Dollarama Inc. (DOL.TO) Discounted Future Market Cap

Dollarama Inc.

DOL.TO (TSX)

Valuation
Dollarama Inc. Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

CAD

Market Price CAD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	197.1 CAD
Estimated net income	1.69 Bil. CAD
Estimated market capitalization	69.84 Bil. CAD
Market capitalization discounted to present	54.2 Bil. CAD
Shares Outstanding	275 Mil.
Earnings Per Share (EPS)	4.72 CAD
Market Price	196.4 CAD
Price to Earnings (PE) Ratio	41.29

Historical and forecasted data

Monetary values in CAD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-01-31", "y": 2650327000}, {"l": "2017", "x": "2017-01-31", "y": 2963219000}, {"l": "2018", "x": "2018-01-31", "y": 3266090000}, {"l": "2019", "x": "2019-01-31", "y": 3548503000}, {"l": "2020", "x": "2020-01-31", "y": 3787291000}, {"l": "2021", "x": "2021-01-31", "y": 4026259000}, {"l": "2022", "x": "2022-01-31", "y": 4330761000}, {"l": "2023", "x": "2023-01-31", "y": 5052741000}, {"l": "2024", "x": "2024-01-31", "y": 5867348000}, {"l": "2025", "x": "2025-01-31", "y": 6413145000}, {"l": "2026", "x": "2026-01-31", "y": 7094220999, "oy": 7094220999, "e": true, "d": 2026, "g": 10.62, "og": 10.62}, {"l": "2027", "x": "2027-01-31", "y": 7847627269, "oy": 7847627269, "e": true, "d": 2027, "g": 10.62, "og": 10.62}, {"l": "2028", "x": "2028-01-31", "y": 8681045285, "oy": 8681045285, "e": true, "d": 2028, "g": 10.62, "og": 10.62}, {"l": "2029", "x": "2029-01-31", "y": 9602972294, "oy": 9602972294, "e": true, "d": 2029, "g": 10.62, "og": 10.62}, {"l": "2030", "x": "2030-01-31", "y": 10622807952, "oy": 10622807952, "e": true, "d": 2030, "g": 10.62, "og": 10.62}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-01-31", "y": 385146000}, {"l": "2017", "x": "2017-01-31", "y": 445636000}, {"l": "2018", "x": "2018-01-31", "y": 519410000}, {"l": "2019", "x": "2019-01-31", "y": 548874000}, {"l": "2020", "x": "2020-01-31", "y": 564039000}, {"l": "2021", "x": "2021-01-31", "y": 564348000}, {"l": "2022", "x": "2022-01-31", "y": 663169000}, {"l": "2023", "x": "2023-01-31", "y": 801863000}, {"l": "2024", "x": "2024-01-31", "y": 1010460000}, {"l": "2025", "x": "2025-01-31", "y": 1168545000}, {"l": "2026", "x": "2026-01-31", "y": 1129399983, "oy": 1129399983, "e": true, "d": 2026, "g": -3.35, "og": -3.35}, {"l": "2027", "x": "2027-01-31", "y": 1249342261, "oy": 1249342261, "e": true, "d": 2027, "g": 10.62, "og": 10.62}, {"l": "2028", "x": "2028-01-31", "y": 1382022409, "oy": 1382022409, "e": true, "d": 2028, "g": 10.62, "og": 10.62}, {"l": "2029", "x": "2029-01-31", "y": 1528793189, "oy": 1528793189, "e": true, "d": 2029, "g": 10.62, "og": 10.62}, {"l": "2030", "x": "2030-01-31", "y": 1691151025, "oy": 1691151025, "e": true, "d": 2030, "g": 10.62, "og": 10.62}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-01-31": 18, "2027-01-31": 19, "2028-01-31": 20, "2029-01-31": 21, "2030-01-31": 22}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-01-31	2027-01-31	2028-01-31	2029-01-31	2030-01-31

↳ Growth Rate

Estimated Future Values

Monetary values in CAD amounts except #	2025 Jan 31	LTM Jan 20	2026 Jan 31	2027 Jan 31	2028 Jan 31	2029 Jan 31	2030 Jan 31
Revenue	6,413	7,036	7,094	7,848	8,681	9,603	10,623
Revenue Growth Rate	9.3%	9.71%	10.62%	10.62%	10.62%	10.62%	10.62%
Net Income	1,169	1,308	1,129	1,249	1,382	1,529	1,691

