Intrinsic value of Atlanticus Holdings - ATLC

Previous Close

$2.31

  Intrinsic Value

$7.69

stock screener

  Rating & Target

str. buy

+233%

Previous close

$2.31

 
Intrinsic value

$7.69

 
Up/down potential

+233%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as ATLC.

We calculate the intrinsic value of ATLC 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, %
  -13.82
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
Revenue, $m
  106
  122
  139
  156
  175
  195
  217
  239
  262
  286
  311
  337
  364
  393
  422
  453
  485
  518
  552
  588
  625
  664
  704
  746
  790
  835
  883
  933
  985
  1,039
  1,096
Variable operating expenses, $m
 
  24
  27
  31
  35
  39
  43
  47
  52
  57
  62
  67
  72
  78
  84
  90
  96
  102
  109
  116
  124
  131
  139
  148
  156
  165
  175
  185
  195
  206
  217
Fixed operating expenses, $m
 
  100
  103
  106
  108
  111
  114
  116
  119
  122
  125
  129
  132
  135
  138
  142
  145
  149
  153
  157
  161
  165
  169
  173
  177
  182
  186
  191
  196
  201
  206
Total operating expenses, $m
  118
  124
  130
  137
  143
  150
  157
  163
  171
  179
  187
  196
  204
  213
  222
  232
  241
  251
  262
  273
  285
  296
  308
  321
  333
  347
  361
  376
  391
  407
  423
Operating income, $m
  -12
  -3
  8
  20
  33
  46
  60
  75
  91
  107
  124
  142
  161
  180
  200
  221
  243
  266
  290
  315
  341
  368
  396
  425
  456
  488
  522
  557
  594
  633
  673
EBITDA, $m
  -5
  -3
  8
  20
  33
  46
  60
  75
  91
  107
  124
  142
  161
  180
  200
  221
  243
  266
  290
  315
  341
  368
  396
  425
  456
  488
  522
  557
  594
  633
  673
Interest expense (income), $m
  19
  15
  16
  20
  23
  27
  31
  36
  40
  45
  50
  55
  60
  66
  72
  78
  84
  91
  97
  104
  112
  119
  127
  136
  144
  153
  162
  172
  182
  193
  204
Earnings before tax, $m
  -12
  -18
  -8
  0
  9
  19
  29
  39
  50
  62
  74
  87
  100
  114
  128
  143
  159
  175
  192
  210
  229
  248
  268
  290
  312
  335
  359
  385
  412
  440
  469
Tax expense, $m
  -6
  0
  0
  0
  2
  5
  8
  11
  14
  17
  20
  23
  27
  31
  35
  39
  43
  47
  52
  57
  62
  67
  72
  78
  84
  90
  97
  104
  111
  119
  127
Net income, $m
  -6
  -18
  -8
  0
  7
  14
  21
  29
  37
  45
  54
  63
  73
  83
  94
  105
  116
  128
  140
  153
  167
  181
  196
  211
  228
  245
  262
  281
  300
  321
  342

