Intrinsic value of Silvercrest Asset Management Group Cl A - SAMG

Previous Close

$12.05

  Intrinsic Value

$48.50

stock screener

  Rating & Target

str. buy

+302%

  Value-price divergence*

-33%

Previous close

$12.05

 
Intrinsic value

$48.50

 
Up/down potential

+302%

 
Rating

str. buy

 
Value-price divergence*

-33%

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

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

We calculate the intrinsic value of SAMG 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, %
  6.67
  15.80
  14.72
  13.75
  12.87
  12.09
  11.38
  10.74
  10.17
  9.65
  9.18
  8.77
  8.39
  8.05
  7.75
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
Revenue, $m
  80
  93
  106
  121
  136
  153
  170
  189
  208
  228
  249
  271
  293
  317
  341
  367
  393
  421
  450
  479
  510
  543
  576
  611
  647
  685
  725
  766
  809
  855
  902
Variable operating expenses, $m
 
  71
  82
  92
  104
  116
  129
  143
  157
  172
  188
  201
  218
  236
  254
  273
  293
  313
  334
  357
  380
  404
  429
  455
  482
  510
  539
  570
  602
  636
  671
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
  66
  71
  82
  92
  104
  116
  129
  143
  157
  172
  188
  201
  218
  236
  254
  273
  293
  313
  334
  357
  380
  404
  429
  455
  482
  510
  539
  570
  602
  636
  671
Operating income, $m
  15
  21
  25
  28
  32
  37
  41
  46
  51
  56
  61
  69
  75
  81
  87
  94
  101
  108
  115
  123
  131
  139
  148
  157
  166
  176
  186
  196
  207
  219
  231
EBITDA, $m
  18
  25
  29
  33
  37
  41
  46
  51
  56
  62
  67
  73
  79
  86
  92
  99
  107
  114
  122
  130
  138
  147
  156
  166
  175
  186
  196
  208
  219
  231
  244
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
Earnings before tax, $m
  15
  21
  24
  28
  31
  35
  39
  43
  48
  52
  57
  64
  70
  75
  81
  87
  93
  99
  105
  112
  119
  127
  134
  142
  151
  159
  169
  178
  188
  198
  209
Tax expense, $m
  5
  6
  7
  7
  8
  9
  11
  12
  13
  14
  15
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
  38
  41
  43
  45
  48
  51
  54
  56
Net income, $m
  5
  15
  18
  20
  23
  26
  28
  32
  35
  38
  42
  47
  51
  55
  59
  63
  68
  72
  77
  82
  87
  93
  98
  104
  110
  116
  123
  130
  137
  145
  153

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  38
  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
  112
  86
  98
  112
  126
  141
  158
  175
  192
  211
  230
  250
  271
  293
  316
  339
  364
  389
  416
  444
  472
  502
  533
  565
  599
  634
  671
  709
  749
  790
  834
Adjusted assets (=assets-cash), $m
  74
  86
  98
  112
  126
  141
  158
  175
  192
  211
  230
  250
  271
  293
  316
  339
  364
  389
  416
  444
  472
  502
  533
  565
  599
  634
  671
  709
  749
  790
  834
Revenue / Adjusted assets
  1.081
  1.081
  1.082
  1.080
  1.079
  1.085
  1.076
  1.080
  1.083
  1.081
  1.083
  1.084
  1.081
  1.082
  1.079
  1.083
  1.080
  1.082
  1.082
  1.079
  1.081
  1.082
  1.081
  1.081
  1.080
  1.080
  1.080
  1.080
  1.080
  1.082
  1.082
Average production assets, $m
  16
  19
  21
  24
  27
  31
  34
  38
  42
  46
  50
  54
  59
  63
  68
  73
  79
  84
  90
  96
  102
  109
  115
  122
  129
  137
  145
  153
  162
  171
  180
Working capital, $m
  0
  -9
  -11
  -12
  -14
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -58
  -61
  -65
  -69
  -73
  -77
  -81
  -85
  -90
Total debt, $m
  2
  12
  23
  35
  48
  61
  75
  90
  106
  122
  139
  157
  175
  194
  214
  235
  257
  279
  302
  326
  352
  378
  405
  433
  463
  494
  526
  559
  594
  631
  669
Total liabilities, $m
  65
  75
  86
  98
  111
  124
  138
  153
  169
  185
  202
  220
  238
  257
  277
  298
  320
  342
  365
  389
  415
  441
  468
  496
  526
  557
  589
  622
  657
  694
  732
Total equity, $m
  47
  10
  12
  14
  15
  17
  19
  21
  23
  26
  28
  31
  33
  36
  39
  41
  44
  48
  51
  54
  58
  61
  65
  69
  73
  77
  82
  86
  91
  96
  102
Total liabilities and equity, $m
  112
  85
  98
  112
  126
  141
  157
  174
  192
  211
  230
  251
  271
  293
  316
  339
  364
  390
  416
  443
  473
  502
  533
  565
  599
  634
  671
  708
  748
  790
  834
Debt-to-equity ratio
  0.043
  1.170
  1.940
  2.580
  3.110
  3.550
  3.920
  4.240
  4.510
  4.750
  4.950
  5.130
  5.290
  5.440
  5.560
  5.680
  5.780
  5.870
  5.960
  6.030
  6.100
  6.170
  6.230
  6.280
  6.330
  6.380
  6.430
  6.470
  6.510
  6.540
  6.580
Adjusted equity ratio
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  15
  18
  20
  23
  26
  28
  32
  35
  38
  42
  47
  51
  55
  59
  63
  68
  72
  77
  82
  87
  93
  98
  104
  110
  116
  123
  130
  137
  145
  153
Depreciation, amort., depletion, $m
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
Funds from operations, $m
  19
  19
  22
  24
  27
  30
  33
  37
  40
  44
  48
  51
  55
  59
  64
  69
  73
  78
  84
  89
  95
  100
  107
  113
  120
  126
  134
  141
  149
  157
  166
Change in working capital, $m
  1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from operations, $m
  18
  21
  23
  26
  29
  32
  35
  39
  42
  46
  50
  53
  57
  62
  66
  71
  76
  81
  86
  92
  98
  104
  110
  116
  123
  130
  138
  145
  153
  162
  170
Maintenance CAPEX, $m
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
New CAPEX, $m
  -1
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
Cash from investing activities, $m
  0
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -7
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -10
  -12
  -12
  -13
  -13
  -13
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -21
Free cash flow, $m
  18
  17
  19
  21
  24
  27
  29
  32
  36
  39
  42
  45
  49
  53
  57
  61
  65
  70
  75
  79
  84
  90
  95
  101
  107
  113
  120
  126
  133
  141
  149
Issuance/(repayment) of debt, $m
  -1
  10
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
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  
  -2
  10
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
Total cash flow (excl. dividends), $m
  16
  27
  30
  33
  37
  40
  44
  47
  51
  55
  59
  63
  67
  72
  77
  82
  87
  92
  98
  104
  110
  116
  123
  129
  137
  144
  152
  160
  168
  177
  187
Retained Cash Flow (-), $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Prev. year cash balance distribution, $m
 
