Intrinsic value of The ONE Group Hospitality, Inc. - STKS

Previous Close

$3.14

  Intrinsic Value

$6.64

stock screener

  Rating & Target

str. buy

+112%

Previous close

$3.14

 
Intrinsic value

$6.64

 
Up/down potential

+112%

 
Rating

str. buy

We calculate the intrinsic value of STKS 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 0.1

 

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, %
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.80
  6.62
  6.46
  6.32
  6.18
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
Revenue, $m
  90
  100
  111
  122
  134
  146
  159
  172
  186
  200
  215
  231
  247
  264
  281
  300
  318
  338
  359
  380
  402
  426
  450
  475
  502
  529
  558
  588
  620
  653
Variable operating expenses, $m
  45
  50
  55
  61
  67
  73
  79
  86
  93
  100
  108
  115
  124
  132
  141
  150
  159
  169
  179
  190
  201
  213
  225
  238
  251
  265
  279
  294
  310
  327
Fixed operating expenses, $m
  45
  46
  47
  48
  49
  50
  51
  52
  54
  55
  56
  57
  58
  60
  61
  62
  64
  65
  67
  68
  69
  71
  73
  74
  76
  77
  79
  81
  83
  85
Total operating expenses, $m
  90
  96
  102
  109
  116
  123
  130
  138
  147
  155
  164
  172
  182
  192
  202
  212
  223
  234
  246
  258
  270
  284
  298
  312
  327
  342
  358
  375
  393
  412
Operating income, $m
  0
  4
  8
  13
  18
  23
  28
  34
  39
  45
  52
  58
  65
  72
  80
  87
  96
  104
  113
  122
  132
  142
  152
  163
  175
  187
  200
  213
  227
  242
EBITDA, $m
  3
  8
  13
  18
  23
  28
  34
  40
  47
  53
  60
  67
  75
  82
  90
  99
  108
  117
  127
  137
  147
  158
  170
  182
  194
  207
  221
  236
  251
  267
Interest expense (income), $m
  1
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
Earnings before tax, $m
  -1
  2
  6
  11
  15
  19
  24
  29
  34
  40
  45
  51
  57
  64
  70
  77
  85
  92
  100
  108
  117
  126
  136
  146
  156
  167
  179
  191
  203
  217
Tax expense, $m
  0
  1
  2
  3
  4
  5
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  37
  39
  42
  45
  48
  51
  55
  58
Net income, $m
  -1
  2
  5
  8
  11
  14
  18
  21
  25
  29
  33
  37
  42
  47
  51
  56
  62
  67
  73
  79
  86
  92
  99
  106
  114
  122
  130
  139
  148
  158

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
  59
  66
  73
  81
  89
  97
  105
  114
  123
  133
  143
  153
  164
  175
  186
  199
  211
  224
  238
  252
  267
  282
  298
  315
  332
  351
  370
  390
  411
  433
Adjusted assets (=assets-cash), $m
  59
  66
  73
  81
  89
  97
  105
  114
  123
  133
  143
  153
  164
  175
  186
  199
  211
  224
  238
  252
  267
  282
  298
  315
  332
  351
  370
  390
  411
  433
Revenue / Adjusted assets
  1.525
  1.515
  1.521
  1.506
  1.506
  1.505
  1.514
  1.509
  1.512
  1.504
  1.503
  1.510
  1.506
  1.509
  1.511
  1.508
  1.507
  1.509
  1.508
  1.508
  1.506
  1.511
  1.510
  1.508
  1.512
  1.507
  1.508
  1.508
  1.509
  1.508
Average production assets, $m
  42
  47
  52
  57
  62
  68
  74
  80
  87
  93
  100
  108
  115
  123
  131
  140
  148
  158
  167
  177
  187
  198
  210
  221
  234
  247
  260
  274
  289
  304
Working capital, $m
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
Total debt, $m
  19
  25
  31
  37
  44
  51
  58
  66
  74
  82
  90
  99
  108
  118
  128
  138
  149
  160
  172
  184
  197
  210
  224
  238
  253
  269
  286
  303
  321
  340
Total liabilities, $m
  51
  57
  63
  69
  76
  83
  90
  98
  106
  114
  123
  131
  141
  150
  160
  171
  181
  193
  204
  216
  229
  242
  256
  270
  286
  301
  318
  335
  353
  372
Total equity, $m
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
Total liabilities and equity, $m
  59
  66
  73
  80
  88
  97
  105
  114
  123
  133
  143
  153
  164
  175
  186
  199
  211
  225
  238
  252
  267
  282
  298
  314
  333
  350
  370
  390
  411
  433
Debt-to-equity ratio
  2.250
  2.640
  2.980
  3.270
  3.520
  3.730
  3.920
  4.090
  4.240
  4.370
  4.490
  4.600
  4.700
  4.790
  4.870
  4.940
  5.010
  5.070
  5.130
  5.190
  5.240
  5.280
  5.330
  5.370
  5.410
  5.440
  5.480
  5.510
  5.540
  5.560
Adjusted equity ratio
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  2
  5
  8
  11
  14
  18
  21
  25
  29
  33
  37
  42
  47
  51
  56
  62
  67
  73
  79
  86
  92
  99
  106
  114
  122
  130
  139
  148
  158
Depreciation, amort., depletion, $m
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
Funds from operations, $m
  2
  6
  9
  12
  16
  20
  24
  28
  32
  37
  41
  46
  51
  57
  62
  68
  74
  80
  87
  94
  101
  108
  116
  125
  133
  142
  152
  162
  172
  183
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  3
  6
  10
  13
  17
  21
  25
  29
  33
  38
  42
  47
  52
  58
  63
  69
  75
  82
  88
  95
  102
  110
  118
  126
  135
  144
  154
  164
  174
  185
Maintenance CAPEX, $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
New CAPEX, $m
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
Cash from investing activities, $m
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -17
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
Free cash flow, $m
  -5
  -2
  1
  4
  7
  10
  13
  16
  20
  24
  28
  32
  36
  40
  45
  50
  55
  60
  66
  71
  77
  84
  90
  97
  104
  112
  120
  128
  137
  146
Issuance/(repayment) of debt, $m
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
Issuance/(repurchase) of shares, $m
  2
  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
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
Total cash flow (excl. dividends), $m
  3
  4
  7
  10
  13
  17
  20
  24
  28
  32
  36
  41
  45
  50
  55
  60
  66
  71
  77
  84
  90
  97
  104
  112
  120
  128
  136
  146
  155
  165
Retained Cash Flow (-), $m
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
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
  1
  3
  6
  9
  12
  16
  19
  23
  27
  31
  35
  39
  44
  48
  53
  59
  64
  70
  75
  82
  88
  95
  102
  109
  117
  125
  134
  143
  152
  162
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  1
  3
  5
  7
  9
  10
  11
  12
  13
  13
  13
  12
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3
  97.3

