Assignment – Teuer Furniture Case B (Relative Valuation) CV -B - Group 8

zStep 1 – Select the comparable companies. Teuer furniture is in the business of selling furniture
items through retail outlets and it source furniture from manufacturers.

 Business – Selling Furniture Items

 Channel – Retail Showroom
 Location/Country – United States of America
 Store/Showroom – On Lease

Here is the summary of information given in the Exhibit 1, Exhibit 2, and Exhibit 3. In the first step we
are trying to select the companies/firms that are comparable to the Teuer Furniture.
Furniture
Financial Data Bassett Ethan Allen Brands Haverty La-Z Boy
Cash flow to assets -2.166620632 27.74843259 -5.825008157 16.22666525 72.53159271
Stock price 14.19 19.9 7.42 16.31 15.34
Common shares outstanding 10.9 28.8 8.04 22.25 52.24
Market value of equity 154.671 573.12 59.6568 362.8975 801.3616
Enterprise value 112.158 638.89 152.7968 328.6975 658.7516
Business- Manufacturing Yes Yes Yes No Yes
Geographical Presence USA International International NA USA, Canada
Online No No No No No
Import Yes No No Yes Yes
Lease Yes No No No No

Financial Data Restoration Stanley H Tempur Williams Teuer

Cash flow to assets -173.761174 22.68240187 88.51020942 125.9752576 12.5080865
Stock price 70.3 4.5 31.49 43.77 0
Common shares
outstanding 38.912 14.57 59.7 97.73 9.945
Market value of equity 2735.5136 65.565 1879.953 4277.6421 0
Enterprise value 2814.1876 29.635 2350.653 3858.5521 0
Business- Manufacturing No Yes Yes No No
Geographical Presence USA, Canada USA International International USA
Online Yes Yes Yes Yes No
Import No Yes No No No
Lease No No No No Yes

From the summary of all the exhibit we identified that M/s Havetry, M/s Restoration, and M/s
Williams have same source of Revenue (Retail Showrooms – Selling furniture items). However, none
of the firm is replica of Teuer in terms of the business model, channel, etc. These 3 firms can be
selected for the comparative analysis and multiple valuation.

Teuer CV GROUP
8.xls
Assignment – Teuer Furniture Case B (Relative Valuation) CV -B - Group 8

Furniture
Multiples Bassett Ethan Allen Brands Haverty La-Z Boy
Growth CAGR of Sales 5.0% 2.7% -4.3% 4.5% 0.1%
Growth CAGR of Net Income -207.8% -208.2% -26.5% -262.6% -192.6%
growth (equity) 14.16% 6.63% -18.0% -2.1% 1.5%
Implied Growth 0.00% 0.00% 0.0% 0.0% 0.0%
Net Income Margin 9.89% 6.81% -4.4% 2.2% 7.2%
Degree of Operating Leverage -1239.29% 748.85% -27.7% 4464.2% 3759.4%
Degree of Financial Leverage 66.11% 124.20% 392.1% -4.2% 268.7%
Debt to Equity Ratio 0.02 0.480 1.92 0.07 0.02

Multiples Restoration Stanley H Tempur Williams Teuer

Growth CAGR of Sales 24.0% -15.0% 19.1% 9.2% 17.8%
Growth CAGR of Net Income -22.5% -251.1% 6.2% 48.4% 56.7%
growth (equity) 31.1% 9.4% 29.3% 8.4% 12.6%
Implied Growth 0.0% 0.0% 0.0% 0.0% 0.0%
Net Income Margin -1.1% 30.8% 7.6% 6.4% 14.6%
Degree of Operating Leverage -1457.2% 23074.8% 2564.3% 83.0% 76.7%
Degree of Financial Leverage 41.0% 97.9% 181.5% 113.7% 100.0%
Debt to Equity Ratio 0.193 0.000 16.89 0.00 0.00

Market value of equity Enterprise value

Williams Williams
Stanley Stanley
La-Z Boy La-Z Boy
Furniture Brands Furniture Brands
Bassett Bassett
0 1000 2000 3000 4000 5000 0 1000 2000 3000 4000 5000

Net Income Margin

Teuer
Williams
H Tempur
Stanley
Restoration
La-Z Boy
Haverty
Furniture Brands
Ethan Allen
Bassett
-10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Assignment – Teuer Furniture Case B (Relative Valuation) CV -B - Group 8

Growth CAGR of Sales

30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
r r
tt le
n ds rty Bo
y on e y
pu
s
ue
-5.0% asse Al an ve ti nl a m e
n Br a -Z ra ta Te
m i lli T
B
ha re
H La s to S W
H
-10.0% Et tu Re
rni
-15.0% Fu

