Intrinsic value of Two River Bancorp - TRCB

Previous Close

$18.62

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$18.62

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of TRCB 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, %
  -100.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
Revenue, $m
  0
  38
  40
  43
  45
  48
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  108
  114
  120
  126
  132
  139
  146
  153
  161
  169
Variable operating expenses, $m
 
  24
  25
  27
  28
  30
  32
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
  97
  101
  107
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
  0
  24
  25
  27
  28
  30
  32
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
  97
  101
  107
Operating income, $m
  0
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62
EBITDA, $m
  1
  118
  124
  132
  139
  147
  155
  163
  172
  182
  191
  201
  212
  223
  235
  247
  260
  273
  287
  302
  318
  334
  351
  369
  387
  407
  428
  449
  472
  496
  521
Interest expense (income), $m
  5
  51
  48
  51
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
  136
  142
  149
  157
  165
  173
  181
  190
Earnings before tax, $m
  13
  -37
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
Tax expense, $m
  4
  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
  9
  -37
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  940
  908
  960
  1,015
  1,073
  1,133
  1,196
  1,261
  1,330
  1,401
  1,476
  1,555
  1,637
  1,723
  1,813
  1,907
  2,006
  2,110
  2,218
  2,332
  2,452
  2,577
  2,708
  2,846
  2,991
  3,142
  3,302
  3,468
  3,644
  3,828
  4,021
Adjusted assets (=assets-cash), $m
  940
  908
  960
  1,015
  1,073
  1,133
  1,196
  1,261
  1,330
  1,401
  1,476
  1,555
  1,637
  1,723
  1,813
  1,907
  2,006
  2,110
  2,218
  2,332
  2,452
  2,577
  2,708
  2,846
  2,991
  3,142
  3,302
  3,468
  3,644
  3,828
  4,021
Revenue / Adjusted assets
  0.000
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
Average production assets, $m
  3
  1,035
  1,095
  1,158
  1,224
  1,292
  1,363
  1,438
  1,516
  1,598
  1,683
  1,773
  1,866
  1,964
  2,067
  2,175
  2,288
  2,406
  2,530
  2,660
  2,796
  2,939
  3,088
  3,246
  3,411
  3,583
  3,765
  3,955
  4,155
  4,365
  4,585
Working capital, $m
  0
  -957
  -1,012
  -1,070
  -1,131
  -1,194
  -1,260
  -1,329
  -1,401
  -1,477
  -1,556
  -1,639
  -1,725
  -1,816
  -1,911
  -2,010
  -2,115
  -2,224
  -2,338
  -2,458
  -2,584
  -2,716
  -2,855
  -3,000
  -3,153
  -3,312
  -3,480
  -3,656
  -3,841
  -4,035
  -4,238
Total debt, $m
  55
  893
  940
  990
  1,041
  1,095
  1,152
  1,211
  1,272
  1,337
  1,404
  1,475
  1,549
  1,626
  1,707
  1,792
  1,881
  1,974
  2,072
  2,175
  2,282
  2,395
  2,513
  2,637
  2,767
  2,904
  3,047
  3,197
  3,355
  3,521
  3,694
Total liabilities, $m
  840
  817
  864
  914
  966
  1,020
  1,076
  1,135
  1,197
  1,261
  1,328
  1,399
  1,473
  1,550
  1,631
  1,716
  1,805
  1,899
  1,996
  2,099
  2,206
  2,319
  2,437
  2,561
  2,692
  2,828
  2,971
  3,122
  3,279
  3,445
  3,619
Total equity, $m
  101
  91
  96
  102
  107
  113
  120
  126
  133
  140
  148
  155
  164
  172
  181
  191
  201
  211
  222
  233
  245
  258
  271
  285
  299
  314
  330
  347
  364
  383
  402
Total liabilities and equity, $m
  941
  908
  960
  1,016
  1,073
  1,133
  1,196
  1,261
  1,330
  1,401
  1,476
  1,554
  1,637
  1,722
  1,812
  1,907
  2,006
  2,110
  2,218
  2,332
  2,451
  2,577
  2,708
  2,846
  2,991
  3,142
  3,301
  3,469
  3,643
  3,828
  4,021
Debt-to-equity ratio
  0.545
  9.830
  9.790
  9.750
  9.710
  9.670
  9.630
  9.600
  9.570
  9.540
  9.510
  9.490
  9.460
  9.440
  9.420
  9.400
  9.380
  9.360
  9.340
  9.320
  9.310
  9.290
  9.280
  9.270
  9.250
  9.240
  9.230
  9.220
  9.210
  9.200
  9.190
Adjusted equity ratio
  0.107
  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
  9
  -37
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
Depreciation, amort., depletion, $m
  1
  104
  110
  116
  122
  129
  136
  144
  152
  160
  168
  177
  187
  196
  207
  217
  229
  241
  253
  266
  280
  294
  309
  325
  341
  358
  376
  396
  416
  436
  459
Funds from operations, $m
  9
  67
  76
  81
  86
  91
  96
  101
  107
  113
  119
  126
  132
  140
  147
  155
  163
  172
  181
  190
  200
  211
  221
  233
  245
  258
  271
  285
  299
  315
  331
Change in working capital, $m
  0
  -53
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -194
  -203
Cash from operations, $m
  9
  120
  132
  139
  146
  154
  162
  170
  179
  188
  198
  208
  219
  230
  242
  254
  267
  281
  295
  310
  326
  343
  360
  378
  397
  417
  439
  461
  484
  508
  534
Maintenance CAPEX, $m
  0
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -144
  -152
  -160
  -168
  -177
  -187
  -196
  -207
  -217
  -229
  -241
  -253
  -266
  -280
  -294
  -309
  -325
  -341
  -358
  -376
  -396
  -416
  -436
New CAPEX, $m
  0
  -45
  -60
  -63
  -65
  -68
  -71
  -75
  -78
  -82
  -85
  -89
  -94
  -98
  -103
  -108
  -113
  -118
  -124
  -130
  -136
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -200
  -210
  -220
Cash from investing activities, $m
  -80
  -144
  -164
  -173
  -181
  -190
  -200
  -211
  -222
  -234
  -245
  -257
  -271
  -285
  -299
  -315
  -330
  -347
  -365
  -383
  -402
  -423
  -444
  -466
  -490
  -514
  -539
  -566
  -596
  -626
  -656
Free cash flow, $m
  -71
  -24
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
  -101
  -106
  -111
  -117
  -122
Issuance/(repayment) of debt, $m
  -1
  -45
  47
  50
  52
  54
  56
  59
  62
  64
  67
  71
  74
  77
  81
  85
  89
  93
  98
  103
  108
  113
  118
  124
  130
  137
  143
  150
  158
  166
  174
Issuance/(repurchase) of shares, $m
  0
  128
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  62
  66
  69
  72
  76
  79
  83
  87
  91
  96
  100
  105
  111
  116
  122
  127
  134
  140
  147
Cash from financing (excl. dividends), $m  
  67
  83
  86
  91
  95
  99
  103
  108
  114
  118
  124
  131
  136
  143
  150
  157
  165
  172
  181
  190
  199
  209
  218
  229
  241
  253
  265
  277
  292
  306
  321
Total cash flow (excl. dividends), $m
  -4
  59
  54
  57
  59
  62
  64
  67
  70
  74
  77
  81
  84
  88
  93
  97
  102
  107
  112
  117
  123
  129
  135
  142
  149
  156
  164
  172
  180
  189
  198
Retained Cash Flow (-), $m
  -8
  -128
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -62
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -127
  -134
  -140
  -147
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
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash available for distribution, $m
 
