Intrinsic value of Weyco Group - WEYS

Previous Close

$33.11

  Intrinsic Value

$8.64

stock screener

  Rating & Target

str. sell

-74%

Previous close

$33.11

 
Intrinsic value

$8.64

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of WEYS 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, %
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  301
  319
  337
  356
  376
  398
  420
  443
  467
  492
  518
  545
  574
  604
  636
  669
  704
  740
  778
  818
  860
  904
  950
  999
  1,049
  1,103
  1,159
  1,217
  1,279
  1,343
Variable operating expenses, $m
  277
  293
  310
  328
  346
  365
  385
  406
  428
  451
  470
  495
  521
  549
  577
  607
  639
  672
  706
  743
  781
  821
  862
  906
  952
  1,001
  1,051
  1,104
  1,160
  1,219
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
  277
  293
  310
  328
  346
  365
  385
  406
  428
  451
  470
  495
  521
  549
  577
  607
  639
  672
  706
  743
  781
  821
  862
  906
  952
  1,001
  1,051
  1,104
  1,160
  1,219
Operating income, $m
  23
  25
  27
  29
  30
  32
  34
  37
  39
  41
  48
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  88
  92
  97
  102
  107
  113
  118
  124
EBITDA, $m
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  56
  59
  62
  66
  69
  73
  77
  80
  85
  89
  93
  98
  103
  108
  114
  120
  126
  132
  139
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
Earnings before tax, $m
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  45
  48
  50
  52
  55
  58
  60
  63
  66
  70
  73
  77
  80
  84
  88
  93
  97
  102
  107
  112
Tax expense, $m
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
Net income, $m
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  53
  56
  59
  62
  64
  68
  71
  74
  78
  82

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
  274
  290
  307
  325
  343
  362
  382
  403
  425
  448
  472
  497
  523
  551
  579
  609
  641
  674
  709
  745
  784
  824
  866
  910
  956
  1,004
  1,055
  1,108
  1,164
  1,223
Adjusted assets (=assets-cash), $m
  274
  290
  307
  325
  343
  362
  382
  403
  425
  448
  472
  497
  523
  551
  579
  609
  641
  674
  709
  745
  784
  824
  866
  910
  956
  1,004
  1,055
  1,108
  1,164
  1,223
Revenue / Adjusted assets
  1.099
  1.100
  1.098
  1.095
  1.096
  1.099
  1.099
  1.099
  1.099
  1.098
  1.097
  1.097
  1.098
  1.096
  1.098
  1.099
  1.098
  1.098
  1.097
  1.098
  1.097
  1.097
  1.097
  1.098
  1.097
  1.099
  1.099
  1.098
  1.099
  1.098
Average production assets, $m
  58
  61
  65
  69
  73
  77
  81
  85
  90
  95
  100
  105
  111
  117
  123
  129
  136
  143
  150
  158
  166
  175
  183
  193
  203
  213
  224
  235
  247
  259
Working capital, $m
  96
  102
  108
  114
  120
  127
  134
  142
  149
  157
  166
  175
  184
  193
  204
  214
  225
  237
  249
  262
  275
  289
  304
  320
  336
  353
  371
  389
  409
  430
Total debt, $m
  4
  8
  12
  17
  21
  26
  31
  36
  42
  47
  53
  59
  66
  73
  80
  87
  95
  104
  112
  121
  131
  141
  151
  162
  174
  186
  198
  212
  226
  240
Total liabilities, $m
  68
  72
  76
  81
  85
  90
  95
  100
  106
  111
  117
  124
  130
  137
  144
  152
  160
  168
  177
  186
  195
  205
  216
  226
  238
  250
  263
  276
  290
  305
Total equity, $m
  206
  218
  231
  244
  258
  272
  287
  303
  319
  336
  354
  373
  393
  413
  435
  458
  481
  506
  532
  560
  588
  618
  650
  683
  718
  754
  792
  832
  875
  919
Total liabilities and equity, $m
  274
  290
  307
  325
  343
  362
  382
  403
  425
  447
  471
  497
  523
  550
  579
  610
  641
  674
  709
  746
  783
  823
  866
  909
  956
  1,004
  1,055
  1,108
  1,165
  1,224
Debt-to-equity ratio
  0.020
  0.040
  0.050
  0.070
  0.080
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.250
  0.260
  0.260
Adjusted equity ratio
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  53
  56
  59
  62
  64
  68
  71
  74
  78
  82
Depreciation, amort., depletion, $m
  8
  8
  8
  8
  8
  9
  9
  9
  9
  10
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Funds from operations, $m
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  83
  88
  92
  96
Change in working capital, $m
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
Cash from operations, $m
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
Maintenance CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
New CAPEX, $m
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from investing activities, $m
  -6
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -21
  -23
  -24
  -25
  -26
Free cash flow, $m
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
Issuance/(repayment) of debt, $m
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  12
  12
  13
  13
  14
  15
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  
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  12
  12
  13
  13
  14
  15
Total cash flow (excl. dividends), $m
  17
  18
  19
  19
  20
  21
  22
  24
  25
  26
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
Retained Cash Flow (-), $m
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
Prev. year cash balance distribution, $m
  4
  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
  10
  6
  6
  6
  7
  7
  7
  8
  8
  9
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  9
  5
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  3
  3
  3
  3
  2
  2
  2
  2
  1
  1
  1
  1
  1
  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

