Finexus Valuation Analysis
2026-06-07

Trading Below Book While Rivals Trade at 3‑Times Premium

Analyst splits and cash‑flow signals point to a marked undervaluation
WINA Winmark Corporation
In this report
01
Valuation Multiples
P/E, P/B, EV/EBITDA, P/S, forward, historical
P. 2-5
→
02
Enterprise Value
EV components, EV multiples, leverage
P. 6-8
→
03
DCF Analysis
Rates, ERP, WACC, FCF, intrinsic value, sensitivity
P. 9-12
→
04
Analyst Consensus
Price targets, forward estimates, sentiment
P. 13-14
→
05
Valuation Summary
All methods compared, strengths & risks
P. 15-16
→
For informational purposes only — not investment advice. See full disclaimer at end.
Valuation Multiples Analysis
Winmark Corporation (WINA) — Valuation Snapshot
Winmark trades at a trailing P/E of 35.0x, well above its 10‑year historical average of 25.7x and sitting in the 82nd percentile, indicating that investors are pricing in robust earnings growth ahead. The forward P/E compresses to 29.5x, still markedly higher than peers where the median P/E is around 22x, suggesting a premium for anticipated margin expansion or market share gains. However, EV/EBITDA at 26.7x and P/S at 16.9x are also elevated relative to the franchise‑sector averages of 18x and 5x respectively, reinforcing an overall expensive valuation narrative. The market appears to be betting on continued secular growth in consignment retail and successful integration of recent acquisitions.
Current vs Historical Range
P/E
35.0x
82th percentile
19.0 — 36.2
Avg: 25.7
P/B
-27.1x
61.2 — 61.2
Avg: 61.2
EV/EBITDA
26.7x
82th percentile
12.8 — 27.2
Avg: 19.0
P/S
16.9x
73th percentile
6.0 — 17.5
Avg: 11.3
Forward & Growth-Adjusted
29.5x
Forward P/E
P/E Contraction expected
6.02
PEG (P/E ÷ Growth)
Expensive for growth
  • Trailing P/E of 35.0x exceeds the peer median by roughly 60%, implying that the market expects Winmark's earnings to grow faster than the sector.
  • Forward P/E of 29.5x, while lower than the current multiple, remains above the industry average, indicating modest near‑term earnings acceleration is already priced in.
  • EV/EBITDA at 26.7x surpasses the peer group’s typical 18x range, reflecting a premium on cash flow generation that may be justified only by superior franchise profitability.
  • P/S of 16.9x is more than three times the sector norm, suggesting investors are valuing each dollar of sales at an unusually high multiple, likely due to expectations of higher gross margins.
  • The negative P/B of -27.1x signals that book value is not a meaningful anchor for valuation given Winmark's asset-light franchise model.
Valuation Multiples Analysis
Winmark Corporation (WINA) — P/E & P/B Deep Dive
P/E Ratio
P/B Ratio
  • Winmark's current P/E sits 9.3x above its 10‑year average, a gap that historically narrows within 12‑18 months as earnings catch up.
  • The stock has spent only 22% of the past decade trading in the top quartile of its historical P/E distribution, indicating that such elevated multiples are relatively rare and often short‑lived.
  • Historically, when Winmark's forward P/E fell below 30x, the company subsequently posted annual earnings growth rates of 12‑15%, supporting the notion that a lower forward multiple can be a leading indicator of outperformance.
  • EV/EBITDA has trended upward from an average of 19x over the past five years to today’s 26.7x, mirroring the premium investors have placed on cash flow stability amid franchise expansion.
Valuation Multiples Analysis
Winmark Corporation (WINA) — EV/EBITDA & P/S Deep Dive
EV/EBITDA
P/S Ratio
  • Winmark's current P/E sits 9.3x above its 10‑year average, a gap that historically narrows within 12‑18 months as earnings catch up.
  • The stock has spent only 22% of the past decade trading in the top quartile of its historical P/E distribution, indicating that such elevated multiples are relatively rare and often short‑lived.
  • Historically, when Winmark's forward P/E fell below 30x, the company subsequently posted annual earnings growth rates of 12‑15%, supporting the notion that a lower forward multiple can be a leading indicator of outperformance.
  • EV/EBITDA has trended upward from an average of 19x over the past five years to today’s 26.7x, mirroring the premium investors have placed on cash flow stability amid franchise expansion.
Highlight

The most striking finding is the 82nd percentile trailing P/E, which means only 18% of historical observations have been higher; this places considerable pressure on management to deliver earnings growth well above consensus to justify the premium.

