Intrinsic value of Elbit Imaging - EMITF

Previous Close

$2.69

  Intrinsic Value

$147.88

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

-62%

Previous close

$2.69

 
Intrinsic value

$147.88

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

-62%

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

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

We calculate the intrinsic value of EMITF 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 2015), $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
2015(a)
   2016
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -16.20
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  119
  136
  154
  174
  194
  216
  238
  262
  287
  312
  339
  367
  396
  426
  458
  490
  524
  560
  596
  634
  674
  715
  759
  803
  850
  899
  950
  1,003
  1,059
  1,117
  1,178
Variable operating expenses, $m
 
  -67
  -76
  -86
  -96
  -107
  -118
  -130
  -142
  -155
  -168
  -182
  -197
  -212
  -227
  -243
  -260
  -278
  -296
  -315
  -334
  -355
  -376
  -398
  -422
  -446
  -471
  -498
  -525
  -554
  -584
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
  204
  -67
  -76
  -86
  -96
  -107
  -118
  -130
  -142
  -155
  -168
  -182
  -197
  -212
  -227
  -243
  -260
  -278
  -296
  -315
  -334
  -355
  -376
  -398
  -422
  -446
  -471
  -498
  -525
  -554
  -584
Operating income, $m
  -86
  203
  231
  260
  290
  322
  356
  392
  429
  467
  507
  549
  593
  638
  685
  734
  784
  837
  892
  949
  1,009
  1,070
  1,135
  1,202
  1,272
  1,345
  1,421
  1,501
  1,584
  1,671
  1,762
EBITDA, $m
  -86
  203
  231
  260
  290
  322
  356
  392
  429
  467
  507
  549
  593
  638
  685
  734
  784
  837
  892
  949
  1,009
  1,070
  1,135
  1,202
  1,272
  1,345
  1,421
  1,501
  1,584
  1,671
  1,762
Interest expense (income), $m
  10
  19
  20
  23
  26
  30
  34
  38
  42
  47
  51
  56
  61
  66
  72
  78
  83
  90
  96
  102
  109
  116
  124
  132
  140
  148
  157
  166
  176
  186
  196
Earnings before tax, $m
  -86
  185
  211
  237
  264
  292
  322
  354
  386
  421
  456
  493
  532
  571
  613
  656
  701
  748
  796
  847
  899
  954
  1,011
  1,070
  1,132
  1,197
  1,264
  1,335
  1,408
  1,485
  1,565
Tax expense, $m
  1
  50
  57
  64
  71
  79
  87
  95
  104
  114
  123
  133
  144
  154
  166
  177
  189
  202
  215
  229
  243
  258
  273
  289
  306
  323
  341
  360
  380
  401
  423
Net income, $m
  -50
  135
  154
  173
  193
  213
  235
  258
  282
  307
  333
  360
  388
  417
  448
  479
  512
  546
  581
  618
  656
  696
  738
  781
  826
  874
  923
  974
  1,028
  1,084
  1,143

