Intrinsic value of Stitch Fix Cl A - SFIX

Previous Close

$26.88

  Intrinsic Value

$229.75

stock screener

  Rating & Target

str. buy

+755%

Previous close

$26.88

 
Intrinsic value

$229.75

 
Up/down potential

+755%

 
Rating

str. buy

We calculate the intrinsic value of SFIX 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 0.7

 

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, %
  33.20
  30.38
  27.84
  25.56
  23.50
  21.65
  19.99
  18.49
  17.14
  15.93
  14.83
  13.85
  12.96
  12.17
  11.45
  10.81
  10.23
  9.70
  9.23
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.48
  6.33
Revenue, $m
  1,302
  1,697
  2,169
  2,724
  3,364
  4,092
  4,910
  5,818
  6,815
  7,901
  9,073
  10,329
  11,668
  13,088
  14,587
  16,163
  17,816
  19,545
  21,349
  23,230
  25,188
  27,224
  29,342
  31,542
  33,829
  36,205
  38,675
  41,243
  43,913
  46,692
Variable operating expenses, $m
  1,187
  1,548
  1,979
  2,484
  3,068
  3,732
  4,478
  5,306
  6,216
  7,205
  8,274
  9,420
  10,641
  11,936
  13,303
  14,741
  16,248
  17,825
  19,470
  21,186
  22,971
  24,829
  26,759
  28,766
  30,852
  33,019
  35,271
  37,613
  40,049
  42,583
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
  1,187
  1,548
  1,979
  2,484
  3,068
  3,732
  4,478
  5,306
  6,216
  7,205
  8,274
  9,420
  10,641
  11,936
  13,303
  14,741
  16,248
  17,825
  19,470
  21,186
  22,971
  24,829
  26,759
  28,766
  30,852
  33,019
  35,271
  37,613
  40,049
  42,583
Operating income, $m
  115
  149
  191
  240
  296
  360
  432
  512
  600
  695
  798
  909
  1,027
  1,152
  1,284
  1,422
  1,568
  1,720
  1,879
  2,044
  2,217
  2,396
  2,582
  2,776
  2,977
  3,186
  3,403
  3,629
  3,864
  4,109
EBITDA, $m
  121
  157
  201
  252
  312
  379
  455
  539
  631
  732
  840
  956
  1,080
  1,212
  1,351
  1,497
  1,650
  1,810
  1,977
  2,151
  2,332
  2,521
  2,717
  2,921
  3,133
  3,353
  3,581
  3,819
  4,066
  4,324
Interest expense (income), $m
  0
  0
  3
  8
  13
  19
  26
  34
  42
  52
  63
  75
  87
  101
  115
  131
  147
  164
  182
  200
  220
  240
  261
  283
  306
  330
  354
  380
  407
  434
  463
Earnings before tax, $m
  115
  146
  183
  227
  277
  334
  399
  470
  548
  632
  724
  822
  926
  1,036
  1,153
  1,276
  1,404
  1,538
  1,678
  1,824
  1,976
  2,135
  2,299
  2,470
  2,647
  2,832
  3,023
  3,223
  3,430
  3,646
Tax expense, $m
  31
  39
  49
  61
  75
  90
  108
  127
  148
  171
  195
  222
  250
  280
  311
  344
  379
  415
  453
  493
  534
  576
  621
  667
  715
  765
  816
  870
  926
  984
Net income, $m
  84
  106
  134
  166
  202
  244
  291
  343
  400
  462
  528
  600
  676
  757
  842
  931
  1,025
  1,123
  1,225
  1,332
  1,443
  1,558
  1,678
  1,803
  1,932
  2,067
  2,207
  2,353
  2,504
  2,661

