Intrinsic value of Perry Ellis International - PERY

Previous Close

$28.29

  Intrinsic Value

$8.39

stock screener

  Rating & Target

str. sell

-70%

Previous close

$28.29

 
Intrinsic value

$8.39

 
Up/down potential

-70%

 
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 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 0.4

 

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, %
  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
  878
  898
  922
  947
  976
  1,008
  1,042
  1,079
  1,119
  1,162
  1,208
  1,257
  1,309
  1,365
  1,424
  1,486
  1,552
  1,622
  1,696
  1,774
  1,856
  1,943
  2,034
  2,130
  2,232
  2,338
  2,451
  2,569
  2,693
  2,824
Variable operating expenses, $m
  872
  891
  914
  939
  967
  997
  1,031
  1,067
  1,106
  1,147
  1,173
  1,221
  1,272
  1,326
  1,383
  1,443
  1,507
  1,575
  1,647
  1,723
  1,803
  1,887
  1,975
  2,069
  2,168
  2,271
  2,380
  2,495
  2,616
  2,743
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
  872
  891
  914
  939
  967
  997
  1,031
  1,067
  1,106
  1,147
  1,173
  1,221
  1,272
  1,326
  1,383
  1,443
  1,507
  1,575
  1,647
  1,723
  1,803
  1,887
  1,975
  2,069
  2,168
  2,271
  2,380
  2,495
  2,616
  2,743
Operating income, $m
  7
  7
  8
  9
  9
  10
  11
  12
  13
  15
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
EBITDA, $m
  51
  52
  53
  55
  56
  58
  60
  62
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  142
  149
  156
  163
Interest expense (income), $m
  7
  7
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
  39
  41
  43
Earnings before tax, $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  22
  23
  23
  24
  24
  25
  25
  26
  27
  28
  28
  29
  30
  31
  32
  33
  34
  35
  36
  38
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  10
Net income, $m
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  16
  16
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28

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
  604
  618
  634
  652
  672
  694
  717
  743
  770
  800
  831
  865
  901
  939
  980
  1,023
  1,068
  1,116
  1,167
  1,221
  1,277
  1,337
  1,400
  1,466
  1,536
  1,609
  1,687
  1,768
  1,854
  1,944
Adjusted assets (=assets-cash), $m
  604
  618
  634
  652
  672
  694
  717
  743
  770
  800
  831
  865
  901
  939
  980
  1,023
  1,068
  1,116
  1,167
  1,221
  1,277
  1,337
  1,400
  1,466
  1,536
  1,609
  1,687
  1,768
  1,854
  1,944
Revenue / Adjusted assets
  1.454
  1.453
  1.454
  1.452
  1.452
  1.452
  1.453
  1.452
  1.453
  1.453
  1.454
  1.453
  1.453
  1.454
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
  1.453
Average production assets, $m
  256
  261
  268
  276
  284
  293
  303
  314
  326
  338
  352
  366
  381
  397
  414
  432
  452
  472
  493
  516
  540
  565
  592
  620
  649
  680
  713
  748
  784
  822
Working capital, $m
  60
  61
  63
  64
  66
  69
  71
  73
  76
  79
  82
  85
  89
  93
  97
  101
  106
  110
  115
  121
  126
  132
  138
  145
  152
  159
  167
  175
  183
  192
Total debt, $m
  112
  118
  126
  134
  143
  154
  165
  177
  190
  204
  219
  235
  251
  269
  289
  309
  330
  353
  377
  402
  429
  457
  486
  518
  550
  585
  621
  660
  700
  743
Total liabilities, $m
  285
  291
  299
  307
  316
  327
  338
  350
  363
  377
  392
  407
  424
  442
  461
  482
  503
  526
  550
  575
  602
  630
  659
  691
  723
  758
  794
  833
  873
  916
Total equity, $m
  320
  327
  335
  345
  355
  367
  379
  393
  407
  423
  440
  458
  477
  497
  518
  541
  565
  590
  617
  646
  676
  707
  740
  776
  812
  851
  892
  935
  981
  1,028
Total liabilities and equity, $m
  605
  618
  634
  652
  671
  694
  717
  743
  770
  800
  832
  865
  901
  939
  979
  1,023
  1,068
  1,116
  1,167
  1,221
  1,278
  1,337
  1,399
  1,467
  1,535
  1,609
  1,686
  1,768
  1,854
  1,944
Debt-to-equity ratio
  0.350
  0.360
  0.370
  0.390
  0.400
  0.420
  0.430
  0.450
  0.470
  0.480
  0.500
  0.510
  0.530
  0.540
  0.560
  0.570
  0.580
  0.600
  0.610
  0.620
  0.630
  0.650
  0.660
  0.670
  0.680
  0.690
  0.700
  0.710
  0.710
  0.720
Adjusted equity ratio
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  16
  16
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
Depreciation, amort., depletion, $m
  44
  45
  46
  46
  47
  48
  49
  50
  51
  53
  35
  37
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
Funds from operations, $m
  44
  45
  46
  47
  48
  49
  50
  52
  53
  55
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  81
  85
  88
  92
  96
  100
  105
  110
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Cash from operations, $m
  43
  44
  44
  45
  46
  47
  48
  49
  50
  52
  48
  50
  51
  53
  55
  57
  59
  62
  64
  66
  69
  72
  75
  78
  81
  85
  89
  92
  97
  101
Maintenance CAPEX, $m
  -25
  -26
  -26
  -27
  -28
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -78
New CAPEX, $m
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
Cash from investing activities, $m
  -30
  -32
  -33
  -35
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -76
  -79
  -84
  -87
  -92
  -96
  -101
  -105
  -111
  -116
Free cash flow, $m
  13
  12
  11
  11
  10
  9
  9
  8
  7
  7
  1
  0
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
Issuance/(repayment) of debt, $m
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
Issuance/(repurchase) of shares, $m
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  1
  1
  2
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
Cash from financing (excl. dividends), $m  
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  16
  17
  19
  21
  23
  25
  26
  29
  31
  33
  36
  38
  41
  43
  47
  50
  52
  55
  59
  62
Total cash flow (excl. dividends), $m
  25
  26
  27
  28
  29
  30
  31
  32
  33
  34
  16
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  35
  36
  38
  40
  42
  45
  47
Retained Cash Flow (-), $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
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
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
Cash available for distribution, $m
  19
  19
  19
  19
  19
  19
  19
  18
  18
  18
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
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
  18
  17
  16
  15
  14
  13
  13
  12
  11
  10
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.7
  97.0
  95.3
  93.5
  91.5
  89.6
  87.6
  85.6
  83.6
  81.6
  81.5
  81.3
  81.0
  80.6
  80.2
  79.7
  79.1
  78.4
  77.7
  77.0
  76.1
  75.3
  74.4
  73.5
  72.6
  71.6
  70.6
  69.6
  68.6
  67.6