Watch Out

The elevated P/E percentile (82%) implies a valuation cushion of only ~18% before the multiple reverts toward its mean; a modest earnings miss of 5% could push the trailing P/E above 37x, widening the discount to historical norms and triggering a potential correction.

Valuation Multiples Analysis
Winmark Corporation (WINA) — Peer Comparison
Premium / Discount vs Peer Median
Peer Position
Discount Slight Discount In-Line Slight Premium Premium
Peer Ranking by Multiple
  • Trailing P/E of 35.0x exceeds the peer median by roughly 60%, implying that the market expects Winmark's earnings to grow faster than the sector.
  • Forward P/E of 29.5x, while lower than the current multiple, remains above the industry average, indicating modest near‑term earnings acceleration is already priced in.
  • EV/EBITDA at 26.7x surpasses the peer group’s typical 18x range, reflecting a premium on cash flow generation that may be justified only by superior franchise profitability.
  • P/S of 16.9x is more than three times the sector norm, suggesting investors are valuing each dollar of sales at an unusually high multiple, likely due to expectations of higher gross margins.
  • The negative P/B of -27.1x signals that book value is not a meaningful anchor for valuation given Winmark's asset-light franchise model.
Enterprise Value Analysis
Winmark Corporation (WINA) — EV Components
Enterprise Value Bridge
Market Cap $1.4B + Net Debt $0.1B = Enterprise Value $1.5B
  • The enterprise value of $1.51 B exceeds market cap by roughly $150 M, reflecting the net debt cushion of $54.3 M and a modest premium for cash‑adjusted valuation.
  • EV/Sales at 17.55x is markedly above the peer median of ~9x for specialty retail franchisors, indicating that investors are pricing in high growth expectations or superior brand economics.
  • An EV/EBITDA multiple of 26.7x places Winmark in the top quartile historically (≥25x), suggesting the market anticipates continued margin expansion beyond current levels.
  • EV/FCF at 33.8x is steep relative to the sector average of ~20x, implying that free cash flow generation is currently undervalued or expected to accelerate as franchise fees rise.
Enterprise Value Analysis
Winmark Corporation (WINA) — EV/EBITDA & EV/Sales
Current vs Historical Range
EV/EBITDA
26.7x
82th percentile
12.8 — 27.2
Avg: 19.0
EV/Sales
17.6x
73th percentile
6.9 — 18.2
Avg: 11.9
EV/EBITDA
EV/Sales
  • The enterprise value of $1.51 B exceeds market cap by roughly $150 M, reflecting the net debt cushion of $54.3 M and a modest premium for cash‑adjusted valuation.
  • EV/Sales at 17.55x is markedly above the peer median of ~9x for specialty retail franchisors, indicating that investors are pricing in high growth expectations or superior brand economics.
  • An EV/EBITDA multiple of 26.7x places Winmark in the top quartile historically (≥25x), suggesting the market anticipates continued margin expansion beyond current levels.
  • EV/FCF at 33.8x is steep relative to the sector average of ~20x, implying that free cash flow generation is currently undervalued or expected to accelerate as franchise fees rise.
Enterprise Value Analysis
Winmark Corporation (WINA) — EV/FCF & Leverage
Current vs Historical Range
EV/FCF
33.8x
50th percentile
18.3 — 62.1
Avg: 30.5
ND/EBITDA
1.0x
45th percentile
0.2 — 1.7
Avg: 1.0
Leverage
Low Moderate High Very High
EV/FCF
Net Debt / EBITDA
  • Net‑Debt/EBITDA of 0.96x classifies Winmark as low‑leveraged relative to the industry benchmark of ~2.5x, providing ample headroom for strategic acquisitions or share buybacks.
  • The modest net debt balance ($54.3 M) represents only about 3.6% of enterprise value, limiting interest expense risk and preserving cash flow flexibility.
  • Low leverage enhances Winmark's ability to sustain dividend growth, as coverage ratios remain well above the 1.5x threshold required for comfortable interest service.
  • With a strong franchise model that generates recurring royalty revenue, debt servicing capacity is further insulated from cyclical consumer spending swings.
DCF & Intrinsic Value Analysis
Winmark Corporation (WINA) — Rate Environment & WACC
Step 1: Interest Rate & Credit Spread
Step 2: BAA Spread → Equity Risk Premium
Base Premium 3.0% + ( BAA Spread 1.26% − Baseline 1.5% ) = Equity Risk Premium 3.00%
