Intrinsic value of Liberty TripAdvisor Holdings Series A - LTRPA

Previous Close

$9.55

  Intrinsic Value

$11.88

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  Rating & Target

buy

+24%

Previous close

$9.55

 
Intrinsic value

$11.88

 
Up/down potential

+24%

 
Rating

buy

We calculate the intrinsic value of LTRPA 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, %
  -2.11
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,532
  1,563
  1,599
  1,640
  1,686
  1,737
  1,793
  1,854
  1,920
  1,991
  2,068
  2,150
  2,237
  2,330
  2,428
  2,533
  2,644
  2,762
  2,886
  3,017
  3,156
  3,302
  3,456
  3,619
  3,790
  3,971
  4,161
  4,361
  4,571
  4,793
  5,025
Variable operating expenses, $m
 
  1,540
  1,567
  1,597
  1,632
  1,670
  1,712
  1,758
  1,807
  1,861
  1,918
  1,610
  1,675
  1,745
  1,819
  1,897
  1,980
  2,068
  2,161
  2,260
  2,363
  2,473
  2,588
  2,710
  2,838
  2,974
  3,116
  3,266
  3,423
  3,589
  3,763
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
  1,509
  1,540
  1,567
  1,597
  1,632
  1,670
  1,712
  1,758
  1,807
  1,861
  1,918
  1,610
  1,675
  1,745
  1,819
  1,897
  1,980
  2,068
  2,161
  2,260
  2,363
  2,473
  2,588
  2,710
  2,838
  2,974
  3,116
  3,266
  3,423
  3,589
  3,763
Operating income, $m
  23
  23
  32
  42
  54
  67
  81
  96
  113
  131
  150
  540
  562
  585
  610
  636
  664
  694
  725
  758
  793
  829
  868
  909
  952
  997
  1,045
  1,095
  1,148
  1,204
  1,262
EBITDA, $m
  245
  484
  496
  508
  523
  538
  556
  575
  595
  617
  641
  666
  693
  722
  753
  785
  820
  856
  895
  935
  978
  1,024
  1,072
  1,122
  1,175
  1,231
  1,290
  1,352
  1,417
  1,486
  1,558
Interest expense (income), $m
  10
  19
  5
  10
  15
  21
  28
  36
  44
  53
  62
  73
  84
  95
  108
  121
  135
  150
  166
  182
  200
  218
  238
  259
  281
  304
  328
  353
  380
  408
  438
Earnings before tax, $m
  46
  4
  27
  33
  39
  45
  53
  60
  69
  78
  87
  467
  478
  490
  502
  515
  529
  544
  559
  575
  593
  611
  630
  650
  671
  694
  717
  742
  768
  795
  824
Tax expense, $m
  -1
  1
  7
  9
  10
  12
  14
  16
  19
  21
  24
  126
  129
  132
  136
  139
  143
  147
  151
  155
  160
  165
  170
  176
  181
  187
  194
  200
  207
  215
  223
Net income, $m
  21
  3
  20
  24
  28
  33
  38
  44
  50
  57
  64
  341
  349
  358
  367
  376
  386
  397
  408
  420
  433
  446
  460
  475
  490
  506
  524
  542
  561
  581
  602

