Intrinsic value of Eldorado Resorts - ERI

Previous Close

$25.50

  Intrinsic Value

$18.63

stock screener

  Rating & Target

sell

-27%

Previous close

$25.50

 
Intrinsic value

$18.63

 
Up/down potential

-27%

 
Rating

sell

We calculate the intrinsic value of ERI 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 2.0

 

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, %
  24.03
  53.70
  48.83
  44.45
  40.50
  36.95
  33.76
  30.88
  28.29
  25.96
  23.87
  21.98
  20.28
  18.75
  17.38
  16.14
  15.03
  14.02
  13.12
  12.31
  11.58
  10.92
  10.33
  9.80
  9.32
  8.88
  8.50
  8.15
  7.83
  7.55
  7.29
Revenue, $m
  893
  1,373
  2,043
  2,951
  4,146
  5,678
  7,594
  9,940
  12,752
  16,063
  19,896
  24,270
  29,192
  34,667
  40,692
  47,260
  54,362
  61,986
  70,119
  78,751
  87,869
  97,465
  107,532
  118,065
  129,064
  140,531
  152,471
  164,892
  177,806
  191,229
  205,176
Variable operating expenses, $m
 
  1,167
  1,734
  2,502
  3,512
  4,807
  6,428
  8,411
  10,788
  13,588
  16,829
  20,520
  24,682
  29,311
  34,405
  39,958
  45,963
  52,409
  59,286
  66,583
  74,293
  82,406
  90,918
  99,824
  109,124
  118,819
  128,914
  139,416
  150,335
  161,683
  173,476
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
  804
  1,167
  1,734
  2,502
  3,512
  4,807
  6,428
  8,411
  10,788
  13,588
  16,829
  20,520
  24,682
  29,311
  34,405
  39,958
  45,963
  52,409
  59,286
  66,583
  74,293
  82,406
  90,918
  99,824
  109,124
  118,819
  128,914
  139,416
  150,335
  161,683
  173,476
Operating income, $m
  89
  205
  309
  449
  634
  871
  1,167
  1,529
  1,963
  2,475
  3,067
  3,750
  4,510
  5,356
  6,287
  7,302
  8,399
  9,577
  10,834
  12,167
  13,576
  15,059
  16,614
  18,241
  19,941
  21,712
  23,557
  25,476
  27,472
  29,545
  31,700
EBITDA, $m
  152
  303
  451
  652
  916
  1,254
  1,678
  2,196
  2,817
  3,549
  4,396
  5,362
  6,449
  7,659
  8,990
  10,441
  12,010
  13,694
  15,491
  17,398
  19,412
  21,532
  23,756
  26,083
  28,513
  31,046
  33,684
  36,428
  39,281
  42,246
  45,328
Interest expense (income), $m
  48
  46
  77
  120
  179
  256
  354
  478
  629
  810
  1,023
  1,270
  1,552
  1,869
  2,222
  2,610
  3,033
  3,490
  3,981
  4,505
  5,061
  5,648
  6,266
  6,915
  7,593
  8,302
  9,040
  9,809
  10,609
  11,441
  12,305
Earnings before tax, $m
  38
  159
  232
  329
  455
  615
  812
  1,051
  1,335
  1,665
  2,044
  2,480
  2,958
  3,487
  4,066
  4,692
  5,366
  6,087
  6,853
  7,662
  8,515
  9,410
  10,348
  11,327
  12,348
  13,411
  14,517
  15,667
  16,862
  18,104
  19,395
Tax expense, $m
  13
  43
  63
  89
  123
  166
  219
  284
  360
  450
  552
  669
  799
  942
  1,098
  1,267
  1,449
  1,643
  1,850
  2,069
  2,299
  2,541
  2,794
  3,058
  3,334
  3,621
  3,920
  4,230
  4,553
  4,888
  5,237
Net income, $m
  25
  116
  169
  240
  332
  449
  593
  767
  974
  1,215
  1,492
  1,810
  2,160
  2,546
  2,968
  3,425
  3,918
  4,443
  5,002
  5,593
  6,216
  6,870
  7,554
  8,269
  9,014
  9,790
  10,597
  11,437
  12,310
  13,216
  14,158

