Question 3 Partially correct Mark 16.00 out of 26.00 Flag question Estimating Share Value Using the ROPI Model Following are the income statement and balance sheet for Texas Roadhouse for the year ended December 29, 2015. 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 $2,060,400 $2,348,855 $2,513,275 $2,689,205 $ 2,716,097 NOPAT 102,495 168,953 192,606 206,089 220,515 222,720 NOA 662,502 755,279 861,017 921,288 985,779 995,637 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 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. - Reported 2015 Forecast Horizon 2012 TXRH $ thousands ROPI (NOPAT - [NOABeg x rw]) Discount factor [1/(1 + rwyt ] Terminal Period 153,716 X Period $ $ Forecast Horizon 2018 $ 145,818 0.8163 119,031 $ 2016 122,578 0.93458 114,559 $ 2017 139,736 0.87344 122,051 2019 156,025 0.7629 119,031 $ 474,672 OX Present value of horizon ROPI Present value of terminal ROPI NOA Total firm value NNO NCI Firm equity value Shares outstanding (thousands) Stock value per share Oo ooo $ 0x b. TXRH closed at $42.13 on February 26, 2016, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? Stock prices are a function of many factors. It is impossible to speculate on the reasons for the difference. Our stock price estimate is higher than the TXRH market price, indicating that we believe that the stock is slightly undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our higher stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is higher than the TXRH market price, indicating that we believe that the stock is slightly undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our higher stock price estimate might be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is slightly higher than the WMT market price, indicating that we believe that WMT stock is slightly overvalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our higher stock price estimate might be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts' model assumptions.X Question 3 Partially correct Mark 16.00 out of 26.00 Flag question Estimating Share Value Using the ROPI Model Following are the income statement and balance sheet for Texas Roadhouse for the year ended December 29, 2015. 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 $2,060,400 $2,348,855 $2,513,275 $2,689,205 $ 2,716,097 NOPAT 102,495 168,953 192,606 206,089 220,515 222,720 NOA 662,502 755,279 861,017 921,288 985,779 995,637 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 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. - Reported 2015 Forecast Horizon 2012 TXRH $ thousands ROPI (NOPAT - [NOABeg x rw]) Discount factor [1/(1 + rwyt ] Terminal Period 153,716 X Period $ $ Forecast Horizon 2018 $ 145,818 0.8163 119,031 $ 2016 122,578 0.93458 114,559 $ 2017 139,736 0.87344 122,051 2019 156,025 0.7629 119,031 $ 474,672 OX Present value of horizon ROPI Present value of terminal ROPI NOA Total firm value NNO NCI Firm equity value Shares outstanding (thousands) Stock value per share Oo ooo $ 0x b. TXRH closed at $42.13 on February 26, 2016, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? Stock prices are a function of many factors. It is impossible to speculate on the reasons for the difference. Our stock price estimate is higher than the TXRH market price, indicating that we believe that the stock is slightly undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our higher stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is higher than the TXRH market price, indicating that we believe that the stock is slightly undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our higher stock price estimate might be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is slightly higher than the WMT market price, indicating that we believe that WMT stock is slightly overvalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our higher stock price estimate might be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts' model assumptions.X