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  76
  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
  363
  330
  375
  424
  475
  530
  587
  647
  709
  775
  843
  914
  988
  1,064
  1,144
  1,227
  1,313
  1,403
  1,496
  1,593
  1,693
  1,798
  1,907
  2,021
  2,140
  2,263
  2,392
  2,527
  2,668
  2,815
  2,969
Adjusted assets (=assets-cash), $m
  287
  330
  375
  424
  475
  530
  587
  647
  709
  775
  843
  914
  988
  1,064
  1,144
  1,227
  1,313
  1,403
  1,496
  1,593
  1,693
  1,798
  1,907
  2,021
  2,140
  2,263
  2,392
  2,527
  2,668
  2,815
  2,969
Revenue / Adjusted assets
  0.369
  0.370
  0.371
  0.368
  0.368
  0.368
  0.370
  0.369
  0.370
  0.369
  0.369
  0.369
  0.368
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
Average production assets, $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
  0
Working capital, $m
  0
  61
  69
  78
  88
  98
  108
  119
  131
  143
  156
  169
  182
  196
  211
  226
  242
  259
  276
  294
  312
  332
  352
  373
  395
  418
  441
  466
  492
  519
  548
Total debt, $m
  254
  194
  235
  279
  325
  374
  425
  479
  535
  594
  656
  720
  786
  855
  927
  1,001
  1,079
  1,159
  1,243
  1,330
  1,421
  1,515
  1,614
  1,716
  1,823
  1,934
  2,050
  2,172
  2,298
  2,431
  2,569
Total liabilities, $m
  357
  297
  338
  382
  428
  477
  528
  582
  638
  697
  759
  823
  889
  958
  1,030
  1,104
  1,182
  1,262
  1,346
  1,433
  1,524
  1,618
  1,717
  1,819
  1,926
  2,037
  2,153
  2,275
  2,401
  2,534
  2,672
Total equity, $m
  6
  33
  38
  42
  48
  53
  59
  65
  71
  77
  84
  91
  99
  106
  114
  123
  131
  140
  150
  159
  169
  180
  191
  202
  214
  226
  239
  253
  267
  282
  297
Total liabilities and equity, $m
  363
  330
  376
  424
  476
  530
  587
  647
  709
  774
  843
  914
  988
  1,064
  1,144
  1,227
  1,313
  1,402
  1,496
  1,592
  1,693
  1,798
  1,908
  2,021
  2,140
  2,263
  2,392
  2,528
  2,668
  2,816
  2,969
Debt-to-equity ratio
  42.333
  5.880
  6.260
  6.570
  6.830
  7.060
  7.240
  7.410
  7.550
  7.670
  7.780
  7.870
  7.960
  8.030
  8.100
  8.160
  8.220
  8.270
  8.310
  8.350
  8.390
  8.430
  8.460
  8.490
  8.520
  8.540
  8.570
  8.590
  8.610
  8.630
  8.650
Adjusted equity ratio
  0.021
  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
  -6
  -18
  -8
  0
  7
  14
  21
  29
  37
  45
  54
  63
  73
  83
  94
  105
  116
  128
  140
  153
  167
  181
  196
  211
  228
  245
  262
  281
  300
  321
  342
Depreciation, amort., depletion, $m
  7
  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
Funds from operations, $m
  67
  -18
  -8
  0
  7
  14
  21
  29
  37
  45
  54
  63
  73
  83
  94
  105
  116
  128
  140
  153
  167
  181
  196
  211
  228
  245
  262
  281
  300
  321
  342
Change in working capital, $m
  28
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
Cash from operations, $m
  39
  -26
  -17
  -9
  -3
  4
  10
  18
  25
  33
  42
  50
  59
  69
  79
  89
  100
  112
  123
  136
  148
  162
  176
  190
  206
  222
  239
  256
  274
  294
  314
Maintenance CAPEX, $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
  0
New CAPEX, $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
  0
Cash from investing activities, $m
  -76
  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
Free cash flow, $m
  -37
  -26
  -17
  -9
  -3
  4
  10
  18
  25
  33
  42
  50
  59
  69
  79
  89
  100
  112
  123
  136
  148
  162
  176
  190
  206
  222
  239
  256
  274
  294
  314
Issuance/(repayment) of debt, $m
  64
  16
  41
  44
  46
  49
  51
  54
  56
  59
  61
  64
  66
  69
  72
  75
  78
  81
  84
  87
  91
  94
  98
  102
  107
  111
  116
  121
  127
  132
  138
Issuance/(repurchase) of shares, $m
  -1
  45
  13
  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
Cash from financing (excl. dividends), $m  
  63
  61
  54
  49
  46
  49
  51
  54
  56
  59
  61
  64
  66
  69
  72
  75
  78
  81
  84
  87
  91
  94
  98
  102
  107
  111
  116
  121
  127
  132
  138
Total cash flow (excl. dividends), $m
  25
  35
  37
  40
  43
  52
  62
  71
  82
  92
  103
  114
  126
  138
  151
  164
  178
  192
  207
  223
  239
  256
  274
  293
  312
  333
  355
  377
  401
  426
  452
Retained Cash Flow (-), $m
  5
  -45
  -13
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
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
 
  -10
  24
  35
  38
  47
  56
  65
  75
  85
  96
  107
  118
  130
  143
  156
  169
  183
  198
  213
  229
  246
  263
  281
  301
  321
  342
  364
  387
  411
  437
Discount rate, %
 
