Intrinsic value of Peak Resorts - SKIS

Previous Close

$5.00

  Intrinsic Value

$21.32

stock screener

  Rating & Target

str. buy

+326%

Previous close

$5.00

 
Intrinsic value

$21.32

 
Up/down potential

+326%

 
Rating

str. buy

We calculate the intrinsic value of SKIS 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 2017), $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
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  28.13
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  123
  141
  159
  179
  200
  223
  246
  271
  296
  323
  351
  379
  410
  441
  473
  507
  542
  578
  616
  656
  697
  740
  784
  830
  879
  929
  982
  1,037
  1,094
  1,154
  1,217
Variable operating expenses, $m
 
  94
  106
  119
  133
  148
  164
  180
  197
  215
  233
  252
  271
  292
  314
  336
  359
  383
  409
  435
  462
  490
  520
  550
  583
  616
  651
  687
  725
  765
  807
Fixed operating expenses, $m
 
  29
  29
  30
  31
  32
  32
  33
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  51
  52
  53
  55
  56
  57
  59
Total operating expenses, $m
  109
  123
  135
  149
  164
  180
  196
  213
  231
  250
  269
  289
  309
  331
  354
  377
  401
  426
  453
  480
  508
  537
  568
  599
  634
  668
  704
  742
  781
  822
  866
Operating income, $m
  14
  18
  24
  30
  36
  43
  50
  57
  65
  73
  82
  91
  100
  110
  120
  130
  141
  152
  164
  176
  189
  202
  216
  230
  246
  261
  278
  295
  313
  332
  352
EBITDA, $m
  27
  33
  40
  48
  57
  66
  75
  85
  95
  106
  118
  129
  141
  154
  167
  181
  196
  210
  226
  242
  259
  276
  295
  314
  334
  355
  376
  399
  423
  448
  474
Interest expense (income), $m
  0
  6
  7
  8
  10
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
  64
  67
  71
Earnings before tax, $m
  2
  12
  17
  21
  26
  32
  38
  44
  50
  56
  63
  71
  78
  86
  94
  102
  111
  120
  129
  139
  149
  160
  171
  183
  195
  208
  221
  235
  249
  265
  281
Tax expense, $m
  1
  3
  4
  6
  7
  9
  10
  12
  13
  15
  17
  19
  21
  23
  25
  28
  30
  32
  35
  38
  40
  43
  46
  49
  53
  56
  60
  63
  67
  71
  76
Net income, $m
  1
  9
  12
  16
  19
  23
  27
  32
  36
  41
  46
  52
  57
  63
  68
  75
  81
  87
  94
  102
  109
  117
  125
  133
  142
  152
  161
  171
  182
  193
  205

