Intrinsic value of Black Diamond - BDE

Previous Close

$6.65

  Intrinsic Value

$1.40

stock screener

  Rating & Target

str. sell

-79%

  Value-price divergence*

-68%

Previous close

$6.65

 
Intrinsic value

$1.40

 
Up/down potential

-79%

 
Rating

str. sell

 
Value-price divergence*

-68%

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

We calculate the intrinsic value of BDE 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 0.2

 

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, %
  -4.52
  10.50
  9.95
  9.45
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.36
  5.32
  5.29
  5.26
Revenue, $m
  148
  164
  180
  197
  215
  233
  252
  272
  293
  315
  337
  360
  385
  410
  436
  463
  492
  521
  552
  584
  618
  653
  689
  728
  768
  809
  853
  899
  946
  996
  1,049
Variable operating expenses, $m
 
  203
  224
  245
  267
  290
  314
  338
  364
  391
  419
  448
  478
  509
  542
  576
  611
  648
  686
  726
  768
  811
  857
  904
  954
  1,006
  1,060
  1,117
  1,176
  1,239
  1,304
Fixed operating expenses, $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
Total operating expenses, $m
  154
  203
  224
  245
  267
  290
  314
  338
  364
  391
  419
  448
  478
  509
  542
  576
  611
  648
  686
  726
  768
  811
  857
  904
  954
  1,006
  1,060
  1,117
  1,176
  1,239
  1,304
Operating income, $m
  -6
  -40
  -44
  -48
  -52
  -57
  -61
  -66
  -71
  -76
  -82
  -88
  -93
  -100
  -106
  -113
  -119
  -127
  -134
  -142
  -150
  -159
  -168
  -177
  -187
  -197
  -207
  -218
  -230
  -242
  -255
EBITDA, $m
  -3
  -36
  -40
  -44
  -48
  -52
  -56
  -61
  -65
  -70
  -75
  -80
  -86
  -91
  -97
  -103
  -110
  -116
  -123
  -130
  -138
  -145
  -154
  -162
  -171
  -180
  -190
  -200
  -211
  -222
  -234
Interest expense (income), $m
  1
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
Earnings before tax, $m
  -8
  -40
  -44
  -48
  -53
  -57
  -62
  -67
  -72
  -78
  -83
  -89
  -95
  -102
  -108
  -115
  -122
  -130
  -137
  -146
  -154
  -163
  -172
  -182
  -192
  -202
  -213
  -225
  -237
  -249
  -262
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
  -40
  -44
  -48
  -53
  -57
  -62
  -67
  -72
  -78
  -83
  -89
  -95
  -102
  -108
  -115
  -122
  -130
  -137
  -146
  -154
  -163
  -172
  -182
  -192
  -202
  -213
  -225
  -237
  -249
  -262

