Robinsons Retail Holdings, Inc. (RRHI) Stock Analysis

Robinsons Retail Holdings, Inc. (RRHI) was incorporated and registered with the Securities and Exchange Commission on February 4, 2002 as Robinsons Holdings, Inc.

The primary purpose of the Company and its subsidiaries is to engage in the business of trading goods, commodities and merchandise of any kind. On March 26, 2013, the Securities and Exchange Commission approved the change in the Company’s name to the present one.

RRHI conducts its core retail operations in six business segments, namely;

Supermarkets
Department stores
Do-it-yourself (DIY) stores
Convenience stores
Drug stores
Specialty stores

Some of the brand names under RRHI include “Handyman Do it Best“, “True Value“, “Topshop“, “Topman“, “Toys “R” Us“, and “Ministop“.

RRHI operates its supermarkets, department stores and consumer electronics and appliances stores under the “Robinsons” brand name.

In 2015, RRHI, through a subsidiary, entered the coffee shop business with the opening of Costa Coffee shops in several locations in Metro Manila.

As of December 31, 2015, the Company has 1,506 stores; 124 supermarkets, 42 department stores, 166 DIY stores, 519 convenience stores, 367 drug stores and 288 specialty stores. RRHI has 12 wholly-owned subsidiaries and 13 partly-owned subsidiaries.

Sector Details:

Sector: Services
Subsector: Retail

source: PSE Edge

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Value Screen Scorecard

Piotroski F-Score

Altman Z-Score

Estimated Growth Rates

Intrinsic Value Calculations

Valuations By Top Leading Brokers

Value Screen Scorecard

Stocks are scored based on Profitability & Growth, Financial Health, Quality, Dividends and Valuation. Each criterion in the list is scored based on financial data for a total of 100 points. Stocks are ranked from 1 to 5, 1 being the highest.

Read this post to get more information on how the value scorecard works.

Scoring Criteria:

Rank # 1: Extremely good company
Rank # 2: Good company
Rank # 3: Average company
Rank # 4: Needs further study and research to identify the company's weaknesses
Rank # 5: Risky company

Value Scorecard (1-27-2017 3Q2016)

Criteria	Values	Score
Criteria # 1: Market capitalization	108,099,250,000	1
Criteria # 2: Profit margins (5-yr. Average) Gross profit margin Operating profit margin Net profit margin	16.92% 5.09% 4.51%	3
Criteria # 3: Net income consistently growing for the last 5 years		2
Criteria # 4: Revenue consistently growing for the last 5 years		2
Criteria #5: Cash & equivalents consistently growing for the past 5 years		1
Criteria # 6: Operating cash flow consistently growing for the past 5 years		1
Criteria # 7: Earnings per share consistently growing for the past 5 years		1
Criteria # 8: 5-yr. EPS growth rate	14.80%	2
Criteria # 9: Return on equity 3-yr. average 5-yr. average Previous year's ROE YoY growth	10.74% 11.70% 11.66%	3
Criteria # 10: Return on invested capital 5-yr. average	9.75%	0
TOTAL POINTS		16/30

Criteria	Values	Score
Criteria # 1: Debt settlement capacity Free cash flow Long-term debt Current ratio D/E ratio Interest coverage ratio Working capital to total debt ratio	2,648,953,842 None 1.29 N/A 103.51 1.06	8
Criteria # 2: Cash to current assets Current Recent	0.28 0.32	4
Criteria # 3: Inventory to current assets Current Recent	0.56 0.52	2
Criteria # 4: Accounts receivable to current assets Current Recent	0.15 0.16	4
Criteria # 5: Accounts payable to current assets Current Recent	0.39 0.45	3
TOTAL POINTS		21/25

Criteria	Values	Score
Criteria # 1: Piotroski F-Score	7	7
Criteria # 2: Altman Z-Score	5.44	10
TOTAL POINTS		17/20

Criteria	Values	Score
Criteria # 1: Dividend payout ratio	18.75%	3
Criteria # 2: Dividend yield	0.81%	1
TOTAL POINTS		4/10

Criteria	Values	Score
Criteria # 1: PEGY ratio	2.01	0
TOTAL POINTS		0/15

Stock Rating	Score
Final Score	58/100
Stock Ranking	3

Piotroski F-Score

The Piotroski F-Score is a financial metric model that's helpful in spotting turnaround businesses. For more information, you may read about it here.