-20.0%

growth (equity)
40.00%

30.00%

20.00%

10.00%

0.00%
n ds ty y on y r s r
ett le er Bo nl
e pu m ue
as
s Al an v ati ta m ia Te
-10.00% B n B r
Ha -Z or S Te ill
ha re La st H W
Et itu Re
rn
-20.00% Fu

-30.00%

In addition to using the three firms mentioned above as comparable we tried to use different other
options to understand the impact on the valuation.

a) Include all the firms as in case of Relative Valuation firms that are not in the same industry
can also be used for valuation
b) Include firms with same growth rate of sales (CAGR) or firm with same growth rate of equity
Assignment – Teuer Furniture Case B (Relative Valuation) CV -B - Group 8

Step 2 - Multiples

Firms having the same mode of Revenue Generation

Multiples Bassett Ethan Furniture Havert La-Z Restoratio Stanley H William Teuer
Allen Brands y Boy n Tempu s
r
Asset price/Cash       20.257   NMF     30.629  
flow assets
Asset       21.474   NMF     15.058  
price/Adjusted net
income
Asset price/Sales       0.490   2.359     0.954  
Equity price/Net       24.338   NMF     16.661  
income

In the next step we calculated the parameters such as mean, median, High, low to understand the
distribution of the multiples (and to identify any outlier and its impact on the average)

Mean Median High Low

25.443 25.443 30.629 20.257
18.266 18.266 21.474 15.058
1.268 0.954 2.359 0.490
20.499 20.499 24.338 16.661

Teuer Furniture
Cash flow to assets 12.508
Adjusted Net Income 21.651
Sales 148.218
Net Income 21.651

Cash and cash equivalent 0.000

Long term debt 0.000

Net Debt 13.046

Proposed EV
318.244 318.244 383.116 253.372
395.486 395.486 464.945 326.027
187.919 141.461 349.620 72.675
Equity 300.549 285.063 399.227 217.358

Average
301 Share Price 30.359
Equity
Assignment – Teuer Furniture Case B (Relative Valuation) CV -B - Group 8

Valuation with respect to all the firms (including firms with other sources of revenues and firms
involved in manufacturing also)

Multiples Bassett Ethan Allen Furniture Brands Haverty La-Z Boy Restoration Stanley H Tempur Williams Teuer
Asset price/Cash flow assets NMF 23.0243636 NMF 20.257 9.082 NMF 1.307 26.558 30.629 0
Asset price/Adjusted net income 4.293888631 10.669785 NMF 21.474 7.262 NMF 0.908 20.341 15.058 0
Asset price/Sales 0.415905248 0.87594774 0.142491793 0.490 0.535 2.359 0.301 1.676 0.954 0
Equity price/Net income 5.801177706 11.5348388 NMF 24.338 9.017 NMF 2.158 17.603 16.661 0

Mean Median High Low

18.476 21.640 30.629 1.307
11.430 10.670 21.474 0.908
0.861 0.535 2.359 0.142
12.445 11.535 24.338 2.158

Teuer Furniture  
Cash flow to assets 12.508
Adjusted Net Income 21.651
Sales 148.218
Net Income 21.651
Cash and cash equivalent
0.000
Long term debt 0.000
Net Debt 13.046

Proposed EV
231.102 270.681 383.116 16.342
247.466 231.016 464.945 19.651
127.615 79.273 349.620 21.120
Equity 202.061 193.657 399.227 19.038

Average
203 Share Price 20.555
Equity

Firms with same Revenue growth rate (CAGR)

Assignment – Teuer Furniture Case B (Relative Valuation) CV -B - Group 8

Multiples Bassett Ethan Allen Furniture Brands Haverty La-Z Boy Restoration Stanley H Tempur Williams Teuer
Asset price/Cash flow assets NMF 26.558 30.629 0
Asset price/Adjusted net income NMF 20.341 15.058 0
Asset price/Sales 2.359 1.676 0.954 0
Equity price/Net income NMF 17.603 16.661 0

Mean Median High Low

28.594 28.594 30.629 26.558
17.700 17.700 20.341 15.058
1.663 1.676 2.359 0.954
17.132 17.132 17.603 16.661

Proposed EV
357.653 357.653 383.116 332.190
383.223 383.223 440.419 326.027
246.477 248.349 349.620 141.461
Equity 329.117 329.742 391.052 266.559

Average Share
329 33.244
Equity Price