Intrinsic value of Steven Madden, Ltd. - SHOO

Previous Close

$30.12

  Intrinsic Value

$24.95

stock screener

  Rating & Target

hold

-17%

Previous close

$30.12

 
Intrinsic value

$24.95

 
Up/down potential

-17%

 
Rating

hold

We calculate the intrinsic value of SHOO 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 2.6

 

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, %
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
Revenue, $m
  1,862
  2,083
  2,315
  2,559
  2,815
  3,082
  3,361
  3,651
  3,953
  4,267
  4,593
  4,932
  5,285
  5,651
  6,032
  6,428
  6,840
  7,269
  7,715
  8,180
  8,664
  9,170
  9,697
  10,247
  10,821
  11,422
  12,049
  12,704
  13,390
  14,108
Variable operating expenses, $m
  1,654
  1,846
  2,049
  2,262
  2,485
  2,718
  2,961
  3,214
  3,477
  3,751
  4,007
  4,303
  4,611
  4,930
  5,262
  5,608
  5,967
  6,341
  6,731
  7,136
  7,559
  8,000
  8,460
  8,940
  9,441
  9,964
  10,511
  11,083
  11,682
  12,308
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
  1,654
  1,846
  2,049
  2,262
  2,485
  2,718
  2,961
  3,214
  3,477
  3,751
  4,007
  4,303
  4,611
  4,930
  5,262
  5,608
  5,967
  6,341
  6,731
  7,136
  7,559
  8,000
  8,460
  8,940
  9,441
  9,964
  10,511
  11,083
  11,682
  12,308
Operating income, $m
  209
  237
  266
  297
  330
  364
  400
  437
  475
  515
  586
  629
  674
  721
  770
  820
  873
  927
  984
  1,044
  1,106
  1,170
  1,237
  1,307
  1,381
  1,457
  1,537
  1,621
  1,708
  1,800
EBITDA, $m
  253
  283
  314
  347
  382
  418
  456
  495
  536
  579
  623
  669
  717
  767
  818
  872
  928
  986
  1,047
  1,110
  1,176
  1,244
  1,316
  1,390
  1,468
  1,550
  1,635
  1,724
  1,817
  1,914
Interest expense (income), $m
  1
  0
  2
  4
  6
  8
  10
  12
  15
  17
  20
  23
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  61
  66
  70
  75
  80
  85
  91
  96
  102
Earnings before tax, $m
  209
  235
  263
  292
  322
  354
  387
  422
  458
  495
  563
  604
  646
  689
  735
  782
  831
  882
  935
  991
  1,049
  1,109
  1,172
  1,237
  1,306
  1,377
  1,452
  1,530
  1,612
  1,698
Tax expense, $m
  56
  63
  71
  79
  87
  96
  105
  114
  124
  134
  152
  163
  174
  186
  198
  211
  224
  238
  253
  268
  283
  299
  316
  334
  353
  372
  392
  413
  435
  458
Net income, $m
  152
  171
  192
  213
  235
  258
  283
  308
  334
  362
  411
  441
  471
  503
  536
  571
  607
  644
  683
  723
  766
  809
  855
  903
  953
  1,006
  1,060
  1,117
  1,177
  1,239