Scoring Criteria:

7 to 9 points: Wonderful business
5 to 6 points: Average business
1 to 4 points: Weak business

Piotroski F-Score (1-27-2017 3Q2016)

Piotroski F-Score	Values
Profitability:
1: Net income 2: Operating cash flow 3: Return on assets 4: Quality of earnings	1 1 1 1
Leverage:
5: Long-term debt vs. assets 6: Current ratio 7: Shares outstanding	0 1 1
Operating efficiency:
8: Gross margin 9: Asset turnover	0 1
Piotroski F-Score	7

Altman Z-Score

The Altman Z-Score is a bankruptcy prediction model that's helpful in spotting low quality companies. More information about it can be found in this post here.

Scoring Criteria:

Z > 2.99; “SAFE” Zone (Healthy business)
Z < 1.81; “DISTRESS” Zone (Troubled business)
1.81 > Z > 2.99; “GREY” Zone (Warrants more investigation)

Altman Z-Score (1-27-2017 3Q2016)

Altman Z-Score	Values
X1 (Working capital / Total assets)	0.0742
X2 (Retained earnings / Total assets)	0.2624
X3 (EBIT / Total assets)	0.0928
X4 (Market capitalization / Total liabilities)	4.8102
X5 (Revenue / Total assets)	1.4994
Altman Z-Score	5.44

Estimated Growth Rates

Estimated growth rates are calculated using exponential chart trend line formula.

Estimated Growth Rates (3Q2016)

Growth Rate	3-yr. (%)	5-yr. (%)
Revenue	13.60%	15.09%
Net income	17.93%	44.18%
Earnings per share	-1.80%	14.80%
Operating cash flow	25.97%	15.77%

Intrinsic Value Calculations

The figures and all other variables used in order to get the intrinsic value are listed in detail below for reference purposes so that cross-checking can be made to verify the values obtained.

Intrinsic Value Calculations (1-27-2017 3Q2016)

WACC Variables	Values
Risk free rate Stock beta Market risk premium Cost of equity (Re)	4.350% 1.24 8.10% 14.39%
Shares Price Market value of equity	1,385,000,000 78.05 108,099,250,000
Interest rate Tax rate Cost of debt (Rd)	1.29% 21.40% 1.01%
Debt book value Adjustment Market value of debt	4,812,000,663 1.20 5,774,400,796
Total capital Weighted average cost of capital (WACC)	113,873,650,796 13.72%

DCF Variables	Values
Free cash flow	2,648,953,842
Projected growth rate	15.09%
Shares outstanding (diluted)	1,385,000,000
Discount rate (WACC)	13.72%
Perpetuity growth rate	2.60%
Margin of safety	25%
Intrinsic value per share	14.32
Adjusted intrinsic value per share	10.74

P/E Valuation Model Variables	Values
Input data:
Earnings per share (TTM) P/E ratio (TTM) Growth rate Discount rate	3.36 23.23 14.80% 13.72%
Calculations:
Year	EPS x Growth
1 2 3 4 5 6 7 8 9 10	3.36 3.86 4.43 5.08 5.84 6.70 7.69 8.83 10.14 11.64
Value in 10 years	270.30
Margin of safety	25%
Intrinsic value	74.76
Adjusted intrinsic value	56.07

Valuations By Top Leading Brokers

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JRP says:

January 31, 2017 at 5:01 pm

Nice of you to review RRHI, as it’s been recommended by a few analysts lately.

Too bad it’s currently trading above its’ full intrinsic value. I’ll be on the lookout for any pullbacks.

I especially liked this one:

Current Long-Term Debt: None

The Investing Engineer PH says:

January 31, 2017 at 7:16 pm

Good company and has a healthy balance sheet. Just wait for the right entry and I’m sure you’ll do fine with this stock.

Stock Picks for the week by First Metro Securities

Robinsons Retail Holdings, Inc. (RRHI) Stock Analysis

Value Screen Scorecard

Scoring Criteria:

Value Scorecard (1-27-2017 3Q2016)

Profitability & Growth

Financial Health

Quality

Dividend Assessment

Valuation

Final Score & Ranking

Final Score

58/100

Stock Ranking

3

Piotroski F-Score

Scoring Criteria:

Piotroski F-Score (1-27-2017 3Q2016)

Altman Z-Score

Scoring Criteria:

Altman Z-Score (1-27-2017 3Q2016)

Estimated Growth Rates

Estimated Growth Rates (3Q2016)

Intrinsic Value Calculations

Intrinsic Value Calculations (1-27-2017 3Q2016)

Weighted Average Cost Of Capital (WACC) Calculations

Discounted Cash Flow (DCF) Calculations

P/E Valuation Model

Valuations By Top Leading Brokers

We love to hear your thoughts! Share them on the comments section below. Happy investing!

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