Intrinsic value of Dover Motorsports - DVD

Previous Close

$2.05

  Intrinsic Value

$1.74

stock screener

  Rating & Target

hold

-15%

Previous close

$2.05

 
Intrinsic value

$1.74

 
Up/down potential

-15%

 
Rating

hold

We calculate the intrinsic value of DVD 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -2.13
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  46
  74
  114
  170
  247
  348
  479
  642
  844
  1,085
  1,371
  1,702
  2,081
  2,509
  2,985
  3,510
  4,083
  4,703
  5,369
  6,081
  6,837
  7,636
  8,477
  9,360
  10,285
  11,250
  12,257
  13,305
  14,396
  15,530
  16,709
Variable operating expenses, $m
 
  59
  91
  137
  198
  280
  385
  516
  678
  873
  1,102
  1,369
  1,673
  2,017
  2,400
  2,822
  3,282
  3,781
  4,317
  4,889
  5,497
  6,139
  6,816
  7,526
  8,269
  9,045
  9,854
  10,697
  11,574
  12,486
  13,434
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
  39
  59
  91
  137
  198
  280
  385
  516
  678
  873
  1,102
  1,369
  1,673
  2,017
  2,400
  2,822
  3,282
  3,781
  4,317
  4,889
  5,497
  6,139
  6,816
  7,526
  8,269
  9,045
  9,854
  10,697
  11,574
  12,486
  13,434
Operating income, $m
  7
  14
  22
  33
  48
  68
  94
  126
  165
  213
  269
  334
  408
  492
  585
  688
  800
  922
  1,052
  1,192
  1,340
  1,497
  1,662
  1,835
  2,016
  2,205
  2,402
  2,608
  2,822
  3,044
  3,275
EBITDA, $m
  10
  19
  30
  44
  64
  91
  125
  168
  220
  284
  358
  445
  544
  655
  780
  917
  1,066
  1,228
  1,403
  1,589
  1,786
  1,995
  2,214
  2,445
  2,687
  2,939
  3,202
  3,476
  3,761
  4,057
  4,365
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  6
  9
  12
  17
  21
  27
  34
  42
  51
  60
  71
  83
  96
  109
  124
  139
  156
  173
  191
  210
  230
  251
  272
  295
  318
Earnings before tax, $m
  6
  14
  22
  32
  46
  64
  87
  117
  153
  196
  247
  306
  374
  450
  534
  627
  729
  839
  957
  1,083
  1,216
  1,357
  1,506
  1,661
  1,825
  1,995
  2,172
  2,357
  2,549
  2,749
  2,957
Tax expense, $m
  2
  4
  6
  9
  12
  17
  24
  32
  41
  53
  67
  83
  101
  121
  144
  169
  197
  226
  258
  292
  328
  366
  407
  449
  493
  539
  587
  636
  688
  742
  798
Net income, $m
  4
  10
  16
  23
  33
  47
  64
  85
  112
  143
  180
  224
  273
  328
  390
  458
  532
  612
  698
  790
  888
  991
  1,099
  1,213
  1,332
  1,456
  1,586
  1,721
  1,861
  2,007
  2,159

