Intrinsic value of Aimia Inc. - AIM

Previous Close

$1.57

  Intrinsic Value

$3.75

stock screener

  Rating & Target

str. buy

+139%

  Value-price divergence*

+14%

Previous close

$1.57

 
Intrinsic value

$3.75

 
Up/down potential

+139%

 
Rating

str. buy

 
Value-price divergence*

+14%

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

We calculate the intrinsic value of AIM 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 0.3

 

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, %
  -7.03
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  2,288
  2,334
  2,387
  2,449
  2,518
  2,594
  2,678
  2,769
  2,868
  2,974
  3,088
  3,210
  3,341
  3,479
  3,627
  3,783
  3,949
  4,124
  4,310
  4,506
  4,713
  4,932
  5,162
  5,405
  5,661
  5,930
  6,214
  6,513
  6,827
  7,158
  7,505
Variable operating expenses, $m
 
  1,170
  1,192
  1,218
  1,247
  1,278
  1,313
  1,351
  1,392
  1,437
  1,484
  1,338
  1,392
  1,450
  1,511
  1,576
  1,645
  1,718
  1,796
  1,877
  1,964
  2,055
  2,151
  2,252
  2,358
  2,471
  2,589
  2,713
  2,844
  2,982
  3,127
Fixed operating expenses, $m
 
  1,286
  1,319
  1,351
  1,385
  1,420
  1,455
  1,492
  1,529
  1,567
  1,607
  1,647
  1,688
  1,730
  1,773
  1,818
  1,863
  1,910
  1,957
  2,006
  2,056
  2,108
  2,161
  2,215
  2,270
  2,327
  2,385
  2,444
  2,506
  2,568
  2,632
Total operating expenses, $m
  2,375
  2,456
  2,511
  2,569
  2,632
  2,698
  2,768
  2,843
  2,921
  3,004
  3,091
  2,985
  3,080
  3,180
  3,284
  3,394
  3,508
  3,628
  3,753
  3,883
  4,020
  4,163
  4,312
  4,467
  4,628
  4,798
  4,974
  5,157
  5,350
  5,550
  5,759
Operating income, $m
  -86
  -123
  -123
  -121
  -114
  -104
  -91
  -74
  -54
  -30
  -3
  226
  261
  300
  342
  389
  441
  496
  557
  622
  693
  769
  851
  938
  1,032
  1,133
  1,240
  1,355
  1,477
  1,607
  1,746
EBITDA, $m
  97
  152
  153
  157
  166
  178
  195
  214
  238
  265
  296
  331
  371
  414
  461
  513
  570
  632
  698
  770
  848
  931
  1,020
  1,116
  1,218
  1,327
  1,444
  1,568
  1,701
  1,842
  1,992
Interest expense (income), $m
  45
  37
  -12
  -5
  3
  13
  23
  34
  46
  59
  73
  89
  105
  122
  141
  161
  181
  204
  227
  252
  278
  306
  335
  365
  398
  432
  468
  506
  546
  588
  632
Earnings before tax, $m
  -78
  -159
  -111
  -116
  -118
  -117
  -114
  -108
  -100
  -89
  -76
  137
  156
  177
  201
  229
  259
  293
  330
  371
  415
  463
  516
  573
  634
  701
  772
  849
  931
  1,020
  1,114
Tax expense, $m
  -13
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  37
  42
  48
  54
  62
  70
  79
  89
  100
  112
  125
  139
  155
  171
  189
  208
  229
  251
  275
  301
Net income, $m
  -66
  -159
  -111
  -116
  -118
  -117
  -114
  -108
  -100
  -89
  -76
  100
  114
  129
  147
  167
  189
  214
  241
  271
  303
  338
  377
  418
  463
  512
  564
  620
  680
  744
  813

