Intrinsic value of Siebert Financial - SIEB

Previous Close

$13.10

  Intrinsic Value

$0.02

stock screener

  Rating & Target

str. sell

-100%

Previous close

$13.10

 
Intrinsic value

$0.02

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of SIEB 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, %
  0.00
  50.00
  45.50
  41.45
  37.81
  34.52
  31.57
  28.91
  26.52
  24.37
  22.43
  20.69
  19.12
  17.71
  16.44
  15.29
  14.27
  13.34
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
Revenue, $m
  10
  15
  22
  31
  43
  57
  75
  97
  123
  153
  187
  226
  269
  316
  369
  425
  485
  550
  619
  692
  768
  849
  933
  1,021
  1,113
  1,209
  1,308
  1,411
  1,519
  1,631
  1,747
Variable operating expenses, $m
 
  20
  28
  40
  55
  74
  98
  126
  160
  199
  243
  293
  350
  411
  479
  552
  631
  715
  805
  899
  999
  1,104
  1,213
  1,328
  1,447
  1,571
  1,700
  1,835
  1,975
  2,120
  2,271
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
  15
  20
  28
  40
  55
  74
  98
  126
  160
  199
  243
  293
  350
  411
  479
  552
  631
  715
  805
  899
  999
  1,104
  1,213
  1,328
  1,447
  1,571
  1,700
  1,835
  1,975
  2,120
  2,271
Operating income, $m
  -6
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -56
  -68
  -81
  -95
  -111
  -127
  -146
  -165
  -186
  -208
  -231
  -255
  -280
  -306
  -334
  -363
  -392
  -423
  -456
  -489
  -524
EBITDA, $m
  -6
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -56
  -68
  -81
  -95
  -111
  -127
  -146
  -165
  -186
  -208
  -231
  -255
  -280
  -306
  -334
  -363
  -392
  -423
  -456
  -489
  -524
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
Earnings before tax, $m
  -6
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -57
  -68
  -81
  -96
  -111
  -129
  -147
  -167
  -187
  -209
  -233
  -257
  -283
  -309
  -337
  -366
  -396
  -427
  -460
  -494
  -529
Tax expense, $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
Net income, $m
  -6
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -57
  -68
  -81
  -96
  -111
  -129
  -147
  -167
  -187
  -209
  -233
  -257
  -283
  -309
  -337
  -366
  -396
  -427
  -460
  -494
  -529

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3
  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
  4
  2
  2
  3
  4
  6
  8
  10
  12
  15
  19
  23
  27
  32
  37
  42
  49
  55
  62
  69
  77
  85
  93
  102
  111
  121
  131
  141
  152
  163
  175
Adjusted assets (=assets-cash), $m
  1
  2
  2
  3
  4
  6
  8
  10
  12
  15
  19
  23
  27
  32
  37
  42
  49
  55
  62
  69
  77
  85
  93
  102
  111
  121
  131
  141
  152
  163
  175
Revenue / Adjusted assets
  10.000
  7.500
  11.000
  10.333
  10.750
  9.500
  9.375
  9.700
  10.250
  10.200
  9.842
  9.826
  9.963
  9.875
  9.973
  10.119
  9.898
  10.000
  9.984
  10.029
  9.974
  9.988
  10.032
  10.010
  10.027
  9.992
  9.985
  10.007
  9.993
  10.006
  9.983
Average production assets, $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
Working capital, $m
  0
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -56
  -68
  -81
  -95
  -111
  -127
  -146
  -165
  -186
  -208
  -231
  -255
  -280
  -306
  -334
  -363
  -392
  -423
  -456
  -489
  -524
Total debt, $m
  0
  -1
  0
  1
  2
  3
  5
  7
  9
  12
  15
  18
  22
  26
  31
  36
  42
  48
  54
  60
  67
  74
  82
  90
  98
  107
  116
  125
  135
  145
  155
Total liabilities, $m
  2
  1
  2
  3
  4
  5
  7
  9
  11
  14
  17
  20
  24
  28
  33
  38
  44
  50
  56
  62
  69
  76
  84
  92
  100
  109
  118
  127
  137
  147
  157
Total equity, $m
  2
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
Total liabilities and equity, $m
  4
  1
  2
  3
  4
  6
  8
  10
  12
  16
  19
  22
  27
  31
  37
  42
  49
  56
  62
  69
  77
  84
  93
  102
  111
  121
  131
  141
  152
  163
  174
Debt-to-equity ratio
  0.000
  -4.330
  -0.160
  2.520
  4.300
  5.510
  6.340
  6.940
  7.370
  7.690
  7.930
  8.110
  8.260
  8.370
  8.460
  8.530
  8.590
  8.640
  8.680
  8.710
  8.740
  8.760
  8.790
  8.800
  8.820
  8.830
  8.850
  8.860
  8.870
  8.880
  8.890
Adjusted equity ratio
  -1.000
  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
  -6
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -57
  -68
  -81
  -96
  -111
  -129
  -147
  -167
  -187
  -209
  -233
  -257
  -283
  -309
  -337
  -366
  -396
  -427
  -460
  -494
  -529
Depreciation, amort., depletion, $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
Funds from operations, $m
  -3
  -5
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -57
  -68
  -81
  -96
  -111
  -129
  -147
  -167
  -187
  -209
  -233
  -257
  -283
  -309
  -337
  -366
  -396
  -427
  -460
  -494
  -529
Change in working capital, $m
  0
  -2
  -2
  -3
  -4
  -4
  -5
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
Cash from operations, $m
  -3
  -3
  -4
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -57
  -68
  -81
  -96
  -112
  -129
  -147
  -167
  -188
  -210
  -233
  -257
  -283
  -309
  -337
  -366
  -396
  -428
  -460
  -494
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $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
Free cash flow, $m
  -3
  -3
  -4
  -7
  -9
  -13
  -17
  -23
  -29
  -37
  -46
  -57
  -68
  -81
  -96
  -112
  -129
  -147
  -167
  -188
  -210
  -233
  -257
  -283
  -309
  -337
  -366
  -396
  -428
  -460
  -494
Issuance/(repayment) of debt, $m
  1
  -1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
Issuance/(repurchase) of shares, $m
  0
  6
  7
  9
  13
  17
  23
  30
  37
  46
  57
  69
  82
  96
  112
  129
  148
  167
  188
  210
  233
  258
  283
  310
  338
  367
  397
  429
  461
  495
  530
Cash from financing (excl. dividends), $m  
  0
  5
  8
  10
  14
  18
  25
  32
  39
  49
  60
  72
  86
  100
  117
  134
  153
  173
  194
  217
  240
  265
  291
  318
  346
  376
  406
  438
  471
  505
  540
Total cash flow (excl. dividends), $m
  -3
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  15
  17
  19
  21
  23
  24
  26
  28
  29
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  46
Retained Cash Flow (-), $m
  14
  -6
  -7
  -9
  -13
  -17
  -23
  -30
  -37
  -46
  -57
  -69
  -82
  -96
  -112
  -129
  -148
  -167
  -188
  -210
  -233
  -258
  -283
  -310
  -338
  -367
  -397
  -429
  -461
  -495
  -530
Prev. year cash balance distribution, $m
 