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  81
  130
  200
  299
  434
  613
  843
  1,131
  1,485
  1,911
  2,414
  2,997
  3,664
  4,417
  5,255
  6,179
  7,188
  8,280
  9,453
  10,706
  12,037
  13,443
  14,925
  16,479
  18,107
  19,806
  21,579
  23,424
  25,345
  27,341
  29,417
Adjusted assets (=assets-cash), $m
  81
  130
  200
  299
  434
  613
  843
  1,131
  1,485
  1,911
  2,414
  2,997
  3,664
  4,417
  5,255
  6,179
  7,188
  8,280
  9,453
  10,706
  12,037
  13,443
  14,925
  16,479
  18,107
  19,806
  21,579
  23,424
  25,345
  27,341
  29,417
Revenue / Adjusted assets
  0.568
  0.569
  0.570
  0.569
  0.569
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
Average production assets, $m
  27
  43
  67
  100
  145
  204
  281
  377
  495
  637
  805
  999
  1,222
  1,473
  1,752
  2,060
  2,396
  2,761
  3,152
  3,570
  4,013
  4,482
  4,976
  5,494
  6,037
  6,604
  7,195
  7,810
  8,450
  9,116
  9,808
Working capital, $m
  -1
  -2
  -3
  -4
  -5
  -8
  -11
  -14
  -19
  -24
  -30
  -37
  -46
  -55
  -66
  -77
  -90
  -103
  -118
  -134
  -150
  -168
  -186
  -206
  -226
  -247
  -270
  -293
  -317
  -342
  -368
Total debt, $m
  4
  20
  44
  77
  122
  181
  258
  354
  472
  613
  781
  975
  1,197
  1,448
  1,727
  2,035
  2,370
  2,734
  3,125
  3,542
  3,985
  4,454
  4,947
  5,465
  6,006
  6,572
  7,163
  7,777
  8,417
  9,082
  9,773
Total liabilities, $m
  27
  43
  67
  100
  145
  204
  281
  377
  495
  636
  804
  998
  1,220
  1,471
  1,750
  2,058
  2,393
  2,757
  3,148
  3,565
  4,008
  4,477
  4,970
  5,488
  6,029
  6,595
  7,186
  7,800
  8,440
  9,105
  9,796
Total equity, $m
  54
  86
  134
  200
  290
  409
  562
  754
  991
  1,275
  1,610
  1,999
  2,444
  2,946
  3,505
  4,121
  4,794
  5,523
  6,305
  7,141
  8,029
  8,967
  9,955
  10,992
  12,077
  13,211
  14,393
  15,624
  16,905
  18,237
  19,621
Total liabilities and equity, $m
  81
  129
  201
  300
  435
  613
  843
  1,131
  1,486
  1,911
  2,414
  2,997
  3,664
  4,417
  5,255
  6,179
  7,187
  8,280
  9,453
  10,706
  12,037
  13,444
  14,925
  16,480
  18,106
  19,806
  21,579
  23,424
  25,345
  27,342
  29,417
Debt-to-equity ratio
  0.074
  0.230
  0.330
  0.380
  0.420
  0.440
  0.460
  0.470
  0.480
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
Adjusted equity ratio
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  10
  16
  23
  33
  47
  64
  85
  112
  143
  180
  224
  273
  328
  390
  458
  532
  612
  698
  790
  888
  991
  1,099
  1,213
  1,332
  1,456
  1,586
  1,721
  1,861
  2,007
  2,159
Depreciation, amort., depletion, $m
  3
  5
  7
  11
  16
  23
  31
  42
  55
  71
  89
  111
  136
  164
  195
  229
  266
  307
  350
  397
  446
  498
  553
  610
  671
  734
  799
  868
  939
  1,013
  1,090
Funds from operations, $m
  7
  15
  23
  34
  49
  69
  95
  127
  167
  214
  270
  335
  409
  492
  585
  687
  798
  919
  1,049
  1,187
  1,334
  1,489
  1,652
  1,823
  2,003
  2,190
  2,385
  2,588
  2,800
  3,020
  3,248
Change in working capital, $m
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
Cash from operations, $m
  7
  16
  24
  36
  51
  72
  98
  131
  171
  219
  276
  342
  417
  501
  595
  698
  811
  933
  1,063
  1,203
  1,350
  1,506
  1,671
  1,843
  2,023
  2,211
  2,407
  2,612
  2,824
  3,045
  3,274
Maintenance CAPEX, $m
  0
  -3
  -5
  -7
  -11
  -16
  -23
  -31
  -42
  -55
  -71
  -89
  -111
  -136
  -164
  -195
  -229
  -266
  -307
  -350
  -397
  -446
  -498
  -553
  -610
  -671
  -734
  -799
  -868
  -939
  -1,013
New CAPEX, $m
  -3
  -16
  -24
  -33
  -45
  -60
  -77
  -96
  -118
  -142
  -168
  -195
  -222
  -251
  -280
  -308
  -336
  -364
  -391
  -418
  -444
  -469
  -494
  -518
  -543
  -567
  -591
  -615
  -640
  -666
  -692
Cash from investing activities, $m
  -3
  -19
  -29
  -40
  -56
  -76
  -100
  -127
  -160
  -197
  -239
  -284
  -333
  -387
  -444
  -503
  -565
  -630
  -698
  -768
  -841
  -915
  -992
  -1,071
  -1,153
  -1,238
  -1,325
  -1,414
  -1,508
  -1,605
  -1,705
Free cash flow, $m
  4
  -3
  -4
  -5
  -5
  -4
  -1
  3
  11
  22
  38
  58
  83
  115
  152
  196
  246
  302
  365
  435
  510
  591
  679
  772
  870
  974
  1,083
  1,197
  1,316
  1,440
  1,570
Issuance/(repayment) of debt, $m
  -2
  16
  24
  33
  45
  59
  76
  96
  118
  142
  167
  194
  222
  251
  279
  308
  336
  364
  391
  417
  443
  468
  493
  518
  542
  566
  590
  615
  639
  665
  691
Issuance/(repurchase) of shares, $m
  0
  22
  31
  43
  57
  72
  89
  107
  125
  141
  155
  166
  172
  174
  169
  158
  141
  116
  84
  46
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2
  38
  55
  76
  102
  131
  165
  203
  243
  283
  322
  360
  394
  425
  448
  466
  477
  480
  475
  463
  443
  468
  493
  518
  542
  566
  590
  615
  639
  665
  691
Total cash flow (excl. dividends), $m
  2
  35
  51
  71
  97
  128
  164
  207
  254
  305
  360
  418
  478
  539
  600
  662
  722
  782
  840
  897
  953
  1,060
  1,172
  1,289
  1,412
  1,540
  1,673
  1,811
  1,955
  2,105
  2,261
Retained Cash Flow (-), $m
  -2
  -32
  -47
  -66
  -90
  -119
  -153
  -192
  -236
  -284
  -335
  -389
  -445
  -502
  -559
  -616
  -673
  -728
  -783
  -836
  -888
  -938
  -988
  -1,037
  -1,085
  -1,134
  -1,182
  -1,231
  -1,281
  -1,332
  -1,384
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
 
