Intrinsic value of Vitamin Shoppe - VSI

Previous Close

$8.61

  Intrinsic Value

$7.33

stock screener

  Rating & Target

hold

-15%

Previous close

$8.61

 
Intrinsic value

$7.33

 
Up/down potential

-15%

 
Rating

hold

We calculate the intrinsic value of VSI 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, %
  2.00
  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
Revenue, $m
  1,202
  1,230
  1,262
  1,297
  1,336
  1,379
  1,426
  1,477
  1,532
  1,591
  1,654
  1,721
  1,792
  1,868
  1,949
  2,034
  2,125
  2,220
  2,321
  2,428
  2,541
  2,659
  2,784
  2,916
  3,055
  3,201
  3,355
  3,517
  3,687
  3,866
Variable operating expenses, $m
  1,159
  1,186
  1,216
  1,250
  1,288
  1,330
  1,375
  1,424
  1,477
  1,533
  1,593
  1,657
  1,726
  1,799
  1,877
  1,959
  2,046
  2,138
  2,236
  2,338
  2,447
  2,561
  2,682
  2,808
  2,942
  3,083
  3,231
  3,387
  3,551
  3,724
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
  1,159
  1,186
  1,216
  1,250
  1,288
  1,330
  1,375
  1,424
  1,477
  1,533
  1,593
  1,657
  1,726
  1,799
  1,877
  1,959
  2,046
  2,138
  2,236
  2,338
  2,447
  2,561
  2,682
  2,808
  2,942
  3,083
  3,231
  3,387
  3,551
  3,724
Operating income, $m
  43
  44
  45
  47
  48
  50
  52
  53
  55
  58
  61
  64
  66
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  130
  136
  143
EBITDA, $m
  74
  76
  78
  80
  82
  85
  88
  91
  94
  98
  102
  106
  111
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  217
  227
  238
Interest expense (income), $m
  4
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  52
  55
Earnings before tax, $m
  33
  34
  35
  35
  36
  37
  38
  39
  40
  41
  44
  45
  46
  48
  50
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  74
  77
  81
  84
  88
Tax expense, $m
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
Net income, $m
  24
  25
  25
  26
  26
  27
  28
  29
  29
  30
  32
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  46
  48
  50
  52
  54
  57
  59
  61
  64

