Intrinsic value of Steven Madden - SHOO

Previous Close

$28.10

  Intrinsic Value

$34.39

stock screener

  Rating & Target

buy

+22%

Previous close

$28.10

 
Intrinsic value

$34.39

 
Up/down potential

+22%

 
Rating

buy

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 1.6

 

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, %
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
Revenue, $m
  1,636
  1,729
  1,827
  1,929
  2,036
  2,147
  2,263
  2,385
  2,513
  2,646
  2,786
  2,932
  3,085
  3,246
  3,414
  3,591
  3,775
  3,969
  4,172
  4,386
  4,609
  4,844
  5,090
  5,348
  5,618
  5,903
  6,201
  6,514
  6,842
  7,187
Variable operating expenses, $m
  1,436
  1,517
  1,600
  1,688
  1,780
  1,876
  1,976
  2,080
  2,190
  2,305
  2,395
  2,521
  2,652
  2,790
  2,935
  3,086
  3,245
  3,412
  3,587
  3,770
  3,962
  4,164
  4,375
  4,597
  4,830
  5,074
  5,330
  5,599
  5,882
  6,178
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
  1,436
  1,517
  1,600
  1,688
  1,780
  1,876
  1,976
  2,080
  2,190
  2,305
  2,395
  2,521
  2,652
  2,790
  2,935
  3,086
  3,245
  3,412
  3,587
  3,770
  3,962
  4,164
  4,375
  4,597
  4,830
  5,074
  5,330
  5,599
  5,882
  6,178
Operating income, $m
  200
  213
  227
  241
  256
  271
  288
  305
  323
  342
  391
  412
  433
  456
  479
  504
  530
  557
  586
  616
  647
  680
  715
  751
  789
  829
  871
  914
  961
  1,009
EBITDA, $m
  243
  257
  272
  287
  303
  319
  337
  355
  374
  393
  414
  436
  459
  483
  508
  534
  561
  590
  620
  652
  685
  720
  757
  795
  835
  878
  922
  968
  1,017
  1,069
Interest expense (income), $m
  1
  0
  1
  2
  3
  3
  4
  5
  6
  7
  9
  10
  11
  12
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  32
  34
  36
  39
  41
  44
  47
Earnings before tax, $m
  200
  212
  225
  238
  252
  267
  282
  299
  315
  333
  381
  401
  421
  442
  464
  487
  512
  537
  564
  592
  622
  653
  685
  719
  755
  792
  832
  873
  916
  962
Tax expense, $m
  54
  57
  61
  64
  68
  72
  76
  81
  85
  90
  103
  108
  114
  119
  125
  132
  138
  145
  152
  160
  168
  176
  185
  194
  204
  214
  225
  236
  247
  260
Net income, $m
  146
  155
  164
  174
  184
  195
  206
  218
  230
  243
  278
  292
  307
  323
  339
  356
  374
  392
  412
  432
  454
  477
  500
  525
  551
  578
  607
  637
  669
  702