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  61
  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
  1,294
  1,896
  2,821
  4,076
  5,726
  7,842
  10,489
  13,729
  17,613
  22,186
  27,481
  33,522
  40,321
  47,883
  56,204
  65,276
  75,085
  85,615
  96,850
  108,771
  121,366
  134,620
  148,524
  163,074
  178,266
  194,104
  210,595
  227,752
  245,589
  264,128
  283,393
Adjusted assets (=assets-cash), $m
  1,233
  1,896
  2,821
  4,076
  5,726
  7,842
  10,489
  13,729
  17,613
  22,186
  27,481
  33,522
  40,321
  47,883
  56,204
  65,276
  75,085
  85,615
  96,850
  108,771
  121,366
  134,620
  148,524
  163,074
  178,266
  194,104
  210,595
  227,752
  245,589
  264,128
  283,393
Revenue / Adjusted assets
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
Average production assets, $m
  1,110
  1,705
  2,537
  3,665
  5,149
  7,052
  9,432
  12,345
  15,838
  19,950
  24,711
  30,143
  36,257
  43,057
  50,539
  58,697
  67,517
  76,986
  87,088
  97,808
  109,133
  121,051
  133,554
  146,637
  160,298
  174,540
  189,369
  204,796
  220,836
  237,506
  254,829
Working capital, $m
  0
  -86
  -129
  -186
  -261
  -358
  -478
  -626
  -803
  -1,012
  -1,253
  -1,529
  -1,839
  -2,184
  -2,564
  -2,977
  -3,425
  -3,905
  -4,418
  -4,961
  -5,536
  -6,140
  -6,774
  -7,438
  -8,131
  -8,853
  -9,606
  -10,388
  -11,202
  -12,047
  -12,926
Total debt, $m
  800
  1,328
  2,072
  3,081
  4,408
  6,109
  8,238
  10,842
  13,965
  17,642
  21,899
  26,756
  32,222
  38,302
  44,992
  52,286
  60,173
  68,639
  77,671
  87,256
  97,382
  108,038
  119,218
  130,915
  143,130
  155,864
  169,123
  182,916
  197,258
  212,163
  227,652
Total liabilities, $m
  996
  1,524
  2,268
  3,277
  4,604
  6,305
  8,434
  11,038
  14,161
  17,838
  22,095
  26,952
  32,418
  38,498
  45,188
  52,482
  60,369
  68,835
  77,867
  87,452
  97,578
  108,234
  119,414
  131,111
  143,326
  156,060
  169,319
  183,112
  197,454
  212,359
  227,848
Total equity, $m
  298
  372
  553
  799
  1,122
  1,537
  2,056
  2,691
  3,452
  4,348
  5,386
  6,570
  7,903
  9,385
  11,016
  12,794
  14,717
  16,781
  18,983
  21,319
  23,788
  26,385
  29,111
  31,962
  34,940
  38,044
  41,277
  44,639
  48,135
  51,769
  55,545
Total liabilities and equity, $m
  1,294
  1,896
  2,821
  4,076
  5,726
  7,842
  10,490
  13,729
  17,613
  22,186
  27,481
  33,522
  40,321
  47,883
  56,204
  65,276
  75,086
  85,616
  96,850
  108,771
  121,366
  134,619
  148,525
  163,073
  178,266
  194,104
  210,596
  227,751
  245,589
  264,128
  283,393
Debt-to-equity ratio
  2.685
  3.570
  3.750
  3.860
  3.930
  3.970
  4.010
  4.030
  4.050
  4.060
  4.070
  4.070
  4.080
  4.080
  4.080
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.090
  4.100
  4.100
  4.100
  4.100
  4.100
  4.100
  4.100
  4.100
  4.100
Adjusted equity ratio
  0.192
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  116
  169
  240
  332
  449
  593
  767
  974
  1,215
  1,492
  1,810
  2,160
  2,546
  2,968
  3,425
  3,918
  4,443
  5,002
  5,593
  6,216
  6,870
  7,554
  8,269
  9,014
  9,790
  10,597
  11,437
  12,310
  13,216
  14,158
Depreciation, amort., depletion, $m
  63
  98
  142
  203
  282
  384
  511
  667
  854
  1,074
  1,328
  1,612
  1,939
  2,302
  2,703
  3,139
  3,611
  4,117
  4,657
