Intrinsic value of Weight Watchers International Inc - WTW

Previous Close

$17.70

  Intrinsic Value

$12.77

stock screener

  Rating & Target

sell

-28%

Previous close

$17.70

 
Intrinsic value

$12.77

 
Up/down potential

-28%

 
Rating

sell

We calculate the intrinsic value of WTW 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 1.2

 

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, %
  5.70
  5.63
  5.57
  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
  5.11
  5.09
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
Revenue, $m
  1,600
  1,690
  1,784
  1,883
  1,986
  2,093
  2,206
  2,323
  2,446
  2,575
  2,710
  2,852
  3,000
  3,155
  3,318
  3,489
  3,668
  3,856
  4,052
  4,259
  4,475
  4,703
  4,941
  5,191
  5,454
  5,729
  6,018
  6,321
  6,640
  6,974
Variable operating expenses, $m
  655
  687
  720
  754
  790
  828
  867
  908
  951
  996
  947
  997
  1,049
  1,103
  1,160
  1,219
  1,282
  1,348
  1,416
  1,489
  1,564
  1,644
  1,727
  1,814
  1,906
  2,002
  2,103
  2,209
  2,321
  2,438
Fixed operating expenses, $m
  522
  534
  545
  557
  570
  582
  595
  608
  622
  635
  649
  663
  678
  693
  708
  724
  740
  756
  773
  790
  807
  825
  843
  861
  880
  900
  920
  940
  960
  982
Total operating expenses, $m
  1,177
  1,221
  1,265
  1,311
  1,360
  1,410
  1,462
  1,516
  1,573
  1,631
  1,596
  1,660
  1,727
  1,796
  1,868
  1,943
  2,022
  2,104
  2,189
  2,279
  2,371
  2,469
  2,570
  2,675
  2,786
  2,902
  3,023
  3,149
  3,281
  3,420
Operating income, $m
  423
  470
  519
  571
  626
  683
  743
  807
  874
  944
  1,114
  1,192
  1,273
  1,360
  1,450
  1,546
  1,646
  1,752
  1,863
  1,981
  2,104
  2,234
  2,371
  2,515
  2,667
  2,827
  2,995
  3,172
  3,359
  3,555
EBITDA, $m
  543
  592
  643
  696
  752
  811
  873
  939
  1,007
  1,079
  1,155
  1,235
  1,319
  1,408
  1,501
  1,599
  1,702
  1,811
  1,925
  2,046
  2,173
  2,306
  2,447
  2,595
  2,750
  2,914
  3,087
  3,269
  3,460
  3,661
Interest expense (income), $m
  89
  140
  70
  76
  82
  89
  95
  103
  110
  118
  126
  135
  144
  154
  164
  174
  185
  197
  209
  221
  235
  248
  263
  278
  294
  311
  329
  347
  367
  387
  409
Earnings before tax, $m
  283
  400
  444
  489
  537
  588
  641
  697
  755
  817
  979
  1,047
  1,120
  1,196
  1,276
  1,360
  1,450
  1,543
  1,642
  1,746
  1,856
  1,971
  2,093
  2,221
  2,356
  2,498
  2,648
  2,805
  2,971
  3,146
Tax expense, $m
  76
  108
  120
  132
  145
  159
  173
  188
  204
  221
  264
  283
  302
  323
  345
  367
  391
  417
  443
  471
  501
  532
  565
  600
  636
  674
  715
  757
  802
  849
Net income, $m
  206
  292
  324
  357
  392
  429
  468
  509
  551
  597
  714
  765
  817
  873
  931
  993
  1,058
  1,127
  1,199
  1,275
  1,355
  1,439
  1,528
  1,621
  1,720
  1,824
  1,933
  2,048
  2,169
  2,297

