Intrinsic value of Sportsman's Warehouse Holdings - SPWH

Previous Close

$4.75

  Intrinsic Value

$9.79

stock screener

  Rating & Target

str. buy

+106%

Previous close

$4.75

 
Intrinsic value

$9.79

 
Up/down potential

+106%

 
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, %
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
Revenue, $m
  930
  1,058
  1,195
  1,340
  1,493
  1,654
  1,823
  2,000
  2,184
  2,376
  2,576
  2,784
  3,000
  3,225
  3,459
  3,701
  3,954
  4,216
  4,489
  4,773
  5,068
  5,376
  5,697
  6,031
  6,380
  6,743
  7,123
  7,520
  7,935
  8,368
Variable operating expenses, $m
  857
  975
  1,102
  1,235
  1,377
  1,525
  1,681
  1,844
  2,014
  2,191
  2,375
  2,567
  2,766
  2,973
  3,189
  3,413
  3,645
  3,887
  4,138
  4,400
  4,673
  4,956
  5,252
  5,560
  5,882
  6,217
  6,567
  6,933
  7,315
  7,715
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
  857
  975
  1,102
  1,235
  1,377
  1,525
  1,681
  1,844
  2,014
  2,191
  2,375
  2,567
  2,766
  2,973
  3,189
  3,413
  3,645
  3,887
  4,138
  4,400
  4,673
  4,956
  5,252
  5,560
  5,882
  6,217
  6,567
  6,933
  7,315
  7,715
Operating income, $m
  73
  83
  93
  105
  116
  129
  142
  156
  170
  185
  201
  217
  234
  252
  270
  289
  309
  329
  350
  372
  395
  420
  445
  471
  498
  526
  556
  587
  619
  653
EBITDA, $m
  90
  103
  116
  130
  145
  161
  177
  195
  213
  231
  251
  271
  292
  314
  337
  360
  385
  410
  437
  465
  493
  523
  554
  587
  621
  656
  693
  732
  772
  814
Interest expense (income), $m
  12
  14
  17
  21
  25
  29
  33
  38
  43
  48
  53
  59
  65
  71
  77
  84
  90
  97
  105
  112
  120
  128
  137
  146
  155
  165
  175
  185
  196
  208
  220
Earnings before tax, $m
  59
  65
  72
  80
  87
  96
  104
  113
  122
  132
  142
  152
  163
  175
  186
  198
  211
  224
  238
  252
  267
  283
  299
  316
  333
  351
  370
  390
  411
  433
Tax expense, $m
  16
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  54
  57
  61
  64
  68
  72
  76
  81
  85
  90
  95
  100
  105
  111
  117
Net income, $m
  43
  48
  53
  58
  64
  70
  76
  82
  89
  96
  104
  111
  119
  127
  136
  145
  154
  164
  174
  184
  195
  206
  218
  230
  243
  257
  270
  285
  300
  316