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  373
  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
  4,508
  4,220
  4,317
  4,428
  4,553
  4,691
  4,842
  5,007
  5,186
  5,378
  5,584
  5,805
  6,041
  6,292
  6,558
  6,841
  7,141
  7,458
  7,794
  8,148
  8,523
  8,918
  9,335
  9,774
  10,236
  10,724
  11,237
  11,777
  12,345
  12,943
  13,572
Adjusted assets (=assets-cash), $m
  4,135
  4,220
  4,317
  4,428
  4,553
  4,691
  4,842
  5,007
  5,186
  5,378
  5,584
  5,805
  6,041
  6,292
  6,558
  6,841
  7,141
  7,458
  7,794
  8,148
  8,523
  8,918
  9,335
  9,774
  10,236
  10,724
  11,237
  11,777
  12,345
  12,943
  13,572
Revenue / Adjusted assets
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
Average production assets, $m
  1,413
  1,440
  1,473
  1,511
  1,553
  1,601
  1,652
  1,708
  1,769
  1,835
  1,905
  1,981
  2,061
  2,147
  2,238
  2,334
  2,436
  2,545
  2,659
  2,780
  2,908
  3,043
  3,185
  3,335
  3,493
  3,659
  3,834
  4,018
  4,212
  4,416
  4,631
Working capital, $m
  -1,224
  -1,629
  -1,666
  -1,709
  -1,757
  -1,811
  -1,869
  -1,933
  -2,002
  -2,076
  -2,156
  -2,241
  -2,332
  -2,429
  -2,531
  -2,641
  -2,756
  -2,879
  -3,008
  -3,145
  -3,290
  -3,442
  -3,603
  -3,773
  -3,951
  -4,139
  -4,337
  -4,546
  -4,765
  -4,996
  -5,239
Total debt, $m
  448
  -146
  -58
  41
  153
  278
  414
  562
  723
  896
  1,082
  1,281
  1,493
  1,718
  1,958
  2,213
  2,483
  2,768
  3,070
  3,390
  3,727
  4,082
  4,457
  4,852
  5,269
  5,707
  6,169
  6,655
  7,167
  7,705
  8,271
Total liabilities, $m
  4,393
  3,798
  3,886
  3,985
  4,097
  4,222
  4,358
  4,506
  4,667
  4,840
  5,026
  5,225
  5,437
  5,662
  5,902
  6,157
  6,427
  6,712
  7,014
  7,334
  7,671
  8,026
  8,401
  8,796
  9,213
  9,651
  10,113
  10,599
  11,111
  11,649
  12,215
Total equity, $m
  116
  422
  432
  443
  455
  469
  484
  501
  519
  538
  558
  581
  604
  629
  656
  684
  714
  746
  779
  815
  852
  892
  933
  977
  1,024
  1,072
  1,124
  1,178
  1,235
  1,294
  1,357
Total liabilities and equity, $m
  4,509
  4,220
  4,318
  4,428
  4,552
  4,691
  4,842
  5,007
  5,186
  5,378
  5,584
  5,806
  6,041
  6,291
  6,558
  6,841
  7,141
  7,458
  7,793
  8,149
  8,523
  8,918
  9,334
  9,773
  10,237
  10,723
  11,237
  11,777
  12,346
  12,943
  13,572
Debt-to-equity ratio
  3.862
  -0.350
  -0.140
  0.090
  0.340
  0.590
  0.850
  1.120
  1.390
  1.670
  1.940
  2.210
  2.470
  2.730
  2.990
  3.230
  3.480
  3.710
  3.940
  4.160
  4.370
  4.580
  4.770
  4.960
  5.150
  5.320
  5.490
  5.650
  5.810
  5.950
  6.090
Adjusted equity ratio
  -0.062
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -66
  -159
  -111
  -116
  -118
  -117
  -114
  -108
  -100
  -89
  -76
  100
  114
  129
  147
  167
  189
  214
  241
  271
  303
  338
  377
  418
  463
  512
  564
  620
  680
  744
  813
Depreciation, amort., depletion, $m
  183
  274
  276
  278
  280
  283
  285
  288
  292
  295
  299
  105
  110
  114
  119
  124
  130
  135
  141
  148
  155
  162
  169
  177
  186
  195
  204
  214
  224
  235
  246
Funds from operations, $m
  437
  115
  165
  162
  163
  166
  172
  180
  192
  206
  223
  206
  223
  244
  266
  291
  319
  349
  382
  418
  458
  500
  546
  596
  649
  706
  768
  833
  904
  979
  1,060
Change in working capital, $m
  135
  -32
  -37
  -43
  -48
  -53
  -58
  -64
  -69
  -74
  -80
  -85
  -91
  -97
  -103
  -109
  -116
  -122
  -130
  -137
  -145
  -152
  -161
  -170
  -179
  -188
  -198
  -208
  -219
  -231
  -243
Cash from operations, $m
  302
  147
  202
  205
  211
  219
  230
  244
  261
  280
  303
  291
  314
  340
  369
  400
  434
  472
  512
  555
  602
  653
  707
  765
  828
  894
  966
  1,042
  1,123
  1,210
  1,302
Maintenance CAPEX, $m
  0
  -75
  -77
  -78
  -80
  -83
  -85
  -88
  -91
  -94
  -98
  -101
  -105
  -110
  -114
  -119
  -124
  -130
  -135
  -141
  -148
  -155
  -162
  -169
  -177
  -186
  -195
  -204
  -214
  -224
  -235
New CAPEX, $m
  -68
  -27
  -33
  -38
  -43
  -47
  -52
  -56
  -61
  -66
  -70
  -75
  -80
  -86
  -91
  -97
  -102
  -108
  -115
  -121
  -128
  -135
  -142
  -150
  -158
  -166
  -175
  -184
  -194
  -204
  -215
Cash from investing activities, $m
  -67
  -102
  -110
  -116
  -123
  -130
  -137
  -144
  -152
  -160
  -168
  -176
  -185
  -196
  -205
  -216
  -226
  -238
  -250
  -262
  -276
  -290
  -304
  -319
  -335
  -352
  -370
  -388
  -408
  -428
  -450
Free cash flow, $m
  235
  44
  92
  89
  88
  89
  93
  100
  109
  120
  135
  114
  129
  145
  164
  185
  208
  234
  262
  293
  327
  363
  403
  446
  492
  542
  596
  654
  716
  782
  853
Issuance/(repayment) of debt, $m
  -200
  -594
  87
  100
  112
  124
  136
  148
  161
  173
  186
  199
  212
  226
  240
  255
  270
  286
  302
  319
  337
  356
  375
  395
  416
  439
  462
  486
  511
  538
  566
Issuance/(repurchase) of shares, $m
  -24
  838
  121
  127
  130
  131
  129
  125
  118
  109
  97
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -246
  244
  208
  227
  242
  255
  265
  273
  279
  282
  283
  199
  212
  226
  240
  255
  270
  286
  302
  319
  337
  356
  375
  395
  416
  439
  462
  486
  511
  538
  566
Total cash flow (excl. dividends), $m
  -52
  289
  301
  316
  330
  344
  359
  373
  387
  402
  417
  313
  341
  371
  404
  439
  478
  519
  564
  612
  664
  719
  778
  841
  909
  981
  1,058
  1,140
  1,227
  1,320
  1,419
Retained Cash Flow (-), $m
  379
  -838
  -121
  -127
  -130
  -131
  -129
  -125
  -118
  -109
  -97
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -35
  -37
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
Prev. year cash balance distribution, $m
 