  5,230
  5,836
  6,473
  7,142
  7,842
  8,572
  9,334
  10,127
  10,952
  11,809
  12,701
  13,627
Funds from operations, $m
  85
  214
  312
  443
  614
  833
  1,104
  1,434
  1,828
  2,289
  2,820
  3,422
  4,099
  4,848
  5,670
  6,564
  7,528
  8,560
  9,659
  10,824
  12,052
  13,343
  14,696
  16,110
  17,586
  19,124
  20,724
  22,389
  24,119
  25,917
  27,785
Change in working capital, $m
  -13
  -30
  -42
  -57
  -75
  -97
  -121
  -148
  -177
  -209
  -242
  -276
  -310
  -345
  -380
  -414
  -447
  -480
  -512
  -544
  -574
  -605
  -634
  -664
  -693
  -722
  -752
  -783
  -814
  -846
  -879
Cash from operations, $m
  98
  244
  354
  500
  690
  929
  1,225
  1,582
  2,005
  2,498
  3,062
  3,698
  4,409
  5,193
  6,050
  6,978
  7,975
  9,041
  10,172
  11,368
  12,626
  13,947
  15,330
  16,774
  18,279
  19,846
  21,476
  23,171
  24,933
  26,763
  28,664
Maintenance CAPEX, $m
  0
  -59
  -91
  -136
  -196
  -275
  -377
  -504
  -660
  -847
  -1,067
  -1,321
  -1,612
  -1,939
  -2,302
  -2,703
  -3,139
  -3,611
  -4,117
  -4,657
  -5,230
  -5,836
  -6,473
  -7,142
  -7,842
  -8,572
  -9,334
  -10,127
  -10,952
  -11,809
  -12,701
New CAPEX, $m
  -47
  -595
  -832
  -1,128
  -1,484
  -1,903
  -2,380
  -2,913
  -3,493
  -4,112
  -4,762
  -5,432
  -6,114
  -6,800
  -7,483
  -8,158
  -8,820
  -9,469
  -10,102
  -10,720
  -11,325
  -11,918
  -12,503
  -13,083
  -13,661
  -14,242
  -14,829
  -15,427
  -16,039
  -16,670
  -17,323
Cash from investing activities, $m
  -41
  -654
  -923
  -1,264
  -1,680
  -2,178
  -2,757
  -3,417
  -4,153
  -4,959
  -5,829
  -6,753
  -7,726
  -8,739
  -9,785
  -10,861
  -11,959
  -13,080
  -14,219
  -15,377
  -16,555
  -17,754
  -18,976
  -20,225
  -21,503
  -22,814
  -24,163
  -25,554
  -26,991
  -28,479
  -30,024
Free cash flow, $m
  57
  -410
  -570
  -763
  -991
  -1,249
  -1,533
  -1,835
  -2,148
  -2,461
  -2,766
  -3,056
  -3,317
  -3,545
  -3,735
  -3,882
  -3,984
  -4,039
  -4,047
  -4,010
  -3,929
  -3,807
  -3,646
  -3,451
  -3,224
  -2,968
  -2,686
  -2,382
  -2,059
  -1,717
  -1,360
Issuance/(repayment) of debt, $m
  -69
  533
  744
  1,008
  1,327
  1,701
  2,128
  2,604
  3,123
  3,677
  4,257
  4,857
  5,466
  6,080
  6,690
  7,294
  7,886
  8,466
  9,032
  9,585
  10,126
  10,656
  11,179
  11,698
  12,215
  12,734
  13,259
  13,794
  14,341
  14,905
  15,489
Issuance/(repurchase) of shares, $m
  0
  13
  12
  6
  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  
  -74
  546
  756
  1,014
  1,327
  1,701
  2,128
  2,604
  3,123
  3,677
  4,257
  4,857
  5,466
  6,080
  6,690
  7,294
  7,886
  8,466
  9,032
  9,585
  10,126
  10,656
  11,179
  11,698
  12,215
  12,734
  13,259
  13,794
  14,341
  14,905
  15,489
Total cash flow (excl. dividends), $m
  -17
  136
  187
  251
  336
  452
  596
  769
  975
  1,215
  1,491
  1,801
  2,149
  2,534
  2,955
  3,412
  3,903
  4,428
  4,985
  5,575
  6,197
  6,850
  7,533
  8,247
  8,991
  9,766
  10,573
  11,411
  12,283
  13,188
  14,129
Retained Cash Flow (-), $m
  -27
  -130
  -181
  -246
  -324
  -415
  -519
  -635
  -761
  -896
  -1,038
  -1,184
  -1,333
  -1,482
  -1,631
  -1,778
  -1,923
  -2,064
  -2,202
  -2,337
  -2,468
  -2,598
  -2,725
  -2,852
  -2,978
  -3,104
  -3,232
  -3,363
  -3,496
  -3,634
  -3,776
Prev. year cash balance distribution, $m
 