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
  436
  496
  560
  628
  700
  776
  855
  937
  1,024
  1,114
  1,208
  1,305
  1,407
  1,512
  1,621
  1,735
  1,854
  1,977
  2,104
  2,238
  2,376
  2,520
  2,671
  2,827
  2,991
  3,161
  3,340
  3,526
  3,720
  3,923
Adjusted assets (=assets-cash), $m
  436
  496
  560
  628
  700
  776
  855
  937
  1,024
  1,114
  1,208
  1,305
  1,407
  1,512
  1,621
  1,735
  1,854
  1,977
  2,104
  2,238
  2,376
  2,520
  2,671
  2,827
  2,991
  3,161
  3,340
  3,526
  3,720
  3,923
Revenue / Adjusted assets
  2.133
  2.133
  2.134
  2.134
  2.133
  2.131
  2.132
  2.134
  2.133
  2.133
  2.132
  2.133
  2.132
  2.133
  2.134
  2.133
  2.133
  2.133
  2.134
  2.133
  2.133
  2.133
  2.133
  2.133
  2.133
  2.133
  2.133
  2.133
  2.133
  2.133
Average production assets, $m
  102
  116
  131
  147
  164
  182
  201
  220
  240
  261
  283
  306
  330
  355
  380
  407
  435
  464
  494
  525
  557
  591
  627
  663
  702
  742
  784
  827
  873
  920
Working capital, $m
  212
  241
  272
  306
  340
  377
  416
  456
  498
  542
  587
  635
  684
  735
  789
  844
  901
  961
  1,023
  1,088
  1,156
  1,226
  1,299
  1,375
  1,455
  1,537
  1,624
  1,715
  1,809
  1,908
Total debt, $m
  242
  294
  350
  409
  472
  537
  606
  678
  753
  831
  913
  998
  1,086
  1,177
  1,273
  1,371
  1,474
  1,581
  1,692
  1,808
  1,928
  2,054
  2,184
  2,320
  2,463
  2,611
  2,766
  2,927
  3,096
  3,273
Total liabilities, $m
  379
  431
  487
  546
  608
  674
  743
  815
  890
  968
  1,050
  1,134
  1,222
  1,314
  1,409
  1,508
  1,611
  1,718
  1,829
  1,944
  2,065
  2,190
  2,321
  2,457
  2,599
  2,747
  2,902
  3,064
  3,233
  3,409
Total equity, $m
  57
  65
  73
  82
  92
  102
  112
  123
  134
  146
  158
  171
  184
  198
  212
  227
  243
  259
  276
  293
  311
  330
  350
  370
  392
  414
  437
  462
  487
  514
Total liabilities and equity, $m
  436
  496
  560
  628
  700
  776
  855
  938
  1,024
  1,114
  1,208
  1,305
  1,406
  1,512
  1,621
  1,735
  1,854
  1,977
  2,105
  2,237
  2,376
  2,520
  2,671
  2,827
  2,991
  3,161
  3,339
  3,526
  3,720
  3,923
Debt-to-equity ratio
  4.240
  4.530
  4.770
  4.970
  5.140
  5.290
  5.410
  5.520
  5.620
  5.700
  5.770
  5.840
  5.890
  5.940
  5.990
  6.030
  6.070
  6.110
  6.140
  6.170
  6.190
  6.220
  6.240
  6.260
  6.290
  6.300
  6.320
  6.340
  6.350
  6.370
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
  43
  48
  53
  58
  64
  70
  76
  82
  89
  96
  104
  111
  119
  127
  136
  145
  154
  164
  174
  184
  195
  206
  218
  230
  243
  257
  270
  285
  300
  316
Depreciation, amort., depletion, $m
  18
  20
  23
  26
  29
  32
  35
  39
  42
  46
  50
  54
  58
  62
  67
  71
  76
  81
  87
  92
  98
  104
  110
  116
  123
  130
  137
  145
  153
  161
Funds from operations, $m
  61
  68
  76
  84
  93
  102
  111
  121
  131
  142
  153
  165
  177
  190
  203
  216
  230
  245
  260
  276
  293
  310
  328
  347
  366
  387
  408
  430
  453
  478
Change in working capital, $m
  27
  29
  31
  33
  35
  37
  38
  40
  42
  44
  46
  47
  49
  51
  53
  55
  58
  60
  62
  65
  67
  70
  73
  76
  80
  83
  87
  90
  95
  99
Cash from operations, $m
  34
  39
  45
  51
  58
  65
  73
  81
  89
  98
  108
  118
  128
  138
  149
  161
  173
  185
  198
  212
  225
  240
  255
  270
  287
  304
  321
  340
  359
  379
Maintenance CAPEX, $m
  -16
  -18
  -20
  -23
  -26
  -29
  -32
  -35
  -39
  -42
  -46
  -50
  -54
  -58
  -62
  -67
  -71
  -76
  -81
  -87
  -92
  -98
  -104
  -110
  -116
  -123
  -130
  -137
  -145
  -153
New CAPEX, $m
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
Cash from investing activities, $m
  -29
  -32
  -35
  -39
  -43
  -47
  -51
  -54
  -59
  -63
  -68
  -73
  -78
  -83
  -88
  -94
  -99
  -105
  -111
  -118
  -125
  -132
  -139
  -147
  -154
  -163
  -172
  -181
  -191
  -201
Free cash flow, $m
  5
  7
  9
  12
  15
  18
  22
  26
  31
  35
  40
  45
  50
  56
  62
  68
  74
  80
  87
  94
  101
  108
  116
  124
  132
  141
  149
  159
  168
  178
Issuance/(repayment) of debt, $m
  49
  52
  56
  59
  62
  66
  69
  72
  75
  78
  81
  85
  88
  92
  95
  99
  103
  107
  111
  116
  120
  125
  131
  136
  142
  148
  155
  162
  169
  177
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  
  49
  52
  56
  59
  62
  66
  69
  72
  75
  78
  81
  85
  88
  92
  95
  99
  103
  107
  111
  116
  120
  125
  131
  136
  142
  148
  155
  162
  169
  177
Total cash flow (excl. dividends), $m
  54
  59
  65
  71
  77
  84
  91
  98
  106
  113
  121
  130
  138
  147
  157
  166
  177
  187
  198
  209
  221
  234
  247
  260
  274
  289
  304
  320
  337
  355
Retained Cash Flow (-), $m
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -27
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
  46
  51
  57
  62
  68
  74
  81
  87
  94
  102
  109
  117
  125
  134
  142
  152
  161
  171
  181
  192
  203
  215
  227
  239
  253
  266
  281
  296
  312
  328
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
  42
  41
  40
  39
  37
  34
  31
  28
  25
  21
  18
  15
  12
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
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Current shareholders' claim on cash, %
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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 (SPWH)

