Estimating Share Value Using the DCF Model

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

a. Assume the following forecasts for TXRHs 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	$2,105,584	$2,453,005	$2,661,510	$2,887,738	$Answer Mark 0.00 out of 1.00
NOPAT	102,495	172,658	201,146	218,244	236,795	$Answer Mark 0.00 out of 1.00
NOA	662,502	771,842	899,195	975,627	1,058,555	$Answer Mark 0.00 out of 1.00

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 companys 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.

TXRH	Reported			Forecast Horizon		Terminal
$ thousands	2015	2016	2017	2018	2019	Period
Increase in NOA		$Answer Mark 0.00 out of 1.00	$Answer Mark 0.00 out of 1.00	$Answer Mark 0.00 out of 1.00	$Answer Mark 0.00 out of 1.00	$Answer Mark 0.00 out of 1.00
FCFF (NOPAT - Increase in NOA)		Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00
Discount factor [1 / (1 + rw)t ]		Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00
Present value of horizon FCFF		Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00	Answer Mark 0.00 out of 1.00
Cummu PV of horizon FCFF	$Answer Mark 0.00 out of 1.00
Present value of terminal FCFF	Answer Mark 0.00 out of 1.00
Total firm value	Answer Mark 0.00 out of 1.00
NNO	Answer Mark 0.00 out of 1.00
NCI	Answer Mark 0.00 out of 1.00
Firm equity value	$Answer Mark 0.00 out of 1.00
Shares outstanding (thousands)	Answer Mark 0.00 out of 1.00
Stock price per share	$Answer