Savers Value Village, Inc. (SVV) stock intrinsic value fair value estimate & owner earnings analysis

Savers Value Village runs 367 thrift stores (Savers, Value Village, Village des Valeurs and Savers Australia) in the United States, Canada and Australia, plus a wholesale business. It sources most of its goods from community donations and from nonprofit partners it pays for donated items, prices them well below new retail and sells them in its stores. Because it buys locally, the company says it is not directly exposed to import tariffs. It opened 26 stores in fiscal 2025 (sales up 9.2% to $1.68 billion, 7.3% excluding a 53rd week; comparable store sales up 4.7%) and financed all of it from its own operating cash flow. How we measure earnings. We start from operating cash flow, strip out swings in inventory, receivables and payables, and deduct stock compensation and the capex needed to keep stores running. We treat rent on stores as an ordinary operating cost (it is already inside cash flow), not as debt. On this basis owner earnings were roughly $0.86, $0.71, $0.05, negative $0.05 and $0.29 per share for fiscal 2021 through 2025. The swings have three causes: fiscal 2021 and 2022 were private-company years with almost no stock compensation; fiscal 2023 carried about $69 million of one-time stock awards triggered by the June 2023 IPO; and fiscal 2024 and 2025 carry $62 million and $39 million of ongoing stock compensation plus heavy new-store and processing-plant spending. Because the company's debt is valued separately, we add back cash interest paid to get the cash the business generates before its lenders: about $1.17, $1.13, $0.56 ($1.00 excluding the one-time IPO stock awards), $0.40 and $0.76 per share for fiscal 2021 through 2025. Anchor. We use the median of fiscal 2023 (excluding the one-time IPO awards), 2024 and 2025, about $0.76 per share, or roughly $124 million a year. We ignore fiscal 2021 and 2022 because the company then was privately owned with almost no stock compensation and, in 2021, unusually low capex. The most recent fiscal year rose about 90% from the depressed fiscal 2024 level; we assume just 3% growth in the first forecast year, below that rebound, so no reversal of a trend is required. The first half of fiscal 2026 supports the level: operating cash flow was $92.7 million versus $54.9 million a year earlier, and stock compensation fell to $9.7 million from $24.0 million. We did not raise the base level for that reduction because two quarters is too little to be sure it lasts. Debt. The company owes a $726 million term loan maturing September 2032, plus about $23 million of finance leases, against $92 million of cash. We count about $30 million of cash as needed to run stores, so net debt is about $687 million, or $4.22 per share. The loan floats at a margin of 2.00% to 3.00% over the benchmark rate and was refinanced in 2025, cutting cash interest (first-half fiscal 2026 interest paid was $24.5 million versus $34.5 million a year ago). We charge about $0.16 per share in the base case for the loan costing somewhat more than 6% over its remaining life. No maturity falls inside the forecast window. Base case: about $10.00 per share. The business is worth about $14.41 per share (about $2.35 billion), the company owes about $4.38 per share including that cost adjustment, leaving about $10.0. We credit only unit growth from the store-opening program the company has run steadily and funded from its own cash: growth of 3% in year one, tapering to zero by year ten, and flat thereafter. We do not credit rising comparable sales, share gains or margin expansion, and we assume nothing beyond the level of earnings the stores already produce. Bear case: about $2.00 per share. Cash flow before lenders falls back to the fiscal 2024 level of about $0.40 per share and stays there with no growth. Fiscal 2024 actually happened, so this is an evidenced outcome, and higher store labor and occupancy costs and rising rent (lease payments have risen from $110 million in 2023 to $129 million in 2025) are disclosed pressures. The business is worth about $6.67 per share (about $1.09 billion). It owes about $4.67 per share (net debt plus a $0.45 charge assuming the loan is refinanced at materially higher rates), leaving about $2.00. Net debt is about 5.6 times normal cash flow before lenders, so the equity is thin in this case, though cash flow still covers interest. Bull case: about $14.20 per share. The company's own levers work: it keeps opening about 26 stores a year (5% growth in year one, tapering to zero by year eleven), and stock compensation stays near the first-half fiscal 2026 pace (lifting the starting level to about $0.88). The business is worth about $18.48 per share (about $3.0 billion), owes about $4.32, leaving about $14.20. What we left out. We give no credit to comparable-sales gains or to expansion into new markets, because they depend on things that have not happened yet. The fiscal 2025 results include an extra 53rd week that will not repeat. What would make this wrong. The case is most sensitive to how much of the company's store-opening spending is truly discretionary; we treated nearly all capex as required (only $8.8 million of the $118.6 million in fiscal 2025 as growth), which is conservative. If a large part of it is in fact growth spending, owner earnings and value are understated. Consumer trade-down toward thrift has helped recent sales, and a fading of that would show up in comparable sales, though we did not rely on it. The company reported and remediated a material weakness in information technology controls, which was closed as of January 3, 2026. The company was acquired by private equity in 2019 and went public in June 2023, so the public-company record is only about three years long.