Intrinsic value of Weyco Group, Inc. - WEYS

Previous Close

$23.77

  Intrinsic Value

$7.01

stock screener

  Rating & Target

str. sell

-70%

Previous close

$23.77

 
Intrinsic value

$7.01

 
Up/down potential

-70%

 
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 0.2

 

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, %
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
Revenue, $m
  333
  369
  407
  447
  489
  532
  578
  625
  674
  725
  777
  832
  890
  949
  1,011
  1,075
  1,142
  1,212
  1,284
  1,360
  1,439
  1,521
  1,607
  1,697
  1,790
  1,888
  1,991
  2,098
  2,210
  2,328
Variable operating expenses, $m
  293
  325
  358
  393
  429
  467
  506
  547
  589
  633
  675
  723
  772
  824
  878
  933
  991
  1,052
  1,115
  1,181
  1,249
  1,321
  1,395
  1,473
  1,555
  1,640
  1,729
  1,822
  1,919
  2,021
Fixed operating expenses, $m
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
Total operating expenses, $m
  303
  335
  369
  404
  440
  478
  518
  559
  601
  645
  688
  736
  785
  838
  892
  947
  1,005
  1,067
  1,130
  1,196
  1,265
  1,337
  1,411
  1,490
  1,572
  1,658
  1,747
  1,840
  1,938
  2,040
Operating income, $m
  29
  34
  39
  44
  49
  54
  60
  66
  72
  79
  90
  97
  104
  111
  119
  127
  136
  145
  154
  164
  174
  184
  195
  207
  219
  231
  244
  258
  272
  288
EBITDA, $m
  37
  42
  47
  52
  58
  64
  70
  76
  83
  90
  97
  105
  112
  121
  129
  138
  147
  156
  166
  177
  187
  199
  211
  223
  236
  249
  263
  278
  293
  310
Interest expense (income), $m
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
Earnings before tax, $m
  29
  33
  37
  42
  47
  52
  57
  62
  68
  74
  84
  91
  97
  104
  111
  119
  127
  135
  143
  152
  161
  171
  181
  191
  202
  213
  225
  238
  251
  265
Tax expense, $m
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  23
  25
  26
  28
  30
  32
  34
  36
  39
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
Net income, $m
  21
  24
  27
  31
  34
  38
  42
  46
  50
  54
  62
  66
  71
  76
  81
  87
  92
  98
  104
  111
  118
  125
  132
  139
  147
  156
  165
  174
  183
  193

