Estimating Share Value Using the ROPI Model

Following are forecasted sales, NOPAT, and NOA for Texas Roadhouse 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
NOPAT	102,495	172,658	201,146	218,244	236,795	Answer
NOA	662,502	771,842	899,195	975,627	1,058,555	Answer

a. Estimate the value of a share of TXRH common stock using the residual operating income (ROPI) 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.
• Use a negative sign with your negative NNO answer. Otherwise, do not use negative signs with your answers.