Intrinsic value of Perry Ellis International - PERY

Previous Close

$27.50

  Intrinsic Value

$5.18

stock screener

  Rating & Target

str. sell

-81%

Previous close

$27.50

 
Intrinsic value

$5.18

 
Up/down potential

-81%

 
Rating

str. sell

We calculate the intrinsic value of PERY 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 0.4

 

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, %
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.15
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
Revenue, $m
  922
  972
  1,023
  1,077
  1,134
  1,193
  1,256
  1,321
  1,389
  1,461
  1,536
  1,615
  1,697
  1,784
  1,875
  1,970
  2,070
  2,175
  2,285
  2,400
  2,521
  2,648
  2,782
  2,922
  3,069
  3,223
  3,385
  3,555
  3,734
  3,921
Variable operating expenses, $m
  897
  944
  993
  1,045
  1,099
  1,156
  1,215
  1,277
  1,342
  1,410
  1,463
  1,538
  1,617
  1,699
  1,786
  1,877
  1,972
  2,072
  2,177
  2,287
  2,402
  2,523
  2,650
  2,784
  2,924
  3,071
  3,225
  3,387
  3,557
  3,736
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
  897
  944
  993
  1,045
  1,099
  1,156
  1,215
  1,277
  1,342
  1,410
  1,463
  1,538
  1,617
  1,699
  1,786
  1,877
  1,972
  2,072
  2,177
  2,287
  2,402
  2,523
  2,650
  2,784
  2,924
  3,071
  3,225
  3,387
  3,557
  3,736
Operating income, $m
  25
  27
  30
  32
  35
  38
  41
  44
  47
  50
  73
  76
  80
  84
  89
  93
  98
  103
  108
  113
  119
  125
  132
  138
  145
  152
  160
  168
  177
  185
EBITDA, $m
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  108
  114
  119
  125
  132
  138
  145
  153
  160
  168
  177
  186
  195
  205
  215
  226
Interest expense (income), $m
  7
  7
  8
  9
  10
  11
  12
  13
  15
  16
  18
  19
  21
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
  56
  60
  63
  67
Earnings before tax, $m
  18
  20
  21
  22
  24
  26
  27
  29
  31
  33
  53
  56
  58
  60
  63
  65
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  108
  113
  118
Tax expense, $m
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
Net income, $m
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86

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
  668
  704
  741
  781
  822
  865
  910
  957
  1,007
  1,059
  1,113
  1,170
  1,230
  1,293
  1,358
  1,427
  1,500
  1,576
  1,656
  1,739
  1,827
  1,919
  2,016
  2,117
  2,224
  2,336
  2,453
  2,576
  2,706
  2,842
Adjusted assets (=assets-cash), $m
  668
  704
  741
  781
  822
  865
  910
  957
  1,007
  1,059
  1,113
  1,170
  1,230
  1,293
  1,358
  1,427
  1,500
  1,576
  1,656
  1,739
  1,827
  1,919
  2,016
  2,117
  2,224
  2,336
  2,453
  2,576
  2,706
  2,842
Revenue / Adjusted assets
  1.380
  1.381
  1.381
  1.379
  1.380
  1.379
  1.380
  1.380
  1.379
  1.380
  1.380
  1.380
  1.380
  1.380
  1.381
  1.381
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
Average production assets, $m
  160
  169
  178
  187
  197
  208
  218
  230
  242
  254
  267
  281
  295
  310
  326
  343
  360
  378
  398
  418
  439
  461
  484
  508
  534
  561
  589
  619
  650
  682
Working capital, $m
  211
  222
  234
  247
  260
  273
  288
  302
  318
  335
  352
  370
  389
  408
  429
  451
  474
  498
  523
  550
  577
  607
  637
  669
  703
  738
  775
  814
  855
  898
Total debt, $m
  108
  122
  137
  153
  170
  187
  206
  225
  245
  266
  288
  311
  335
  361
  387
  415
  445
  475
  508
  541
  577
  614
  654
  695
  738
  783
  831
  881
  933
  988
Total liabilities, $m
  271
  285
  300
  316
  333
  350
  369
  388
  408
  429
  451
  474
  498
  523
  550
  578
  607
  638
  671
  704
  740
  777
  816
  858
  901
  946
  994
  1,043
  1,096
  1,151
Total equity, $m
  398
  419
  441
  465
  489
  515
  541
  570
  599
  630
  662
  696
  732
  769
  808
  849
  892
  938
  985
  1,035
  1,087
  1,142
  1,199
  1,260
  1,323
  1,390
  1,460
  1,533
  1,610
  1,691
Total liabilities and equity, $m
  669
  704
  741
  781
  822
  865
  910
  958
  1,007
  1,059
  1,113
  1,170
  1,230
  1,292
  1,358
  1,427
  1,499
  1,576
  1,656
  1,739
  1,827
  1,919
  2,015
  2,118
  2,224
  2,336
  2,454
  2,576
  2,706
  2,842
Debt-to-equity ratio
  0.270
  0.290
  0.310
  0.330
  0.350
  0.360
  0.380
  0.390
  0.410
  0.420
  0.430
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
Adjusted equity ratio
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86
Depreciation, amort., depletion, $m
  28
  29
  29
  30
  30
  31
  32
  32
  33
  34
  16
  17
  18
  18
  19
  20
  21
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
Funds from operations, $m
  41
  43
  45
  46
  48
  50
  52
  53
  56
  58
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
  101
  106
  111
  116
  121
  127
Change in working capital, $m
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
Cash from operations, $m
  31
  32
  33
  34
  35
  36
  37
  39
  40
  41
  38
  39
  41
  43
  44
  46
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  80
  84
Maintenance CAPEX, $m
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
New CAPEX, $m
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
Cash from investing activities, $m
  -17
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -42
  -44
  -46
  -48
  -50
  -53
  -56
  -59
  -61
  -65
  -68
  -72
Free cash flow, $m
  13
  13
  14
  14
  14
  14
  14
  14
  14
  14
  10
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  11
  11
  12
  12
  12
  12
  12
  13
  13
Issuance/(repayment) of debt, $m
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  52
  55
Issuance/(repurchase) of shares, $m
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  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  
  21
  22
  22
  23
  24
  24
  25
  26
  27
  28
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  52
  55
Total cash flow (excl. dividends), $m
  34
  35
  36
  37
  37
  38
  39
  40
  41
  42
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  48
  51
  53
  55
  57
  60
  62
  65
  68
Retained Cash Flow (-), $m
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -60
  -63
  -67
  -70
  -73
  -77
  -81
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
  14
  14
  13
  13
  13
  13
  12
  12
  12
  12
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
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
  14
  13
  12
  11
  10
  9
  8
  8
  7
  6
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.5
  97.0
  95.6
  94.3
  93.1
  92.0
  90.9
  89.9
  89.0
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1
  88.1