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
  301
  334
  369
  405
  443
  482
  523
  566
  610
  656
  704
  754
  806
  860
  916
  974
  1,034
  1,097
  1,163
  1,232
  1,303
  1,378
  1,456
  1,537
  1,622
  1,711
  1,803
  1,901
  2,002
  2,108
Adjusted assets (=assets-cash), $m
  301
  334
  369
  405
  443
  482
  523
  566
  610
  656
  704
  754
  806
  860
  916
  974
  1,034
  1,097
  1,163
  1,232
  1,303
  1,378
  1,456
  1,537
  1,622
  1,711
  1,803
  1,901
  2,002
  2,108
Revenue / Adjusted assets
  1.106
  1.105
  1.103
  1.104
  1.104
  1.104
  1.105
  1.104
  1.105
  1.105
  1.104
  1.103
  1.104
  1.103
  1.104
  1.104
  1.104
  1.105
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.104
  1.103
  1.104
  1.104
  1.104
  1.104
Average production assets, $m
  58
  65
  71
  78
  86
  93
  101
  109
  118
  127
  136
  146
  156
  166
  177
  188
  200
  212
  225
  238
  252
  266
  281
  297
  313
  330
  348
  367
  387
  407
Working capital, $m
  111
  123
  136
  149
  163
  177
  192
  208
  224
  241
  259
  277
  296
  316
  337
  358
  380
  403
  428
  453
  479
  507
  535
  565
  596
  629
  663
  699
  736
  775
Total debt, $m
  13
  21
  30
  38
  47
  57
  66
  77
  87
  98
  110
  122
  134
  147
  160
  174
  189
  204
  219
  236
  253
  271
  289
  309
  329
  350
  372
  396
  420
  445
Total liabilities, $m
  72
  80
  88
  97
  106
  115
  125
  135
  146
  157
  168
  180
  193
  205
  219
  233
  247
  262
  278
  294
  311
  329
  348
  367
  388
  409
  431
  454
  479
  504
Total equity, $m
  229
  254
  281
  308
  337
  367
  398
  431
  464
  499
  536
  574
  613
  654
  697
  741
  787
  835
  885
  937
  992
  1,048
  1,108
  1,170
  1,234
  1,302
  1,372
  1,446
  1,524
  1,605
Total liabilities and equity, $m
  301
  334
  369
  405
  443
  482
  523
  566
  610
  656
  704
  754
  806
  859
  916
  974
  1,034
  1,097
  1,163
  1,231
  1,303
  1,377
  1,456
  1,537
  1,622
  1,711
  1,803
  1,900
  2,003
  2,109
Debt-to-equity ratio
  0.060
  0.080
  0.110
  0.120
  0.140
  0.150
  0.170
  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
  0.260
  0.270
  0.270
  0.270
  0.270
  0.280
  0.280
Adjusted equity ratio
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  21
  24
  27
  31
  34
  38
  42
  46
  50
  54
  62
  66
  71
  76
  81
  87
  92
  98
  104
  111
  118
  125
  132
  139
  147
  156
  165
  174
  183
  193
Depreciation, amort., depletion, $m
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Funds from operations, $m
  29
  32
  36
  39
  43
  47
  52
  56
  60
  65
  69
  74
  80
  85
  91
  97
  103
  110
  117
  124
  131
  139
  147
  156
  165
  174
  184
  194
  204
  215
Change in working capital, $m
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
Cash from operations, $m
  17
  20
  23
  26
  29
  33
  36
  40
  44
  48
  51
  56
  61
  65
  70
  76
  81
  87
  92
  99
  105
  112
  119
  126
  133
  141
  149
  158
  167
  176
Maintenance CAPEX, $m
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
New CAPEX, $m
  -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
  -20
  -21
Cash from investing activities, $m
  -9
  -9
  -11
  -11
  -11
  -13
  -13
  -13
  -15
  -15
  -16
  -17
  -18
  -18
  -20
  -21
  -22
  -23
  -25
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
Free cash flow, $m
  8
  10
  13
  15
  18
  21
  23
  26
  30
  33
  35
  39
  43
  46
  51
  55
  59
  64
  68
  73
  78
  84
  89
  95
  101
  107
  113
  120
  127
  135
Issuance/(repayment) of debt, $m
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
Issuance/(repurchase) of shares, $m
  3
  1
  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  
  11
  9
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
Total cash flow (excl. dividends), $m
  18
  19
  21
  24
  27
  30
  33
  37
  40
  44
  47
  51
  55
  59
  64
  69
  74
  79
  84
  90
  95
  101
  108
  114
  121
  128
  136
  143
  152
  160
Retained Cash Flow (-), $m
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -77
  -81
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
  -5
  -4
  -2
  0
  2
  4
  7
  9
  10
  13
  16
  18
  21
  24
  27
  31
  34
  37
  41
  45
  48
  52
  56
  61
  65
  70
  74
  79
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
  -5
  -5
  -5
  -3
  -2
  0
  1
  3
  4
  5
  5
  5
  6
  6
  6
  6
  6
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
Current shareholders' claim on cash, %
  98.9
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6

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, Inc. (WEYS)

Valuation Ratios
P/E Ratio 15.6
Price to Sales 0.8
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 5.3
Price to Free Cash Flow 6.1
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 $298 million for the last fiscal year's total revenue generated by Weyco Group, Inc.. The default revenue input number comes from 0001 income statement of Weyco Group, 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 WEYS stock valuation model: a) initial revenue growth rate of 11.6% 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, 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 Weyco Group, 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 WEYS stock the variable cost ratio is equal to 88.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Weyco Group, 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 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 17.5%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Weyco Group, 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 WEYS is equal to 33.3%. 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 - $205.583 million for Weyco Group, 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 10.136 million for Weyco Group, 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 Weyco Group, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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