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 40.4%
Gross Margin - 3 Yr. Avg. 40%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 11.5%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin 10.8%
Pre-Tax Margin - 3 Yr. Avg. 8.4%
Net Profit Margin 6.7%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 37.7%
Payout Ratio 0%

OLLI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OLLI stock intrinsic value calculation we used $1077 million for the last fiscal year's total revenue generated by Ollie's Bargain Outlet Holdings, Inc. The default revenue input number comes from 0001 income statement of Ollie's Bargain Outlet Holdings, 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 OLLI stock valuation model: a) initial revenue growth rate of 19.1% 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 4.3%, whose default value for OLLI is calculated based on our internal credit rating of Ollie's Bargain Outlet Holdings, 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 Ollie's Bargain Outlet Holdings, 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 OLLI stock the variable cost ratio is equal to 82.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $59 million in the base year in the intrinsic value calculation for OLLI 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 Ollie's Bargain Outlet Holdings, Inc.

Corporate tax rate of 27% is the nominal tax rate for Ollie's Bargain Outlet Holdings, 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 OLLI 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 OLLI are equal to 36.2%.

Life of production assets of 59.4 years is the average useful life of capital assets used in Ollie's Bargain Outlet Holdings, 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 OLLI is equal to 12.8%. 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 - $796.462 million for Ollie's Bargain Outlet Holdings, 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 62.925 million for Ollie's Bargain Outlet Holdings, 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 Ollie's Bargain Outlet Holdings, Inc at the current share price and the inputted number of shares is $5.0 billion.

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