Intrinsic value of Rocky Brands - RCKY

Previous Close

$26.56

  Intrinsic Value

$3.74

stock screener

  Rating & Target

str. sell

-86%

Previous close

$26.56

 
Intrinsic value

$3.74

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of RCKY 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 0.2

 

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
  258
  264
  271
  279
  287
  296
  306
  317
  329
  342
  355
  370
  385
  401
  419
  437
  456
  477
  499
  522
  546
  571
  598
  626
  656
  688
  721
  755
  792
  831
Variable operating expenses, $m
  261
  267
  274
  282
  290
  299
  309
  320
  332
  345
  355
  370
  385
  401
  419
  437
  456
  477
  499
  522
  546
  571
  598
  626
  656
  688
  721
  756
  792
  831
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
  261
  267
  274
  282
  290
  299
  309
  320
  332
  345
  355
  370
  385
  401
  419
  437
  456
  477
  499
  522
  546
  571
  598
  626
  656
  688
  721
  756
  792
  831
Operating income, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
EBITDA, $m
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
Interest expense (income), $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
Earnings before tax, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
Tax expense, $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
Net income, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4

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
  177
  181
  186
  191
  197
  203
  210
  218
  226
  234
  244
  254
  264
  275
  287
  300
  313
  327
  342
  358
  374
  392
  410
  430
  450
  472
  494
  518
  543
  570
Adjusted assets (=assets-cash), $m
  177
  181
  186
  191
  197
  203
  210
  218
  226
  234
  244
  254
  264
  275
  287
  300
  313
  327
  342
  358
  374
  392
  410
  430
  450
  472
  494
  518
  543
  570
Revenue / Adjusted assets
  1.458
  1.459
  1.457
  1.461
  1.457
  1.458
  1.457
  1.454
  1.456
  1.462
  1.455
  1.457
  1.458
  1.458
  1.460
  1.457
  1.457
  1.459
  1.459
  1.458
  1.460
  1.457
  1.459
  1.456
  1.458
  1.458
  1.460
  1.458
  1.459
  1.458
Average production assets, $m
  42
  43
  44
  45
  47
  48
  50
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  93
  97
  101
  106
  111
  117
  122
  128
  135
Working capital, $m
  97
  100
  102
  105
  108
  112
  116
  120
  124
  129
  134
  139
  145
  151
  158
  165
  172
  180
  188
  197
  206
  215
  225
  236
  247
  259
  272
  285
  299
  313
Total debt, $m
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  24
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  67
  71
  76
Total liabilities, $m
  33
  34
  35
  36
  37
  38
  39
  41
  42
  44
  46
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  102
  107
Total equity, $m
  144
  147
  151
  155
  160
  165
  171
  177
  184
  191
  198
  206
  215
  224
  233
  244
  255
  266
  278
  291
  304
  319
  334
  349
  366
  383
  402
  421
  442
  463
Total liabilities and equity, $m
  177
  181
  186
  191
  197
  203
  210
  218
  226
  235
  244
  253
  264
  275
  287
  300
  314
  327
  342
  358
  374
  392
  411
  429
  450
  471
  494
  518
  544
  570
Debt-to-equity ratio
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.100
  0.100
  0.110
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.140
  0.140
  0.150
  0.150
  0.150
  0.160
  0.160
  0.160
Adjusted equity ratio
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
Depreciation, amort., depletion, $m
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
Funds from operations, $m
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
Change in working capital, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
Cash from operations, $m
  3
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
Maintenance CAPEX, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
Free cash flow, $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
Issuance/(repurchase) of shares, $m
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
Cash from financing (excl. dividends), $m  
  7
  8
  8
  9
  9
  10
  10
  11
  12
  13
  10
  11
  12
  12
  13
  14
  14
  16
  17
  18
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
Total cash flow (excl. dividends), $m
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Retained Cash Flow (-), $m
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
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
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
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
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  97.0
  94.0
  90.9
  87.7
  84.6
  81.5
  78.4
  75.3
  72.3
  69.4
  67.3
  65.2
  63.2
  61.1
  59.0
  57.0
  55.0
  53.1
  51.2
  49.3
  47.5
  45.8
  44.0
  42.4
  40.8
  39.2
  37.7
  36.2
  34.8
  33.4