Perry Ellis International, Inc. is an apparel company. The Company designs, sources, markets and licenses its products nationally and internationally at multiple price points and across all levels of retail distribution. It operates through four segments: Men's Sportswear and Swim, Women's Sportswear, Direct-to-Consumer and Licensing. Its Men's Sportswear and Swim, and Women's Sportswear segments are engaged in design, import and distribution of apparel to department stores and other retail outlets, primarily across the United States. Its Direct-to-Consumer segment is engaged in the sale of its branded and licensed products through its retail stores and e-commerce platform. Its Licensing segment includes royalties associated from the use of its brand names. Its brands include Perry Ellis and Original Penguin by Munsingwear (Original Penguin), Ben Hogan, Cubavera, Farah, Grand Slam, Jantzen, Laundry by Shelli Segal, Rafaella and Savane.

FINANCIAL RATIOS  of  Perry Ellis International (PERY)

Valuation Ratios
P/E Ratio 28.5
Price to Sales 0.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow 14.7
Growth Rates
Sales Growth Rate -4.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.8%
Cap. Spend. - 3 Yr. Gr. Rate -10%
Financial Strength
Quick Ratio 42
Current Ratio 0
LT Debt to Equity 33.8%
Total Debt to Equity 34.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. -3%
Return On Total Capital 3.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity 5%
Return On Equity - 3 Yr. Avg. -2.9%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 37%
Gross Margin - 3 Yr. Avg. 35.5%
EBITDA Margin 4.3%
EBITDA Margin - 3 Yr. Avg. 3.4%
Operating Margin 2.6%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin 1.7%
Pre-Tax Margin - 3 Yr. Avg. 0.6%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. -1.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 174.5%
Payout Ratio 0%

PERY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PERY stock intrinsic value calculation we used $874.853 million for the last fiscal year's total revenue generated by Perry Ellis International. The default revenue input number comes from 0001 income statement of Perry Ellis International. 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 PERY stock valuation model: a) initial revenue growth rate of 5.4% 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 PERY is calculated based on our internal credit rating of Perry Ellis International, 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 Perry Ellis International.
    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 PERY stock the variable cost ratio is equal to 97.4%.

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 PERY 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 7.2% for Perry Ellis International.

Corporate tax rate of 27% is the nominal tax rate for Perry Ellis International. 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 PERY 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 PERY are equal to 17.4%.

Life of production assets of 16.8 years is the average useful life of capital assets used in Perry Ellis International 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 PERY is equal to 22.9%. 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 - $377.55 million for Perry Ellis International - 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 15.867 million for Perry Ellis International 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 Perry Ellis International at the current share price and the inputted number of shares is $0.4 billion.

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