Intrinsic value of Tile Shop Hldgs, Inc. - TTS

Previous Close

$6.17

  Intrinsic Value

$1.56

stock screener

  Rating & Target

str. sell

-75%

Previous close

$6.17

 
Intrinsic value

$1.56

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of TTS 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 0.3

 

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, %
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  381
  407
  433
  460
  489
  518
  549
  581
  615
  650
  686
  725
  764
  806
  850
  895
  943
  993
  1,046
  1,100
  1,158
  1,218
  1,281
  1,347
  1,416
  1,489
  1,565
  1,645
  1,729
  1,817
Variable operating expenses, $m
  352
  376
  400
  425
  451
  479
  507
  537
  568
  600
  634
  669
  706
  745
  785
  827
  872
  918
  966
  1,017
  1,070
  1,125
  1,184
  1,245
  1,309
  1,376
  1,446
  1,520
  1,598
  1,679
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
  352
  376
  400
  425
  451
  479
  507
  537
  568
  600
  634
  669
  706
  745
  785
  827
  872
  918
  966
  1,017
  1,070
  1,125
  1,184
  1,245
  1,309
  1,376
  1,446
  1,520
  1,598
  1,679
Operating income, $m
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
  61
  65
  68
  72
  75
  79
  84
  88
  93
  97
  102
  108
  113
  119
  125
  131
  138
EBITDA, $m
  59
  63
  67
  71
  76
  80
  85
  90
  95
  101
  106
  112
  118
  125
  132
  139
  146
  154
  162
  170
  179
  189
  198
  209
  219
  231
  242
  255
  268
  281
Interest expense (income), $m
  0
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  40
  42
Earnings before tax, $m
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
Tax expense, $m
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Net income, $m
  19
  19
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70

