Intrinsic value of Stitch Fix, Inc. - SFIX

Previous Close

$27.65

  Intrinsic Value

$20.10

stock screener

  Rating & Target

sell

-27%

Previous close

$27.65

 
Intrinsic value

$20.10

 
Up/down potential

-27%

 
Rating

sell

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 2.8

 

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, %
  25.10
  23.09
  21.28
  19.65
  18.19
  16.87
  15.68
  14.61
  13.65
  12.79
  12.01
  11.31
  10.68
  10.11
  9.60
  9.14
  8.72
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
Revenue, $m
  1,535
  1,889
  2,291
  2,742
  3,241
  3,787
  4,381
  5,021
  5,707
  6,437
  7,209
  8,025
  8,881
  9,779
  10,718
  11,697
  12,718
  13,780
  14,885
  16,033
  17,227
  18,467
  19,756
  21,096
  22,489
  23,938
  25,445
  27,015
  28,650
  30,354
Variable operating expenses, $m
  1,463
  1,801
  2,184
  2,613
  3,088
  3,609
  4,175
  4,785
  5,439
  6,134
  6,871
  7,648
  8,464
  9,320
  10,214
  11,148
  12,120
  13,132
  14,185
  15,280
  16,417
  17,599
  18,827
  20,104
  21,432
  22,812
  24,249
  25,745
  27,303
  28,927
Fixed operating expenses, $m
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
Total operating expenses, $m
  1,477
  1,816
  2,199
  2,628
  3,104
  3,625
  4,191
  4,802
  5,456
  6,151
  6,889
  7,666
  8,483
  9,339
  10,233
  11,168
  12,140
  13,153
  14,206
  15,302
  16,439
  17,622
  18,850
  20,128
  21,456
  22,837
  24,274
  25,771
  27,329
  28,954
Operating income, $m
  58
  74
  93
  114
  137
  162
  190
  219
  251
  285
  321
  359
  399
  441
  484
  530
  577
  627
  678
  732
  788
  845
  905
  968
  1,033
  1,100
  1,171
  1,244
  1,320
  1,400
EBITDA, $m
  66
  84
  104
  127
  153
  181
  212
  244
  280
  317
  357
  399
  443
  490
  538
  588
  641
  696
  753
  812
  874
  938
  1,004
  1,073
  1,145
  1,220
  1,298
  1,379
  1,463
  1,551
Interest expense (income), $m
  0
  0
  2
  5
  8
  11
  15
  19
  23
  28
  33
  38
  44
  50
  56
  63
  70
  77
  84
  92
  100
  109
  117
  126
  136
  146
  156
  167
  178
  189
  201
Earnings before tax, $m
  58
  72
  88
  106
  126
  147
  171
  196
  223
  252
  283
  315
  349
  385
  422
  460
  501
  543
  586
  632
  679
  728
  779
  832
  887
  944
  1,004
  1,066
  1,131
  1,199
Tax expense, $m
  16
  19
  24
  29
  34
  40
  46
  53
  60
  68
  76
  85
  94
  104
  114
  124
  135
  147
  158
  171
  183
  197
  210
  225
  240
  255
  271
  288
  305
  324
Net income, $m
  42
  52
  64
  77
  92
  108
  125
  143
  163
  184
  206
  230
  255
  281
  308
  336
  366
  396
  428
  461
  496
  531
  569
  607
  648
  689
  733
  778
  826
  875