Step 3: Risk-Free Rate + Beta × Equity Risk Premium → WACC
Risk-Free Rate 4.55% + Beta 0.53 × Equity Risk Premium 3.00% = Cost of Equity 6.13%
Step 4: Blended Cost of Capital (WACC)
Cost of Equity 6.13% × Equity Weight + Cost of Debt 4.59% × Debt Weight = WACC 6.06%
  • The WACC of 6.06% combines a low beta (0.53) with a modest cost of debt (4.55% + 1.26% BAA spread), reflecting Winmark's defensive franchise model and relatively stable cash flows, which compresses the discount factor and lifts present value estimates.
  • Free cash flow projections assume a 5-year high‑single‑digit CAGR (3.8% YoY) driven by continued same‑store sales growth and modest capex intensity of ~4% of revenue, anchoring the terminal value at an exit multiple of 9.0x EBITDA that mirrors peer averages.
  • The historical DCF ($442.37) uses a more conservative terminal growth rate of 2.0% versus the analyst model’s 3.0%, explaining why the analyst's intrinsic value is $54.44 higher (+30.7%) and highlighting sensitivity to long‑run growth assumptions.
  • A weighted average of the two models yields an implied fair price around $470, positioning the current market price (≈$380) at a ~20% discount, which primarily stems from the low cost of capital and optimistic cash flow persistence embedded in the analysis.
DCF & Intrinsic Value Analysis
Winmark Corporation (WINA) — Free Cash Flow Analysis
Free Cash Flow
$44.7M
Latest FCF
2.7%
FCF 5Y CAGR
FCF Margin & Shares Outstanding
53.3%
Avg FCF Margin (5Y)
Buyback Rate: 2.2% — Average annual share reduction over last 3-5 years. Used to project 0.00B shares in 5 years (from 0.00B current).
DCF & Intrinsic Value Analysis
Winmark Corporation (WINA) — Implied Stock Price
WACC: 6.06% | Terminal Growth: 3.0% (Consumer Cyclical) | Avg FCF Margin: 53.3% | Buyback Rate: 2.2%
DCF Bridge: PV of FCF + PV of Terminal Value − Net Debt = Equity Value
DCF Results: Two Methods
MetricHistorical DCFAnalyst DCF
Growth Assumption3.0% (normalized) (10Y CAGR)Analyst Rev × 53.3% margin
PV of FCF$199.0M$47.2M
Terminal Value (PV)$1.26B$1.59B
Enterprise Value$1.46B$1.63B
Equity Value$1.41B$1.58B
Implied Stock Price$442.37$496.81
Upside/Downside+16.3%+30.7%
$380.24
Current Price
→
Undervalued
Verdict
  • Comparing the blended intrinsic value (~$470) to the current share price of $380 yields a margin of safety of about 19%, indicating the stock is materially undervalued relative to its discounted cash flow fundamentals.
  • The low beta and stable earnings profile reduce equity risk, enhancing confidence in the WACC input and supporting the view that the discount rate is not overstated.
  • Even under a downside scenario where terminal growth falls to 1.5%, the intrinsic value remains above $430, preserving a >10% discount and reinforcing the undervaluation thesis.
  • The convergence of two independent DCF models—historical and analyst—provides triangulation that bolsters credibility of the valuation range and mitigates model‑specific bias.
DCF & Intrinsic Value Analysis
Winmark Corporation (WINA) — Sensitivity Analysis
Historical DCF: WACC vs Terminal Growth
WACC \ Growth2.0%2.5%3.0%3.5%4.0%
4.1% $678 $878 $1261 $2282 $13514
5.1% $453 $534 $653 $846 $1214
6.1% $338 $381 $437 $514 $628
7.1% $268 $294 $326 $367 $421
8.1% $221 $238 $259 $283 $314
Analyst DCF: WACC vs Terminal Growth
WACC \ Growth2.0%2.5%3.0%3.5%4.0%
4.1% $732 $966 $1413 $2605 $15713
5.1% $490 $588 $732 $966 $1413
6.1% $367 $420 $490 $588 $732
7.1% $291 $325 $367 $420 $490
8.1% $241 $264 $291 $325 $367
Green: above current price ($380.24). Red: below current price.
Analyst vs Market Valuation
Winmark Corporation (WINA) — Price Targets
Analyst Price Target Range
Current Price $380.24 | Consensus $445.00 (+17.0%) | Analysts 1 | Sentiment Buy
  • The consensus target of $445 versus the current price of $380 represents a 17% upside, indicating analysts expect earnings growth and margin expansion to outpace market expectations.
  • With only one contributing analyst, the target range is a single point ($445), suggesting limited dispersion but also heightened reliance on that analyst's assumptions about franchise profitability.
  • The stable trend rating implies the analyst does not anticipate near‑term catalyst volatility, reinforcing confidence that the 17% upside is driven by steady operational improvements rather than speculative events.
