Intrinsic value of Stein Mart, Inc. - SMRT

Previous Close

$0.78

  Intrinsic Value

$0.25

stock screener

  Rating & Target

str. sell

-68%

Previous close

$0.78

 
Intrinsic value

$0.25

 
Up/down potential

-68%

 
Rating

str. sell

We calculate the intrinsic value of SMRT 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 0.0

 

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
  1,345
  1,376
  1,412
  1,451
  1,495
  1,544
  1,596
  1,653
  1,714
  1,780
  1,851
  1,926
  2,006
  2,091
  2,181
  2,277
  2,378
  2,485
  2,598
  2,717
  2,843
  2,976
  3,116
  3,263
  3,419
  3,582
  3,754
  3,936
  4,126
  4,327
Variable operating expenses, $m
  268
  274
  281
  289
  298
  307
  318
  329
  341
  354
  368
  383
  399
  416
  434
  453
  473
  494
  517
  541
  566
  592
  620
  649
  680
  713
  747
  783
  821
  861
Fixed operating expenses, $m
  1,134
  1,159
  1,185
  1,211
  1,238
  1,265
  1,293
  1,321
  1,350
  1,380
  1,410
  1,441
  1,473
  1,505
  1,538
  1,572
  1,607
  1,642
  1,678
  1,715
  1,753
  1,792
  1,831
  1,871
  1,912
  1,955
  1,998
  2,041
  2,086
  2,132
Total operating expenses, $m
  1,402
  1,433
  1,466
  1,500
  1,536
  1,572
  1,611
  1,650
  1,691
  1,734
  1,778
  1,824
  1,872
  1,921
  1,972
  2,025
  2,080
  2,136
  2,195
  2,256
  2,319
  2,384
  2,451
  2,520
  2,592
  2,668
  2,745
  2,824
  2,907
  2,993
Operating income, $m
  -57
  -57
  -54
  -48
  -40
  -28
  -14
  3
  23
  46
  72
  101
  134
  169
  208
  251
  298
  348
  402
  461
  524
  592
  665
  743
  826
  915
  1,010
  1,111
  1,219
  1,333
EBITDA, $m
  -24
  -24
  -20
  -14
  -4
  9
  24
  43
  64
  89
  117
  148
  182
  220
  261
  306
  355
  408
  465
  526
  592
  663
  740
  821
  908
  1,001
  1,100
  1,205
  1,318
  1,437
Interest expense (income), $m
  4
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  31
  33
  36
  38
  40
  43
  46
  49
  52
  55
  58
Earnings before tax, $m
  -65
  -66
  -64
  -58
  -51
  -40
  -26
  -10
  9
  31
  56
  83
  114
  149
  186
  227
  272
  321
  373
  430
  491
  556
  627
  702
  783
  869
  961
  1,059
  1,164
  1,275
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  2
  8
  15
  23
  31
  40
  50
  61
  73
  87
  101
  116
  133
  150
  169
  190
  211
  235
  259
  286
  314
  344
Net income, $m
  -65
  -66
  -64
  -58
  -51
  -40
  -26
  -10
  6
  22
  41
  61
  84
  109
  136
  166
  199
  234
  272
  314
  358
  406
  458
  513
  571
  634
  702
  773
  849
  931