  11.10
  11.66
  12.24
  12.85
  13.49
  14.17
  14.88
  15.62
  16.40
  17.22
  18.08
  18.98
  19.93
  20.93
  21.98
  23.08
  24.23
  25.44
  26.71
  28.05
  29.45
  30.92
  32.47
  34.09
  35.80
  37.59
  39.47
  41.44
  43.51
  45.69
PV of cash for distribution, $m
 
  -9
  20
  25
  24
  25
  25
  25
  24
  22
  20
  17
  15
  12
  10
  8
  6
  5
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  41.9
  39.1
  38.2
  38.2
  38.2
  38.2
  38.2
  38.2
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Atlanticus Holdings Corporation is focused on providing financial services. Through its subsidiaries, the Company offers an array of financial products and services. The Company operates through two segments: Credit and Other Investments, and Auto Finance. The Company's Credit and Other Investments segment includes its point-of-sale and direct-to-consumer finance operations, investments in and servicing of its various credit card receivables portfolios and other product development and limited investment in consumer finance technology platforms that capitalize on its credit infrastructure. The Company's Auto Finance segment operations are principally conducted through its CAR platform, which purchases and services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The Company also provides loan servicing activities.

FINANCIAL RATIOS  of  Atlanticus Holdings (ATLC)

Valuation Ratios
P/E Ratio -5.9
Price to Sales 0.3
Price to Book 5.9
Price to Tangible Book
Price to Cash Flow 0.9
Price to Free Cash Flow 0.9
Growth Rates
Sales Growth Rate -13.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 1
Current Ratio NaN
LT Debt to Equity 1883.3%
Total Debt to Equity 4233.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 0.7%
Return On Total Capital -2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity -70.6%
Return On Equity - 3 Yr. Avg. 42.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 55.7%
Gross Margin - 3 Yr. Avg. 57.8%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 29.9%
Operating Margin -11.3%
Oper. Margin - 3 Yr. Avg. -8.5%
Pre-Tax Margin -11.3%
Pre-Tax Margin - 3 Yr. Avg. -8.2%
Net Profit Margin -5.7%
Net Profit Margin - 3 Yr. Avg. 0.1%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 75.3%
Payout Ratio 0%

ATLC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATLC stock intrinsic value calculation we used $106 million for the last fiscal year's total revenue generated by Atlanticus Holdings. The default revenue input number comes from 2016 income statement of Atlanticus Holdings. 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 ATLC stock valuation model: a) initial revenue growth rate of 14.8% 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 11.1%, whose default value for ATLC is calculated based on our internal credit rating of Atlanticus Holdings, 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 Atlanticus Holdings.
    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 ATLC stock the variable cost ratio is equal to 19.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $98 million in the base year in the intrinsic value calculation for ATLC 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 8.4% for Atlanticus Holdings.

Corporate tax rate of 27% is the nominal tax rate for Atlanticus Holdings. 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 ATLC 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 ATLC are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Atlanticus Holdings 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 ATLC is equal to 50%. 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 - $6 million for Atlanticus Holdings - 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 13.983 million for Atlanticus Holdings 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 Atlanticus Holdings at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Atlanticus Holdings Corp. Earnings Q2, 2015   [Sep-09  12:39PM  Capital Cube]
▶ 10-Q for Atlanticus Holdings Corp.   [Aug-16  08:12PM  at Company Spotlight]
▶ 10-Q for Atlanticus Holdings Corp.   [May-17  08:11PM  at Company Spotlight]
▶ 10-K for Atlanticus Holdings Corp.   [Mar-08  08:08PM  at Company Spotlight]
▶ 10-Q for Atlanticus Holdings Corp.   [Nov-16  07:08PM  Company Spotlight]
▶ ATLANTICUS HOLDINGS CORP Financials   [May-17  01:04PM  EDGAR Online Financials]
▶ ATLANTICUS HOLDINGS CORP Financials   [Dec-06-12 01:04PM  EDGAR Online Financials]
▶ ATLANTICUS HOLDINGS CORP Files SEC form 8-K, Other Events   [Dec-04-12 08:19AM  EDGAR Online]
▶ Envistacom expands in Perimeter   [Nov-26-12 11:04AM  at bizjournals.com]
▶ COMPUCREDIT HOLDINGS CORP Financials   [Nov-16-12 01:04PM  EDGAR Online Financials]
Financial statements of ATLC
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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