Intrinsic value of Revolution Lighting Technologies - RVLT

Previous Close

$6.77

  Intrinsic Value

$1.79

stock screener

  Rating & Target

str. sell

-74%

  Value-price divergence*

+563%

Previous close

$6.77

 
Intrinsic value

$1.79

 
Up/down potential

-74%

 
Rating

str. sell

 
Value-price divergence*

+563%

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

We calculate the intrinsic value of RVLT 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 0.1

 

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, %
  32.31
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
  6.06
  5.95
  5.86
  5.77
  5.69
  5.62
  5.56
  5.51
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
Revenue, $m
  172
  190
  210
  230
  251
  273
  296
  319
  344
  370
  396
  424
  453
  483
  514
  546
  580
  615
  652
  690
  730
  771
  815
  860
  907
  957
  1,009
  1,063
  1,119
  1,179
  1,241
Variable operating expenses, $m
 
  176
  193
  211
  230
  250
  270
  291
  313
  336
  359
  377
  402
  429
  456
  485
  515
  546
  579
  613
  648
  685
  724
  764
  806
  850
  896
  944
  994
  1,047
  1,102
Fixed operating expenses, $m
 
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  16
  16
  16
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
Total operating expenses, $m
  170
  186
  204
  222
  241
  261
  282
  303
  325
  348
  372
  390
  415
  443
  470
  499
  530
  561
  595
  629
  664
  702
  741
  782
  824
  869
  915
  963
  1,014
  1,067
  1,123
Operating income, $m
  2
  4
  6
  8
  10
  12
  14
  17
  19
  22
  24
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  69
  74
  79
  83
  88
  94
  99
  105
  111
  118
EBITDA, $m
  8
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  71
  75
  80
  85
  90
  96
  102
  108
  114
  120
  127
  135
Interest expense (income), $m
  2
  2
  3
  5
  6
  8
  10
  12
  13
  15
  17
  19
  22
  24
  26
  29
  31
  34
  37
  39
  42
  46
  49
  52
  56
  59
  63
  67
  72
  76
  81
Earnings before tax, $m
  -1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  35
  37
Tax expense, $m
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
Net income, $m
  -1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1
  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
  218
  240
  264
  290
  316
  344
  373
  403
  434
  466
  500
  535
  571
  609
  648
  689
  731
  776
  822
  870
  920
  973
  1,027
  1,084
  1,144
  1,207
  1,272
  1,340
  1,412
  1,486
  1,565
Adjusted assets (=assets-cash), $m
  217
  240
  264
  290
  316
  344
  373
  403
  434
  466
  500
  535
  571
  609
  648
  689
  731
  776
  822
  870
  920
  973
  1,027
  1,084
  1,144
  1,207
  1,272
  1,340
  1,412
  1,486
  1,565
Revenue / Adjusted assets
  0.793
  0.792
  0.795
  0.793
  0.794
  0.794
  0.794
  0.792
  0.793
  0.794
  0.792
  0.793
  0.793
  0.793
  0.793
  0.792
  0.793
  0.793
  0.793
  0.793
  0.793
  0.792
  0.794
  0.793
  0.793
  0.793
  0.793
  0.793
  0.792
  0.793
  0.793
Average production assets, $m
  44
  48
  53
  58
  63
  69
  75
  81
  87
  94
  100
  107
  115
  122
  130
  138
  147
  156
  165
  175
  185
  195
  206
  218
  230
  242
  255
  269
  283
  298
  314
Working capital, $m
  51
  58
  63
  69
  76
  82
  89
  96
  104
  112
  120
  128
  137
  146
  155
  165
  175
  186
  197
  208
  220
  233
  246
  260
  274
  289
  305
  321
  338
  356
  375
Total debt, $m
  14
  23
  33
  43
  55
  66
  78
  91
  104
  117
  131
  146
  161
  177
  194
  211
  228
  247
  266
  287
  308
  330
  352
  376
  401
  428
  455
  484
  513
  545
  578
Total liabilities, $m
  92
  101
  111
  121
  133
  144
  156
  169
  182
  195
  209
  224
  239
  255
  272
  289
  306
  325
  344
  365
  386
  408
  430
  454
  479
  506
  533
  562
  591
  623
  656
Total equity, $m
  126
  140
  154
  168
  184
  200
  217
  234
  252
  271
  290
  311
  332
  354
  377
  400
  425
  451
  478
  505
  535
  565
  597
  630
  665
  701
  739
  779
  820
  864
  909
Total liabilities and equity, $m
  218
  241
  265
  289
  317
  344
  373
  403
  434
  466
  499
  535
  571
  609
  649
  689
  731
  776
  822
  870
  921
  973
  1,027
  1,084
  1,144
  1,207
  1,272
  1,341
  1,411
  1,487
  1,565
Debt-to-equity ratio
  0.111
  0.160
  0.210
  0.260
  0.300
  0.330
  0.360
  0.390
  0.410
  0.430
  0.450
  0.470
  0.490
  0.500
  0.510
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.580
  0.590
  0.600
  0.600
  0.610
  0.620
  0.620
  0.630
  0.630
  0.640
Adjusted equity ratio
  0.576
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
Depreciation, amort., depletion, $m
  6
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
Funds from operations, $m
  -19
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
Change in working capital, $m
  -13
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
Cash from operations, $m
  -6
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
Maintenance CAPEX, $m
  0
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
New CAPEX, $m
  -1
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
Cash from investing activities, $m
  -13
  -7
  -8
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -21
  -22
  -24
  -25
  -26
  -28
  -28
  -30
  -32
Free cash flow, $m
  -19
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
Issuance/(repayment) of debt, $m
  4
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
Issuance/(repurchase) of shares, $m
  16
  12
  12
  13
  13
  13
  13
  14
  14
  14
  14
  9
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
Cash from financing (excl. dividends), $m  
  20
  22
  22
  24
  24
  25
  25
  27
  27
  28
  28
  24
  25
  26
  26
  28
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
Total cash flow (excl. dividends), $m
  1
  20
  21
  22
  22
  23
  24
  24
  25
  26
  26
  20
  21
  22
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
Retained Cash Flow (-), $m
  -24
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -43
  -45
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
 