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
  1,160
  1,298
  1,443
  1,595
  1,754
  1,920
  2,094
  2,275
  2,463
  2,658
  2,862
  3,073
  3,293
  3,521
  3,758
  4,005
  4,262
  4,529
  4,807
  5,096
  5,398
  5,713
  6,042
  6,384
  6,742
  7,116
  7,507
  7,916
  8,343
  8,790
Adjusted assets (=assets-cash), $m
  1,160
  1,298
  1,443
  1,595
  1,754
  1,920
  2,094
  2,275
  2,463
  2,658
  2,862
  3,073
  3,293
  3,521
  3,758
  4,005
  4,262
  4,529
  4,807
  5,096
  5,398
  5,713
  6,042
  6,384
  6,742
  7,116
  7,507
  7,916
  8,343
  8,790
Revenue / Adjusted assets
  1.605
  1.605
  1.604
  1.604
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
  1.605
Average production assets, $m
  244
  273
  303
  335
  369
  404
  440
  478
  518
  559
  602
  646
  692
  740
  790
  842
  896
  952
  1,011
  1,072
  1,135
  1,201
  1,270
  1,342
  1,418
  1,496
  1,578
  1,664
  1,754
  1,848
Working capital, $m
  238
  267
  296
  328
  360
  394
  430
  467
  506
  546
  588
  631
  676
  723
  772
  823
  876
  930
  988
  1,047
  1,109
  1,174
  1,241
  1,312
  1,385
  1,462
  1,542
  1,626
  1,714
  1,806
Total debt, $m
  34
  69
  107
  146
  187
  231
  276
  322
  371
  422
  474
  529
  586
  645
  707
  771
  837
  906
  978
  1,053
  1,131
  1,213
  1,298
  1,387
  1,480
  1,576
  1,678
  1,783
  1,894
  2,010
Total liabilities, $m
  301
  336
  374
  413
  454
  497
  542
  589
  638
  689
  741
  796
  853
  912
  973
  1,037
  1,104
  1,173
  1,245
  1,320
  1,398
  1,480
  1,565
  1,654
  1,746
  1,843
  1,944
  2,050
  2,161
  2,277
Total equity, $m
  860
  962
  1,069
  1,182
  1,300
  1,423
  1,552
  1,685
  1,825
  1,970
  2,121
  2,277
  2,440
  2,609
  2,785
  2,968
  3,158
  3,356
  3,562
  3,776
  4,000
  4,233
  4,477
  4,731
  4,996
  5,273
  5,563
  5,865
  6,182
  6,513
Total liabilities and equity, $m
  1,161
  1,298
  1,443
  1,595
  1,754
  1,920
  2,094
  2,274
  2,463
  2,659
  2,862
  3,073
  3,293
  3,521
  3,758
  4,005
  4,262
  4,529
  4,807
  5,096
  5,398
  5,713
  6,042
  6,385
  6,742
  7,116
  7,507
  7,915
  8,343
  8,790
Debt-to-equity ratio
  0.040
  0.070
  0.100
  0.120
  0.140
  0.160
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.290
  0.300
  0.300
  0.300
  0.300
  0.310
  0.310
Adjusted equity ratio
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  152
  171
  192
  213
  235
  258
  283
  308
  334
  362
  411
  441
  471
  503
  536
  571
  607
  644
  683
  723
  766
  809
  855
  903
  953
  1,006
  1,060
  1,117
  1,177
  1,239
Depreciation, amort., depletion, $m
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  37
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  83
  88
  92
  97
  103
  108
  114
Funds from operations, $m
  196
  217
  239
  263
  287
  312
  339
  367
  395
  425
  448
  481
  514
  549
  585
  623
  662
  703
  745
  789
  836
  884
  934
  986
  1,041
  1,098
  1,158
  1,220
  1,285
  1,353
Change in working capital, $m
  27
  28
  30
  31
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  74
  77
  80
  84
  88
  92
Cash from operations, $m
  170
  189
  210
  231
  254
  278
  303
  329
  357
  385
  407
  437
  469
  502
  536
  572
  609
  648
  688
  730
  774
  819
  866
  916
  967
  1,021
  1,077
  1,136
  1,197
  1,262
Maintenance CAPEX, $m
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -59
  -62
  -66
  -70
  -74
  -78
  -83
  -88
  -92
  -97
  -103
  -108
New CAPEX, $m
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -94
Cash from investing activities, $m
  -41
  -44
  -47
  -51
  -54
  -58
  -61
  -65
  -70
  -73
  -78
  -81
  -86
  -91
  -96
  -101
  -106
  -111
  -117
  -123
  -129
  -136
  -143
  -150
  -158
  -167
  -174
  -183
  -193
  -202
Free cash flow, $m
  128
  145
  162
  181
  200
  221
  242
  264
  288
  312
  329
  356
  383
  411
  441
  472
  503
  536
  571
  607
  644
  683
  723
  765
  809
  855
  903
  953
  1,005
  1,059
Issuance/(repayment) of debt, $m
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  82
  85
  89
  93
  97
  101
  106
  111
  116
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  
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  82
  85
  89
  93
  97
  101
  106
  111
  116
Total cash flow (excl. dividends), $m
  162
  181
  200
  220
  241
  264
  287
  311
  336
  363
  382
  410
  440
  470
  502
  535
  570
  606
  643
  682
  722
  764
  808
  854
  902
  952
  1,004
  1,058
  1,116
  1,175
Retained Cash Flow (-), $m
  -96
  -102
  -107
  -113
  -118
  -123
  -129
  -134
  -139
  -145
  -151
  -157
  -163
  -169
  -176
  -183
  -190
  -198
  -206
  -215
  -224
  -233
  -243
  -254
  -265
  -277
  -290
  -303
  -317
  -331
Prev. year cash balance distribution, $m
  42
  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
  108
  79
  93
  108
  123
  140
  158
  177
  197
  218
  231
  254
  277
  301
  326
  353
  380
  408
  437
  467
  498
  531
  565
  600
  637
  675
  714
  756
  799
  844
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
  104
  72
  81
  89
  96
  102
  107
  111
  113
  114
  110
  108
  105
  101
  96
  90
  83
  75
  67
  59
  52
  44
  37
  31
  25
  20
  15
  12
  9
  6
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