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
  501
  513
  526
  541
  557
  575
  595
  616
  639
  663
  689
  717
  747
  779
  812
  848
  886
  926
  968
  1,012
  1,059
  1,108
  1,161
  1,216
  1,273
  1,334
  1,399
  1,466
  1,537
  1,612
Adjusted assets (=assets-cash), $m
  501
  513
  526
  541
  557
  575
  595
  616
  639
  663
  689
  717
  747
  779
  812
  848
  886
  926
  968
  1,012
  1,059
  1,108
  1,161
  1,216
  1,273
  1,334
  1,399
  1,466
  1,537
  1,612
Revenue / Adjusted assets
  2.399
  2.398
  2.399
  2.397
  2.399
  2.398
  2.397
  2.398
  2.397
  2.400
  2.401
  2.400
  2.399
  2.398
  2.400
  2.399
  2.398
  2.397
  2.398
  2.399
  2.399
  2.400
  2.398
  2.398
  2.400
  2.400
  2.398
  2.399
  2.399
  2.398
Average production assets, $m
  220
  225
  231
  237
  245
  252
  261
  270
  280
  291
  303
  315
  328
  342
  357
  372
  389
  406
  425
  444
  465
  487
  510
  534
  559
  586
  614
  644
  675
  708
Working capital, $m
  168
  172
  177
  182
  187
  193
  200
  207
  214
  223
  232
  241
  251
  262
  273
  285
  297
  311
  325
  340
  356
  372
  390
  408
  428
  448
  470
  492
  516
  541
Total debt, $m
  144
  151
  159
  168
  178
  189
  200
  213
  227
  242
  257
  274
  292
  311
  331
  353
  376
  400
  425
  452
  480
  510
  541
  574
  609
  646
  684
  725
  768
  813
Total liabilities, $m
  302
  309
  317
  325
  335
  346
  358
  371
  384
  399
  415
  432
  450
  469
  489
  510
  533
  557
  583
  609
  638
  667
  699
  732
  767
  803
  842
  883
  925
  970
Total equity, $m
  199
  204
  209
  215
  222
  229
  237
  245
  254
  264
  274
  286
  297
  310
  323
  338
  353
  368
  385
  403
  421
  441
  462
  484
  507
  531
  557
  583
  612
  641
Total liabilities and equity, $m
  501
  513
  526
  540
  557
  575
  595
  616
  638
  663
  689
  718
  747
  779
  812
  848
  886
  925
  968
  1,012
  1,059
  1,108
  1,161
  1,216
  1,274
  1,334
  1,399
  1,466
  1,537
  1,611
Debt-to-equity ratio
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
  0.850
  0.870
  0.890
  0.920
  0.940
  0.960
  0.980
  1.000
  1.020
  1.050
  1.070
  1.080
  1.100
  1.120
  1.140
  1.160
  1.170
  1.190
  1.200
  1.220
  1.230
  1.240
  1.250
  1.270
Adjusted equity ratio
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  24
  25
  25
  26
  26
  27
  28
  29
  29
  30
  32
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  46
  48
  50
  52
  54
  57
  59
  61
  64
Depreciation, amort., depletion, $m
  31
  32
  32
  33
  34
  35
  36
  38
  39
  40
  41
  43
  44
  46
  48
  50
  53
  55
  57
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
Funds from operations, $m
  55
  56
  58
  59
  61
  62
  64
  66
  68
  71
  73
  75
  78
  81
  84
  88
  91
  95
  99
  103
  108
  112
  117
  122
  128
  133
  139
  146
  153
  160
Change in working capital, $m
  3
  4
  4
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  18
  19
  20
  22
  23
  24
  25
Cash from operations, $m
  52
  52
  53
  54
  55
  56
  58
  59
  61
  62
  64
  66
  68
  71
  73
  76
  79
  82
  85
  88
  92
  96
  100
  104
  108
  113
  118
  123
  129
  134
Maintenance CAPEX, $m
  -29
  -30
  -30
  -31
  -32
  -33
  -34
  -35
  -37
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
New CAPEX, $m
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
Cash from investing activities, $m
  -33
  -35
  -36
  -37
  -39
  -41
  -43
  -44
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -97
  -103
  -107
  -113
  -118
  -124
Free cash flow, $m
  18
  18
  17
  16
  16
  15
  15
  14
  14
  14
  13
  13
  13
  12
  12
  12
  12
  12
  11
  11
  11
  11
  11
  11
  11
  11
  11
  11
  11
  10
Issuance/(repayment) of debt, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
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  
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
Total cash flow (excl. dividends), $m
  24
  25
  25
  25
  26
  26
  27
  27
  28
  28
  29
  30
  31
  31
  32
  33
  34
  36
  37
  38
  39
  41
  42
  44
  46
  47
  49
  51
  53
  55
Retained Cash Flow (-), $m
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
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
  20
  20
  20
  19
  19
  19
  19
  19
  19
  19
  18
  19
  19
  19
  19
  19
  19
  20
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  26
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  19
  18
  16
  15
  14
  13
  11
  10
  9
  8
  7
  6
  5
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
  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
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Vitamin Shoppe, Inc. (VSI) is a multi-channel specialty retailer and contract manufacturer of vitamins, minerals, herbs, specialty supplements, sports nutrition, and other health and wellness products. The Company operates through three segments: retail, direct and manufacturing. The retail segment includes Vitamin Shoppe, Super Supplements and Vitapath retail store formats. The direct segment sells its products directly to consumers through the Internet, primarily at www.vitaminshoppe.com. The manufacturing segment provides custom manufacturing and private labeling of vitamin, mineral and supplement products, and develops and markets its own branded products for both sales to third parties and for the VSI product assortment. As of December 31, 2016, it marketed approximately 900 brands, as well as its own brands. As of December 31, 2016, it operated 775 stores located in 45 states, the District of Columbia and Puerto Rico, primarily located in retail centers and standalone locations.

