Intrinsic value of Truett-Hurst Cl A - THST

Previous Close

$1.85

  Intrinsic Value

$0.66

stock screener

  Rating & Target

str. sell

-64%

Previous close

$1.85

 
Intrinsic value

$0.66

 
Up/down potential

-64%

 
Rating

str. sell

We calculate the intrinsic value of THST 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, %
  22.20
  20.48
  18.93
  17.54
  16.28
  15.16
  14.14
  13.23
  12.40
  11.66
  11.00
  10.40
  9.86
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
Revenue, $m
  26
  32
  38
  44
  52
  59
  68
  77
  86
  96
  107
  118
  130
  142
  154
  168
  181
  196
  210
  226
  242
  258
  276
  294
  313
  332
  352
  373
  395
  418
Variable operating expenses, $m
  24
  29
  34
  40
  47
  54
  61
  70
  78
  87
  97
  107
  118
  129
  140
  152
  164
  177
  191
  205
  219
  234
  250
  266
  283
  301
  319
  339
  359
  379
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  26
  31
  36
  42
  49
  56
  63
  72
  80
  89
  100
  110
  121
  132
  143
  155
  167
  180
  194
  208
  222
  237
  253
  269
  286
  305
  323
  343
  363
  383
Operating income, $m
  0
  1
  1
  2
  3
  3
  4
  5
  6
  6
  7
  8
  9
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
EBITDA, $m
  1
  2
  3
  4
  4
  5
  6
  8
  9
  10
  11
  13
  14
  16
  17
  19
  21
  23
  24
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
Interest expense (income), $m
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  16
  18
  19
Earnings before tax, $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
Net income, $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12

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
  36
  43
  52
  61
  70
  81
  93
  105
  118
  132
  146
  161
  177
  194
  211
  229
  248
  267
  287
  309
  330
  353
  377
  401
  427
  454
  481
  510
  540
  572
Adjusted assets (=assets-cash), $m
  36
  43
  52
  61
  70
  81
  93
  105
  118
  132
  146
  161
  177
  194
  211
  229
  248
  267
  287
  309
  330
  353
  377
  401
  427
  454
  481
  510
  540
  572
Revenue / Adjusted assets
  0.722
  0.744
  0.731
  0.721
  0.743
  0.728
  0.731
  0.733
  0.729
  0.727
  0.733
  0.733
  0.734
  0.732
  0.730
  0.734
  0.730
  0.734
  0.732
  0.731
  0.733
  0.731
  0.732
  0.733
  0.733
  0.731
  0.732
  0.731
  0.731
  0.731
Average production assets, $m
  7
  8
  10
  12
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  40
  44
  48
  51
  55
  59
  63
  68
  72
  77
  82
  87
  92
  98
  104
  110
Working capital, $m
  13
  16
  19
  22
  26
  30
  34
  38
  43
  48
  53
  59
  65
  71
  77
  84
  91
  98
  105
  113
  121
  129
  138
  147
  156
  166
  176
  187
  198
  209
Total debt, $m
  15
  20
  25
  31
  37
  44
  52
  60
  68
  77
  87
  96
  107
  118
  129
  141
  153
  166
  179
  193
  207
  222
  237
  253
  270
  287
  306
  324
  344
  365
Total liabilities, $m
  23
  28
  34
  40
  46
  53
  60
  68
  77
  86
  95
  105
  116
  126
  138
  150
  162
  174
  188
  201
  216
  231
  246
  262
  279
  296
  314
  333
  353
  373
Total equity, $m
  12
  15
  18
  21
  24
  28
  32
  36
  41
  46
  51
  56
  61
  67
  73
  79
  86
  93
  100
  107
  115
  123
  131
  139
  148
  157
  167
  177
  187
  198
Total liabilities and equity, $m
  35
  43
  52
  61
  70
  81
  92
  104
  118
  132
  146
  161
  177
  193
  211
  229
  248
  267
  288
  308
  331
  354
  377
  401
  427
  453
  481
  510
  540
  571
Debt-to-equity ratio
  1.180
  1.300
  1.390
  1.470
  1.520
  1.570
  1.610
  1.640
  1.670
  1.690
  1.710
  1.730
  1.740
  1.750
  1.760
  1.770
  1.780
  1.790
  1.790
  1.800
  1.810
  1.810
  1.810
  1.820
  1.820
  1.830
  1.830
  1.830
  1.840
  1.840
Adjusted equity ratio
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
Funds from operations, $m
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  16
  17
  18
  19
  20
  22
  23
  24
  26
  28
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
Cash from operations, $m
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -15
  -15
  -16
  -17
  -17
  -19
  -20
  -21
Free cash flow, $m
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
Issuance/(repurchase) of shares, $m
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  6
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  12
  13
  13
  14
  14
  15
  14
  15
  15
  16
  16
  16
  17
  17
  18
  19
  20
  20
Total cash flow (excl. dividends), $m
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
Retained Cash Flow (-), $m
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
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
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  5
  5
Discount rate, %
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  78.6
  62.6
  51.3
  43.1
  36.9
  32.2
  28.6
  25.8
  23.5
  21.7
  20.2
  19.0
  18.0
  17.2
  16.6
  16.0
  15.6
  15.2
  14.9
  14.7
  14.5
  14.4
  14.3
  14.3
  14.3
  14.3
  14.3
  14.3
  14.3
  14.3

