Intrinsic value of Oxford Industries - OXM

Previous Close

$79.74

  Intrinsic Value

$57.69

stock screener

  Rating & Target

sell

-28%

Previous close

$79.74

 
Intrinsic value

$57.69

 
Up/down potential

-28%

 
Rating

sell

We calculate the intrinsic value of OXM 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 1.4

 

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
  1,108
  1,133
  1,163
  1,195
  1,231
  1,271
  1,315
  1,361
  1,412
  1,466
  1,524
  1,586
  1,652
  1,722
  1,796
  1,875
  1,958
  2,046
  2,139
  2,238
  2,341
  2,451
  2,566
  2,687
  2,815
  2,950
  3,092
  3,241
  3,398
  3,563
Variable operating expenses, $m
  1,011
  1,034
  1,060
  1,089
  1,121
  1,156
  1,195
  1,237
  1,282
  1,330
  1,357
  1,412
  1,471
  1,533
  1,599
  1,669
  1,743
  1,822
  1,905
  1,992
  2,085
  2,182
  2,285
  2,393
  2,507
  2,627
  2,753
  2,886
  3,026
  3,173
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
  1,011
  1,034
  1,060
  1,089
  1,121
  1,156
  1,195
  1,237
  1,282
  1,330
  1,357
  1,412
  1,471
  1,533
  1,599
  1,669
  1,743
  1,822
  1,905
  1,992
  2,085
  2,182
  2,285
  2,393
  2,507
  2,627
  2,753
  2,886
  3,026
  3,173
Operating income, $m
  97
  100
  103
  106
  110
  115
  120
  125
  130
  136
  167
  174
  181
  189
  197
  205
  215
  224
  234
  245
  257
  269
  281
  295
  309
  323
  339
  355
  372
  391
EBITDA, $m
  153
  156
  160
  165
  170
  175
  181
  188
  195
  202
  210
  219
  228
  237
  248
  259
  270
  282
  295
  309
  323
  338
  354
  371
  388
  407
  426
  447
  469
  491
Interest expense (income), $m
  3
  2
  3
  3
  4
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  26
  28
  29
  31
  34
Earnings before tax, $m
  94
  97
  100
  103
  106
  110
  115
  119
  124
  129
  159
  165
  172
  179
  186
  193
  202
  210
  219
  229
  239
  249
  260
  272
  285
  298
  311
  326
  341
  357
Tax expense, $m
  25
  26
  27
  28
  29
  30
  31
  32
  33
  35
  43
  45
  46
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  96
Net income, $m
  69
  71
  73
  75
  78
  81
  84
  87
  91
  94
  116
  121
  125
  130
  136
  141
  147
  153
  160
  167
  174
  182
  190
  199
  208
  217
  227
  238
  249
  261