  2
  3
  5
  7
  9
  11
  14
  17
  21
  25
  29
  33
  37
  41
  45
  50
  54
  58
  62
  65
  122
  184
  252
  326
  406
  491
  580
  674
  773
  876
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
 
  2
  3
  4
  5
  7
  8
  10
  11
  12
  13
  14
  14
  14
  14
  13
  13
  12
  11
  9
  8
  13
  15
  17
  17
  16
  14
  12
  10
  8
  7
Current shareholders' claim on cash, %
  100
  77.4
  61.5
  50.0
  41.5
  35.2
  30.5
  26.8
  24.0
  21.8
  20.0
  18.7
  17.6
  16.7
  16.1
  15.6
  15.2
  14.9
  14.8
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7
  14.7

Dover Motorsports, Inc. is a marketer and promoter of motorsports entertainment in the United States. The Company, through its subsidiaries, owns and operates Dover International Speedway in Dover, Delaware, and Nashville Superspeedway near Nashville, Tennessee. The Dover International Speedway is located in Dover, Delaware, on approximately 770 acres of land. The Nashville Superspeedway is a motorsports complex located on approximately 1,400 acres of land in Wilson County and Rutherford County, Tennessee. The Company promotes approximately six National Association for Stock Car Auto Racing (NASCAR)-sanctioned events at the Dover International Speedway, including two races in the NASCAR Sprint Cup Series professional stock car racing circuit, two races in the NASCAR XFINITY Series racing circuit, one race in the NASCAR Camping World Truck Series racing circuit and one race in the NASCAR K&N Pro Series East racing circuit.

FINANCIAL RATIOS  of  Dover Motorsports (DVD)

Valuation Ratios
P/E Ratio 18.9
Price to Sales 1.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 10.8
Price to Free Cash Flow 18.9
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 200%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.6
LT Debt to Equity 7.4%
Total Debt to Equity 7.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 5%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.8%
Return On Equity 7.5%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 39.1%
Gross Margin - 3 Yr. Avg. 40.3%
EBITDA Margin 19.6%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin 15.2%
Oper. Margin - 3 Yr. Avg. 15.8%
Pre-Tax Margin 13%
Pre-Tax Margin - 3 Yr. Avg. 14.4%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 39.3%
Payout Ratio 50%

DVD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DVD stock intrinsic value calculation we used $46 million for the last fiscal year's total revenue generated by Dover Motorsports. The default revenue input number comes from 2016 income statement of Dover Motorsports. 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 DVD stock valuation model: a) initial revenue growth rate of 60% 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 DVD is calculated based on our internal credit rating of Dover Motorsports, 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 Dover Motorsports.
    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 DVD stock the variable cost ratio is equal to 80.4%.

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 DVD 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 Dover Motorsports.

Corporate tax rate of 27% is the nominal tax rate for Dover Motorsports. 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 DVD 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 DVD are equal to 58.7%.

Life of production assets of 9 years is the average useful life of capital assets used in Dover Motorsports 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 DVD is equal to -2.2%. 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 - $54 million for Dover Motorsports - 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 36.81 million for Dover Motorsports 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 Dover Motorsports at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Dover Motorsports posts 4Q profit   [Jan-25-18 07:09AM  Associated Press]
▶ Best Rated NasdaqGM Services Dividend Stocks   [Dec-26-17 02:02PM  Simply Wall St.]
▶ Dover Motorsports reports 3Q loss   [07:41AM  Associated Press]
▶ Dover Motorsports, Inc. Declares Dividend   [Oct-25-17 04:10PM  Business Wire]
▶ Dover Motorsports posts 2Q profit   [Jul-28-17 01:34AM  Associated Press]
▶ Dover Motorsports reports 1Q loss   [Apr-27-17 08:34AM  Associated Press]
▶ Dover Motorsports posts 4Q profit   [Jan-26-17 08:52AM  Associated Press]
▶ Dover Motorsports, Inc. Declares Dividend   [04:15PM  Business Wire]
▶ Is OHA Investment Corp (OHAI) A Good Stock To Buy?   [Nov-24  03:40PM  at Insider Monkey]
▶ Dover Motorsports, Inc. Declares Dividend   [04:15PM  Business Wire]
▶ 10-Q for Dover Motorsports, Inc.   [Aug-03  08:09PM  at Company Spotlight]
Financial statements of DVD
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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