Rocky Brands, Inc. is a designer, manufacturer and marketer of footwear and apparel marketed under a portfolio of brand names, including Rocky, Georgia Boot, Durango, Lehigh and the licensed brand Michelin. The Company operates its business through three segments: wholesale, retail and military. In its wholesale segment, the Company distributes its products through a range of distribution channels representing over 10,000 retail store locations in the United States and Canada, as well as in other international markets. Its wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants and uniform stores. In its retail segment, the Company sells its products directly to consumers through its consumer and business direct Websites and its Rocky outlet store. In its military segment, the Company sells footwear under the Rocky label to the United States military.

FINANCIAL RATIOS  of  Rocky Brands (RCKY)

Valuation Ratios
P/E Ratio -98.5
Price to Sales 0.8
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 13.1
Growth Rates
Sales Growth Rate -3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -5.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 11.1%
Total Debt to Equity 11.1%
Interest Coverage -3
Management Effectiveness
Return On Assets -0.8%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital -1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity -1.4%
Return On Equity - 3 Yr. Avg. 3.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 29.6%
Gross Margin - 3 Yr. Avg. 32.1%
EBITDA Margin 1.9%
EBITDA Margin - 3 Yr. Avg. 5.6%
Operating Margin -1.2%
Oper. Margin - 3 Yr. Avg. 2.7%
Pre-Tax Margin -1.5%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin -0.8%
Net Profit Margin - 3 Yr. Avg. 1.8%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio -150%

RCKY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RCKY stock intrinsic value calculation we used $253.196972 million for the last fiscal year's total revenue generated by Rocky Brands. The default revenue input number comes from 0001 income statement of Rocky Brands. 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 RCKY 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 RCKY is calculated based on our internal credit rating of Rocky Brands, 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 Rocky Brands.
    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 RCKY stock the variable cost ratio is equal to 101.2%.

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 RCKY 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 Rocky Brands.

Corporate tax rate of 27% is the nominal tax rate for Rocky Brands. 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 RCKY 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 RCKY are equal to 16.2%.

Life of production assets of 8.8 years is the average useful life of capital assets used in Rocky Brands 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 RCKY is equal to 37.7%. 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 - $141.092862 million for Rocky Brands - 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 7.412 million for Rocky Brands 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 Rocky Brands at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Rocky Brands Declares Quarterly Cash Dividend   [Nov-08-18 04:05PM  Business Wire]
▶ Rocky S2V Styles Approved for Aviation Use by U.S. Army   [Nov-06-18 03:30PM  PR Newswire]
▶ Rocky Brands: 3Q Earnings Snapshot   [04:14PM  Associated Press]
▶ Is Rocky Brands Inc (NASDAQ:RCKY) A Financially Sound Company?   [Oct-02-18 12:05PM  Simply Wall St.]
▶ Rocky Brands Declares Quarterly Cash Dividend   [Aug-08-18 04:05PM  Business Wire]
▶ Rocky Brands: 2Q Earnings Snapshot   [04:37PM  Associated Press]
▶ Anatomy of Success: Rocky Brands (RCKY)   [Jun-25-18 01:00PM  Zacks]
▶ 5 Top-Ranked Stocks for Easy Gains in Lazy June   [Jun-12-18 11:05AM  InvestorPlace]
▶ 5 Top-Ranked Stocks for Easy Gains in Lazy June   [Jun-01-18 08:47AM  Zacks]
▶ Rocky Brands Declares Increase in Quarterly Cash Dividend   [May-17-18 04:05PM  Business Wire]
▶ 5 Top-Ranked Stocks Shining Amid Market Turmoil   [May-04-18 01:10PM  InvestorPlace]
▶ 5 Top Stocks to Buy Ahead of a Grueling May   [Apr-30-18 09:27AM  Zacks]
▶ Cheap Stocks To Watch Out For In April   [Apr-28-18 10:02AM  Simply Wall St.]
▶ Rocky Brands: 1Q Earnings Snapshot   [04:48PM  Associated Press]
▶ Top 10 Stocks Under $20   [Mar-29-18 12:57PM  Zacks]

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