Weyco Group, Inc. is engaged in the design and distribution of footwear. The Company designs and markets footwear for men, women and children. The Company operates through two segments: the North American wholesale segment (wholesale) and the North American retail segment (retail). The Company also has other wholesale and retail businesses overseas, which include its businesses in Australia, South Africa and Asia Pacific (collectively known as Florsheim Australia), and its wholesale and retail businesses in Europe (Florsheim Europe). Its products consist of leather dress shoes and casual footwear composed of man-made materials or leather. In addition, the Company offers outdoor boots, shoes and sandals. As of December 31, 2016, the Company's shoes were marketed throughout the United States and Canada in over 10,000 shoe, clothing and department stores. As of December 31, 2016, the retail segment consisted of 13 Company-operated stores and an Internet business in the United States.

FINANCIAL RATIOS  of  Weyco Group (WEYS)

Valuation Ratios
P/E Ratio 21.7
Price to Sales 1.2
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow 8.5
Growth Rates
Sales Growth Rate -7.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 200%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 2%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.6%
Ret/ On Assets - 3 Yr. Avg. 6.3%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8.5%
Return On Equity 8%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 1
Profitability Ratios
Gross Margin 37.7%
Gross Margin - 3 Yr. Avg. 38.1%
EBITDA Margin 8.8%
EBITDA Margin - 3 Yr. Avg. 10%
Operating Margin 7.1%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 7.4%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 5.6%
Effective Tax Rate 22.7%
Eff/ Tax Rate - 3 Yr. Avg. 32%
Payout Ratio 56.3%

WEYS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WEYS stock intrinsic value calculation we used $283.749 million for the last fiscal year's total revenue generated by Weyco Group. The default revenue input number comes from 0001 income statement of Weyco Group. 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 WEYS stock valuation model: a) initial revenue growth rate of 6% 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 4.3%, whose default value for WEYS is calculated based on our internal credit rating of Weyco Group, 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 Weyco Group.
    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 WEYS stock the variable cost ratio is equal to 92.3%.

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 WEYS 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 Weyco Group.

Corporate tax rate of 27% is the nominal tax rate for Weyco Group. 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 WEYS 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 WEYS are equal to 19.3%.

Life of production assets of 17.8 years is the average useful life of capital assets used in Weyco Group 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 WEYS is equal to 32%. 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 - $198.537 million for Weyco Group - 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 10.16 million for Weyco Group 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 Weyco Group at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Weyco: 3Q Earnings Snapshot   [Nov-06-18 05:38PM  Associated Press]
▶ What Does Weyco Group Incs (NASDAQ:WEYS) PE Ratio Tell You?   [Sep-30-18 10:20AM  Simply Wall St.]
▶ Weyco: 2Q Earnings Snapshot   [Aug-07-18 05:20PM  Associated Press]
▶ Weyco: 1Q Earnings Snapshot   [May-04-18 04:13PM  Associated Press]
▶ Best NasdaqGS Cyclical Dividend Paying Companies   [May-02-18 08:02AM  Simply Wall St.]
▶ These Cyclical Dividend Stocks Are Best In Class   [Mar-28-18 08:02AM  Simply Wall St.]
▶ Weyco posts 4Q profit   [Mar-06-18 05:55PM  Associated Press]
▶ NasdaqGS Favorite Cyclical Dividend Stocks   [Dec-13-17 07:02AM  Simply Wall St.]
▶ Weyco posts 3Q profit   [Oct-27-17 04:11PM  Associated Press]
▶ Weyco Reports Second Quarter Sales And Earnings   [Aug-08-17 04:05PM  PR Newswire]
▶ LD Micro Index Reconstitution as of August 1, 2017   [Aug-01-17 09:40AM  ACCESSWIRE]
▶ New Strong Sell Stocks for May 9th   [May-09-17 10:57AM  Zacks]
▶ Weyco posts 1Q profit   [May-02-17 06:47PM  Associated Press]
▶ Weyco posts 4Q profit   [Mar-08-17 06:00PM  Associated Press]
▶ ETFs with exposure to Weyco Group, Inc. : January 6, 2017   [Jan-06-17 12:19PM  Capital Cube]
▶ Weyco reports a 13% drop in sales   [Nov-07-16 06:30PM  at bizjournals.com]

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