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  772
  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
  7,282
  6,650
  6,802
  6,977
  7,174
  7,391
  7,630
  7,890
  8,171
  8,474
  8,799
  9,147
  9,518
  9,913
  10,333
  10,779
  11,252
  11,752
  12,280
  12,839
  13,429
  14,052
  14,708
  15,400
  16,129
  16,897
  17,705
  18,556
  19,452
  20,394
  21,385
Adjusted assets (=assets-cash), $m
  6,510
  6,650
  6,802
  6,977
  7,174
  7,391
  7,630
  7,890
  8,171
  8,474
  8,799
  9,147
  9,518
  9,913
  10,333
  10,779
  11,252
  11,752
  12,280
  12,839
  13,429
  14,052
  14,708
  15,400
  16,129
  16,897
  17,705
  18,556
  19,452
  20,394
  21,385
Revenue / Adjusted assets
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
Average production assets, $m
  2,527
  2,577
  2,636
  2,704
  2,780
  2,864
  2,957
  3,057
  3,166
  3,284
  3,410
  3,545
  3,688
  3,842
  4,004
  4,177
  4,360
  4,554
  4,759
  4,975
  5,204
  5,445
  5,700
  5,968
  6,250
  6,548
  6,861
  7,191
  7,538
  7,903
  8,287
Working capital, $m
  575
  -119
  -121
  -125
  -128
  -132
  -136
  -141
  -146
  -151
  -157
  -163
  -170
  -177
  -185
  -193
  -201
  -210
  -219
  -229
  -240
  -251
  -263
  -275
  -288
  -302
  -316
  -331
  -347
  -364
  -382
Total debt, $m
  635
  141
  278
  436
  612
  808
  1,023
  1,257
  1,510
  1,782
  2,075
  2,388
  2,722
  3,078
  3,456
  3,857
  4,282
  4,732
  5,208
  5,711
  6,242
  6,802
  7,393
  8,016
  8,672
  9,363
  10,091
  10,857
  11,663
  12,510
  13,402
Total liabilities, $m
  6,479
  5,985
  6,122
  6,280
  6,456
  6,652
  6,867
  7,101
  7,354
  7,626
  7,919
  8,232
  8,566
  8,922
  9,300
  9,701
  10,126
  10,576
  11,052
  11,555
  12,086
  12,646
  13,237
  13,860
  14,516
  15,207
  15,935
  16,701
  17,507
  18,354
  19,246
Total equity, $m
  803
  665
  680
  698
  717
  739
  763
  789
  817
  847
  880
  915
  952
  991
  1,033
  1,078
  1,125
  1,175
  1,228
  1,284
  1,343
  1,405
  1,471
  1,540
  1,613
  1,690
  1,771
  1,856
  1,945
  2,039
  2,138
Total liabilities and equity, $m
  7,282
  6,650
  6,802
  6,978
  7,173
  7,391
  7,630
  7,890
  8,171
  8,473
  8,799
  9,147
  9,518
  9,913
  10,333
  10,779
  11,251
  11,751
  12,280
  12,839
  13,429
  14,051
  14,708
  15,400
  16,129
  16,897
  17,706
  18,557
  19,452
  20,393
  21,384
Debt-to-equity ratio
  0.791
  0.210
  0.410
  0.620
  0.850
  1.090
  1.340
  1.590
  1.850
  2.100
  2.360
  2.610
  2.860
  3.100
  3.340
  3.580
  3.810
  4.030
  4.240
  4.450
  4.650
  4.840
  5.030
  5.210
  5.380
  5.540
  5.700
  5.850
  6.000
  6.130
  6.270
Adjusted equity ratio
  0.005
  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
  21
  3
  20
  24
  28
  33
  38
  44
  50
  57
  64
  341
  349
  358
  367
  376
  386
  397
  408
  420
  433
  446
  460
  475
  490
  506
  524
  542
  561
  581
  602
Depreciation, amort., depletion, $m
  222
  461
  464
  466
  469
  472
  475
  479
  482
  487
  491
  127
  132
  137
  143
  149
  156
  163
  170
  178
  186
  194
  204
  213
  223
  234
  245
  257
  269
  282
  296
Funds from operations, $m
  346
  464
  483
  490
  497
  505
  513
  523
  533
  543
  555
  468
  481
  495
  510
  525
  542
  559
  578
  598
  618
  640
  663
  688
  713
  740
  769
  798
  830
  863
  898
Change in working capital, $m
  45
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
Cash from operations, $m
  301
  466
  486
  493
  500
  509
  518
  527
  538
  549
  561
  474
  487
  502
  517
  533
  550
  568
  588
  608
  629
  651
  675
  700
  726
  754
  783
  814
  846
  880
  915
Maintenance CAPEX, $m
  0
  -90
  -92
  -94
  -97
  -99
  -102
  -106
  -109
  -113
  -117
  -122
  -127
  -132
  -137
  -143
  -149
  -156
  -163
  -170
  -178
  -186
  -194
  -204
  -213
  -223
  -234
  -245
  -257
  -269
  -282
New CAPEX, $m
  -73
  -50
  -59
  -68
  -76
  -84
  -92
  -101
  -109
  -117
  -126
  -135
  -144
  -153
  -163
  -173
  -183
  -194
  -205
  -217
  -229
  -241
  -254
  -268
  -283
  -298
  -313
  -330
  -347
  -365
  -384
Cash from investing activities, $m
  -164
  -140
  -151
  -162
  -173
  -183
  -194
  -207
  -218
  -230
  -243
  -257
  -271
  -285
  -300
  -316
  -332
  -350
  -368
  -387
  -407
  -427
  -448
  -472
  -496
  -521
  -547
  -575
  -604
  -634
  -666
Free cash flow, $m
  137
  326
  335
  331
  328
  325
  323
  321
  320
  318
  318
  217
  217
  217
  217
  217
  218
  219
  220
  221
  223
  224
  226
  228
  231
  233
  236
  239
  242
  245
  249
Issuance/(repayment) of debt, $m
  1
  -414
  138
  157
  177
  196
  215
  234
  253
  273
  293
  313
  334
  356
  378
  401
  425
  450
  476
  503
  531
  560
  591
  623
  656
  691
  728
  766
  806
  848
  892
Issuance/(repurchase) of shares, $m
  -96
  551
  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  
  -110
  137
  138
  157
  177
  196
  215
  234
  253
  273
  293
  313
  334
  356
  378
  401
  425
  450
  476
  503
  531
  560
  591
  623
  656
  691
  728
  766
  806
  848
  892
Total cash flow (excl. dividends), $m
  10
  463
  472
  488
  504
  521
  538
  555
  573
  591
  610
  530
  551
  573
  595
  619
  643
  669
  696
  724
  754
  785
  817
  851
  887
  924
  963
  1,005
  1,048
  1,093
  1,141
Retained Cash Flow (-), $m
  5
  -554
  -15
  -17
  -20
  -22
  -24
  -26
  -28
  -30
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -90
  -94
  -99
Prev. year cash balance distribution, $m
 