  56
  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
 
  63
  5
  5
  13
  38
  77
  134
  214
  319
  453
  617
  817
  1,052
  1,324
  1,634
  1,980
  2,364
  2,783
  3,239
  3,729
  4,252
  4,808
  5,395
  6,013
  6,662
  7,340
  8,049
  8,787
  9,555
  10,353
Discount rate, %
 
  10.10
  10.61
  11.14
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.05
  20.00
  21.00
  22.05
  23.15
  24.31
  25.52
  26.80
  28.14
  29.55
  31.02
  32.57
  34.20
  35.91
  37.71
  39.59
  41.57
PV of cash for distribution, $m
 
  57
  4
  4
  8
  21
  37
  55
  74
  91
  106
  116
  121
  121
  115
  106
  94
  80
  66
  52
  40
  29
  21
  14
  9
  6
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  100
  99.2
  98.7
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5
  98.5

Eldorado Resorts, Inc. is a gaming and hospitality company that owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. The Company's segments are Nevada, Louisiana, Eastern and Corporate. As of May 1, 2017, the Company owned and operated approximately 503,000 square feet of casino space with approximately 20,000 slot machines and video lottery terminals (VLTs), over 550 table and poker games, 45 restaurants and 6,500 hotel rooms. As of December 31, 2016, the Company owned and operated various properties, including Eldorado Resort Casino Reno (Eldorado Reno), Silver Legacy Resort Casino (Silver Legacy), Circus Circus Reno (Circus Reno), Eldorado Resort Casino Shreveport (Eldorado Shreveport), Mountaineer Casino, Racetrack & Resort (Mountaineer), Presque Isle Downs & Casino (Presque Isle Downs), and Eldorado Gaming Scioto Downs (Scioto Downs).

FINANCIAL RATIOS  of  Eldorado Resorts (ERI)

Valuation Ratios
P/E Ratio 48.1
Price to Sales 1.3
Price to Book 4
Price to Tangible Book
Price to Cash Flow 12.3
Price to Free Cash Flow 23.6
Growth Rates
Sales Growth Rate 24%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 27%
Cap. Spend. - 3 Yr. Gr. Rate 46.4%
Financial Strength
Quick Ratio 12
Current Ratio 0
LT Debt to Equity 266.8%
Total Debt to Equity 268.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 9.9%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 16.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 37.3%
Gross Margin - 3 Yr. Avg. 36.9%
EBITDA Margin 16.7%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 10%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. 2.3%
Net Profit Margin 2.8%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 34.2%
Eff/ Tax Rate - 3 Yr. Avg. -42.3%
Payout Ratio 0%

ERI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ERI stock intrinsic value calculation we used $893 million for the last fiscal year's total revenue generated by Eldorado Resorts. The default revenue input number comes from 2016 income statement of Eldorado Resorts. 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 ERI stock valuation model: a) initial revenue growth rate of 53.7% 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 10.1%, whose default value for ERI is calculated based on our internal credit rating of Eldorado Resorts, 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 Eldorado Resorts.
    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 ERI stock the variable cost ratio is equal to 85.3%.

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 ERI 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 5.8% for Eldorado Resorts.

Corporate tax rate of 27% is the nominal tax rate for Eldorado Resorts. 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 ERI 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 ERI are equal to 124.2%.

Life of production assets of 18.7 years is the average useful life of capital assets used in Eldorado Resorts 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 ERI is equal to -6.3%. 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 - $298 million for Eldorado Resorts - 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 76.863 million for Eldorado Resorts 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 Eldorado Resorts at the current share price and the inputted number of shares is $2.0 billion.

RELATED COMPANIES Price Int.Val. Rating
MGM MGM Resorts In 31.03 1.91  str.sell
CNTY Century Casino 8.06 4.46  sell
BYD Boyd Gaming 28.70 33.71  hold
PENN Penn National 25.13 4.44  str.sell
MCRI Monarch Casino 40.90 23.72  sell
WYNN Wynn Resorts 144.44 80.05  sell
RRR Red Rock Resor 23.74 16.72  sell

COMPANY NEWS

▶ Why Shares of Eldorado Resorts Popped 12% in September   [Oct-04-17 12:58PM  Motley Fool]
▶ Why Eldorado Resorts Inc.'s Shares Popped 11% Today   [Aug-09-17 04:28PM  Motley Fool]
▶ Eldorado Resorts reports 2Q loss   [Aug-08-17 11:17PM  Associated Press]
▶ Eldorado Resorts posts 1Q profit   [May-04-17 05:58PM  Associated Press]
▶ Eldorado completes Isle of Capri buyout, names Alberici exec to board   [May-02-17 07:50AM  American City Business Journals]
▶ Isle of Capri sale to close Monday   [Apr-28-17 02:05PM  American City Business Journals]
▶ Eldorado Resorts posts 4Q profit   [Mar-09-17 06:20PM  Associated Press]
▶ Year In Review 2016: M&A activity alters St. Louis casino scene   [Dec-21-16 04:10PM  at bizjournals.com]
▶ Is Koppers Holdings Inc. (KOP) Worthy of Your Portfolio?   [Dec-09-16 09:11AM  at Insider Monkey]
▶ Do Hedge Funds Love Eldorado Resorts Inc (ERI)?   [Dec-08-16 02:56PM  at Insider Monkey]
▶ Casino Queen parent to buy Isle of Capri casino   [Oct-13-16 10:31AM  at bizjournals.com]
Financial statements of ERI
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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