Intrinsic value of Rightside Group - NAME

Previous Close

$10.61

  Intrinsic Value

$0.58

stock screener

  Rating & Target

str. sell

-95%

  Value-price divergence*

+703%

Previous close

$10.61

 
Intrinsic value

$0.58

 
Up/down potential

-95%

 
Rating

str. sell

 
Value-price divergence*

+703%

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

We calculate the intrinsic value of NAME 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, %
  8.77
  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
  62
  63
  65
  66
  68
  70
  73
  75
  78
  81
  84
  87
  91
  94
  98
  103
  107
  112
  117
  122
  128
  134
  140
  146
  153
  161
  168
  176
  185
  194
  203
Variable operating expenses, $m
 
  25
  26
  26
  27
  27
  28
  29
  30
  30
  31
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  59
Fixed operating expenses, $m
 
  71
  72
  74
  76
  78
  80
  82
  84
  86
  88
  91
  93
  95
  97
  100
  102
  105
  108
  110
  113
  116
  119
  122
  125
  128
  131
  134
  138
  141
  145
Total operating expenses, $m
  92
  96
  98
  100
  103
  105
  108
  111
  114
  116
  119
  116
  119
  122
  125
  130
  133
  137
  142
  145
  150
  155
  159
  164
  169
  174
  180
  185
  191
  197
  204
Operating income, $m
  -30
  -33
  -34
  -34
  -35
  -35
  -35
  -36
  -36
  -36
  -36
  -29
  -28
  -28
  -28
  -27
  -26
  -25
  -25
  -23
  -22
  -21
  -19
  -18
  -16
  -14
  -11
  -9
  -6
  -3
  0
EBITDA, $m
  -17
  -20
  -21
  -21
  -21
  -22
  -22
  -22
  -22
  -21
  -21
  -21
  -20
  -19
  -19
  -18
  -17
  -15
  -14
  -12
  -11
  -9
  -7
  -4
  -2
  1
  4
  7
  11
  14
  19
Interest expense (income), $m
  3
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  26
  29
  31
  34
  37
  40
  43
  46
  50
  53
  57
Earnings before tax, $m
  -34
  -33
  -34
  -35
  -37
  -38
  -39
  -40
  -42
  -43
  -44
  -38
  -39
  -40
  -42
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -54
  -55
  -56
  -57
  -57
Tax expense, $m
  7
  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
  -34
  -33
  -34
  -35
  -37
  -38
  -39
  -40
  -42
  -43
  -44
  -38
  -39
  -40
  -42
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -54
  -55
  -56
  -57
  -57

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  32
  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
  304
  277
  284
  291
  299
  308
  318
  329
  341
  353
  367
  382
  397
  414
  431
  450
  469
  490
  512
  536
  560
  586
  614
  642
  673
  705
  739
  774
  811
  851
  892
Adjusted assets (=assets-cash), $m
  272
  277
  284
  291
  299
  308
  318
  329
  341
  353
  367
  382
  397
  414
  431
  450
  469
  490
  512
  536
  560
  586
  614
  642
  673
  705
  739
  774
  811
  851
  892
Revenue / Adjusted assets
  0.228
  0.227
  0.229
  0.227
  0.227
  0.227
  0.230
  0.228
  0.229
  0.229
  0.229
  0.228
  0.229
  0.227
  0.227
  0.229
  0.228
  0.229
  0.229
  0.228
  0.229
  0.229
  0.228
  0.227
  0.227
  0.228
  0.227
  0.227
  0.228
  0.228
  0.228
Average production assets, $m
  57
  58
  59
  60
  62
  64
  66
  68
  71
  73
  76
  79
  82
  86
  90
  93
  97
  102
  106
  111
  116
  122
  127
  133
  140
  146
  153
  161
  169
  177
  185
Working capital, $m
  -1
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
Total debt, $m
  14
  3
  7
  12
  17
  23
  30
  37
  44
  52
  61
  70
  80
  91
  102
  114
  127
  140
  154
  169
  185
  202
  219
  238
  258
  278
  300
  323
  347
  372
  399
Total liabilities, $m
  190
  178
  182
  187
  192
  198
  205
  212
  219
  227
  236
  245
  255
  266
  277
  289
  302
  315
  329
  344
  360
  377
  394
  413
  433
  453
  475
  498
  522
  547
  574
Total equity, $m
  115
  99
  101
  104
  107
  110
  114
  117
  122
  126
  131
  136
  142
  148
  154
  161
  168
  175
  183
  191
  200
  209
  219
  229
  240
  252
  264
  276
  290
  304
  318
Total liabilities and equity, $m
  305
  277
  283
  291
  299
  308
  319
  329
  341
  353
  367
  381
  397
  414
  431
  450
  470
  490
  512
  535
  560
  586
  613
  642
  673
  705
  739
  774
  812
  851
  892
Debt-to-equity ratio
  0.122
  0.030
  0.070
  0.120
  0.160
  0.210
  0.260
  0.310
  0.360
  0.410
  0.470
  0.520
  0.570
  0.620
  0.660
  0.710
  0.760
  0.800
  0.840
  0.890
  0.930
  0.960
  1.000
  1.040
  1.070
  1.110
  1.140
  1.170
  1.200
  1.220
  1.250
Adjusted equity ratio
  0.353
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -34
  -33
  -34
  -35
  -37
  -38
  -39
  -40
  -42
  -43
  -44
  -38
  -39
  -40
  -42
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -54
  -55
  -56
  -57
  -57
Depreciation, amort., depletion, $m
  13
  13
  13
  13
  13
  14
  14
  14
  14
  14
  15
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
Funds from operations, $m
  6
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -33
  -34
  -35
  -35
  -36
  -37
  -37
  -38
  -38
  -38
  -39
  -39
  -39
  -39
  -39
  -39
Change in working capital, $m
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  4
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -31
  -32
  -33
  -34
  -34
  -35
  -36
  -36
  -37
  -37
  -37
  -38
  -38
  -38
  -38
  -38
  -38
  -38
Maintenance CAPEX, $m
  0
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
New CAPEX, $m
  -3
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
Cash from investing activities, $m
  2
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -21
  -22
  -22
  -24
  -25
  -27
Free cash flow, $m
  6
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -40
  -42
  -43
  -44
  -46
  -47
  -48
  -50
  -51
  -52
  -54
  -55
  -56
  -57
  -59
  -60
  -61
  -62
  -63
  -64
Issuance/(repayment) of debt, $m
  -17
  3
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
Issuance/(repurchase) of shares, $m
  0
  35
  36
  38
  40
  41
  43
  44
  46
  47
  49
  43
  45
  46
  48
  49
  51
  52
  54
  56
  57
  59
  60
  62
  63
  65
  66
  68
  69
  71
  72
Cash from financing (excl. dividends), $m  
  -19
  38
  40
  43
  45
  47
  49
  51
  54
  55
  58
  52
  55
  57
  59
  61
  64
  65
  68
  71
  73
  76
  78
  81
  83
  86
  88
  91
  93
  96
  99
Total cash flow (excl. dividends), $m
  -13
  12
  12
  13
  14
  15
  15
  16
  17
  18
  18
  12
  13
  14
  15
  16
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
Retained Cash Flow (-), $m
  28
  -35
  -36
  -38
  -40
  -41
  -43
  -44
  -46
  -47
  -49
  -43
  -45
  -46
  -48
  -49
  -51
  -52
  -54
  -56
  -57
  -59
  -60
  -62
  -63
  -65
  -66
  -68
  -69
  -71
  -72
Prev. year cash balance distribution, $m
 