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  95
  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
  210
  127
  140
  153
  167
  181
  196
  212
  228
  244
  262
  280
  299
  318
  339
  360
  382
  405
  429
  454
  480
  507
  536
  565
  596
  629
  663
  698
  735
  774
  815
Adjusted assets (=assets-cash), $m
  115
  127
  140
  153
  167
  181
  196
  212
  228
  244
  262
  280
  299
  318
  339
  360
  382
  405
  429
  454
  480
  507
  536
  565
  596
  629
  663
  698
  735
  774
  815
Revenue / Adjusted assets
  1.287
  1.291
  1.286
  1.288
  1.287
  1.287
  1.286
  1.283
  1.285
  1.291
  1.286
  1.286
  1.288
  1.289
  1.286
  1.286
  1.288
  1.286
  1.287
  1.286
  1.288
  1.288
  1.285
  1.288
  1.289
  1.286
  1.287
  1.288
  1.287
  1.287
  1.287
Average production assets, $m
  44
  49
  53
  58
  64
  69
  75
  81
  87
  93
  100
  107
  114
  122
  129
  138
  146
  155
  164
  174
  183
  194
  205
  216
  228
  240
  253
  267
  281
  296
  312
Working capital, $m
  126
  59
  64
  70
  77
  83
  90
  97
  105
  113
  121
  129
  138
  147
  156
  166
  176
  187
  198
  209
  221
  234
  247
  260
  275
  290
  305
  322
  339
  357
  376
Total debt, $m
  22
  3
  6
  9
  12
  16
  19
  23
  26
  30
  35
  39
  43
  48
  53
  58
  63
  68
  74
  80
  86
  92
  99
  106
  113
  121
  129
  137
  146
  155
  165
Total liabilities, $m
  50
  30
  33
  36
  39
  43
  46
  50
  53
  57
  62
  66
  70
  75
  80
  85
  90
  95
  101
  107
  113
  119
  126
  133
  140
  148
  156
  164
  173
  182
  192
Total equity, $m
  161
  97
  107
  117
  128
  139
  150
  162
  174
  187
  200
  214
  229
  244
  259
  275
  292
  310
  328
  347
  367
  388
  410
  433
  456
  481
  507
  534
  563
  592
  623
Total liabilities and equity, $m
  211
  127
  140
  153
  167
  182
  196
  212
  227
  244
  262
  280
  299
  319
  339
  360
  382
  405
  429
  454
  480
  507
  536
  566
  596
  629
  663
  698
  736
  774
  815
Debt-to-equity ratio
  0.137
  0.030
  0.050
  0.080
  0.100
  0.110
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.230
  0.230
  0.240
  0.240
  0.240
  0.250
  0.250
  0.250
  0.260
  0.260
  0.260
  0.260
Adjusted equity ratio
  0.574
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -9
  -40
  -44
  -48
  -53
  -57
  -62
  -67
  -72
  -78
  -83
  -89
  -95
  -102
  -108
  -115
  -122
  -130
  -137
  -146
  -154
  -163
  -172
  -182
  -192
  -202
  -213
  -225
  -237
  -249
  -262
Depreciation, amort., depletion, $m
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
Funds from operations, $m
  13
  -36
  -40
  -44
  -48
  -52
  -57
  -62
  -66
  -71
  -77
  -82
  -88
  -93
  -99
  -106
  -112
  -119
  -126
  -134
  -141
  -150
  -158
  -167
  -176
  -186
  -196
  -206
  -217
  -229
  -241
Change in working capital, $m
  8
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
Cash from operations, $m
  5
  -42
  -46
  -50
  -55
  -59
  -64
  -69
  -74
  -79
  -85
  -90
  -96
  -102
  -109
  -116
  -122
  -130
  -137
  -145
  -153
  -162
  -171
  -181
  -190
  -201
  -211
  -223
  -235
  -247
  -260
Maintenance CAPEX, $m
  0
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
New CAPEX, $m
  -3
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
Cash from investing activities, $m
  7
  -8
  -8
  -9
  -9
  -9
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -20
  -21
  -22
  -22
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
Free cash flow, $m
  12
  -50
  -54
  -59
  -64
  -69
  -74
  -80
  -85
  -91
  -98
  -104
  -111
  -118
  -125
  -132
  -140
  -148
  -157
  -166
  -175
  -185
  -195
  -206
  -217
  -229
  -241
  -254
  -267
  -281
  -296
Issuance/(repayment) of debt, $m
  0
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
Issuance/(repurchase) of shares, $m
  0
  49
  54
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  124
  131
  139
  147
  156
  165
  174
  184
  194
  204
  215
  227
  239
  252
  265
  279
  293
Cash from financing (excl. dividends), $m  
  -5
  52
  57
  61
  66
  71
  77
  83
  89
  95
  101
  107
  114
  122
  129
  136
  144
  152
  162
  171
  180
  190
  201
  211
  222
  235
  247
  260
  274
  288
  303
Total cash flow (excl. dividends), $m
  6
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Retained Cash Flow (-), $m
  13
  -49
  -54
  -58
  -63
  -68
  -73
  -79
  -85
  -91
  -97
  -103
  -110
  -117
  -124
  -131
  -139
  -147
  -156
  -165
  -174
  -184
  -194
  -204
  -215
  -227
  -239
  -252
  -265
  -279
  -293
Prev. year cash balance distribution, $m
 
  73
  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
 
  26
  -51
  -56
  -61
  -66
  -71
  -76
  -82
  -87
  -93
  -100
  -106
  -113
  -120
  -127
  -135
  -143
  -151
  -160
  -169
  -179
  -188
  -199
  -210
  -221
  -233
  -245
  -258
  -272
  -286
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
 
