Randolph Bancorp (NAS:RNDB) Intrinsic Value: DCF (FCF Based)

: $267.27 (As of Today)

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As of today (2023-01-27), Randolph Bancorp's intrinsic value calculated from the Discounted Cash Flow model is $267.27.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Randolph Bancorp's Predictability Rank is Not Rated. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Randolph Bancorp is 89.90%.

The industry rank for Randolph Bancorp's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

Randolph Bancorp Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Randolph Bancorp's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Randolph Bancorp Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Intrinsic Value: DCF (FCF Based)

Randolph Bancorp Quarterly Data
	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22
Intrinsic Value: DCF (FCF Based)																-	-	-	-	-

Randolph Bancorp Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Free Cash Flow Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $21.407.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Randolph Bancorp's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)	=	Free Cash Flow per Share	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.1) = 0.95454545454545
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (FCF Based)

Free Cash Flow per Share

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

Free Cash Flow per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

21.407

12.485

267.27

Margin of Safety (FCF Based)	=	(Intrinsic Value: DCF (FCF Based)	-	Current Price)	/	Intrinsic Value: DCF (FCF Based)
	=	(267.27	-	26.99)	/	267.27
	=	89.90 %

Randolph Bancorp (NAS:RNDB) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Randolph Bancorp Intrinsic Value: DCF (FCF Based) Related Terms

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Randolph Bancorp (NAS:RNDB) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Randolph Bancorp Inc (NAS:RNDB) » Definitions » Intrinsic Value: DCF (FCF Based)

Comparable Companies

Traded in Other Exchanges

N/A

Address

10 Cabot Place, Stoughton, MA, USA, 02072

Website

http://www.randolphbancorp.com

Randolph Bancorp Inc is a bank holding company of Envision Bank. The company is engaged in providing financial services to individuals, families, and small to mid-size businesses. The business of the company includes accepting deposits from the public and investing those deposits, commercial real estate loans, construction loans, investment securities, and consumer loans. The firm also offers deposit accounts, certificates of deposit, and money market accounts. The company has two reporting segments; Envision Bank, which is the key revenue generating segment; and Envision Mortgage. Envision Mortgage consists primarily of gains on loan origination and sales activities, loan servicing income and interest income on loans held for sale and residential construction loans.

Executives

Friedman Martin S.	10 percent owner	7901 JONES BRANCH DR. SUITE 210 MCLEAN VA 22102
Kaupp Evelyn	director	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Perry Ronald K	director	320 NORWOOD PARK SOUTH NORWOOD MA 02062
Scott Pamela C	director	151 BRADLEE AVENUE SWAMPSCOTT MA 01907
Parent William M	director, officer: President & CEO	C/O GRAIL INVESTMENT CORP. 767 THIRD AVENUE, 21ST FLOOR NEW YORK NY 10017
Messmore Lauren	officer: EVP & CFO	320 NORWOOD PARK SOUTH NORWOOD MA 02062
Curry Nancy J.	officer: SVP/Commercial Lending	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Fraser Peter J.	officer: Senior Vice President	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
O'connor John J. Iii	director	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Mcdonough James P	director, officer: See Remarks	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Donovan Paul R	director	CHAIRMAN'S VIEW 300 GRANITE ST., SUITE 406 BRAINTREE MA 02184
Phillips Richard A. Sr.	director	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Dwyer Martie M.	officer: See Remarks	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Devlin Michael K	officer: See Remarks	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Thaxter Donna L.	officer: See Remarks	C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072