  18
  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
 
  -5
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -30
  -30
  -31
  -32
  -33
  -33
  -34
  -34
  -35
  -36
  -36
  -36
  -37
  -37
  -38
  -38
  -38
  -38
  -38
  -38
  -38
  -38
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
 
  -5
  -22
  -22
  -21
  -20
  -20
  -19
  -18
  -17
  -16
  -15
  -14
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  100
  83.0
  68.6
  56.6
  46.5
  38.1
  31.2
  25.6
  20.9
  17.1
  14.0
  11.8
  10.0
  8.4
  7.1
  6.0
  5.1
  4.3
  3.7
  3.1
  2.7
  2.3
  2.0
  1.7
  1.5
  1.3
  1.1
  1.0
  0.8
  0.7
  0.7

Rightside Group, Ltd. provides domain name registration and related value-added services to resellers and domain name registrants in the United States, Ireland, Canada, Australia, and Cayman Islands. Its services enable businesses and consumers to find, establish, and maintain their digital address, the starting point for connecting with their online audience. The company provides domain name registration services under the Name.com brand name; and infrastructure services through its eNom brand. It also develops proprietary tools and services to identify, acquire, monetize, and sell domain names for its own portfolio of names, as well as for customersÂ’ domain names. The company was incorporated in 2013 and is headquartered in Kirkland, Washington.

FINANCIAL RATIOS  of  Rightside Group (NAME)

Valuation Ratios
P/E Ratio -6.1
Price to Sales 3.3
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 51.8
Price to Free Cash Flow 207.3
Growth Rates
Sales Growth Rate 8.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate -22.9%
Financial Strength
Quick Ratio 2
Current Ratio 0.8
LT Debt to Equity 0%
Total Debt to Equity 12.2%
Interest Coverage -10
Management Effectiveness
Return On Assets -9.5%
Ret/ On Assets - 3 Yr. Avg. -4.2%
Return On Total Capital -22.9%
Ret/ On T. Cap. - 3 Yr. Avg. -10.2%
Return On Equity -26.4%
Return On Equity - 3 Yr. Avg. -11.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 40.3%
Gross Margin - 3 Yr. Avg. 35.8%
EBITDA Margin -29%
EBITDA Margin - 3 Yr. Avg. -19%
Operating Margin -48.4%
Oper. Margin - 3 Yr. Avg. -64.1%
Pre-Tax Margin -54.8%
Pre-Tax Margin - 3 Yr. Avg. -47.1%
Net Profit Margin -54.8%
Net Profit Margin - 3 Yr. Avg. -26.3%
Effective Tax Rate -20.6%
Eff/ Tax Rate - 3 Yr. Avg. 21.4%
Payout Ratio 0%

NAME stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NAME stock intrinsic value calculation we used $62 million for the last fiscal year's total revenue generated by Rightside Group. The default revenue input number comes from 2016 income statement of Rightside Group. 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 NAME 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 NAME is calculated based on our internal credit rating of Rightside Group, 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 Rightside Group.
    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 NAME stock the variable cost ratio is equal to 40.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $69 million in the base year in the intrinsic value calculation for NAME 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 15.4% for Rightside Group.

Corporate tax rate of 27% is the nominal tax rate for Rightside Group. 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 NAME 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 NAME are equal to 91.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Rightside Group 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 NAME is equal to -10%. 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 - $115 million for Rightside Group - 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 19.015 million for Rightside Group 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 Rightside Group at the current share price and the inputted number of shares is $0.2 billion.

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Stock chart of NAME Financial statements of NAME
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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