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
  1,078
  1,139
  1,204
  1,271
  1,341
  1,414
  1,491
  1,571
  1,655
  1,743
  1,835
  1,932
  2,033
  2,138
  2,249
  2,365
  2,487
  2,615
  2,749
  2,889
  3,036
  3,191
  3,353
  3,523
  3,701
  3,888
  4,085
  4,291
  4,507
  4,734
Adjusted assets (=assets-cash), $m
  1,078
  1,139
  1,204
  1,271
  1,341
  1,414
  1,491
  1,571
  1,655
  1,743
  1,835
  1,932
  2,033
  2,138
  2,249
  2,365
  2,487
  2,615
  2,749
  2,889
  3,036
  3,191
  3,353
  3,523
  3,701
  3,888
  4,085
  4,291
  4,507
  4,734
Revenue / Adjusted assets
  1.518
  1.518
  1.517
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.517
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
  1.518
Average production assets, $m
  229
  242
  256
  270
  285
  301
  317
  334
  352
  370
  390
  411
  432
  454
  478
  503
  529
  556
  584
  614
  645
  678
  713
  749
  787
  826
  868
  912
  958
  1,006
Working capital, $m
  204
  216
  228
  241
  254
  268
  283
  298
  314
  331
  348
  367
  386
  406
  427
  449
  472
  496
  522
  548
  576
  605
  636
  668
  702
  738
  775
  814
  855
  898
Total debt, $m
  15
  30
  47
  63
  81
  99
  118
  138
  159
  181
  204
  229
  254
  280
  308
  337
  367
  399
  433
  468
  505
  543
  584
  626
  671
  718
  767
  818
  872
  929
Total liabilities, $m
  269
  285
  301
  318
  335
  354
  373
  393
  414
  436
  459
  483
  508
  535
  562
  591
  622
  654
  687
  722
  759
  798
  838
  881
  925
  972
  1,021
  1,073
  1,127
  1,184
Total equity, $m
  808
  854
  903
  953
  1,006
  1,061
  1,118
  1,179
  1,241
  1,307
  1,376
  1,449
  1,524
  1,604
  1,687
  1,774
  1,865
  1,961
  2,061
  2,167
  2,277
  2,393
  2,515
  2,642
  2,776
  2,916
  3,064
  3,218
  3,380
  3,551
Total liabilities and equity, $m
  1,077
  1,139
  1,204
  1,271
  1,341
  1,415
  1,491
  1,572
  1,655
  1,743
  1,835
  1,932
  2,032
  2,139
  2,249
  2,365
  2,487
  2,615
  2,748
  2,889
  3,036
  3,191
  3,353
  3,523
  3,701
  3,888
  4,085
  4,291
  4,507
  4,735
Debt-to-equity ratio
  0.020
  0.040
  0.050
  0.070
  0.080
  0.090
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.170
  0.180
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.250
  0.260
  0.260
Adjusted equity ratio
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  146
  155
  164
  174
  184
  195
  206
  218
  230
  243
  278
  292
  307
  323
  339
  356
  374
  392
  412
  432
  454
  477
  500
  525
  551
  578
  607
  637
  669
  702
Depreciation, amort., depletion, $m
  44
  44
  45
  46
  47
  48
  49
  50
  51
  52
  23
  24
  26
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
  60
Funds from operations, $m
  189
  199
  209
  220
  231
  243
  255
  268
  281
  295
  301
  317
  333
  350
  367
  386
  405
  425
  446
  469
  492
  517
  542
  569
  598
  627
  659
  691
  726
  762
Change in working capital, $m
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
Cash from operations, $m
  178
  187
  197
  207
  218
  229
  240
  252
  265
  278
  284
  298
  314
  329
  346
  364
  382
  401
  421
  442
  464
  487
  512
  537
  564
  592
  621
  652
  685
  719
Maintenance CAPEX, $m
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -57
New CAPEX, $m
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
Cash from investing activities, $m
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -43
  -45
  -48
  -51
  -53
  -56
  -58
  -61
  -65
  -67
  -71
  -74
  -78
  -82
  -87
  -91
  -95
  -100
  -105
Free cash flow, $m
  153
  161
  169
  178
  187
  196
  206
  217
  227
  239
  243
  255
  268
  281
  296
  311
  326
  343
  360
  378
  397
  416
  437
  459
  482
  506
  531
  557
  585
  614
Issuance/(repayment) of debt, $m
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
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  
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
Total cash flow (excl. dividends), $m
  168
  176
  185
  195
  204
  215
  225
  237
  248
  261
  266
  279
  293
  308
  323
  340
  357
  374
  393
  413
  433
  455
  478
  501
  526
  552
  580
  609
  639
  670
Retained Cash Flow (-), $m
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
  -122
  -128
  -134
  -140
  -147
  -155
  -162
  -170
Prev. year cash balance distribution, $m
  39
  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
  163
  130
  137
  144
  152
  160
  168
  176
  185
  195
  196
  207
  217
  229
  240
  252
  265
  279
  293
  307
  323
  339
  356
  374
  392
  412
  432
  454
  476
  500
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
  156
  119
  119
  119
  118
  116
  113
  110
  107
  102
  93
  88
  83
  77
  71
  64
  58
  51
  45
  39
  33
  28
  23
  19
  15
  12
  9
  7
  5
  4
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 (SHOO)

Valuation Ratios
P/E Ratio 14
Price to Sales 1.2
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 11
Price to Free Cash Flow 12.3
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 $1546.098 million for the last fiscal year's total revenue generated by Steven Madden. The default revenue input number comes from 0001 income statement of Steven Madden. 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 5.8% 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, 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.
    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 87.9%.

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.

Corporate tax rate of 27% is the nominal tax rate for Steven Madden. 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 14%.

Life of production assets of 16.9 years is the average useful life of capital assets used in Steven Madden 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 12.5%. 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 - $802.821 million for Steven Madden - 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 58.5 million for Steven Madden 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 at the current share price and the inputted number of shares is $1.6 billion.

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COMPANY NEWS

▶ TJX Cos. sets 2-for-1 stock split   [Sep-17-18 01:14PM  MarketWatch]
▶ Yahoo Finance Live: Market Movers   [06:55AM  Yahoo Finance Video]
▶ Steven Madden: 2Q Earnings Snapshot   [07:22AM  Associated Press]
▶ Steven Madden's Q2 Earnings Preview   [Jul-30-18 03:22PM  Benzinga]
▶ Does Forbes Know What Self-Made Means? The Internet Says No   [Jul-12-18 02:54PM  TheStreet.com]
▶ Steven Madden: 1Q Earnings Snapshot   [07:30AM  Associated Press]
▶ Steve Madden Announces First Quarter Results   [06:59AM  Business Wire]
▶ Steven Madden beats Street 4Q forecasts   [Feb-27-18 07:21AM  Associated Press]
▶ Steven Madden Clears Key Benchmark, Hitting 80-Plus RS Rating   [Jan-11-18 03:00AM  Investor's Business Daily]
▶ National Retail Federation cheers tax reform passage   [Dec-20-17 02:37PM  MarketWatch]
▶ IBD Rating Upgrades: Steven Madden Flashes Improved Technical Strength   [Dec-18-17 03:00AM  Investor's Business Daily]
▶ Steven Madden meets 3Q profit forecasts   [07:19AM  Associated Press]
▶ Steven Madden Trying To Close In On Key Technical Measure   [Oct-25-17 03:00AM  Investor's Business Daily]
▶ Yahoo Finance Live: Market Movers - Oct 11th, 2017   [Oct-11-17 07:20AM  Yahoo Finance Video]
▶ The Market In 5 Minutes   [Aug-16-17 08:34AM  Benzinga]
▶ Steven Madden tops Street 2Q forecasts   [Aug-01-17 09:33PM  Associated Press]
▶ Steven Madden tops Street 2Q forecasts   [07:15AM  Associated Press]
▶ ETFs with exposure to Steven Madden Ltd. : July 25, 2017   [Jul-25-17 01:12PM  Capital Cube]
▶ ETFs with exposure to Steven Madden Ltd. : July 14, 2017   [Jul-14-17 04:49PM  Capital Cube]

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