Discounted Cash Flow Calculation for OTCPK:RSTG.F 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 use
analyst's estimates of cash flows going forward 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.
OTCPK:RSTG.F DCF 1st Stage: Next 5 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.
Restaurant Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
Restaurant Group'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
Restaurant Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Restaurant Group's earnings are expected to grow by 11.9% yearly, however this is not considered high growth (20% yearly).
Restaurant Group's revenue is expected to grow by 3.9% 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.
Restaurant Group'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
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Restaurant Group's finances.
The net worth of a company is the difference between its assets and liabilities.
Restaurant Group's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Restaurant Group's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Restaurant Group's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 1.5x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
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. Andy McCue has been Chief Executive Officer and Director of The Restaurant Group plc since September 19, 2016. Mr. McCue served as the Chief Operating Officer of Paddy Power Betfair plc from February 2016 to April 30, 2016. Mr. McCue served as the Chief Executive Officer of Paddy Power Betfair plc (alternate name: Paddy Power plc) since January 1, 2015. He served as the Managing Director of Retail for UK & Ireland at Paddy Power plc since 2013. Mr. McCue served as the Head of UK Retail at Paddy Power plc since 2006 and served as its Deputy Head of Retail. Prior to that, he led the Paddy Power UK and Irish retail businesses, having transformed the profitability of the UK business and overseen its development over 8 years. Mr. McCue also worked at Arthur Andersen Business Consulting for four years. Prior to his ten years with Paddy Power, Mr. McCue was a Principal with OC&C Strategy Consultants for 2 years and a Manager at Andersen. Since 2009, he served as Managing Director of UK Retail and joined the Paddy Power plc Management Committee, later assumed responsibility for regulatory and public affairs. He has also overseen the development of the UK retail estate which is now 305 shops strong and generates the highest profitability per shop in the sector at Paddy Power. He has been an Independent Non-Executive Director of Hostelworld Group Plc since October 14, 2015 and has been its Senior Independent Non-Executive Director since December 1, 2017. He served as an Executive Director of Paddy Power BetFair plc until April 30, 2016. Previously, he served as a Director of Paddy Power plc since September 2014. Mr. McCue holds MA in Economics and Management from the University of Cambridge and a Masters in Finance from the London Business School.
Andy's compensation has increased in line with Restaurant Group recently becoming profitable.
Andy's remuneration is lower than average for companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Restaurant Group management team is less than 2 years, this suggests a new team.
CEO & Director
CFO & Director
Chief Information Officer
Group HR Director
Managing Director of TRG Concessions
Managing Director of Coast to Coast
Managing Director of Leisure
Mike Van Deventer
Managing Director of Brunning & Price
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Restaurant Group board of directors is less than 3 years, this suggests a new board.
The Restaurant Group plc operates restaurants and pub restaurants in the United Kingdom. Its brands include Frankie & Benny’s, Chiquito, Coast to Coast, Brunning & Price, Garfunkel’s, and Joe’s Kitchen. The company also operates TRG concessions that provide table service, counter service, sandwich shops, pubs, and bars in the United Kingdom’s airports. It operates approximately 490 restaurants and pub restaurants. The Restaurant Group plc was incorporated in 1954 and is headquartered in London, the United Kingdom.
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