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
  1,496
  1,580
  1,668
  1,760
  1,856
  1,956
  2,061
  2,171
  2,286
  2,407
  2,533
  2,665
  2,804
  2,949
  3,101
  3,261
  3,428
  3,603
  3,787
  3,980
  4,183
  4,395
  4,618
  4,852
  5,097
  5,354
  5,624
  5,908
  6,205
  6,518
Adjusted assets (=assets-cash), $m
  1,496
  1,580
  1,668
  1,760
  1,856
  1,956
  2,061
  2,171
  2,286
  2,407
  2,533
  2,665
  2,804
  2,949
  3,101
  3,261
  3,428
  3,603
  3,787
  3,980
  4,183
  4,395
  4,618
  4,852
  5,097
  5,354
  5,624
  5,908
  6,205
  6,518
Revenue / Adjusted assets
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
Average production assets, $m
  560
  592
  625
  659
  695
  733
  772
  813
  856
  901
  949
  998
  1,050
  1,104
  1,161
  1,221
  1,284
  1,349
  1,418
  1,491
  1,566
  1,646
  1,729
  1,817
  1,909
  2,005
  2,106
  2,212
  2,324
  2,441
Working capital, $m
  -142
  -150
  -159
  -168
  -177
  -186
  -196
  -207
  -218
  -229
  -241
  -254
  -267
  -281
  -295
  -311
  -326
  -343
  -361
  -379
  -398
  -419
  -440
  -462
  -485
  -510
  -536
  -563
  -591
  -621
Total debt, $m
  869
  945
  1,024
  1,107
  1,193
  1,284
  1,378
  1,477
  1,581
  1,689
  1,803
  1,922
  2,047
  2,177
  2,314
  2,458
  2,608
  2,766
  2,932
  3,105
  3,288
  3,479
  3,679
  3,890
  4,110
  4,342
  4,585
  4,840
  5,108
  5,389
Total liabilities, $m
  1,346
  1,422
  1,501
  1,584
  1,670
  1,761
  1,855
  1,954
  2,058
  2,166
  2,280
  2,399
  2,523
  2,654
  2,791
  2,935
  3,085
  3,243
  3,409
  3,582
  3,764
  3,955
  4,156
  4,366
  4,587
  4,819
  5,062
  5,317
  5,585
  5,866
Total equity, $m
  150
  158
  167
  176
  186
  196
  206
  217
  229
  241
  253
  267
  280
  295
  310
  326
  343
  360
  379
  398
  418
  439
  462
  485
  510
  535
  562
  591
  621
  652
Total liabilities and equity, $m
  1,496
  1,580
  1,668
  1,760
  1,856
  1,957
  2,061
  2,171
  2,287
  2,407
  2,533
  2,666
  2,803
  2,949
  3,101
  3,261
  3,428
  3,603
  3,788
  3,980
  4,182
  4,394
  4,618
  4,851
  5,097
  5,354
  5,624
  5,908
  6,206
  6,518
Debt-to-equity ratio
  5.810
  5.980
  6.140
  6.290
  6.430
  6.560
  6.690
  6.800
  6.910
  7.020
  7.120
  7.210
  7.300
  7.380
  7.460
  7.540
  7.610
  7.680
  7.740
  7.800
  7.860
  7.920
  7.970
  8.020
  8.060
  8.110
  8.150
  8.190
  8.230
  8.270
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  206
  292
  324
  357
  392
  429
  468
  509
  551
  597
  714
  765
  817
  873
  931
  993
  1,058
  1,127
  1,199
  1,275
  1,355
  1,439
  1,528
  1,621
  1,720
  1,824
  1,933
  2,048
  2,169
  2,297
Depreciation, amort., depletion, $m
  121
  122
  123
  125
  126
  128
  130
  132
  133
  135
  41
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  76
  79
  83
  88
  92
  97
  101
  107
Funds from operations, $m
  327
  414
  447
  482
  519
  557
  598
  640
  685
  732
  756
  808
  863
  921
  982
  1,046
  1,114
  1,186
  1,261
  1,340
  1,423
  1,511
  1,603
  1,701
  1,803
  1,911
  2,025
  2,144
  2,271
  2,403
Change in working capital, $m
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
Cash from operations, $m
  335
  422
  456
  491
  528
  567
  608
  651
  696
  744
  768
  821
  876
  935
  997
  1,062
  1,130
  1,202
  1,278
  1,358
  1,442
  1,531
  1,624
  1,723
  1,826
  1,936
  2,050
  2,171
  2,299
  2,433
Maintenance CAPEX, $m
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -79
  -83
  -88
  -92
  -97
  -101
New CAPEX, $m
  -31
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -83
  -88
  -92
  -96
  -101
  -106
  -111
  -117
Cash from investing activities, $m
  -54
  -56
  -59
  -61
  -65
  -68
  -71
  -75
  -79
  -82
  -86
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -164
  -171
  -179
  -189
  -198
  -208
  -218
Free cash flow, $m
  281
  366
  397
  429
  463
  499
  536
  576
  617
  661
  681
  730
  781
  835
  891
  951
  1,014
  1,080
  1,150
  1,224
  1,301
  1,383
  1,469
  1,560
  1,655
  1,756
  1,862
  1,973
  2,091
  2,215
Issuance/(repayment) of debt, $m
  -877
  76
  79
  83
  86
  90
  95
  99
  104
  108
  114
  119
  125
  131
  137
  144
  151
  158
  166
  174
  182
  191
  201
  210
  221
  232
  243
  255
  268
  281
Issuance/(repurchase) of shares, $m
  752
  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  
  -125
  76
  79
  83
  86
  90
  95
  99
  104
  108
  114
  119
  125
  131
  137
  144
  151
  158
  166
  174
  182
  191
  201
  210
  221
  232
  243
  255
  268
  281
Total cash flow (excl. dividends), $m
  156
  442
  476
  512
  549
  589
  631
  675
  721
  770
  795
  849
  906
  965
  1,028
  1,095
  1,165
  1,238
  1,316
  1,398
  1,484
  1,574
  1,670
  1,770
  1,876
  1,987
  2,105
  2,228
  2,359
  2,496
Retained Cash Flow (-), $m
  -959
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
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
  -803
  433
  467
  503
  540
  579
  620
  664
  709
  758
  782
  836
  892
  951
  1,013
  1,079
  1,148
  1,221
  1,297
  1,378
  1,463
  1,553
  1,647
  1,747
  1,851
  1,962
  2,078
  2,200
  2,329
  2,464
Discount rate, %
  13.10
  13.76
  14.44
  15.16
  15.92
  16.72
  17.56
  18.43
  19.35
  20.32
  21.34
  22.41
  23.53
  24.70
  25.94
  27.23
  28.60
  30.03
  31.53
  33.10
  34.76
  36.50
  38.32
  40.24
  42.25
  44.36
  46.58
  48.91
  51.35
  53.92
PV of cash for distribution, $m
  -710
  335
  312
  286
  258
  229
  200
  171
  144
  119
  93
  74
  57
  43
  32
  23
  16
  11
  7
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Weight Watchers International, Inc. is a provider of weight management services. The Company operates globally through a network of Company-owned and franchise operations. The Company's branded products and services include meetings conducted by its franchisees, digital weight management products provided through its Websites, mobile sites and applications, products sold at meetings, licensed products sold in retail channels and magazine subscriptions and other publications. It operates through four segments: North America, United Kingdom, Continental Europe (CE) and Other. It sells a range of products, including bars, snacks, cookbooks, food and restaurant guides with SmartPoints values, Weight Watchers magazines, SmartPoints calculators and fitness kits, and certain third-party products, such as activity-tracking monitors. It sells its products through its meetings business, online and to its franchisees. It includes a range of nutritional, activity, behavioral and lifestyle tools.