  3
  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
 
  -1
  -4
  -6
  -8
  -12
  -16
  -21
  -27
  -34
  -43
  -53
  -64
  -77
  -91
  -107
  -123
  -141
  -161
  -181
  -203
  -226
  -250
  -275
  -301
  -329
  -357
  -387
  -418
  -450
  -484
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
 
  -1
  -4
  -5
  -7
  -9
  -11
  -14
  -17
  -20
  -23
  -25
  -28
  -29
  -31
  -31
  -31
  -31
  -30
  -28
  -26
  -23
  -21
  -18
  -15
  -13
  -10
  -8
  -6
  -5
  -4
Current shareholders' claim on cash, %
  100
  50.0
  9.3
  1.8
  0.3
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Siebert Financial Corp. is a holding company that conducts retail discount brokerage business through its subsidiary, Muriel Siebert & Co., Inc. (Siebert). The Company's Siebert's principal activity is providing online and traditional brokerage and related services to retail investors. It is also an investment advisor through a subsidiary, Siebert Investment Advisors, Inc. (SIA). SIA offers advice to clients regarding asset allocation and the selection of investments. A subsidiary, Siebert's Women's Financial Network Inc. (WFN), is engaged in providing products, services and information devoted to women's financial needs. Siebert develops and maintains its retail customer base through printed advertising in financial publications, Internet advertising and social media. The Retail Division includes discount brokerage and related services, independent retail execution services, retail customer service, retirement accounts, customer financing, and information and communications systems.

FINANCIAL RATIOS  of  Siebert Financial (SIEB)

Valuation Ratios
P/E Ratio -48.2
Price to Sales 28.9
Price to Book 144.7
Price to Tangible Book
Price to Cash Flow -96.5
Price to Free Cash Flow -96.5
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -54.5%
Ret/ On Assets - 3 Yr. Avg. -32.8%
Return On Total Capital -66.7%
Ret/ On T. Cap. - 3 Yr. Avg. -38.5%
Return On Equity -66.7%
Return On Equity - 3 Yr. Avg. -38.5%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -60%
EBITDA Margin - 3 Yr. Avg. -44.6%
Operating Margin -50%
Oper. Margin - 3 Yr. Avg. -39.2%
Pre-Tax Margin -60%
Pre-Tax Margin - 3 Yr. Avg. -44.6%
Net Profit Margin -60%
Net Profit Margin - 3 Yr. Avg. -44.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio -66.7%

SIEB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SIEB stock intrinsic value calculation we used $10 million for the last fiscal year's total revenue generated by Siebert Financial. The default revenue input number comes from 2016 income statement of Siebert Financial. 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 SIEB stock valuation model: a) initial revenue growth rate of 50% 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 SIEB is calculated based on our internal credit rating of Siebert Financial, 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 Siebert Financial.
    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 SIEB stock the variable cost ratio is equal to 130%.

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 SIEB 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 Siebert Financial.

Corporate tax rate of 27% is the nominal tax rate for Siebert Financial. 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 SIEB 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 SIEB are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Siebert Financial 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 SIEB is equal to -30%. 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 - $2 million for Siebert Financial - 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 22.903 million for Siebert Financial 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 Siebert Financial at the current share price and the inputted number of shares is $0.3 billion.

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Financial statements of SIEB
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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