Discounted Cash Flow Calculation for LSE:WRKS using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
LSE:WRKS DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
TheWorks.co.uk's share price is below the future cash flow value, and at a moderate discount (> 20%).
TheWorks.co.uk's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
TheWorks.co.uk's earnings available for a low price, and how does
this compare to other companies in the same industry?
TheWorks.co.uk's earnings are expected to grow significantly at over 20% yearly.
TheWorks.co.uk's revenue is expected to grow by 10.3% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
TheWorks.co.uk's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Kevin Gerald Patrick Keaney serves as the Chief Executive Officer of THE WORKS. Mr. Keaney is responsible for implementing operational initiatives following recent capital raising. He serves as Chief Executive Officer and Director of Theworks.Co.Uk Plc, since January 2012 after joining as managing director in August 2011. He joined THE WORKS Group as Managing Director in August 2011. Mr. Keaney served as a Commercial Director at Alexon Group Plc., since August 2010. He joined Alexon from Animal, where he has spent three years in various senior roles - most recently as Chief Executive Officer. During his time at Animal, Mr. Keaney was primarily involved in helping to execute its turnaround strategy. He has over 30 years’ front-line retail leadership experience having held senior management positions at Savers, M&S, Somerfield and Sainsbury`s. He holds a Diploma in Company Direction from the IOD.
Insufficient data for Kevin to compare compensation growth.
Insufficient data for Kevin to establish whether their remuneration is reasonable compared to companies of similar size in United Kingdom of Great Britain and Northern Ireland.
CEO & Director
CFO & Director
Human Resources Director
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the TheWorks.co.uk board of directors is less than 3 years, this suggests a new board.
Board of Directors
CEO & Director
CFO & Director
Harry Michael Morley
Senior Independent Non-Executive Director
Independent Non-Executive Director
Who owns this company?
Recent Insider Trading
More shares have been bought than sold by TheWorks.co.uk individual insiders in the past 3 months.
Is TheWorks.co.uk plc's (LON:WRKS) 2.9% ROE Worse Than Average?
One way to conceptualize this, is that for each £1 of shareholders' equity it has, the company made £0.029 in profit. … The formula for ROE is: Return on Equity = Net Profit ÷ Shareholders' Equity Or for TheWorks.co.uk: 2.9% = UK£1.1m ÷ UK£38m (Based on the trailing twelve months to April 2019.) It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. … Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Is There An Opportunity With TheWorks.co.uk plc's (LON:WRKS) 25.02% Undervaluation?
by taking the foreast future cash flows of the company and discounting them back to today's value. … Discounted Cash Flows (DCF) … If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the Simply Wall St analysis model.
How Financially Strong Is TheWorks.co.uk plc (LON:WRKS)?
Investors are always looking for growth in small-cap stocks like TheWorks.co.uk plc (LON:WRKS), with a market cap of UK£85m. … However, an important fact which most ignore is: how financially healthy is the business? … Specialty Retail businesses operating in the environment facing headwinds from current disruption,.
How TheWorkscouk plc (LON:WRKS) Delivered A Better ROE Than Its Industry
and want to learn about Return on Equity using a real-life example. … If WRKS borrows debt to invest in its business, its profits will be higher. … But ROE does not capture any debt, so we only see high profits and low equity, which is great on the surface.
TheWorks.co.uk plc engages in the retail sale of gifts, arts, crafts, toys, books, and stationery products in the United Kingdom and Ireland. The company sells its products through a network of stores, as well as through its online platform. The company was formerly known as Theworks.Co.Uk Limited and changed its name to TheWorks.co.uk plc in July, 2018. TheWorks.co.uk plc was founded in 1981 and is headquartered in Birmingham, United Kingdom.
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