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
  408
  502
  609
  729
  861
  1,006
  1,164
  1,334
  1,517
  1,710
  1,916
  2,133
  2,360
  2,599
  2,848
  3,109
  3,380
  3,662
  3,956
  4,261
  4,578
  4,908
  5,250
  5,606
  5,976
  6,361
  6,762
  7,179
  7,614
  8,066
Adjusted assets (=assets-cash), $m
  408
  502
  609
  729
  861
  1,006
  1,164
  1,334
  1,517
  1,710
  1,916
  2,133
  2,360
  2,599
  2,848
  3,109
  3,380
  3,662
  3,956
  4,261
  4,578
  4,908
  5,250
  5,606
  5,976
  6,361
  6,762
  7,179
  7,614
  8,066
Revenue / Adjusted assets
  3.762
  3.763
  3.762
  3.761
  3.764
  3.764
  3.764
  3.764
  3.762
  3.764
  3.763
  3.762
  3.763
  3.763
  3.763
  3.762
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
  3.763
Average production assets, $m
  38
  47
  57
  69
  81
  95
  110
  126
  143
  161
  180
  201
  222
  244
  268
  292
  318
  345
  372
  401
  431
  462
  494
  527
  562
  598
  636
  675
  716
  759
Working capital, $m
  -29
  -36
  -44
  -52
  -62
  -72
  -83
  -95
  -108
  -122
  -137
  -152
  -169
  -186
  -204
  -222
  -242
  -262
  -283
  -305
  -327
  -351
  -375
  -401
  -427
  -455
  -483
  -513
  -544
  -577
Total debt, $m
  42
  90
  145
  206
  274
  348
  428
  515
  608
  708
  813
  923
  1,040
  1,161
  1,289
  1,422
  1,561
  1,705
  1,855
  2,011
  2,173
  2,341
  2,516
  2,698
  2,887
  3,084
  3,289
  3,502
  3,724
  3,955
Total liabilities, $m
  208
  257
  311
  372
  440
  514
  595
  682
  775
  874
  979
  1,090
  1,206
  1,328
  1,455
  1,588
  1,727
  1,871
  2,021
  2,177
  2,339
  2,508
  2,683
  2,865
  3,054
  3,251
  3,455
  3,669
  3,891
  4,122
Total equity, $m
  199
  246
  298
  356
  421
  492
  569
  653
  742
  836
  937
  1,043
  1,154
  1,271
  1,393
  1,520
  1,653
  1,791
  1,934
  2,084
  2,239
  2,400
  2,567
  2,741
  2,922
  3,111
  3,307
  3,511
  3,723
  3,944
Total liabilities and equity, $m
  407
  503
  609
  728
  861
  1,006
  1,164
  1,335
  1,517
  1,710
  1,916
  2,133
  2,360
  2,599
  2,848
  3,108
  3,380
  3,662
  3,955
  4,261
  4,578
  4,908
  5,250
  5,606
  5,976
  6,362
  6,762
  7,180
  7,614
  8,066
Debt-to-equity ratio
  0.210
  0.370
  0.490
  0.580
  0.650
  0.710
  0.750
  0.790
  0.820
  0.850
  0.870
  0.890
  0.900
  0.910
  0.930
  0.940
  0.940
  0.950
  0.960
  0.970
  0.970
  0.980
  0.980
  0.980
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
Adjusted equity ratio
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  42
  52
  64
  77
  92
  108
  125
  143
  163
  184
  206
  230
  255
  281
  308
  336
  366
  396
  428
  461
  496
  531
  569
  607
  648
  689
  733
  778
  826
  875
Depreciation, amort., depletion, $m
  8
  9
  11
  14
  16
  19
  22
  25
  29
  32
  36
  40
  44
  49
  54
  58
  64
  69
  74
  80
  86
  92
  99
  105
  112
  120
  127
  135
  143
  152
Funds from operations, $m
  50
  62
  76
  91
  108
  126
  147
  168
  192
  216
  243
  270
  299
  330
  361
  395
  429
  465
  502
  541
  582
  624
  667
  713
  760
  809
  860
  914
  969
  1,027
Change in working capital, $m
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
Cash from operations, $m
  56
  69
  83
  99
  117
  137
  158
  180
  205
  230
  257
  286
  315
  347
  379
  413
  448
  485
  523
  563
  604
  647
  692
  738
  787
  837
  889
  943
  1,000
  1,059
Maintenance CAPEX, $m
  -6
  -8
  -9
  -11
  -14
  -16
  -19
  -22
  -25
  -29
  -32
  -36
  -40
  -44
  -49
  -54
  -58
  -64
  -69
  -74
  -80
  -86
  -92
  -99
  -105
  -112
  -120
  -127
  -135
  -143
New CAPEX, $m
  -8
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
Cash from investing activities, $m
  -14
  -17
  -19
  -22
  -26
  -30
  -34
  -38
  -42
  -47
  -51
  -56
  -61
  -66
  -72
  -78
  -84
  -91
  -97
  -103
  -110
  -117
  -124
  -132
  -140
  -148
  -158
  -166
  -176
  -186
Free cash flow, $m
  42
  52
  64
  77
  91
  107
  124
  143
  162
  183
  206
  229
  254
  280
  307
  335
  364
  395
  427
  460
  494
  530
  567
  606
  646
  688
  732
  777
  824
  873
Issuance/(repayment) of debt, $m
  42
  48
  55
  61
  68
  74
  81
  87
  93
  99
  105
  111
  116
  122
  127
  133
  139
  144
  150
  156
  162
  168
  175
  182
  189
  197
  205
  213
  222
  231
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  
  42
  48
  55
  61
  68
  74
  81
  87
  93
  99
  105
  111
  116
  122
  127
  133
  139
  144
  150
  156
  162
  168
  175
  182
  189
  197
  205
  213
  222
  231
Total cash flow (excl. dividends), $m
  83
  100
  118
  138
  159
  181
  205
  230
  255
  283
  311
  340
  370
  402
  434
  468
  503
  539
  577
  616
  657
  699
  742
  788
  835
  885
  936
  990
  1,046
  1,105
Retained Cash Flow (-), $m
  -40
  -46
  -52
  -59
  -65
  -71
  -77
  -83
  -89
  -95
  -100
  -106
  -111
  -117
  -122
  -127
  -133
  -138
  -144
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -196
  -204
  -212
  -221
Prev. year cash balance distribution, $m
  156
  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
  199
  54
  66
  79
  94
  110
  128
  146
  166
  188
  210
  234
  259
  285
  312
  341
  370
  401
  433
  467
  501
  537
  575
  614
  654
  697
  740
  786
  834
  883
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
  191
  50
  58
  65
  73
  80
  86
  91
  96
  98
  100
  100
  98
  96
  92
  87
  81
  74
  67
  59
  52
  45
  38
  31
  25
  20
  16
  12
  9
  7
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, Inc. (SFIX)

Valuation Ratios
P/E Ratio -2665.7
Price to Sales 2.7
Price to Book 25.6
Price to Tangible Book
Price to Cash Flow 68.4
Price to Free Cash Flow 121.2
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 $1227 million for the last fiscal year's total revenue generated by Stitch Fix, Inc.. The default revenue input number comes from 0001 income statement of Stitch Fix, Inc.. 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 25.1% 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, Inc., 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, Inc..
    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 95.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $14 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Stitch Fix, Inc.. 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 2.5%.

Life of production assets of 2.9 years is the average useful life of capital assets used in Stitch Fix, Inc. 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 -1.9%. 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 - $315.072 million for Stitch Fix, Inc. - 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 100.000 million for Stitch Fix, Inc. 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, Inc. at the current share price and the inputted number of shares is $2.8 billion.

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