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
  343
  447
  571
  717
  886
  1,077
  1,293
  1,532
  1,794
  2,080
  2,388
  2,719
  3,071
  3,445
  3,840
  4,255
  4,690
  5,145
  5,620
  6,115
  6,630
  7,166
  7,723
  8,303
  8,905
  9,530
  10,180
  10,856
  11,559
  12,291
Adjusted assets (=assets-cash), $m
  343
  447
  571
  717
  886
  1,077
  1,293
  1,532
  1,794
  2,080
  2,388
  2,719
  3,071
  3,445
  3,840
  4,255
  4,690
  5,145
  5,620
  6,115
  6,630
  7,166
  7,723
  8,303
  8,905
  9,530
  10,180
  10,856
  11,559
  12,291
Revenue / Adjusted assets
  3.796
  3.796
  3.799
  3.799
  3.797
  3.799
  3.797
  3.798
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
  3.799
Average production assets, $m
  30
  39
  50
  63
  77
  94
  113
  134
  157
  182
  209
  238
  268
  301
  335
  372
  410
  450
  491
  534
  579
  626
  675
  725
  778
  833
  890
  949
  1,010
  1,074
Working capital, $m
  -62
  -81
  -104
  -131
  -161
  -196
  -236
  -279
  -327
  -379
  -435
  -496
  -560
  -628
  -700
  -776
  -855
  -938
  -1,025
  -1,115
  -1,209
  -1,307
  -1,408
  -1,514
  -1,624
  -1,738
  -1,856
  -1,980
  -2,108
  -2,241
Total debt, $m
  65
  144
  238
  349
  477
  622
  786
  967
  1,166
  1,383
  1,617
  1,868
  2,136
  2,420
  2,719
  3,034
  3,364
  3,709
  4,070
  4,446
  4,837
  5,244
  5,667
  6,106
  6,563
  7,038
  7,531
  8,045
  8,578
  9,133
Total liabilities, $m
  260
  339
  433
  544
  672
  818
  981
  1,162
  1,362
  1,578
  1,813
  2,064
  2,331
  2,615
  2,914
  3,229
  3,559
  3,905
  4,265
  4,641
  5,032
  5,439
  5,862
  6,302
  6,759
  7,233
  7,727
  8,240
  8,773
  9,329
Total equity, $m
  83
  108
  138
  173
  213
  260
  312
  369
  432
  501
  576
  655
  740
  830
  925
  1,025
  1,130
  1,240
  1,354
  1,474
  1,598
  1,727
  1,861
  2,001
  2,146
  2,297
  2,453
  2,616
  2,786
  2,962
Total liabilities and equity, $m
  343
  447
  571
  717
  885
  1,078
  1,293
  1,531
  1,794
  2,079
  2,389
  2,719
  3,071
  3,445
  3,839
  4,254
  4,689
  5,145
  5,619
  6,115
  6,630
  7,166
  7,723
  8,303
  8,905
  9,530
  10,180
  10,856
  11,559
  12,291
Debt-to-equity ratio
  0.780
  1.330
  1.730
  2.020
  2.230
  2.400
  2.520
  2.620
  2.700
  2.760
  2.810
  2.850
  2.890
  2.910
  2.940
  2.960
  2.980
  2.990
  3.010
  3.020
  3.030
  3.040
  3.040
  3.050
  3.060
  3.060
  3.070
  3.070
  3.080
  3.080
Adjusted equity ratio
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  84
  106
  134
  166
  202
  244
  291
  343
  400
  462
  528
  600
  676
  757
  842
  931
  1,025
  1,123
  1,225
  1,332
  1,443
  1,558
  1,678
  1,803
  1,932
  2,067
  2,207
  2,353
  2,504
  2,661
Depreciation, amort., depletion, $m
  6
  8
  10
  13
  15
  19
  23
  27
  31
  36
  42
  48
  54
  60
  67
  74
  82
  90
  98
  107
  116
  125
  135
  145
  156
  167
  178
  190
  202
  215
Funds from operations, $m
  90
  114
  144
  178
  218
  263
  313
  370
  431
  498
  570
  647
  730
  817
  909
  1,005
  1,107
  1,213
  1,323
  1,439
  1,559
  1,683
  1,813
  1,948
  2,088
  2,234
  2,385
  2,542
  2,706
  2,876
Change in working capital, $m
  -16
  -19
  -23
  -27
  -31
  -35
  -39
  -44
  -48
  -52
  -56
  -60
  -64
  -68
  -72
  -76
  -79
  -83
  -87
  -90
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -123
  -128
  -133
Cash from operations, $m
  105
  133
  166
  205
  249
  298
  353
  413
  479
  550
  626
  708
  794
  885
  981
  1,081
  1,186
  1,296
  1,410
  1,529
  1,653
  1,781
  1,915
  2,054
  2,198
  2,348
  2,503
  2,666
  2,834
  3,010
Maintenance CAPEX, $m
  -5
  -6
  -8
  -10
  -13
  -15
  -19
  -23
  -27
  -31
  -36
  -42
  -48
  -54
  -60
  -67
  -74
  -82
  -90
  -98
  -107
  -116
  -125
  -135
  -145
  -156
  -167
  -178
  -190
  -202
New CAPEX, $m
  -7
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
Cash from investing activities, $m
  -12
  -15
  -19
  -23
  -28
  -32
  -38
  -44
  -50
  -56
  -63
  -71
  -79
  -87
  -94
  -103
  -112
  -122
  -132
  -141
  -152
  -163
  -174
  -186
  -198
  -211
  -224
  -237
  -251
  -266
Free cash flow, $m
  94
  118
  148
  182
  221
  266
  315
  370
  429
  494
  563
  637
  716
  799
  886
  978
  1,074
  1,174
  1,279
  1,388
  1,501
  1,618
  1,741
  1,868
  2,000
  2,137
  2,280
  2,429
  2,583
  2,744
Issuance/(repayment) of debt, $m
  65
  79
  94
  111
  128
  146
  163
  181
  199
  217
  234
  251
  268
  284
  299
  315
  330
  345
  361
  376
  391
  407
  423
  440
  457
  475
  493
  513
  534
  555
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  
  65
  79
  94
  111
  128
  146
  163
  181
  199
  217
  234
  251
  268
  284
  299
  315
  330
  345
  361
  376
  391
  407
  423
  440
  457
  475
  493
  513
  534
  555
Total cash flow (excl. dividends), $m
  158
  197
  242
  293
  349
  411
  479
  551
  628
  711
  797
  888
  983
  1,082
  1,185
  1,293
  1,404
  1,519
  1,639
  1,763
  1,892
  2,025
  2,164
  2,308
  2,457
  2,612
  2,774
  2,942
  3,117
  3,299
Retained Cash Flow (-), $m
  -21
  -25
  -30
  -35
  -41
  -46
  -52
  -58
  -63
  -69
  -74
  -80
  -85
  -90
  -95
  -100
  -105
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -169
  -176
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
  138
  172
  212
  258
  309
  365
  427
  493
  565
  642
  723
  808
  898
  992
  1,090
  1,193
  1,299
  1,410
  1,525
  1,644
  1,768
  1,896
  2,030
  2,168
  2,312
  2,461
  2,617
  2,779
  2,947
  3,123
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
  132
  158
  185
  212
  239
  265
  288
  308
  325
  336
  343
  345
  341
  333
  320
  303
  283
  260
  235
  209
  183
  157
  133
  110
  90
  72
  56
  43
  32
  24
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
  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
  100.0
  100.0
  100.0
  100.0