Truett-Hurst, Inc. is a holding company. The Company produces and sells wines and other select beverage alcohol products made from wine. The Company's segments include wholesale and direct to consumer. Wholesale sales include its retail brand label model and brands sold through the three-tier distribution system. Direct to consumer sales occur through its tasting rooms and wine clubs. It also purchases semi-finished bulk wine, and finished goods from both foreign and domestic producers. The Company owns its tasting room and winery in the Dry Creek Valley and leases the tasting room and winery located in the Russian River Valley. Its wines include Pinot Noir, Chardonnay, Sauvignon Blanc, Zinfandel, Petite Sirah, Merlot and Cabernet Sauvignon, which are sold across a range of price points through various distribution channels, such as three-tier and direct to consumer. Its brands include Truett Hurst, VML, Bradford Mountain, Healdsburg Ranches, The One Armed Man and Stonegate.

FINANCIAL RATIOS  of  Truett-Hurst Cl A (THST)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.4
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 8.2
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -15.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 30%
Total Debt to Equity 110%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -1.5%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -3.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 31.8%
Gross Margin - 3 Yr. Avg. 32%
EBITDA Margin 4.5%
EBITDA Margin - 3 Yr. Avg. -1%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -2.5%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -5%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -1.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

THST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the THST stock intrinsic value calculation we used $21.536 million for the last fiscal year's total revenue generated by Truett-Hurst Cl A. The default revenue input number comes from 0001 income statement of Truett-Hurst Cl A. 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 THST stock valuation model: a) initial revenue growth rate of 22.2% 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 8.6%, whose default value for THST is calculated based on our internal credit rating of Truett-Hurst Cl A, 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 Truett-Hurst Cl A.
    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 THST stock the variable cost ratio is equal to 90.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for THST 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 Truett-Hurst Cl A.

Corporate tax rate of 27% is the nominal tax rate for Truett-Hurst Cl A. 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 THST 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 THST are equal to 26.2%.

Life of production assets of 7.1 years is the average useful life of capital assets used in Truett-Hurst Cl A 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 THST is equal to 50%. 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 - $10.435 million for Truett-Hurst Cl A - 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 4.496 million for Truett-Hurst Cl A 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 Truett-Hurst Cl A at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Truett-Hurst Asset Sale for Cash, Analyst Report   [Aug-16-18 08:15AM  ACCESSWIRE]
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▶ Who Owns Truett-Hurst Inc (THST)?   [Dec-08-17 06:53PM  Simply Wall St.]
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