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  34
  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
  321
  328
  372
  418
  467
  519
  574
  631
  690
  752
  817
  885
  955
  1,027
  1,103
  1,182
  1,263
  1,348
  1,437
  1,529
  1,624
  1,724
  1,828
  1,936
  2,048
  2,166
  2,289
  2,417
  2,551
  2,691
  2,837
Adjusted assets (=assets-cash), $m
  287
  328
  372
  418
  467
  519
  574
  631
  690
  752
  817
  885
  955
  1,027
  1,103
  1,182
  1,263
  1,348
  1,437
  1,529
  1,624
  1,724
  1,828
  1,936
  2,048
  2,166
  2,289
  2,417
  2,551
  2,691
  2,837
Revenue / Adjusted assets
  0.429
  0.430
  0.427
  0.428
  0.428
  0.430
  0.429
  0.429
  0.429
  0.430
  0.430
  0.428
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
Average production assets, $m
  98
  111
  126
  142
  159
  177
  195
  215
  235
  256
  278
  301
  325
  350
  375
  402
  430
  459
  489
  520
  553
  586
  622
  659
  697
  737
  779
  822
  868
  915
  965
Working capital, $m
  19
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
Total debt, $m
  186
  208
  242
  278
  316
  356
  398
  442
  488
  535
  585
  637
  691
  747
  805
  866
  929
  994
  1,062
  1,133
  1,207
  1,283
  1,363
  1,446
  1,533
  1,624
  1,718
  1,817
  1,920
  2,028
  2,141
Total liabilities, $m
  230
  252
  286
  322
  360
  400
  442
  486
  532
  579
  629
  681
  735
  791
  849
  910
  973
  1,038
  1,106
  1,177
  1,251
  1,327
  1,407
  1,490
  1,577
  1,668
  1,762
  1,861
  1,964
  2,072
  2,185
Total equity, $m
  91
  75
  85
  96
  107
  119
  132
  145
  159
  173
  188
  203
  220
  236
  254
  272
  291
  310
  330
  352
  374
  396
  420
  445
  471
  498
  526
  556
  587
  619
  653
Total liabilities and equity, $m
  321
  327
  371
  418
  467
  519
  574
  631
  691
  752
  817
  884
  955
  1,027
  1,103
  1,182
  1,264
  1,348
  1,436
  1,529
  1,625
  1,723
  1,827
  1,935
  2,048
  2,166
  2,288
  2,417
  2,551
  2,691
  2,838
Debt-to-equity ratio
  2.044
  2.760
  2.830
  2.890
  2.940
  2.980
  3.010
  3.040
  3.070
  3.090
  3.110
  3.130
  3.150
  3.160
  3.170
  3.190
  3.200
  3.210
  3.210
  3.220
  3.230
  3.240
  3.240
  3.250
  3.250
  3.260
  3.260
  3.270
  3.270
  3.280
  3.280
Adjusted equity ratio
  0.216
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  9
  12
  16
  19
  23
  27
  32
  36
  41
  46
  52
  57
  63
  68
  75
  81
  87
  94
  102
  109
  117
  125
  133
  142
  152
  161
  171
  182
  193
  205
Depreciation, amort., depletion, $m
  13
  15
  16
  19
  21
  23
  25
  28
  30
  33
  36
  38
  41
  44
  48
  51
  54
  58
  62
  66
  70
  74
  79
  83
  88
  93
  99
  104
  110
  116
  122
Funds from operations, $m
  10
  23
  29
  34
  40
  46
  53
  59
  67
  74
  82
  90
  98
  107
  116
  125
  135
  146
  156
  167
  179
  191
  204
  217
  231
  245
  260
  275
  292
  309
  327
Change in working capital, $m
  -3
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  13
  24
  29
  35
  41
  47
  54
  61
  68
  75
  83
  91
  100
  108
  118
  127
  137
  147
  158
  169
  181
  193
  206
  219
  233
  247
  262
  278
  295
  312
  330
Maintenance CAPEX, $m
  0
  -12
  -14
  -16
  -18
  -20
  -22
  -25
  -27
  -30
  -32
  -35
  -38
  -41
  -44
  -48
  -51
  -54
  -58
  -62
  -66
  -70
  -74
  -79
  -83
  -88
  -93
  -99
  -104
  -110
  -116
New CAPEX, $m
  -11
  -14
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
Cash from investing activities, $m
  5
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -79
  -83
  -88
  -93
  -99
  -104
  -109
  -116
  -121
  -128
  -135
  -143
  -150
  -158
  -166
Free cash flow, $m
  18
  -2
  0
  3
  6
  9
  13
  17
  20
  24
  29
  33
  38
  43
  48
  53
  58
  64
  70
  76
  83
  89
  96
  104
  111
  119
  127
  136
  145
  155
  164
Issuance/(repayment) of debt, $m
  48
  31
  34
  36
  38
  40
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  65
  68
  71
  74
  77
  80
  83
  87
  91
  95
  99
  103
  108
  113
Issuance/(repurchase) of shares, $m
  20
  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
Cash from financing (excl. dividends), $m  
  12
  32
  34
  36
  38
  40
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  65
  68
  71
  74
  77
  80
  83
  87
  91
  95
  99
  103
  108
  113
Total cash flow (excl. dividends), $m
  29
  30
  34
  39
  44
  49
  55
  60
  66
  72
  79
  85
  92
  99
  106
  113
  121
  129
  138
  147
  156
  166
  176
  187
  198
  210
  222
  235
  248
  262
  277
Retained Cash Flow (-), $m
  -19
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
Prev. year cash balance distribution, $m
 
  25
  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
 
  45
  24
  28
  33
  37
  42
  47
  53
  58
  64
  69
  75
  82
  88
  95
  102
  110
  118
  126
  134
  143
  152
  162
  172
  183
  194
  205
  217
  230
  243
Discount rate, %
 
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
 
  42
  20
  21
  22
  22
  22
  21
  20
  18
  17
  15
  13
  11
  9
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8