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
  318
  339
  361
  384
  407
  432
  458
  485
  513
  542
  572
  604
  638
  672
  709
  747
  787
  828
  872
  918
  966
  1,016
  1,068
  1,123
  1,181
  1,242
  1,305
  1,372
  1,442
  1,515
Adjusted assets (=assets-cash), $m
  318
  339
  361
  384
  407
  432
  458
  485
  513
  542
  572
  604
  638
  672
  709
  747
  787
  828
  872
  918
  966
  1,016
  1,068
  1,123
  1,181
  1,242
  1,305
  1,372
  1,442
  1,515
Revenue / Adjusted assets
  1.198
  1.201
  1.199
  1.198
  1.201
  1.199
  1.199
  1.198
  1.199
  1.199
  1.199
  1.200
  1.197
  1.199
  1.199
  1.198
  1.198
  1.199
  1.200
  1.198
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
Average production assets, $m
  165
  176
  188
  200
  212
  225
  238
  252
  267
  282
  298
  314
  332
  350
  369
  389
  409
  431
  454
  478
  502
  529
  556
  585
  615
  646
  679
  714
  750
  788
Working capital, $m
  79
  84
  89
  95
  101
  107
  113
  120
  127
  134
  141
  149
  157
  166
  175
  184
  194
  205
  215
  227
  238
  251
  264
  277
  292
  307
  322
  339
  356
  374
Total debt, $m
  64
  74
  86
  97
  109
  122
  135
  148
  163
  177
  193
  209
  226
  244
  262
  282
  302
  323
  345
  368
  393
  418
  445
  473
  502
  533
  565
  599
  635
  672
Total liabilities, $m
  162
  172
  183
  195
  207
  220
  233
  246
  260
  275
  291
  307
  324
  342
  360
  379
  400
  421
  443
  466
  491
  516
  543
  571
  600
  631
  663
  697
  733
  770
Total equity, $m
  156
  167
  178
  189
  200
  213
  225
  238
  252
  267
  282
  297
  314
  331
  349
  367
  387
  408
  429
  452
  475
  500
  526
  553
  581
  611
  642
  675
  709
  746
Total liabilities and equity, $m
  318
  339
  361
  384
  407
  433
  458
  484
  512
  542
  573
  604
  638
  673
  709
  746
  787
  829
  872
  918
  966
  1,016
  1,069
  1,124
  1,181
  1,242
  1,305
  1,372
  1,442
  1,516
Debt-to-equity ratio
  0.410
  0.450
  0.480
  0.510
  0.540
  0.570
  0.600
  0.620
  0.640
  0.670
  0.690
  0.700
  0.720
  0.740
  0.750
  0.770
  0.780
  0.790
  0.800
  0.820
  0.830
  0.840
  0.850
  0.860
  0.860
  0.870
  0.880
  0.890
  0.890
  0.900
Adjusted equity ratio
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  19
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
Depreciation, amort., depletion, $m
  30
  32
  34
  36
  39
  41
  43
  46
  49
  51
  54
  57
  60
  64
  67
  71
  74
  78
  83
  87
  91
  96
  101
  106
  112
  117
  124
  130
  136
  143
Funds from operations, $m
  49
  52
  55
  58
  61
  64
  68
  72
  75
  79
  84
  88
  93
  97
  102
  108
  113
  119
  125
  131
  138
  145
  152
  160
  168
  176
  185
  194
  203
  214
Change in working capital, $m
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
Cash from operations, $m
  44
  46
  49
  52
  55
  58
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
  126
  132
  139
  146
  153
  161
  169
  177
  186
  195
Maintenance CAPEX, $m
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
  -83
  -87
  -91
  -96
  -101
  -106
  -112
  -117
  -124
  -130
  -136
New CAPEX, $m
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -38
Cash from investing activities, $m
  -39
  -41
  -43
  -46
  -48
  -52
  -54
  -57
  -61
  -64
  -67
  -71
  -74
  -78
  -83
  -87
  -92
  -96
  -101
  -107
  -112
  -117
  -123
  -130
  -136
  -144
  -150
  -159
  -166
  -174
Free cash flow, $m
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
Issuance/(repayment) of debt, $m
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
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  
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
Total cash flow (excl. dividends), $m
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  48
  51
  53
  56
  58
Retained Cash Flow (-), $m
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
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
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  5
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
  1
  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

Tile Shop Holdings, Inc. operates as a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States. It offers approximately 4,000 products, including ceramic, porcelain, glass, cement, wood look, and metal tiles; and marble, granite, quartz, sandstone, travertine, slate, and onyx tiles primarily under the Rush River and Fired Earth brand names. The company also manufactures setting and maintenance materials, such as thinset, grout, and sealers under the Superior brand name. As of February 24, 2017, it operated 124 stores in 31 states with an average size of 21,200 square feet. The company also sells its products through its Website, tileshop.com. Tile Shop Holdings, Inc. was founded in 1985 and is headquartered in Plymouth, Minnesota.

FINANCIAL RATIOS  of  Tile Shop Hldgs, Inc. (TTS)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

TTS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TTS stock intrinsic value calculation we used $357 million for the last fiscal year's total revenue generated by Tile Shop Hldgs, Inc.. The default revenue input number comes from 0001 income statement of Tile Shop Hldgs, 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 TTS stock valuation model: a) initial revenue growth rate of 6.8% 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 4.8%, whose default value for TTS is calculated based on our internal credit rating of Tile Shop Hldgs, 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 Tile Shop Hldgs, 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 TTS stock the variable cost ratio is equal to 92.4%.

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 TTS 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 6.6% for Tile Shop Hldgs, Inc..

Corporate tax rate of 27% is the nominal tax rate for Tile Shop Hldgs, 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 TTS 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 TTS are equal to 43.4%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Tile Shop Hldgs, 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 TTS is equal to 20.6%. 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 - $146.347 million for Tile Shop Hldgs, 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 52.921 million for Tile Shop Hldgs, 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 Tile Shop Hldgs, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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