FINANCIAL RATIOS  of  Vitamin Shoppe (VSI)

Valuation Ratios
P/E Ratio 8.1
Price to Sales 0.2
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 3.8
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.6%
Cap. Spend. - 3 Yr. Gr. Rate -1.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 27.5%
Total Debt to Equity 30%
Interest Coverage 10
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 6.5%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 8.2%
Return On Equity 5.5%
Return On Equity - 3 Yr. Avg. 9%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 33%
Gross Margin - 3 Yr. Avg. 33.1%
EBITDA Margin 6.1%
EBITDA Margin - 3 Yr. Avg. 9.1%
Operating Margin 3.5%
Oper. Margin - 3 Yr. Avg. 6.3%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 6%
Net Profit Margin 1.9%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 30.6%
Eff/ Tax Rate - 3 Yr. Avg. 36.8%
Payout Ratio 0%

VSI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VSI stock intrinsic value calculation we used $1178.694 million for the last fiscal year's total revenue generated by Vitamin Shoppe. The default revenue input number comes from 0001 income statement of Vitamin Shoppe. 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 VSI stock valuation model: a) initial revenue growth rate of 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 5.6%, whose default value for VSI is calculated based on our internal credit rating of Vitamin Shoppe, 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 Vitamin Shoppe.
    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 VSI stock the variable cost ratio is equal to 96.4%.

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 VSI 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 7.2% for Vitamin Shoppe.

Corporate tax rate of 27% is the nominal tax rate for Vitamin Shoppe. 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 VSI 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 VSI are equal to 18.3%.

Life of production assets of 7.4 years is the average useful life of capital assets used in Vitamin Shoppe 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 VSI is equal to 14%. 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 - $195.367 million for Vitamin Shoppe - 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 24.053 million for Vitamin Shoppe 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 Vitamin Shoppe at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Vitamin Shoppe: 3Q Earnings Snapshot   [06:20AM  Associated Press]
▶ Vitamin Shoppe Q3 Earnings Outlook   [Nov-06-18 01:40PM  Benzinga]
▶ The Vitamin Shoppe® Introduces KETO HQ Nationwide   [Aug-29-18 10:00AM  PR Newswire]
▶ Grab These 8 Stocks for Their Strong Numbers   [Aug-24-18 07:19PM  Zacks]
▶ Time to Take Profits in Vitamin Shoppe Stock   [Aug-10-18 04:43PM  InvestorPlace]
▶ Vitamin Shoppe: 2Q Earnings Snapshot   [06:16AM  Associated Press]
▶ A Preview Of Vitamin Shoppe's Q2 Earnings   [Aug-07-18 02:43PM  Benzinga]
▶ 3 Nutritional Stocks to Improve Your Portfolios Health   [Aug-06-18 11:14AM  InvestorPlace]
▶ The Vitamin Shoppe® Introduces Launchpad   [Jul-30-18 10:46AM  PR Newswire]
▶ After-hours buzz: GOOGL, WHR & more   [Jul-23-18 05:54PM  CNBC]
▶ [$$] Vitamin Shoppe Works Out With Two Activists   [Jul-21-18 12:01AM  Barrons.com]
▶ When Should You Buy Vitamin Shoppe Inc (NYSE:VSI)?   [Jun-08-18 07:32PM  Simply Wall St.]
▶ Vitamin Shoppe names Bill Wafford CFO   [May-18-18 07:07AM  MarketWatch]
▶ Vitamin Shoppe: 1Q Earnings Snapshot   [May-09-18 06:11AM  Associated Press]
▶ P&G's vitamin boost could signal more to come   [Apr-20-18 10:20AM  Reuters]
▶ [$$] Vitamin Shoppe Looks to Hire Turnaround Firms: Sources   [Feb-28-18 05:46PM  The Wall Street Journal]
▶ Vitamin Shoppe reports 4Q loss   [06:35AM  Associated Press]
▶ Are Vitamin Shoppe Incs (NYSE:VSI) Interest Costs Too High?   [Jan-06-18 08:30AM  Simply Wall St.]
▶ Why GNC Holdings Inc Stock Is a Ticking Time Bomb   [Dec-21-17 06:55AM  InvestorPlace]
▶ Vitamin Shoppe reports 3Q loss   [06:19AM  Associated Press]
▶ What Analysts Are Recommending for Herbalife Stock   [Nov-06-17 07:33AM  Market Realist]

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