Peak Resorts, Inc. is a holding company. The Company, through its subsidiaries, owns or leases, and operates day ski and overnight drive ski resorts. The Company's ski resort operations consist of snow skiing, snowboarding and snow sports areas in Wildwood and Weston, Missouri; Bellefontaine and Cleveland, Ohio; Paoli, Indiana; Blakeslee and Lake Harmony, Pennsylvania; Bartlett, Bennington and Pinkham Notch, New Hampshire; West Dover, Vermont, and Hunter, New York, and an 18 hole golf course in West Dover, Vermont. It also manages hotels in Bartlett, New Hampshire; West Dover, Vermont, and Hunter, New York. As of April 30, 2016, the Company operates 14 ski resorts, which consist of six overnight drive ski resorts and eight day ski resorts located across seven states, ranging from Missouri to New Hampshire, and appeal to a range of visitors. As of April 30, 2016, the Company's resorts comprises approximately 1,860 acres of skiable terrain that appeal to a range of ages and abilities.

FINANCIAL RATIOS  of  Peak Resorts (SKIS)

Valuation Ratios
P/E Ratio 69.9
Price to Sales 0.6
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 5.4
Price to Free Cash Flow 35
Growth Rates
Sales Growth Rate 28.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.4%
Cap. Spend. - 3 Yr. Gr. Rate 12.9%
Financial Strength
Quick Ratio 4
Current Ratio 0.3
LT Debt to Equity 194.5%
Total Debt to Equity 204.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.3%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 0.4%
Ret/ On T. Cap. - 3 Yr. Avg. -0.7%
Return On Equity 1.2%
Return On Equity - 3 Yr. Avg. -2.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 12.2%
EBITDA Margin - 3 Yr. Avg. 17%
Operating Margin 11.4%
Oper. Margin - 3 Yr. Avg. 9.7%
Pre-Tax Margin 1.6%
Pre-Tax Margin - 3 Yr. Avg. -2.1%
Net Profit Margin 0.8%
Net Profit Margin - 3 Yr. Avg. -1.4%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 41.1%
Payout Ratio 100%

SKIS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SKIS stock intrinsic value calculation we used $123 million for the last fiscal year's total revenue generated by Peak Resorts. The default revenue input number comes from 2017 income statement of Peak Resorts. 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 SKIS stock valuation model: a) initial revenue growth rate of 14.3% 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 9.3%, whose default value for SKIS is calculated based on our internal credit rating of Peak Resorts, 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 Peak Resorts.
    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 SKIS stock the variable cost ratio is equal to 66.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for SKIS 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 Peak Resorts.

Corporate tax rate of 27% is the nominal tax rate for Peak Resorts. 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 SKIS 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 SKIS are equal to 79.3%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Peak Resorts 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 SKIS is equal to -4.9%. 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 - $91 million for Peak Resorts - 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 13.982 million for Peak Resorts 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 Peak Resorts at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Peak Resorts reports 1Q loss   [Sep-06-17 11:57PM  Associated Press]
▶ Is Peak Resorts Inc (SKIS) Undervalued?   [07:56AM  Simply Wall St.]
▶ Peak Resorts Announces CFO Transition   [08:00AM  GlobeNewswire]
▶ ETFs with exposure to Peak Resorts, Inc. : July 31, 2017   [Jul-31-17 05:08PM  Capital Cube]
▶ Peak Resorts misses Street 4Q forecasts   [Jul-13-17 08:35PM  Associated Press]
▶ New Strong Sell Stocks for June 26th   [Jun-26-17 09:32AM  Zacks]
▶ ETFs with exposure to Peak Resorts, Inc. : April 5, 2017   [Apr-05-17 05:28PM  Capital Cube]
▶ Peak Resorts misses 3Q profit forecasts   [07:36AM  Associated Press]
▶ LD Micro Index Reconstitution as of February 1, 2017   [Feb-01-17 09:45AM  Accesswire]
▶ Peak Resorts to open new lodge at Ohio resort after fire   [Dec-15-16 03:50PM  at bizjournals.com]
▶ Peak Resorts $52 million in project funds released   [Dec-14-16 08:55AM  at bizjournals.com]
▶ Vail Resorts' Big Acquisition May Already Be Paying Off   [Nov-05-16 11:28AM  at Motley Fool]
Financial statements of SKIS
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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