Steven Madden, Ltd. and its subsidiaries design, source, market and sell name brand and private label footwear for women, men and children, and name brand and private label fashion handbags and accessories. The Company operates through five segments: Wholesale Footwear, Wholesale Accessories, Retail, First Cost and Licensing. Its products are sold through its retail stores and e-commerce Websites within the United States, Canada, Mexico and South Africa, as well as department stores, specialty stores, luxury retailers, value priced retailers, national chains, merchants and catalog retailers. It provides merchandising support to its department store customers, including in-store fixtures and signage, supervision of displays and merchandising of its various product lines. Its brands include Madden Girl, Steve Madden Men's, Madden, Steven, Stevies and Steve Madden Kids, Betsey Johnson, Superga, FREEBIRD by Steve, Report, Mad Love, Dolce Vita, Brian Atwood and Blondo.

FINANCIAL RATIOS  of  Steven Madden, Ltd. (SHOO)

Valuation Ratios
P/E Ratio 15
Price to Sales 1.3
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 11.8
Price to Free Cash Flow 13.2
Growth Rates
Sales Growth Rate -0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.8%
Cap. Spend. - 3 Yr. Gr. Rate -5.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 172
Management Effectiveness
Return On Assets 13%
Ret/ On Assets - 3 Yr. Avg. 12.6%
Return On Total Capital 17.1%
Ret/ On T. Cap. - 3 Yr. Avg. 16.8%
Return On Equity 17.1%
Return On Equity - 3 Yr. Avg. 16.8%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 37.3%
Gross Margin - 3 Yr. Avg. 36%
EBITDA Margin 13.8%
EBITDA Margin - 3 Yr. Avg. 13.8%
Operating Margin 12.1%
Oper. Margin - 3 Yr. Avg. 12.3%
Pre-Tax Margin 12.2%
Pre-Tax Margin - 3 Yr. Avg. 12.4%
Net Profit Margin 8.6%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 29.2%
Eff/ Tax Rate - 3 Yr. Avg. 32.3%
Payout Ratio 0%

SHOO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHOO stock intrinsic value calculation we used $1654 million for the last fiscal year's total revenue generated by Steven Madden, Ltd.. The default revenue input number comes from 0001 income statement of Steven Madden, Ltd.. 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 SHOO stock valuation model: a) initial revenue growth rate of 12.6% 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 SHOO is calculated based on our internal credit rating of Steven Madden, Ltd., 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 Steven Madden, Ltd..
    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 SHOO stock the variable cost ratio is equal to 89%.

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 SHOO 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 Steven Madden, Ltd..

Corporate tax rate of 27% is the nominal tax rate for Steven Madden, Ltd.. 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 SHOO 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 SHOO are equal to 13.1%.

Life of production assets of 16.2 years is the average useful life of capital assets used in Steven Madden, Ltd. 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 SHOO is equal to 12.8%. 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 - $805.814 million for Steven Madden, Ltd. - 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 85.969 million for Steven Madden, Ltd. 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 Steven Madden, Ltd. at the current share price and the inputted number of shares is $2.6 billion.

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