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  51
  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
  731
  777
  881
  992
  1,108
  1,231
  1,361
  1,496
  1,637
  1,785
  1,938
  2,098
  2,264
  2,437
  2,616
  2,803
  2,996
  3,198
  3,407
  3,625
  3,852
  4,088
  4,334
  4,591
  4,858
  5,137
  5,428
  5,732
  6,050
  6,382
  6,729
Adjusted assets (=assets-cash), $m
  680
  777
  881
  992
  1,108
  1,231
  1,361
  1,496
  1,637
  1,785
  1,938
  2,098
  2,264
  2,437
  2,616
  2,803
  2,996
  3,198
  3,407
  3,625
  3,852
  4,088
  4,334
  4,591
  4,858
  5,137
  5,428
  5,732
  6,050
  6,382
  6,729
Revenue / Adjusted assets
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
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
  -159
  -15
  -17
  -19
  -21
  -23
  -26
  -29
  -31
  -34
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -69
  -73
  -78
  -83
  -88
  -93
  -98
  -104
  -109
  -115
  -122
  -128
Total debt, $m
  587
  561
  654
  753
  859
  969
  1,086
  1,207
  1,335
  1,467
  1,605
  1,749
  1,899
  2,054
  2,216
  2,383
  2,558
  2,739
  2,928
  3,124
  3,328
  3,541
  3,762
  3,993
  4,233
  4,484
  4,746
  5,020
  5,306
  5,605
  5,917
Total liabilities, $m
  726
  700
  793
  892
  998
  1,108
  1,225
  1,346
  1,474
  1,606
  1,744
  1,888
  2,038
  2,193
  2,355
  2,522
  2,697
  2,878
  3,067
  3,263
  3,467
  3,680
  3,901
  4,132
  4,372
  4,623
  4,885
  5,159
  5,445
  5,744
  6,056
Total equity, $m
  5
  78
  88
  99
  111
  123
  136
  150
  164
  178
  194
  210
  226
  244
  262
  280
  300
  320
  341
  363
  385
  409
  433
  459
  486
  514
  543
  573
  605
  638
  673
Total liabilities and equity, $m
  731
  778
  881
  991
  1,109
  1,231
  1,361
  1,496
  1,638
  1,784
  1,938
  2,098
  2,264
  2,437
  2,617
  2,802
  2,997
  3,198
  3,408
  3,626
  3,852
  4,089
  4,334
  4,591
  4,858
  5,137
  5,428
  5,732
  6,050
  6,382
  6,729
Debt-to-equity ratio
  117.400
  7.210
  7.420
  7.600
  7.750
  7.870
  7.980
  8.070
  8.150
  8.220
  8.280
  8.340
  8.390
  8.430
  8.470
  8.500
  8.540
  8.570
  8.590
  8.620
  8.640
  8.660
  8.680
  8.700
  8.710
  8.730
  8.740
  8.760
  8.770
  8.780
  8.790
Adjusted equity ratio
  0.007
  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
  -50
  135
  154
  173
  193
  213
  235
  258
  282
  307
  333
  360
  388
  417
  448
  479
  512
  546
  581
  618
  656
  696
  738
  781
  826
  874
  923
  974
  1,028
  1,084
  1,143
Depreciation, amort., depletion, $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
Funds from operations, $m
  -25
  135
  154
  173
  193
  213
  235
  258
  282
  307
  333
  360
  388
  417
  448
  479
  512
  546
  581
  618
  656
  696
  738
  781
  826
  874
  923
  974
  1,028
  1,084
  1,143
Change in working capital, $m
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
Cash from operations, $m
  -24
  137
  156
  175
  195
  216
  238
  261
  285
  310
  336
  363
  391
  420
  451
  483
  515
  550
  585
  622
  661
  701
  743
  786
  832
  879
  928
  980
  1,034
  1,090
  1,149
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
  49
  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
  25
  137
  156
  175
  195
  216
  238
  261
  285
  310
  336
  363
  391
  420
  451
  483
  515
  550
  585
  622
  661
  701
  743
  786
  832
  879
  928
  980
  1,034
  1,090
  1,149
Issuance/(repayment) of debt, $m
  -20
  25
  94
  99
  105
  111
  116
  122
  127
  133
  138
  144
  150
  155
  161
  168
  174
  181
  189
  196
  204
  213
  221
  231
  241
  251
  262
  274
  286
  299
  312
Issuance/(repurchase) of shares, $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 financing (excl. dividends), $m  
  -31
  25
  94
  99
  105
  111
  116
  122
  127
  133
  138
  144
  150
  155
  161
  168
  174
  181
  189
  196
  204
  213
  221
  231
  241
  251
  262
  274
  286
  299
  312
Total cash flow (excl. dividends), $m
  -6
  161
  250
  274
  300
  327
  354
  382
  412
  442
  474
  507
  541
  576
  612
  650
  690
  731
  774
  818
  865
  913
  964
  1,017
  1,072
  1,130
  1,190
  1,254
  1,320
  1,389
  1,462
Retained Cash Flow (-), $m
  58
  -73
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
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
 
  88
  239
  263
  288
  314
  341
  369
  398
  428
  459
  491
  524
  559
  594
  632
  671
  711
  753
  797
  842
  890
  939
  991
  1,045
  1,102
  1,161
  1,223
  1,288
  1,356
  1,427
Discount rate, %
 
