Estimating Share Value Using the DCF Model

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for Texas Roadhouse for 2016 through 2019. a. 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. 2017 2018 $ thousands Sales Reported Forecast Horizon Terminal 2015 2016 2019 Period $1,807,368 $2,060,400 $2,348,855 $2,513,275 $2,689,205 $ 2,716,097 102,495 168,953 192,606 206,089 220,515 $ 222,720 662,502 755,279 861,017 921,288 985,779 $ 995,637 NOPAT NOA 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. Use a negative sign with your negative NNO answer. Otherwise, do not use negative signs with your answers. 2019 $ Terminal Period OX 0 x 2016 Ox $ OX 0.93458 Forecast Horizon 2017 2018 0 x $ 0X $ 0 X OX 0.87344 0.8163 0 x $ OX 0.7629 0 X 0 x 0 x 0 X $ OX TXRH $ thousands Increase in NOA FCFF (NOPAT - Increase in NOA) Discount factor [1/(1+rw)t ] Present value of horizon FCFF Cum PV of horizon FCFF Present value of terminal FCFF Total firm value NNO NCI Firm equity value Shares outstanding (thousands) Stock price per share 0 X 3,091,660 OX 7,520 0X 70,091 $ $ 0X