  692
  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
 
  601
  457
  471
  485
  499
  514
  529
  545
  561
  578
  496
  514
  533
  553
  574
  596
  619
  643
  668
  695
  722
  751
  782
  814
  847
  883
  920
  958
  999
  1,042
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
 
  576
  418
  410
  399
  387
  373
  357
  340
  322
  303
  235
  219
  203
  186
  169
  151
  135
  118
  103
  88
  75
  62
  51
  41
  33
  26
  20
  15
  11
  8
Current shareholders' claim on cash, %
  100
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2
  15.2

Liberty TripAdvisor Holdings, Inc. is a holding company. Through its interests in subsidiaries and other companies, the Company is primarily engaged in the online travel research and online commerce industries. The Company's subsidiaries include TripAdvisor, Inc. (TripAdvisor), which owns and operates a portfolio of online travel brands, and BuySeasons, Inc., which owns and operates BuyCostumes.com and the Celebrate Express (BuySeasons) family of Websites. TripAdvisor is a travel site focusing on helping people around the world to plan and book a trip. TripAdvisor manages its business in two segments: Hotel, including click-based advertising, display-based advertising and subscription-based advertising, and Non-Hotel, including its attractions, restaurants and vacation rental businesses. BuySeasons is an online retailer and supplier of costumes, accessories, seasonal decor and party supplies.

FINANCIAL RATIOS  of  Liberty TripAdvisor Holdings Series A (LTRPA)

Valuation Ratios
P/E Ratio 34.1
Price to Sales 0.5
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 2.4
Price to Free Cash Flow 3.1
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34.8%
Cap. Spend. - 3 Yr. Gr. Rate 4%
Financial Strength
Quick Ratio 10
Current Ratio 0.1
LT Debt to Equity 69.1%
Total Debt to Equity 79.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital 1.5%
Ret/ On T. Cap. - 3 Yr. Avg. -0.8%
Return On Equity 2.6%
Return On Equity - 3 Yr. Avg. -1.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 31.7%
EBITDA Margin 18.1%
EBITDA Margin - 3 Yr. Avg. 20.8%
Operating Margin 1.5%
Oper. Margin - 3 Yr. Avg. 2.5%
Pre-Tax Margin 3%
Pre-Tax Margin - 3 Yr. Avg. 2.2%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. -0.9%
Effective Tax Rate -2.2%
Eff/ Tax Rate - 3 Yr. Avg. -57.5%
Payout Ratio 0%

LTRPA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LTRPA stock intrinsic value calculation we used $1532 million for the last fiscal year's total revenue generated by Liberty TripAdvisor Holdings Series A. The default revenue input number comes from 2016 income statement of Liberty TripAdvisor Holdings Series A. 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 LTRPA stock valuation model: a) initial revenue growth rate of 2% 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 LTRPA is calculated based on our internal credit rating of Liberty TripAdvisor Holdings Series A, 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 Liberty TripAdvisor Holdings Series A.
    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 LTRPA stock the variable cost ratio is equal to 99%.

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 LTRPA 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 Liberty TripAdvisor Holdings Series A.

Corporate tax rate of 27% is the nominal tax rate for Liberty TripAdvisor Holdings Series A. 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 LTRPA 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 LTRPA are equal to 164.9%.

Life of production assets of 28 years is the average useful life of capital assets used in Liberty TripAdvisor Holdings Series A 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 LTRPA is equal to -7.6%. 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 - $803 million for Liberty TripAdvisor Holdings Series A - 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 74.818 million for Liberty TripAdvisor Holdings Series A 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 Liberty TripAdvisor Holdings Series A at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
PCLN Priceline Grou 1,910.21 2,324.07  buy
EXPE Expedia 126.27 409.22  str.buy
TRIP TripAdvisor 35.45 30.19  hold
PRTY Party City Hol 15.85 18.38  buy
GOOGL Alphabet Cl A 1,143.50 1,028.37  hold
TZOO Travelzoo 6.75 3.59  sell
MSFT Microsoft 90.00 55.03  sell
FB Facebook Cl A 181.29 563.27  str.buy
MMYT MakeMyTrip 31.80 9.48  str.sell

COMPANY NEWS

▶ Colorado: The state that gives out the most negative hotel reviews   [Jan-19-18 10:16AM  American City Business Journals]
▶ Liberty TripAdvisor reports 3Q loss   [Nov-08-17 03:41PM  Associated Press]
▶ TripAdvisor CEO: Trump immigration ban 'heartless and discriminatory'   [02:20PM  American City Business Journals]
▶ [$$] Liberty Media: Better Than Berkshire   [Oct-01-16 12:01AM  at Barrons.com]
Financial statements of LTRPA
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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