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
  714
  730
  749
  770
  793
  819
  847
  877
  910
  945
  982
  1,022
  1,064
  1,109
  1,157
  1,208
  1,262
  1,318
  1,378
  1,442
  1,509
  1,579
  1,653
  1,732
  1,814
  1,901
  1,992
  2,088
  2,189
  2,296
Adjusted assets (=assets-cash), $m
  714
  730
  749
  770
  793
  819
  847
  877
  910
  945
  982
  1,022
  1,064
  1,109
  1,157
  1,208
  1,262
  1,318
  1,378
  1,442
  1,509
  1,579
  1,653
  1,732
  1,814
  1,901
  1,992
  2,088
  2,189
  2,296
Revenue / Adjusted assets
  1.552
  1.552
  1.553
  1.552
  1.552
  1.552
  1.553
  1.552
  1.552
  1.551
  1.552
  1.552
  1.553
  1.553
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
  1.551
  1.552
  1.552
  1.551
  1.552
  1.552
  1.552
  1.552
  1.552
  1.552
Average production assets, $m
  320
  328
  336
  345
  356
  367
  380
  393
  408
  424
  440
  458
  477
  498
  519
  542
  566
  591
  618
  647
  677
  708
  742
  777
  814
  853
  894
  937
  982
  1,030
Working capital, $m
  96
  99
  101
  104
  107
  111
  114
  118
  123
  128
  133
  138
  144
  150
  156
  163
  170
  178
  186
  195
  204
  213
  223
  234
  245
  257
  269
  282
  296
  310
Total debt, $m
  51
  58
  65
  73
  82
  92
  103
  114
  127
  140
  155
  170
  187
  204
  222
  242
  263
  285
  308
  332
  358
  385
  414
  444
  476
  509
  545
  582
  621
  662
Total liabilities, $m
  276
  282
  289
  297
  306
  316
  327
  339
  351
  365
  379
  394
  411
  428
  447
  466
  487
  509
  532
  557
  582
  609
  638
  668
  700
  734
  769
  806
  845
  886
Total equity, $m
  438
  448
  460
  473
  487
  503
  520
  539
  559
  580
  603
  627
  653
  681
  711
  742
  775
  809
  846
  885
  926
  970
  1,015
  1,063
  1,114
  1,167
  1,223
  1,282
  1,344
  1,410
Total liabilities and equity, $m
  714
  730
  749
  770
  793
  819
  847
  878
  910
  945
  982
  1,021
  1,064
  1,109
  1,158
  1,208
  1,262
  1,318
  1,378
  1,442
  1,508
  1,579
  1,653
  1,731
  1,814
  1,901
  1,992
  2,088
  2,189
  2,296
Debt-to-equity ratio
  0.120
  0.130
  0.140
  0.150
  0.170
  0.180
  0.200
  0.210
  0.230
  0.240
  0.260
  0.270
  0.290
  0.300
  0.310
  0.330
  0.340
  0.350
  0.360
  0.380
  0.390
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
Adjusted equity ratio
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  69
  71
  73
  75
  78
  81
  84
  87
  91
  94
  116
  121
  125
  130
  136
  141
  147
  153
  160
  167
  174
  182
  190
  199
  208
  217
  227
  238
  249
  261
Depreciation, amort., depletion, $m
  56
  57
  57
  58
  59
  61
  62
  63
  65
  66
  43
  45
  47
  49
  51
  53
  55
  58
  61
  63
  66
  69
  73
  76
  80
  84
  88
  92
  96
  101
Funds from operations, $m
  125
  127
  130
  134
  137
  141
  145
  150
  155
  160
  160
  166
  172
  179
  187
  194
  203
  211
  221
  230
  241
  251
  263
  275
  288
  301
  315
  330
  345
  362
Change in working capital, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Cash from operations, $m
  123
  125
  128
  131
  134
  138
  142
  146
  151
  156
  155
  160
  167
  173
  180
  188
  195
  204
  212
  222
  232
  242
  253
  264
  276
  289
  303
  317
  332
  347
Maintenance CAPEX, $m
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -61
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -96
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
Cash from investing activities, $m
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -74
  -77
  -80
  -85
  -89
  -93
  -98
  -102
  -108
  -113
  -119
  -125
  -131
  -137
  -144
Free cash flow, $m
  86
  86
  87
  88
  90
  91
  93
  95
  98
  100
  96
  99
  103
  106
  110
  114
  118
  123
  128
  133
  138
  144
  150
  156
  163
  170
  178
  186
  194
  203
Issuance/(repayment) of debt, $m
  5
  6
  7
  8
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
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  
  5
  6
  7
  8
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
Total cash flow (excl. dividends), $m
  91
  93
  94
  96
  99
  101
  104
  107
  110
  114
  111
  115
  119
  123
  128
  133
  139
  145
  151
  157
  164
  171
  179
  187
  195
  204
  213
  223
  233
  244
Retained Cash Flow (-), $m
  -8
  -10
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
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
  83
  83
  83
  84
  84
  85
  87
  88
  90
  92
  88
  90
  93
  96
  99
  102
  106
  110
  114
  118
  123
  128
  133
  139
  144
  151
  157
  164
  171
  179
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
  79
  76
  72
  69
  65
  62
  59
  55
  52
  48
  42
  38
  35
  32
  29
  26
  23
  20
  18
  15
  13
  11
  9
  7
  6
  4
  3
  3
  2
  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
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Oxford Industries, Inc. is an apparel company. The Company designs, sources, markets and distributes products bearing the trademarks of its owned Tommy Bahama, Lilly Pulitzer and Southern Tide lifestyle brands, other owned brands and licensed brands, as well as private label apparel products. It distributes its lifestyle branded products through its direct to consumer channels, consisting of its Tommy Bahama and Lilly Pulitzer full-price retail stores and its e-commerce sites for Tommy Bahama, Lilly Pulitzer and Southern Tide, and through its wholesale distribution channels. As of January 28, 2017, the Company operated 128 Tommy Bahama and 40 Lilly Pulitzer full-price retail stores. Tommy Bahama designs, sources, markets and distributes men's and women's sportswear and related products. Tommy Bahama products are available in the Tommy Bahama stores and on its Website, tommybahama.com, as well as in department stores and independent specialty stores throughout the United States.

