Question

In: Finance

Following are the income statement and balance sheet for Texas Roadhouse for the year ended December...

Following are the income statement and balance sheet for Texas Roadhouse for the year ended December 29, 2015.

a. Assume the following forecasts for TXRH’s sales, NOPAT, and NOA for 2016 through 2019. Forecast the terminal period values assuming a 1% terminal period growth rate for all three model inputs: Sales, NOPAT, and NOA.

Round your answers to the nearest dollar.

Reported Forecast Horizon Terminal
$ thousands 2015 2016 2017 2018 2019 Period
Sales $1,807,368 $2,078,473 $2,390,244 $2,581,464 $2,787,981 Answer
NOPAT 102,495 170,435 196,000 211,680 228,614 Answer
NOA 662,502 761,904 876,189 946,284 1,021,987 Answer

b. Estimate the value of a share of TXRH common stock using the discounted cash flow (DCF) model as of December 29, 2015; assume a discount rate (WACC) of 7%, common shares outstanding of 70,091 thousand, net nonoperating obligations (NNO) of $(14,680) thousand, and noncontrolling interest (NCI) from the balance sheet of $7,520 thousand. Note that NNO is negative because the company’s cash exceeds its nonoperating liabilities.

Rounding instructions:

  • Use rounded answers for subsequent computations.

  • Round answers to the nearest whole number unless otherwise noted.
  • Round discount factor to 5 decimal places and stock price per share to two decimal places.

Do not use negative signs with any of your answers below.

Question: What is the stock price per share?

Solutions

Expert Solution

2015 2016 2017 2018 2019 Terminal Period
Sales $    18,07,368 $   20,78,473 $   23,90,244 $   25,81,464 $   27,87,981 $       28,15,861
NOPAT $      1,02,495 $     1,70,435 $     1,96,000 $      2,11,680 $     2,28,614 $          2,30,900
NOA $      6,62,502 $     7,61,904 $     8,76,189 $      9,46,284 $   10,21,987 $       10,32,207
Increase in NOA $         99,402 $     1,14,285 $         70,095 $         75,703 $             10,220
FCFF = NOPAT-Increase in NOA = $         71,033 $         81,715 $      1,41,585 $     1,52,911 $          2,20,680
Discount factor [1/1.07^t] 0.93458 0.87344 0.81630 0.76290
PV of horizon FCFF $         66,386 $         71,373 $      1,15,576 $     1,16,655
Cumulative PV of FCFF $      3,69,990
Terminal FCFF = 220680/(0.07-0.01) = $   36,78,000
PV of terminal FCFF = 3678000*0.76290 = $    28,05,946
Total firm value $    31,75,936
Less: NNO $        -14,680
Less: NCI $            7,520
Firm's equity value $    31,83,096
Common shares outstanding 70091
Value of one share $            45.41

jeff jeffy answered 1 year ago
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