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
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
 
  7
  6
  6
  6
  5
  5
  5
  4
  4
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  91.9
  85.0
  79.0
  73.8
  69.2
  65.2
  61.6
  58.4
  55.5
  52.9
  51.4
  50.0
  48.6
  47.4
  46.2
  45.0
  44.0
  42.9
  42.0
  41.0
  40.1
  39.3
  38.5
  37.7
  36.9
  36.2
  35.4
  34.7
  34.1
  33.4

Revolution Lighting Technologies, Inc. designs, manufactures, markets, and sells light emitting diode (LED) lighting solutions focusing on the industrial, commercial, and government markets in the United States, Canada, and internationally. It markets a line of high-quality interior and exterior LED lamps and fixtures under the Seesmart brand. The company also supplies LED illumination for the signage industry; manufactures outdoor LED products; and offers a patented and licensed monitoring and smart grid control system for outdoor lighting applications. Revolution Lighting Technologies, Inc. markets and distributes its products through a network of independent sales representatives and distributors, as well as through energy savings companies and national accounts. The company was formerly known as Nexxus Lighting, Inc. and changed its name to Revolution Lighting Technologies, Inc. in November 2012. Revolution Lighting Technologies, Inc. was founded in 1991 and is headquartered in Stamford, Connecticut.

FINANCIAL RATIOS  of  Revolution Lighting Technologies (RVLT)

Valuation Ratios
P/E Ratio -141.4
Price to Sales 0.8
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow -23.6
Price to Free Cash Flow -20.2
Growth Rates
Sales Growth Rate 32.3%
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 1
Current Ratio 0.2
LT Debt to Equity 9.5%
Total Debt to Equity 11.1%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital -0.8%
Ret/ On T. Cap. - 3 Yr. Avg. -3.8%
Return On Equity -0.9%
Return On Equity - 3 Yr. Avg. -4%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 32.6%
Gross Margin - 3 Yr. Avg. 32.3%
EBITDA Margin 4.1%
EBITDA Margin - 3 Yr. Avg. -0.2%
Operating Margin 1.2%
Oper. Margin - 3 Yr. Avg. -4.6%
Pre-Tax Margin -0.6%
Pre-Tax Margin - 3 Yr. Avg. -5.9%
Net Profit Margin -0.6%
Net Profit Margin - 3 Yr. Avg. -2.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 19.4%
Payout Ratio 0%

RVLT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RVLT stock intrinsic value calculation we used $172 million for the last fiscal year's total revenue generated by Revolution Lighting Technologies. The default revenue input number comes from 2016 income statement of Revolution Lighting Technologies. 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 RVLT stock valuation model: a) initial revenue growth rate of 10.7% 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 4.3%, whose default value for RVLT is calculated based on our internal credit rating of Revolution Lighting Technologies, 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 Revolution Lighting Technologies.
    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 RVLT stock the variable cost ratio is equal to 93%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10 million in the base year in the intrinsic value calculation for RVLT 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 14.8% for Revolution Lighting Technologies.

Corporate tax rate of 27% is the nominal tax rate for Revolution Lighting Technologies. 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 RVLT 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 RVLT are equal to 25.3%.

Life of production assets of 18.6 years is the average useful life of capital assets used in Revolution Lighting Technologies 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 RVLT is equal to 30.2%. 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 - $126 million for Revolution Lighting Technologies - 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 20.259 million for Revolution Lighting Technologies 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 Revolution Lighting Technologies at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Revolution Lighting reports 2Q loss   [Jul-27-17 02:37PM  Associated Press]
▶ RVLT: A Maturing Sales Channel Should Accelerate Second Half Growth   [May-03-17 12:00PM  Zacks Small Cap Research]
▶ Revolution Lighting reports 1Q loss   [May-02-17 07:41AM  Associated Press]
▶ RVLT: Could 2017 Be the Perfect Storm For Growth?   [Mar-10-17 11:00AM  Zacks Small Cap Research]
▶ Revolution Lighting tops 4Q profit forecasts   [07:52AM  Associated Press]
▶ RVLT: Company Turns a Profit in Q2 And Raises Guidance   [Aug-05-16 05:10PM  Zacks Small Cap Research]
Stock chart of RVLT Financial statements of RVLT
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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