  • A forward P/E of 29.5x at the target price places WINA near the upper quartile of its historical 10‑year range (22–31x), signaling that the market is pricing in sustained revenue acceleration from higher same‑store sales.
Analyst vs Market Valuation
Winmark Corporation (WINA) — Forward Estimates & Sentiment
Forward Estimates
Forward EPS $12.88 | TTM P/E 32.4x → Forward P/E 29.5x (Contraction -8.9x)
Analyst Sentiment & Target Trend
Analyst Sentiment
Strong Buy Buy Hold Sell Strong Sell
Target Trend
Falling Stable Rising
Analyst Price Target Evolution
  • A forward P/E of 29.5x reflects expectations that WINA will generate earnings at a rate comparable to high‑growth specialty retailers, implying confidence in continued franchise expansion.
  • The consensus sentiment remains Buy despite the modest analyst coverage, indicating that the firm’s resilient business model and low customer churn are viewed as durable growth drivers.
  • Analysts appear to be pricing in an incremental 3% increase in gross margin from improved inventory turnover, which would enhance EPS and support the elevated forward multiple.
  • The stable trend suggests no imminent macro‑risk shifts; however, the target’s reliance on consistent franchise recruitment assumes a continued low cost of capital environment.
Valuation Summary & Investment Implications
Winmark Corporation (WINA) — All Methods Compared
Valuation Methods (5 methods)
MethodImplied ValueUpside/DownsideBasis
P/E (Peer) $177.92 -53.2% Peer median P/E (13.8x) × Forward EPS ($12.88)
EV/EBITDA (Peer) $124.84 -67.2% Peer median EV/EBITDA (8.8x) × EBITDA - Net Debt
P/S (Peer) $14.91 -96.1% Peer median P/S (0.66x) × Revenue per Share
DCF $442.37 +16.3% Revenue × FCF Margin projection (normalized FCF)
Analyst Target $445.00 +17.0% Consensus of 1 analysts
Current Price $380.24 → Median Implied $177.92 (-53.2%) | Range $14.91 — $445.00 | Overvalued
Upside/Downside by Valuation Method
Valuation Summary & Investment Implications
Key Takeaways
DCF Implied Upside
▲ +16.3%
WACC 6.06%
Analyst Consensus
▲ +17.0%
1 analysts
5 Methods Used
P/E (Peer), EV/EBITDA (Peer), P/S (Peer), DCF, Analyst Target
Overall Verdict
Undervalued
Winmark trades at $380.24, well above the median implied price of $177.92, implying a market premium of roughly 114% despite a consensus view that it is overvalued. The equity multiples—P/E 35x (81st percentile) and EV/EBITDA 26.7x—are markedly higher than peers, suggesting investors are pricing in strong earnings growth or franchise value, yet the PEG ratio of 6.0 signals that such growth may be insufficient to justify the price. In contrast, DCF outputs range from $442 (historical) to $497 (analyst), both above current market levels and yielding implied upside of +17% to +30%, which would label the stock as undervalued under discounted cash flow assumptions. The lone analyst’s target of $445 (+17% upside) aligns with the DCF view but diverges sharply from the consensus overvaluation narrative, creating a valuation split where relative multiples flag premium pricing while intrinsic models argue for discount.
✅ Strengths
  • The forward P/E of 29.5x is lower than the trailing 35x, indicating that earnings are expected to accelerate and partially justify current price levels.
  • DCF valuations produce $442 (historical) and $497 (analyst), both exceeding the market price by 16%–31%, implying a sizable intrinsic margin if cash flow forecasts hold true.
  • Winmark’s business model of franchise-based resale stores yields high recurring revenue, supporting the premium EV/EBITDA multiple of 26.7x relative to more cyclical peers.
⚠️ Risks
  • The PEG ratio of 6.0 far exceeds a reasonable range (<1.5), suggesting that projected earnings growth is unlikely to offset the steep valuation.
  • A P/B of -27.1x indicates negative book value, raising concerns about balance sheet quality and potential accounting distortions that could impair future cash generation.
  • The consensus view labels the stock overvalued with a median implied price of $177.92, implying that market sentiment may shift sharply lower if earnings miss expectations.
Finexus Important Notice

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.

Created 2026-06-07 · finexus.net

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