The ONE Group Hospitality, Inc., formerly Committed Capital Acquisition Corporation, is a hospitality company. The Company develops, owns and operates restaurants and lounges, and provides food and beverage services for hospitality venues, including hotels, casinos and other locations across the globe. It operates through three segments: owned STK units (STKs), F&B hospitality management agreements (F&B), and Other concepts (Other). Its STKs segment consists of leased restaurant locations. Its F&B segment consists of management agreements, in which the Company operates the food and beverage services in hotels or casinos and could include an STK. Its Other segment includes owned non-STK leased locations. Its restaurant brand is STK, a multi-unit steakhouse concept with locations in metropolitan cities around the globe. Its F&B hospitality management services include developing, managing and operating restaurants, bars, rooftop lounges, pools, banqueting and catering facilities.

FINANCIAL RATIOS  of  The ONE Group Hospitality, Inc. (STKS)

Valuation Ratios
P/E Ratio -4.6
Price to Sales 1.1
Price to Book 9.8
Price to Tangible Book
Price to Cash Flow 39.3
Price to Free Cash Flow -8.7
Growth Rates
Sales Growth Rate 18%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.4%
Cap. Spend. - 3 Yr. Gr. Rate 61.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 162.5%
Total Debt to Equity 212.5%
Interest Coverage -5
Management Effectiveness
Return On Assets -26.3%
Ret/ On Assets - 3 Yr. Avg. 0.4%
Return On Total Capital -57.6%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity -121.4%
Return On Equity - 3 Yr. Avg. -10.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 77.8%
Gross Margin - 3 Yr. Avg. 78.1%
EBITDA Margin -2.8%
EBITDA Margin - 3 Yr. Avg. 4.5%
Operating Margin -8.3%
Oper. Margin - 3 Yr. Avg. 0.9%
Pre-Tax Margin -8.3%
Pre-Tax Margin - 3 Yr. Avg. 0.9%
Net Profit Margin -23.6%
Net Profit Margin - 3 Yr. Avg. -0.6%
Effective Tax Rate -166.7%
Eff/ Tax Rate - 3 Yr. Avg. 94.4%
Payout Ratio 0%

STKS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STKS stock intrinsic value calculation we used $80 million for the last fiscal year's total revenue generated by The ONE Group Hospitality, Inc.. The default revenue input number comes from 0001 income statement of The ONE Group Hospitality, 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 STKS stock valuation model: a) initial revenue growth rate of 12.1% 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 5.9%, whose default value for STKS is calculated based on our internal credit rating of The ONE Group Hospitality, 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 The ONE Group Hospitality, 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 STKS stock the variable cost ratio is equal to 50%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $44 million in the base year in the intrinsic value calculation for STKS 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 7.9% for The ONE Group Hospitality, Inc..

Corporate tax rate of 27% is the nominal tax rate for The ONE Group Hospitality, 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 STKS 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 STKS are equal to 46.6%.

Life of production assets of 12.2 years is the average useful life of capital assets used in The ONE Group Hospitality, 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 STKS is equal to -6.8%. 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 - $7.475 million for The ONE Group Hospitality, 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 28.295 million for The ONE Group Hospitality, 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 The ONE Group Hospitality, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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