Intrinsic value of Sportsman's Warehouse Holdings, Inc. - SPWH

Previous Close

$3.81

  Intrinsic Value

$5.83

stock screener

  Rating & Target

str. buy

+53%

Previous close

$3.81

 
Intrinsic value

$5.83

 
Up/down potential

+53%

 
Rating

str. buy

We calculate the intrinsic value of SPWH 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 0.2

 

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, %
  2.30
  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
  4.87
Revenue, $m
  829
  850
  874
  900
  929
  961
  995
  1,032
  1,072
  1,114
  1,159
  1,208
  1,259
  1,313
  1,371
  1,432
  1,496
  1,564
  1,636
  1,712
  1,792
  1,876
  1,965
  2,058
  2,157
  2,260
  2,369
  2,484
  2,605
  2,732
Variable operating expenses, $m
  764
  784
  806
  830
  857
  886
  918
  952
  988
  1,027
  1,069
  1,113
  1,161
  1,211
  1,264
  1,320
  1,379
  1,442
  1,508
  1,578
  1,652
  1,730
  1,811
  1,898
  1,989
  2,084
  2,185
  2,290
  2,402
  2,519
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
  764
  784
  806
  830
  857
  886
  918
  952
  988
  1,027
  1,069
  1,113
  1,161
  1,211
  1,264
  1,320
  1,379
  1,442
  1,508
  1,578
  1,652
  1,730
  1,811
  1,898
  1,989
  2,084
  2,185
  2,290
  2,402
  2,519
Operating income, $m
  65
  66
  68
  70
  72
  75
  78
  81
  84
  87
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  146
  153
  161
  168
  176
  185
  194
  203
  213
EBITDA, $m
  81
  83
  85
  88
  90
  94
  97
  100
  104
  108
  113
  117
  122
  128
  133
  139
  146
  152
  159
  167
  174
  183
  191
  200
  210
  220
  231
  242
  253
  266
Interest expense (income), $m
  12
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
Earnings before tax, $m
  51
  52
  53
  55
  56
  58
  60
  61
  63
  66
  68
  70
  73
  76
  79
  82
  85
  88
  92
  96
  100
  104
  109
  113
  118
  124
  129
  135
  141
  147
Tax expense, $m
  14
  14
  14
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
Net income, $m
  37
  38
  39
  40
  41
  42
  43
  45
  46
  48
  50
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
  98
  103
  108

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
  388
  398
  410
  422
  436
  451
  467
  484
  503
  522
  544
  566
  590
  616
  643
  671
  701
  733
  767
  802
  840
  879
  921
  965
  1,011
  1,060
  1,111
  1,165
  1,221
  1,281
Adjusted assets (=assets-cash), $m
  388
  398
  410
  422
  436
  451
  467
  484
  503
  522
  544
  566
  590
  616
  643
  671
  701
  733
  767
  802
  840
  879
  921
  965
  1,011
  1,060
  1,111
  1,165
  1,221
  1,281
Revenue / Adjusted assets
  2.137
  2.136
  2.132
  2.133
  2.131
  2.131
  2.131
  2.132
  2.131
  2.134
  2.131
  2.134
  2.134
  2.131
  2.132
  2.134
  2.134
  2.134
  2.133
  2.135
  2.133
  2.134
  2.134
  2.133
  2.134
  2.132
  2.132
  2.132
  2.133
  2.133
Average production assets, $m
  91
  93
  96
  99
  102
  106
  109
  114
  118
  123
  128
  133
  138
  144
  151
  157
  165
  172
  180
  188
  197
  206
  216
  226
  237
  249
  261
  273
  287
  301
Working capital, $m
  189
  194
  199
  205
  212
  219
  227
  235
  244
  254
  264
  275
  287
  299
  312
  326
  341
  357
  373
  390
  408
  428
  448
  469
  492
  515
  540
  566
  594
  623
Total debt, $m
  201
  210
  219
  230
  242
  255
  269
  284
  300
  317
  336
  355
  376
  398
  422
  447
  473
  501
  530
  561
  593
  628
  664
  702
  742
  784
  829
  876
  925
  976
Total liabilities, $m
  338
  346
  356
  367
  379
  392
  405
  421
  437
  454
  472
  492
  513
  535
  558
  583
  609
  637
  666
  697
  730
  764
  800
  839
  879
  921
  965
  1,012
  1,061
  1,113
Total equity, $m
  51
  52
  54
  55
  57
  59
  61
  63
  66
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  121
  126
  132
  139
  146
  153
  160
  168
Total liabilities and equity, $m
  389
  398
  410
  422
  436
  451
  466
  484
  503
  522
  543
  566
  590
  616
  642
  671
  701
  733
  766
  802
  840
  879
  921
  965
  1,011
  1,060
  1,111
  1,165
  1,221
  1,281
Debt-to-equity ratio
  3.950
  4.020
  4.090
  4.160
  4.240
  4.320
  4.400
  4.480
  4.560
  4.640
  4.720
  4.790
  4.870
  4.940
  5.010
  5.080
  5.150
  5.210
  5.270
  5.330
  5.390
  5.450
  5.500
  5.550
  5.600
  5.650
  5.700
  5.740
  5.780
  5.820
Adjusted equity ratio
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  37
  38
  39
  40
  41
  42
  43
  45
  46
  48
  50
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
  98
  103
  108
Depreciation, amort., depletion, $m
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
Funds from operations, $m
  53
  54
  56
  57
  59
  61
  63
  65
  67
  69
  72
  75
  78
  81
  84
  87
  91
  95
  99
  103
  108
  112
  117
  123
  128
  134
  140
  146
  153
  160
Change in working capital, $m
  4
  5
  5
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
Cash from operations, $m
  49
  50
  50
  51
  52
  54
  55
  56
  58
  60
  62
  64
  66
  68
  71
  73
  76
  79
  82
  86
  89
  93
  97
  101
  106
  110
  115
  120
  126
  131
Maintenance CAPEX, $m
  -16
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
New CAPEX, $m
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
Cash from investing activities, $m
  -18
  -18
  -19
  -20
  -20
  -21
  -23
  -23
  -24
  -26
  -27
  -27
  -29
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -61
  -64
Free cash flow, $m
  31
  31
  31
  31
  32
  32
  33
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  43
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  64
  67
Issuance/(repayment) of debt, $m
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  52
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  
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  52
Total cash flow (excl. dividends), $m
  39
  40
  41
  42
  44
  45
  46
  48
  50
  52
  54
  56
  58
  60
  62
  65
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  114
  119
Retained Cash Flow (-), $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
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
  38
  39
  40
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  82
  85
  89
  93
  97
  102
  106
  111
Discount rate, %
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
  34
  31
  28
  25
  22
  20
  17
  15
  12
  10
  8
  7
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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