Monetary values in CAD

amounts except #

2025
Jan 31

LTM
Jan 20

2026
Jan 31

2027
Jan 31

2028
Jan 31

2029
Jan 31

2030
Jan 31

Revenue

6,413

7,036

7,094

7,848

8,681

9,603

10,623

Revenue Growth Rate

9.3%

9.71%

10.62%

Net Income

1,169

1,308

1,129

1,249

1,382

1,529

1,691

Historical Values

Monetary values in CAD amounts except #	Average	LTM Jan 20	2025 Jan 31	2024 Jan 31	2023 Jan 31	2022 Jan 31	2021 Jan 31	2020 Jan 31	2019 Jan 31	2018 Jan 31	2017 Jan 31	2016 Jan 31
Revenue	4,449	7,036	6,413	5,867	5,053	4,331	4,026	3,787	3,549	3,266	2,963	2,650
Cost of Revenue	2,375	3,863	3,519	3,254	2,702	2,282	2,115	2,002	1,838	1,666	1,523	1,361
Gross Profit	2,074	3,173	2,894	2,613	2,351	2,049	1,912	1,785	1,710	1,600	1,440	1,289
Gross Margin	47.06%	45.1%	45.12%	44.54%	46.53%	47.31%	47.48%	47.14%	48.2%	49%	48.59%	48.64%
Operating Income	1,071	1,869	1,711	1,496	1,192	984.6	861	868.1	845.2	755.6	645.5	549.4
Operating Margin	23.53%	26.57%	26.67%	25.49%	23.58%	22.74%	21.38%	22.92%	23.82%	23.13%	21.78%	20.73%
Net Income	725.4	1,308	1,169	1,010	801.9	663.2	564.3	564	548.9	519.4	445.6	385.1
Net Margin	15.91%	18.59%	18.22%	17.22%	15.87%	15.31%	14.02%	14.89%	15.47%	15.9%	15.04%	14.53%

Historical Growth Rates

Monetary values in CAD amounts except #	Average	LTM Jan 20	2025 Jan 31	2024 Jan 31	2023 Jan 31	2022 Jan 31	2021 Jan 31	2020 Jan 31	2019 Jan 31	2018 Jan 31	2017 Jan 31	2016 Jan 31
Revenue	4,449	7,036	6,413	5,867	5,053	4,331	4,026	3,787	3,549	3,266	2,963	2,650
Revenue Growth Rate	10.62%	9.71%	9.3%	16.12%	16.67%	7.56%	6.31%	6.73%	8.65%	10.22%	11.81%	13.71%
Net Income	725.4	1,308	1,169	1,010	801.9	663.2	564.3	564	548.9	519.4	445.6	385.1
Net Margin	15.91%	18.59%	18.22%	17.22%	15.87%	15.31%	14.02%	14.89%	15.47%	15.9%	15.04%	14.53%
Net Income Growth Rate	14.83%	11.93%	15.64%	26.01%	20.91%	17.51%	0.055%	2.76%	5.67%	16.55%	15.71%	30.38%
Stockholders Equity	286.6	1,298	1,188	380.8	28.41	-66.03	334.9	-92.2	-234.1	-252.4	100.3	466.9
Equity Growth Rate	18.31%	9.24%	212%	1,241%	-143%	-119.7%	-463.2%	-60.62%	-7.24%	-351.6%	-78.52%	-36.95%
Return on Invested Capital (ROIC)	27.66%	24.12%	24.17%	26.19%	24.97%	23.73%	25.77%	25.09%	20.17%	47.33%	36.47%	26.23%
After-tax Operating Income	794.3	1,404	1,292	1,119	887.8	730.9	634.9	635.6	613.7	548.4	469.7	400.8
Income Tax Rate	26.18%	24.89%	24.46%	25.2%	25.48%	25.77%	26.26%	26.78%	27.39%	27.42%	27.23%	27.05%
Invested Capital	3,099	5,822	5,346	4,272	3,556	3,081	2,463	2,534	3,042	1,159	1,288	1,528