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.68
  21.72
  22.80
  23.94
  25.14
  26.40
  27.72
  29.10
  30.56
  32.09
  33.69
  35.38
  37.15
  39.00
  40.95
  43.00
  45.15
  47.41
  49.78
  52.27
  54.88
  57.63
  60.51
PV of cash for distribution, $m
 
  77
  180
  168
  154
  138
  122
  105
  88
  73
  59
  46
  36
  27
  19
  14
  9
  6
  4
  3
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  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
  100.0

Elbit Imaging Ltd. engages, directly and through its investee companies, in the fields of commercial centers, hotels, medical industries and devices, and plots in India. The Company's segments include Commercial centers, Hotel, Medical Industries and devices, and Plots in India. Commercial centers segment include initiation, construction and sale of commercial centers and other mixed-use real property projects, principally in the retail sector. Hotel segment is engaged in the operation and management of hotels. Medical Industries and devices segment includes research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment, and development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine. Plots in India segment includes plots designated for sale, initially designated to residential projects.

FINANCIAL RATIOS  of  Elbit Imaging (EMITF)

Valuation Ratios
P/E Ratio -0
Price to Sales 0
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow -0
Price to Free Cash Flow -0
Growth Rates
Sales Growth Rate -16.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 7800%
Total Debt to Equity 11740%
Interest Coverage -8
Management Effectiveness
Return On Assets -4.6%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital -7.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.3%
Return On Equity -147.1%
Return On Equity - 3 Yr. Avg. -29.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 5%
Gross Margin - 3 Yr. Avg. 9.1%
EBITDA Margin -63.9%
EBITDA Margin - 3 Yr. Avg. -123.5%
Operating Margin -71.4%
Oper. Margin - 3 Yr. Avg. -130.9%
Pre-Tax Margin -72.3%
Pre-Tax Margin - 3 Yr. Avg. -131.2%
Net Profit Margin -42%
Net Profit Margin - 3 Yr. Avg. -63.3%
Effective Tax Rate -1.2%
Eff/ Tax Rate - 3 Yr. Avg. 0.1%
Payout Ratio 0%

EMITF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EMITF stock intrinsic value calculation we used $119 million for the last fiscal year's total revenue generated by Elbit Imaging. The default revenue input number comes from 2015 income statement of Elbit Imaging. 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 EMITF stock valuation model: a) initial revenue growth rate of 14.3% 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 14.7%, whose default value for EMITF is calculated based on our internal credit rating of Elbit Imaging, 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 Elbit Imaging.
    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 EMITF stock the variable cost ratio is equal to -49.6%.

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 EMITF 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 Elbit Imaging.

Corporate tax rate of 27% is the nominal tax rate for Elbit Imaging. 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 EMITF 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 EMITF are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Elbit Imaging 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 EMITF is equal to -10.9%. 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 - $5 million for Elbit Imaging - 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 8.993 million for Elbit Imaging 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 Elbit Imaging at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ [$$] Clinical Development News, May 8-12   [12:31AM  The Wall Street Journal]
▶ Elbit Imaging Announces Update Regarding Class Action   [May-02-17 02:47PM  Accesswire]
▶ Elbit Imaging Ltd. Announces Notes Buyback   [Dec-22-16 12:50PM  GlobeNewswire]
▶ Elbit Imaging Ltd. Announces Notes Buyback   [Dec-15-16 02:13PM  GlobeNewswire]
▶ Elbit Imaging Ltd. Announces Third Quarter Results for 2016   [Dec-02-16 01:05PM  GlobeNewswire]
▶ Elbit Imaging Ltd. Announces Notes Buyback   [Sep-29-16 02:10PM  GlobeNewswire]
▶ Elbit Imaging Ltd. Announces Notes Buyback   [Sep-01-16 11:05AM  GlobeNewswire]
▶ Elbit Imaging Ltd. Announces Notes Buyback   [Jul-14-16 10:45AM  GlobeNewswire]
▶ Elbit Imaging Ltd. Announces Notes Buyback   [Jun-16-16 11:39AM  GlobeNewswire]
Financial statements of EMITF
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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