Intrinsic value of Poydras Gaming Finance Corp - PYD

Previous Close

$0.32

  Intrinsic Value

$0.12

stock screener

  Rating & Target

str. sell

-63%

  Value-price divergence*

0%

Previous close

$0.32

 
Intrinsic value

$0.12

 
Up/down potential

-63%

 
Rating

str. sell

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PYD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  81.82
  20.00
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
Revenue, $m
  20
  24
  28
  33
  39
  44
  51
  57
  64
  71
  79
  87
  96
  104
  114
  123
  133
  144
  154
  165
  177
  189
  202
  215
  228
  243
  257
  273
  289
  305
  323
Variable operating expenses, $m
 
  26
  31
  36
  42
  48
  55
  62
  69
  77
  85
  94
  103
  112
  122
  132
  143
  154
  166
  178
  190
  203
  217
  231
  246
  261
  277
  293
  310
  328
  347
Fixed operating expenses, $m
 
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Total operating expenses, $m
  23
  27
  32
  37
  43
  49
  56
  63
  70
  78
  86
  95
  104
  113
  123
  133
  144
  156
  168
  180
  192
  205
  219
  233
  248
  263
  279
  295
  312
  330
  349
Operating income, $m
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
EBITDA, $m
  6
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Interest expense (income), $m
  0
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
Earnings before tax, $m
  -10
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -13
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -45
  -48
Tax expense, $m
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -9
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -13
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -45
  -48

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  55
  60
  71
  83
  97
  111
  126
  143
  160
  178
  198
  218
  239
  261
  284
  308
  333
  359
  386
  414
  443
  473
  504
  537
  571
  606
  643
  682
  722
  764
  807
Adjusted assets (=assets-cash), $m
  50
  60
  71
  83
  97
  111
  126
  143
  160
  178
  198
  218
  239
  261
  284
  308
  333
  359
  386
  414
  443
  473
  504
  537
  571
  606
  643
  682
  722
  764
  807
Revenue / Adjusted assets
  0.400
  0.400
  0.394
  0.398
  0.402
  0.396
  0.405
  0.399
  0.400
  0.399
  0.399
  0.399
  0.402
  0.398
  0.401
  0.399
  0.399
  0.401
  0.399
  0.399
  0.400
  0.400
  0.401
  0.400
  0.399
  0.401
  0.400
  0.400
  0.400
  0.399
  0.400
Average production assets, $m
  7
  8
  9
  11
  13
  14
  16
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  61
  66
  70
  74
  79
  84
  89
  94
  99
  105
Working capital, $m
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
Total debt, $m
  39
  42
  51
  61
  72
  84
  97
  110
  124
  139
  155
  172
  189
  207
  226
  246
  266
  287
  309
  332
  356
  381
  407
  433
  461
  490
  521
  552
  585
  619
  655
Total liabilities, $m
  46
  49
  58
  68
  79
  91
  104
  117
  131
  146
  162
  179
  196
  214
  233
  253
  273
  294
  316
  339
  363
  388
  414
  440
  468
  497
  528
  559
  592
  626
  662
Total equity, $m
  9
  11
  13
  15
  17
  20
  23
  26
  29
  32
  36
  39
  43
  47
  51
  55
  60
  65
  69
  74
  80
  85
  91
  97
  103
  109
  116
  123
  130
  137
  145
Total liabilities and equity, $m
  55
  60
  71
  83
  96
  111
  127
  143
  160
  178
  198
  218
  239
  261
  284
  308
  333
  359
  385
  413
  443
  473
  505
  537
  571
  606
  644
  682
  722
  763
  807
Debt-to-equity ratio
  4.333
  3.910
  4.010
  4.090
  4.150
  4.200
  4.250
  4.280
  4.310
  4.340
  4.360
  4.380
  4.390
  4.410
  4.420
  4.430
  4.440
  4.450
  4.450
  4.460
  4.470
  4.470
  4.480
  4.480
  4.490
  4.490
  4.500
  4.500
  4.500
  4.500
  4.510
Adjusted equity ratio
  0.080
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -9
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -13
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -45
  -48
Depreciation, amort., depletion, $m
  9
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
Funds from operations, $m
  2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
Change in working capital, $m
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
Maintenance CAPEX, $m
  0
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
New CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
Cash from investing activities, $m
  -4
  -2
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -14
  -15
  -16
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -24
  -26
Free cash flow, $m
  -1
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -45
  -48
  -51
  -53
Issuance/(repayment) of debt, $m
  2
  8
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
Issuance/(repurchase) of shares, $m
  0
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
  53
  56
Cash from financing (excl. dividends), $m  
  2
  14
  16
  18
  20
  22
  24
  25
  27
  30
  32
  34
  35
  38
  40
  43
  45
  47
  50
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
Total cash flow (excl. dividends), $m
  1
  9
  10
  11
  12
  13
  14
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  25
  26
  28
  29
  30
  31
  32
  34
  35
  37
  38
Retained Cash Flow (-), $m
  9
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -50
  -53
  -56
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3
  3
  3
  3
  3
  3
  3
  2
  2
  1
  1
  0
  0
  -1
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -18
Discount rate, %
 