Sportsman's Warehouse Holdings, Inc. is an outdoor sporting goods retailer. The Company has outdoor specialty store base in the Western United States and Alaska. The Company has over 70 stores across approximately 20 states, which are located in power, neighborhood and lifestyle centers. The Company also operates several single-unit, standalone locations. Its stores average approximately 44,000 gross square feet. Its stores include locally relevant features, such as a fishing board at the entrance that displays fishing conditions in local lakes and rivers with coordinating gear in end-cap displays in the fishing aisles. The Company engages its customers through in-store features, such as the Braggin Board, various contests (such as Bucks & Bulls and Fish Alaska), and customer-owned taxidermy displays on the walls. It also hosts in-store programs, such as ladies night and a range of instructional seminars, from Dutch oven cooking to choosing the right binocular.

FINANCIAL RATIOS  of  Sportsman's Warehouse Holdings, Inc. (SPWH)

Valuation Ratios
P/E Ratio 5.4
Price to Sales 0.2
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 10.7
Price to Free Cash Flow -6.7
Growth Rates
Sales Growth Rate 10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.7%
Cap. Spend. - 3 Yr. Gr. Rate 14.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 446.7%
Total Debt to Equity 670%
Interest Coverage 5
Management Effectiveness
Return On Assets 11.6%
Ret/ On Assets - 3 Yr. Avg. 11.3%
Return On Total Capital 14.4%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 214.3%
Return On Equity - 3 Yr. Avg. 8.7%
Asset Turnover 2.4
Profitability Ratios
Gross Margin 33.7%
Gross Margin - 3 Yr. Avg. 33.7%
EBITDA Margin 9.4%
EBITDA Margin - 3 Yr. Avg. 8.9%
Operating Margin 7.8%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin 6%
Pre-Tax Margin - 3 Yr. Avg. 5.3%
Net Profit Margin 3.8%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 36.2%
Eff/ Tax Rate - 3 Yr. Avg. 36.8%
Payout Ratio 0%

SPWH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPWH stock intrinsic value calculation we used $810 million for the last fiscal year's total revenue generated by Sportsman's Warehouse Holdings, Inc.. The default revenue input number comes from 0001 income statement of Sportsman's Warehouse Holdings, 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 SPWH stock valuation model: a) initial revenue growth rate of 2.3% 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 10.9%, whose default value for SPWH is calculated based on our internal credit rating of Sportsman's Warehouse Holdings, 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 Sportsman's Warehouse Holdings, 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 SPWH stock the variable cost ratio is equal to 92.2%.

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 SPWH 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 7.1% for Sportsman's Warehouse Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for Sportsman's Warehouse Holdings, 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 SPWH 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 SPWH are equal to 11%.

Life of production assets of 5.7 years is the average useful life of capital assets used in Sportsman's Warehouse Holdings, 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 SPWH is equal to 22.8%. 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 - $49.798 million for Sportsman's Warehouse Holdings, 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 42.939 million for Sportsman's Warehouse Holdings, 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 Sportsman's Warehouse Holdings, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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