  373
  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
 
  -177
  180
  189
  200
  214
  230
  248
  270
  294
  320
  291
  317
  346
  377
  411
  448
  488
  530
  577
  626
  679
  736
  797
  862
  932
  1,006
  1,086
  1,170
  1,260
  1,356
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -169
  164
  164
  165
  166
  167
  168
  168
  169
  168
  138
  135
  132
  127
  121
  114
  106
  98
  89
  80
  70
  61
  52
  44
  36
  29
  23
  18
  14
  10
Current shareholders' claim on cash, %
  100
  50.0
  44.7
  40.0
  35.7
  31.9
  28.7
  26.0
  23.7
  21.8
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3

Aimia Inc., through its subsidiaries, operates as a data-driven marketing and loyalty analytics company worldwide. The company operates in three segments: Canada; the United States and Asia-Pacific; and Europe, Middle-East and Africa. It owns and operates various coalition loyalty programs comprising Aeroplan in Canada; Nectar in the United Kingdom; Club Premier in Mexico; Travel Club in Spain; Air Miles in the Middle East; and China Rewards in China. The company also provides data driven analytics and insights services to retailers and their suppliers; and Smart Button, a SaaS platform that delivers self-service program management solutions. It serves various industries, including airlines, automotive, CPG/FMCG, financial services, high tech, pharma/healthcare, retail, telecom, and travel hospitality. The company was formerly known as Groupe Aeroplan Inc. and changed its name to Aimia Inc. in October 2011. Aimia Inc. was founded in 1984 and is headquartered in Montreal, Canada.


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FINANCIAL RATIOS  of  Aimia Inc. (AIM)

Valuation Ratios
P/E Ratio -3.6
Price to Sales 0.1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 0.8
Price to Free Cash Flow 1
Growth Rates
Sales Growth Rate -7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -27.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 386.2%
Total Debt to Equity 386.2%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.6%
Ret/ On Assets - 3 Yr. Avg. -0.1%
Return On Total Capital -7.7%
Ret/ On T. Cap. - 3 Yr. Avg. -3.5%
Return On Equity -21.6%
Return On Equity - 3 Yr. Avg. -8.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 27.9%
Gross Margin - 3 Yr. Avg. 27.5%
EBITDA Margin 6.6%
EBITDA Margin - 3 Yr. Avg. 7.9%
Operating Margin -3.8%
Oper. Margin - 3 Yr. Avg. -1.4%
Pre-Tax Margin -3.4%
Pre-Tax Margin - 3 Yr. Avg. -1.7%
Net Profit Margin -2.9%
Net Profit Margin - 3 Yr. Avg. -1.5%
Effective Tax Rate 16.7%
Eff/ Tax Rate - 3 Yr. Avg. 29.8%
Payout Ratio -207.6%

AIM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AIM stock intrinsic value calculation we used $2288 million for the last fiscal year's total revenue generated by Aimia Inc.. The default revenue input number comes from 2016 income statement of Aimia Inc.. 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 AIM stock valuation model: a) initial revenue growth rate of 2% 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 4.3%, whose default value for AIM is calculated based on our internal credit rating of Aimia Inc., 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 Aimia Inc..
    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 AIM stock the variable cost ratio is equal to 50.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1255 million in the base year in the intrinsic value calculation for AIM 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 8.2% for Aimia Inc..

Corporate tax rate of 27% is the nominal tax rate for Aimia Inc.. 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 AIM 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 AIM are equal to 61.7%.

Life of production assets of 18.8 years is the average useful life of capital assets used in Aimia Inc. 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 AIM is equal to -69.8%. 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 - $116 million for Aimia Inc. - 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 180.776 million for Aimia Inc. 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 Aimia Inc. at the current share price and the inputted number of shares is $0.3 billion.

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Stock chart of AIM Financial statements of AIM
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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