  25
  -47
  -49
  -50
  -51
  -51
  -51
  -51
  -50
  -49
  -47
  -45
  -43
  -40
  -37
  -34
  -31
  -28
  -25
  -21
  -18
  -16
  -13
  -11
  -9
  -7
  -5
  -4
  -3
  -2
Current shareholders' claim on cash, %
  100
  68.1
  46.5
  31.9
  21.9
  15.1
  10.4
  7.2
  5.0
  3.5
  2.4
  1.7
  1.2
  0.8
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

FINANCIAL RATIOS  of  Black Diamond (BDE)

Valuation Ratios
P/E Ratio -22.2
Price to Sales 1.3
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 39.9
Price to Free Cash Flow 99.8
Growth Rates
Sales Growth Rate -4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -9.7%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 13.7%
Interest Coverage -7
Management Effectiveness
Return On Assets -3.6%
Ret/ On Assets - 3 Yr. Avg. -8.9%
Return On Total Capital -4.8%
Ret/ On T. Cap. - 3 Yr. Avg. -11%
Return On Equity -5.4%
Return On Equity - 3 Yr. Avg. -12%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 29.7%
Gross Margin - 3 Yr. Avg. 33.8%
EBITDA Margin -2.7%
EBITDA Margin - 3 Yr. Avg. -9.1%
Operating Margin -4.1%
Oper. Margin - 3 Yr. Avg. -11.6%
Pre-Tax Margin -5.4%
Pre-Tax Margin - 3 Yr. Avg. -13.1%
Net Profit Margin -6.1%
Net Profit Margin - 3 Yr. Avg. -15.8%
Effective Tax Rate -12.5%
Eff/ Tax Rate - 3 Yr. Avg. -36.5%
Payout Ratio 0%

BDE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BDE stock intrinsic value calculation we used $148 million for the last fiscal year's total revenue generated by Black Diamond. The default revenue input number comes from 2016 income statement of Black Diamond. 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 BDE stock valuation model: a) initial revenue growth rate of 10.5% 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 BDE is calculated based on our internal credit rating of Black Diamond, 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 Black Diamond.
    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 BDE stock the variable cost ratio is equal to 124.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BDE 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 4.8% for Black Diamond.

Corporate tax rate of 27% is the nominal tax rate for Black Diamond. 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 BDE 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 BDE are equal to 29.7%.

Life of production assets of 14.7 years is the average useful life of capital assets used in Black Diamond 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 BDE is equal to 35.8%. 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 - $161 million for Black Diamond - 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 28.723 million for Black Diamond 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 Black Diamond at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Black Diamond, Inc. to Change Name to Clarus Corporation   [Aug-10-17 01:17PM  GlobeNewswire]
▶ New Strong Sell Stocks for August 8th   [Aug-08-17 07:36AM  Zacks]
▶ Black Diamond reports 2Q loss   [Aug-07-17 10:53PM  Associated Press]
▶ New Strong Buy Stocks for June 16th   [Jun-16-17 11:00AM  Zacks]
▶ Black Diamond, Inc. Files Shelf Registration Statements   [Jun-15-17 08:30AM  GlobeNewswire]
▶ ETFs with exposure to Black Diamond, Inc. : May 11, 2017   [May-11-17 04:15PM  Capital Cube]
▶ New Strong Buy Stocks for May 9th   [May-09-17 09:24AM  Zacks]
▶ Black Diamond reports 1Q loss   [May-08-17 04:30PM  Associated Press]
▶ ETFs with exposure to Black Diamond, Inc. : April 5, 2017   [Apr-05-17 04:23PM  Capital Cube]
▶ New Strong Sell Stocks for March 23rd   [Mar-23-17 06:55AM  Zacks]
▶ Black Diamond reports 4Q loss   [05:04PM  Associated Press]
▶ LD Micro Index Reconstitution as of February 1, 2017   [Feb-01-17 09:45AM  Accesswire]
▶ How Black Diamond Inc (BDE) Stacks Up Against Its Peers?   [Dec-13-16 09:54AM  at Insider Monkey]
▶ Smith & Wesson Hunts for Acquisitions   [Jan-21-16 09:28AM  at TheStreet]
▶ Hedge Funds Are Selling Black Diamond Inc (BDE)   [Nov-25  03:59AM  at Insider Monkey]
Stock chart of BDE Financial statements of BDE
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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