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 29.3
Price to Sales 0.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 15.1
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 $861 million for the last fiscal year's total revenue generated by Perry Ellis International. The default revenue input number comes from 2017 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 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 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 99.3%.

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 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 6.2% 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 0.8%.

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 29.1%.

Life of production assets of 10 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 6.8%. 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 - $314 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 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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COMPANY NEWS

▶ [$$] Randa Accessories to Publicly Press Bid for Perry Ellis   [Jul-08-18 10:56PM  The Wall Street Journal]
▶ Perry Ellis board wants shareholders to vote for founder takeover   [10:18AM  American City Business Journals]
▶ Why Perry Ellis, BRF S.A., and Acxiom Jumped Today   [Jul-02-18 05:21PM  Motley Fool]
▶ The Late Morning Rundown: July 02, 2018   [01:24PM  CNBC Videos]
▶ [$$] Perry Ellis Gets Rival Takeover Bid   [12:30PM  The Wall Street Journal]
▶ The Late Morning Rundown: July 2, 2018   [12:06PM  CNBC Videos]
▶ Perry Ellis founder faces competing bid to take company private   [09:37AM  American City Business Journals]
▶ [$$] Perry Ellis to Go Private in $437 Million Deal   [10:06AM  The Wall Street Journal]
▶ Perry Ellis: Fiscal 1Q Earnings Snapshot   [May-31-18 06:55AM  Associated Press]
▶ Feldenkreis sets deadline for Perry Ellis to accept acquisition offer   [May-24-18 10:29AM  American City Business Journals]
▶ George Feldenkreis Sends Letter to Perry Ellis Board   [May-23-18 04:00PM  Business Wire]
▶ Rafaella® Partners With Bottomless Closet   [09:00AM  GlobeNewswire]
▶ [$$] Former Perry Ellis CEO Seeks to Overhaul Board   [May-18-18 11:15PM  The Wall Street Journal]
▶ [$$] Former Perry Ellis CEO Seeks to Overhaul Board   [12:22PM  The Wall Street Journal]
▶ Perry Ellis International extends deadline to nominate new directors   [Apr-10-18 02:23PM  American City Business Journals]
▶ Perry Ellis shares sink after weak outlook   [Mar-16-18 07:37AM  MarketWatch]
▶ Perry Ellis meets 4Q profit forecasts   [07:19AM  Associated Press]
▶ Data dump What you need to know in markets on Friday   [Mar-15-18 06:14PM  Yahoo Finance]
▶ Perry Ellis International And Other Great Cheap Stocks   [Mar-07-18 09:02AM  Simply Wall St.]
▶ Perry Ellis forms special committee to evaluate former CEO's bid to buy company   [Feb-26-18 03:25PM  American City Business Journals]
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