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. Reported Forecast Horizon Terminal S thousands 2015 2016 2017 2018 2019 Period Sales $1,807,368 $2,069,436 $2,369,504 $2,547,217 $2,738,258 $ 46,094,010 X NOPAT 102,495 169,694 194.299 208,872 224,537 $ 3,779,706 X NOA 662,502 758,591 868,587 933,731 1,003,760 $ 16,896,627 X 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. Terminal Period TXRH $thousands Increase in NOA FCFF (NOPAT - Increase in NOA) Discount factor [1 / (1+rwit ] Present value of horizon FCFF 2016 96,089 $ 73,605 0.93458 68,790 2017 109,996 84,303 0.87344 73,634 Forecast Horizon 2018 $ 65,144 S 143,728 0.8163 117,325 2019 70,029 $ 154.508 0.7629 117,873 0 % 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. TXRH $ thousands 2016 2017 2019 Forecast Horizon 2018 $ 65,144 143,728 Terminal Period 0 x Increase in NOA $ $ $ 96,089 73,605 109,996 84,303 70,029 154,508 0 x 0.93458 0.87344 0.8163 0.7629 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 68,790 73,634 117,325 117,873 $ Total firm value NNO 372,811 x 1,797,731 x 2,170,542 x (14,680) 7,520 2,177,702 x 70,091 NCI $ Firm equity value Shares outstanding (thousands) Stock price per share $ 37.07 X 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. Reported Forecast Horizon Terminal S thousands 2015 2016 2017 2018 2019 Period Sales $1,807,368 $2,069,436 $2,369,504 $2,547,217 $2,738,258 $ 46,094,010 X NOPAT 102,495 169,694 194.299 208,872 224,537 $ 3,779,706 X NOA 662,502 758,591 868,587 933,731 1,003,760 $ 16,896,627 X 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. Terminal Period TXRH $thousands Increase in NOA FCFF (NOPAT - Increase in NOA) Discount factor [1 / (1+rwit ] Present value of horizon FCFF 2016 96,089 $ 73,605 0.93458 68,790 2017 109,996 84,303 0.87344 73,634 Forecast Horizon 2018 $ 65,144 S 143,728 0.8163 117,325 2019 70,029 $ 154.508 0.7629 117,873 0 % 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. TXRH $ thousands 2016 2017 2019 Forecast Horizon 2018 $ 65,144 143,728 Terminal Period 0 x Increase in NOA $ $ $ 96,089 73,605 109,996 84,303 70,029 154,508 0 x 0.93458 0.87344 0.8163 0.7629 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 68,790 73,634 117,325 117,873 $ Total firm value NNO 372,811 x 1,797,731 x 2,170,542 x (14,680) 7,520 2,177,702 x 70,091 NCI $ Firm equity value Shares outstanding (thousands) Stock price per share $ 37.07 X