FINANCIAL RATIOS  of  Oxford Industries (OXM)

Valuation Ratios
P/E Ratio 25.7
Price to Sales 1.3
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 11.2
Price to Free Cash Flow 19.1
Growth Rates
Sales Growth Rate 5.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.9%
Cap. Spend. - 3 Yr. Gr. Rate 2.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 24.5%
Total Debt to Equity 24.5%
Interest Coverage 30
Management Effectiveness
Return On Assets 8.5%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 12.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 14.6%
Return On Equity - 3 Yr. Avg. 13.8%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 57%
Gross Margin - 3 Yr. Avg. 57%
EBITDA Margin 12.8%
EBITDA Margin - 3 Yr. Avg. 13.6%
Operating Margin 8.8%
Oper. Margin - 3 Yr. Avg. 9.6%
Pre-Tax Margin 8.4%
Pre-Tax Margin - 3 Yr. Avg. 9.3%
Net Profit Margin 5.1%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 36%
Eff/ Tax Rate - 3 Yr. Avg. 38%
Payout Ratio 34.6%

OXM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OXM stock intrinsic value calculation we used $1086.211 million for the last fiscal year's total revenue generated by Oxford Industries. The default revenue input number comes from 0001 income statement of Oxford Industries. 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 OXM 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 4.3%, whose default value for OXM is calculated based on our internal credit rating of Oxford Industries, 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 Oxford Industries.
    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 OXM stock the variable cost ratio is equal to 91.3%.

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 OXM 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 Oxford Industries.

Corporate tax rate of 27% is the nominal tax rate for Oxford Industries. 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 OXM 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 OXM are equal to 28.9%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Oxford Industries 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 OXM is equal to 8.7%. 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 - $429.824 million for Oxford Industries - 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 16.937 million for Oxford Industries 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 Oxford Industries at the current share price and the inputted number of shares is $1.4 billion.

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COMPANY NEWS

▶ Tommy Bahama and Pendleton Collaborate for Fall 2018   [Oct-04-18 08:42AM  PR Newswire]
▶ 2 Stocks Move Thursday   [Sep-13-18 06:34PM  GuruFocus.com]
▶ Oxford Industries: Fiscal 2Q Earnings Snapshot   [04:27PM  Associated Press]
▶ Forever 21, Tommy Bahama leaving the Magnificent Mile   [03:27PM  American City Business Journals]
▶ How Financially Strong Is Oxford Industries Inc (NYSE:OXM)?   [Aug-20-18 10:39AM  Simply Wall St.]
▶ Oxford Declares Quarterly Cash Dividend   [Jun-21-18 09:00AM  GlobeNewswire]
▶ Company News For Jun 14, 2018   [10:32AM  Zacks]
▶ Oxford Industries: Fiscal 1Q Earnings Snapshot   [04:15PM  Associated Press]
▶ Top-Rated Oxford Industries Near Buy Zone Before Next Earnings Report   [May-25-18 03:00AM  Investor's Business Daily]
▶ Oxford Industries meets 4Q profit forecasts   [Mar-28-18 04:31PM  Associated Press]
▶ Tommy Bahama Introduces Maritime Deep Blue   [Mar-13-18 09:07AM  PR Newswire]
▶ Oxford to Present at the ICR Conference 2018   [Dec-26-17 09:00AM  GlobeNewswire]
▶ 9 Small-Cap Stocks to Buy for 2018   [Dec-19-17 03:03PM  InvestorPlace]
▶ Company News For Dec 7, 2017   [10:04AM  Zacks]
▶ Oxford Industries tops 3Q profit forecasts   [Dec-05-17 04:23PM  Associated Press]
▶ Oxford Industries tops 2Q profit forecasts   [Aug-31-17 09:30PM  Associated Press]
▶ Oxford Declares Quarterly Cash Dividend   [Jun-15-17 08:45AM  GlobeNewswire]
▶ Oxford Industries beats 1Q profit forecasts   [04:19PM  Associated Press]

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