Valuation Ratios
P/E Ratio 6.7
Price to Sales 0.3
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow -8.4
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 $809.671 million for the last fiscal year's total revenue generated by Sportsman's Warehouse Holdings. The default revenue input number comes from 0001 income statement of Sportsman's Warehouse Holdings. 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 14.8% 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 10.9%, whose default value for SPWH is calculated based on our internal credit rating of Sportsman's Warehouse Holdings, 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.
    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.

Corporate tax rate of 27% is the nominal tax rate for Sportsman's Warehouse Holdings. 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 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 - 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 42.834 million for Sportsman's Warehouse Holdings 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 at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ 6 Cheap Stocks to Buy Under $6   [Jun-15-18 09:32AM  InvestorPlace]
▶ Sportsman's Warehouse Gets Love From Gun Fans   [Mar-28-18 06:51PM  Barrons.com]
▶ Sportsman's Warehouse misses 4Q profit forecasts   [04:21PM  Associated Press]
▶ Sportsman's Warehouse misses Street 3Q forecasts   [Nov-16-17 04:33PM  Associated Press]
▶ Down Over 55% in 2017, Is Sportsman's Warehouse a Buy?   [Oct-30-17 03:00PM  Motley Fool]
▶ Sportsman's Warehouse beats 2Q profit forecasts   [Aug-17-17 09:09PM  Associated Press]
▶ LD Micro Index Reconstitution as of August 1, 2017   [Aug-01-17 09:40AM  ACCESSWIRE]
▶ Hibbett's Dim Outlook Sends Sports Retailer Stocks Tumbling   [Jul-24-17 02:17PM  TheStreet.com]
▶ Why Sportsman's Warehouse, Inc. Stock Skyrocketed in May   [Jun-08-17 08:38PM  Motley Fool]
▶ These Stocks Are Changing Direction   [May-22-17 01:00PM  TheStreet.com]
▶ Sportsman's Warehouse reports 1Q loss   [May-18-17 04:14PM  Associated Press]
▶ Sportsmans Warehouse to Hold Grand Opening in Yuma, Arizona   [May-08-17 07:00AM  GlobeNewswire]
▶ 3 Stocks That Have Been Cut in Half This Year   [Apr-19-17 03:25PM  Motley Fool]
▶ Sportsman's Warehouse Stock Falling on Goldman Downgrade   [Mar-27-17 03:40PM  TheStreet.com]

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