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
  493
  504
  517
  532
  548
  566
  585
  606
  628
  652
  678
  706
  735
  766
  799
  834
  871
  910
  952
  996
  1,042
  1,090
  1,142
  1,196
  1,253
  1,313
  1,376
  1,442
  1,512
  1,585
Adjusted assets (=assets-cash), $m
  493
  504
  517
  532
  548
  566
  585
  606
  628
  652
  678
  706
  735
  766
  799
  834
  871
  910
  952
  996
  1,042
  1,090
  1,142
  1,196
  1,253
  1,313
  1,376
  1,442
  1,512
  1,585
Revenue / Adjusted assets
  2.728
  2.730
  2.731
  2.727
  2.728
  2.728
  2.728
  2.728
  2.729
  2.730
  2.730
  2.728
  2.729
  2.730
  2.730
  2.730
  2.730
  2.731
  2.729
  2.728
  2.728
  2.730
  2.729
  2.728
  2.729
  2.728
  2.728
  2.730
  2.729
  2.730
Average production assets, $m
  161
  165
  169
  174
  179
  185
  192
  198
  206
  214
  222
  231
  241
  251
  262
  273
  285
  298
  312
  326
  341
  357
  374
  392
  410
  430
  451
  472
  495
  519
Working capital, $m
  101
  103
  106
  109
  112
  116
  120
  124
  129
  134
  139
  144
  150
  157
  164
  171
  178
  186
  195
  204
  213
  223
  234
  245
  256
  269
  282
  295
  309
  325
Total debt, $m
  165
  175
  187
  200
  214
  230
  248
  266
  287
  308
  331
  356
  383
  411
  440
  472
  505
  541
  578
  617
  659
  702
  749
  797
  849
  902
  959
  1,019
  1,082
  1,148
Total liabilities, $m
  444
  454
  466
  479
  493
  509
  526
  545
  565
  587
  610
  635
  661
  690
  719
  751
  784
  819
  857
  896
  938
  981
  1,028
  1,076
  1,127
  1,181
  1,238
  1,298
  1,361
  1,427
Total equity, $m
  49
  50
  52
  53
  55
  57
  58
  61
  63
  65
  68
  71
  73
  77
  80
  83
  87
  91
  95
  100
  104
  109
  114
  120
  125
  131
  138
  144
  151
  159
Total liabilities and equity, $m
  493
  504
  518
  532
  548
  566
  584
  606
  628
  652
  678
  706
  734
  767
  799
  834
  871
  910
  952
  996
  1,042
  1,090
  1,142
  1,196
  1,252
  1,312
  1,376
  1,442
  1,512
  1,586
Debt-to-equity ratio
  3.340
  3.470
  3.610
  3.760
  3.910
  4.070
  4.230
  4.400
  4.560
  4.720
  4.890
  5.050
  5.210
  5.360
  5.510
  5.660
  5.800
  5.940
  6.070
  6.200
  6.320
  6.440
  6.560
  6.670
  6.770
  6.880
  6.970
  7.070
  7.160
  7.240
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -65
  -66
  -64
  -58
  -51
  -40
  -26
  -10
  6
  22
  41
  61
  84
  109
  136
  166
  199
  234
  272
  314
  358
  406
  458
  513
  571
  634
  702
  773
  849
  931
Depreciation, amort., depletion, $m
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
  104
Funds from operations, $m
  -33
  -33
  -30
  -24
  -15
  -3
  12
  29
  48
  65
  85
  107
  132
  159
  188
  221
  256
  294
  335
  379
  427
  478
  532
  591
  654
  720
  792
  868
  949
  1,035
Change in working capital, $m
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
Cash from operations, $m
  -35
  -35
  -32
  -27
  -18
  -6
  8
  25
  43
  60
  80
  101
  126
  152
  182
  213
  248
  286
  326
  370
  417
  468
  522
  580
  642
  708
  779
  854
  934
  1,020
Maintenance CAPEX, $m
  -32
  -32
  -33
  -34
  -35
  -36
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
New CAPEX, $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Cash from investing activities, $m
  -35
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -63
  -67
  -70
  -74
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -112
  -117
  -123
Free cash flow, $m
  -70
  -71
  -70
  -65
  -58
  -48
  -35
  -20
  -4
  11
  29
  48
  70
  94
  121
  150
  181
  216
  253
  293
  337
  384
  434
  487
  545
  606
  672
  742
  817
  896
Issuance/(repayment) of debt, $m
  9
  10
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
Issuance/(repurchase) of shares, $m
  66
  67
  65
  60
  52
  42
  28
  12
  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  
  75
  77
  77
  73
  67
  58
  45
  31
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
Total cash flow (excl. dividends), $m
  5
  6
  7
  8
  9
  9
  10
  11
  16
  33
  52
  73
  96
  122
  150
  181
  215
  251
  290
  333
  378
  427
  480
  536
  596
  660
  729
  802
  880
  963
Retained Cash Flow (-), $m
  -66
  -67
  -65
  -60
  -52
  -42
  -28
  -12
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
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
  -61
  -61
  -58
  -52
  -44
  -32
  -18
  -1
  14
  30
  49
  70
  93
  119
  147
  178
  211
  247
  286
  328
  374
  422
  475
  531
  590
  654
  723
  795
  873
  955
Discount rate, %
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
  -56
  -51
  -44
  -36
  -27
  -17
  -9
  -1
  5
  9
  12
  14
  15
  15
  15
  14
  12
  10
  9
  7
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  36.1
  13.1
  4.9
  2.0
  0.9
  0.4
  0.3
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2

Stein Mart, Inc. is a national retailer offering the fashion merchandise, service and presentation of a department or specialty store. The Company offers apparel for women and men, as well as accessories, shoes and home fashions. The Company's target customers are women over 45 years old. The Company operates approximately 280 stores in over 30 states and an Internet store. Its stores are located in the Northeast, Midwest, Southeast, Texas and the Southwest. It is concentrated in the Southeast and Texas where over 180 of its stores are located. The Company's stores offer a range of services, such as merchandise locator service, a Preferred Customer program, co-branded and private label credit card programs, and electronic gift cards. The Company's merchants purchase products from approximately 1,200 vendors. It leases all of its store locations, generally for approximately 10 years with options to extend the lease term for over two or five year periods.

FINANCIAL RATIOS  of  Stein Mart, Inc. (SMRT)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 0.6
Price to Free Cash Flow 1.9
Growth Rates
Sales Growth Rate 0.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.5%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 245.7%
Total Debt to Equity 260%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 3.6%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 7.7%
Asset Turnover 2.6
Profitability Ratios
Gross Margin 26.4%
Gross Margin - 3 Yr. Avg. 28%
EBITDA Margin 2.7%
EBITDA Margin - 3 Yr. Avg. 4.5%
Operating Margin 0.3%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 1.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 25.2%
Payout Ratio 0%

SMRT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SMRT stock intrinsic value calculation we used $1319 million for the last fiscal year's total revenue generated by Stein Mart, Inc.. The default revenue input number comes from 0001 income statement of Stein Mart, 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 SMRT 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 8.4%, whose default value for SMRT is calculated based on our internal credit rating of Stein Mart, 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 Stein Mart, 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 SMRT stock the variable cost ratio is equal to 19.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1110 million in the base year in the intrinsic value calculation for SMRT 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 Stein Mart, Inc..

Corporate tax rate of 27% is the nominal tax rate for Stein Mart, 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 SMRT 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 SMRT are equal to 12%.

Life of production assets of 4.9 years is the average useful life of capital assets used in Stein Mart, 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 SMRT is equal to 7.5%. 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 - $48.318 million for Stein Mart, 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 47.843 million for Stein Mart, 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 Stein Mart, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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