Stitch Fix, Inc. is an online personalized styling service company. The Company offers apparel, shoes and accessories across categories, brands, product types and price points. The Company serves its clients in the following categories: Women’s, Petite, Maternity, Men’s and Plus. The Company also offers a wide variety of product types, including denim, dresses, blouses, skirts, shoes, jewelry and handbags. The Company’s data science capabilities fuel business consist of rich and growing set of detailed client and merchandise data and proprietary algorithms. The Company uses data science throughout its business, including prediction of purchase behavior, forecast demand, optimize inventory and design new apparel.

FINANCIAL RATIOS  of  Stitch Fix Cl A (SFIX)

Valuation Ratios
P/E Ratio -2591.5
Price to Sales 2.7
Price to Book 24.9
Price to Tangible Book
Price to Cash Flow 66.4
Price to Free Cash Flow 117.8
Growth Rates
Sales Growth Rate 33.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.3%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.4%
Ret/ On Assets - 3 Yr. Avg. 11.3%
Return On Total Capital -1%
Ret/ On T. Cap. - 3 Yr. Avg. 23.6%
Return On Equity -1%
Return On Equity - 3 Yr. Avg. 23.6%
Asset Turnover 4.4
Profitability Ratios
Gross Margin 44.4%
Gross Margin - 3 Yr. Avg. 29.6%
EBITDA Margin 2.1%
EBITDA Margin - 3 Yr. Avg. 3.7%
Operating Margin 3.2%
Oper. Margin - 3 Yr. Avg. 4%
Pre-Tax Margin 1.3%
Pre-Tax Margin - 3 Yr. Avg. 3.2%
Net Profit Margin -0.1%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate 107.7%
Eff/ Tax Rate - 3 Yr. Avg. 51.2%
Payout Ratio 0%

SFIX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SFIX stock intrinsic value calculation we used $977.139 million for the last fiscal year's total revenue generated by Stitch Fix Cl A. The default revenue input number comes from 0001 income statement of Stitch Fix Cl A. 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 SFIX stock valuation model: a) initial revenue growth rate of 33.2% 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 SFIX is calculated based on our internal credit rating of Stitch Fix Cl A, 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 Stitch Fix Cl A.
    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 SFIX stock the variable cost ratio is equal to 91.2%.

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 SFIX 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 Stitch Fix Cl A.

Corporate tax rate of 27% is the nominal tax rate for Stitch Fix Cl A. 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 SFIX 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 SFIX are equal to 2.3%.

Life of production assets of 3 years is the average useful life of capital assets used in Stitch Fix Cl A 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 SFIX is equal to -4.8%. 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 - $61.861 million for Stitch Fix Cl A - 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 27.725 million for Stitch Fix Cl A 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 Stitch Fix Cl A at the current share price and the inputted number of shares is $0.7 billion.

COMPANY NEWS

▶ Why Stitch Fix Inc. Stock Has Given Up Its Gains in 2018   [Nov-17-18 11:25AM  Motley Fool]
▶ 3 Growth Stocks to Consider on the Dip   [03:02PM  InvestorPlace]
▶ How to Invest in E-Commerce Stocks   [05:02PM  Motley Fool]

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