FINANCIAL RATIOS  of  Weight Watchers International Inc (WTW)

Valuation Ratios
P/E Ratio 16.6
Price to Sales 1
Price to Book -0.9
Price to Tangible Book
Price to Cash Flow 9.5
Price to Free Cash Flow 13.3
Growth Rates
Sales Growth Rate 0.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.6%
Cap. Spend. - 3 Yr. Gr. Rate -11.3%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity -164%
Total Debt to Equity -165.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 10.4%
Ret/ On Assets - 3 Yr. Avg. 10%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity -5.4%
Return On Equity - 3 Yr. Avg. -5.4%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 50.3%
Gross Margin - 3 Yr. Avg. 51.3%
EBITDA Margin 19.4%
EBITDA Margin - 3 Yr. Avg. 20.6%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 17.9%
Pre-Tax Margin 7.2%
Pre-Tax Margin - 3 Yr. Avg. 8.2%
Net Profit Margin 5.8%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 20.2%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 0%

WTW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WTW stock intrinsic value calculation we used $1514 million for the last fiscal year's total revenue generated by Weight Watchers International Inc. The default revenue input number comes from 0001 income statement of Weight Watchers International 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 WTW stock valuation model: a) initial revenue growth rate of 5.7% 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 13.1%, whose default value for WTW is calculated based on our internal credit rating of Weight Watchers International 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 Weight Watchers International 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 WTW stock the variable cost ratio is equal to 41.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $511 million in the base year in the intrinsic value calculation for WTW 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 8% for Weight Watchers International Inc.

Corporate tax rate of 27% is the nominal tax rate for Weight Watchers International 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 WTW 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 WTW are equal to 35%.

Life of production assets of 22.9 years is the average useful life of capital assets used in Weight Watchers International 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 WTW is equal to -8.9%. 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 - $-808.943 million for Weight Watchers International 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 66.993 million for Weight Watchers International 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 Weight Watchers International Inc at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating
MED MEDIFAST INC 137.29 1,633.18  str.buy
SFLY Shutterfly, In 50.55 1,295.02  str.buy
NLS Nautilus Group 2.32 14.48  str.buy
MTCH Match Group, I 72.09 52.29  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.