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
 
  3
  2
  2
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  63.9
  41.7
  27.7
  18.6
  12.7
  8.8
  6.1
  4.3
  3.0
  2.2
  1.6
  1.1
  0.8
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Poydras Gaming Finance Corp is a Canada-based company engaged in slot route operations. The Company is engaged in providing capital and gaming equipment to casino operators and vendors in the United States. It is focused on leasing and distributing slot machines, electronic table games, and casino and bingo equipment and supplies. It is focused on Tribal gaming market with over 2,500 machines across over 25 casinos in Oklahoma and Texas. It provides slot machines under short and long term contracts for existing casinos, new casino developments and gaming machine suppliers in the United States. It distributes gaming machines for a range of manufacturers and its portfolio includes Scientific Games (Bally and WMS), IGT, Aristocrat, Konami, Aruze, Ainsworth, Everi, and AGS machines. It also sells bingo products online through its Website, BingoShop.com and table game and poker supplies to Tribal casinos through direct sales and to online customers at PokerShop.com.

FINANCIAL RATIOS  of  Poydras Gaming Finance Corp (PYD)

Valuation Ratios
P/E Ratio -1.2
Price to Sales 0.6
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 3.7
Price to Free Cash Flow 5.5
Growth Rates
Sales Growth Rate 81.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 377.8%
Total Debt to Equity 433.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -16.1%
Ret/ On Assets - 3 Yr. Avg. -71.8%
Return On Total Capital -18.4%
Ret/ On T. Cap. - 3 Yr. Avg. -76.9%
Return On Equity -66.7%
Return On Equity - 3 Yr. Avg. -247.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -5%
EBITDA Margin - 3 Yr. Avg. -260.8%
Operating Margin -15%
Oper. Margin - 3 Yr. Avg. -177.7%
Pre-Tax Margin -50%
Pre-Tax Margin - 3 Yr. Avg. -304.5%
Net Profit Margin -45%
Net Profit Margin - 3 Yr. Avg. -293.8%
Effective Tax Rate 10%
Eff/ Tax Rate - 3 Yr. Avg. 17.6%
Payout Ratio 0%

PYD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PYD stock intrinsic value calculation we used $20 million for the last fiscal year's total revenue generated by Poydras Gaming Finance Corp. The default revenue input number comes from 2016 income statement of Poydras Gaming Finance Corp. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PYD stock valuation model: a) initial revenue growth rate of 20% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.8%, whose default value for PYD is calculated based on our internal credit rating of Poydras Gaming Finance Corp, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Poydras Gaming Finance Corp.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PYD stock the variable cost ratio is equal to 110%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1 million in the base year in the intrinsic value calculation for PYD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Poydras Gaming Finance Corp.

Corporate tax rate of 27% is the nominal tax rate for Poydras Gaming Finance Corp. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PYD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PYD are equal to 32.5%.

Life of production assets of 1.3 years is the average useful life of capital assets used in Poydras Gaming Finance Corp operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PYD is equal to 5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9 million for Poydras Gaming Finance Corp - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 34.951 million for Poydras Gaming Finance Corp is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Poydras Gaming Finance Corp at the current share price and the inputted number of shares is $0.0 billion.

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Financial statements of PYD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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