  38
  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
 
  64
  29
  32
  35
  38
  42
  45
  49
  53
  57
  60
  65
  69
  74
  79
  84
  89
  95
  100
  106
  112
  119
  125
  132
  140
  147
  155
  164
  172
  181
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
 
  61
  26
  28
  29
  30
  30
  31
  31
  30
  30
  29
  28
  26
  25
  23
  21
  19
  17
  15
  13
  12
  10
  8
  7
  5
  4
  3
  3
  2
  1
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Silvercrest Asset Management Group Inc., a wealth management firm, provides financial advisory and related family office services in the United States. The company serves ultra-high net worth individuals and families, as well as their trusts; endowments; foundations; and other institutional investors. It also manages funds of funds and other investment funds. The company was founded in 2002 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Silvercrest Asset Management Group Cl A (SAMG)

Valuation Ratios
P/E Ratio 31.2
Price to Sales 1.9
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 8.7
Price to Free Cash Flow 9.2
Growth Rates
Sales Growth Rate 6.7%
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 NaN
Current Ratio NaN
LT Debt to Equity 4.3%
Total Debt to Equity 4.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 10%
Ret/ On T. Cap. - 3 Yr. Avg. 10.1%
Return On Equity 10.8%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 22.5%
EBITDA Margin - 3 Yr. Avg. 25.6%
Operating Margin 17.5%
Oper. Margin - 3 Yr. Avg. 20.6%
Pre-Tax Margin 18.8%
Pre-Tax Margin - 3 Yr. Avg. 22.5%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 6.7%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 35.8%
Payout Ratio 200%

SAMG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SAMG stock intrinsic value calculation we used $80 million for the last fiscal year's total revenue generated by Silvercrest Asset Management Group Cl A. The default revenue input number comes from 2016 income statement of Silvercrest Asset Management Group Cl 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 SAMG stock valuation model: a) initial revenue growth rate of 15.8% 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 SAMG is calculated based on our internal credit rating of Silvercrest Asset Management Group Cl 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 Silvercrest Asset Management Group Cl 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 SAMG stock the variable cost ratio is equal to 77.5%.

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 SAMG 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 Silvercrest Asset Management Group Cl A.

Corporate tax rate of 27% is the nominal tax rate for Silvercrest Asset Management Group Cl 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 SAMG 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 SAMG are equal to 20%.

Life of production assets of 13.7 years is the average useful life of capital assets used in Silvercrest Asset Management Group Cl 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 SAMG 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 - $47 million for Silvercrest Asset Management Group Cl 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 12.384 million for Silvercrest Asset Management Group Cl 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 Silvercrest Asset Management Group Cl A at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Silvercrest posts 1Q profit   [May-05-17 05:03AM  Associated Press]
▶ Silvercrest posts 4Q profit   [Mar-09-17 06:00PM  Associated Press]
▶ How to Invest in Hedge Funds   [Jan-10-17 01:38PM  at Barrons.com]
▶ Selling Frenzy: What's Ahead for China's Stocks?   [Jan-04-16 03:27PM  at Bloomberg]
▶ The Richest Family Offices, Ranked   [Nov-13  12:01AM  at Bloomberg]
▶ Whats Chinas Biggest Problem?   [Aug-11  05:19PM  at Bloomberg]
Stock chart of SAMG Financial statements of SAMG
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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