  -68
  16
  16
  16
  17
  18
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
Discount rate, %
 
  14.20
  14.91
  15.66
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
  25.50
  26.78
  28.12
  29.52
  31.00
  32.55
  34.17
  35.88
  37.68
  39.56
  41.54
  43.62
  45.80
  48.09
  50.49
  53.02
  55.67
  58.45
PV of cash for distribution, $m
 
  -60
  12
  10
  9
  8
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  35.1
  24.7
  17.4
  12.3
  8.7
  6.1
  4.4
  3.1
  2.2
  1.6
  1.1
  0.8
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Two River Bancorp is the holding company for Two River Community Bank (the Bank). The Company acts as an independent community financial services provider. The Company's segment is community banking operations. The Bank is a state-chartered commercial bank. The Bank offers a range of banking services, including demand, savings and time deposits, and commercial loans, residential loans and consumer/installment loans to small and medium-sized businesses, not-for-profit organizations, professionals and individuals primarily in Monmouth, Middlesex and Union Counties, New Jersey. The Bank also offers its customers various banking products, such as night depository, wire transfers, money orders, automated teller machines, direct deposit, telephone and Internet banking and corporate business services. It also offers customers a range of electronic banking services. The Bank's deposits consist of checking accounts, savings accounts, money market accounts and certificates of deposit.

FINANCIAL RATIOS  of  Two River Bancorp (TRCB)

Valuation Ratios
P/E Ratio 18.2
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 18.2
Price to Free Cash Flow 18.2
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 54.5%
Total Debt to Equity 54.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 1.4%
Ret/ On Assets - 3 Yr. Avg. 1.1%
Return On Total Capital 5.9%
Ret/ On T. Cap. - 3 Yr. Avg. 4.9%
Return On Equity 9.3%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 36.9%
Payout Ratio 11.1%

TRCB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TRCB stock intrinsic value calculation we used $36 million for the last fiscal year's total revenue generated by Two River Bancorp. The default revenue input number comes from 2016 income statement of Two River Bancorp. 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 TRCB stock valuation model: a) initial revenue growth rate of 5.9% 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 14.2%, whose default value for TRCB is calculated based on our internal credit rating of Two River Bancorp, 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 Two River Bancorp.
    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 TRCB stock the variable cost ratio is equal to 63.1%.

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 TRCB 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 5.4% for Two River Bancorp.

Corporate tax rate of 27% is the nominal tax rate for Two River Bancorp. 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 TRCB stock is equal to 0.8%.

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 TRCB are equal to 2715.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Two River Bancorp 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 TRCB is equal to -2509.8%. 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 - $0 million for Two River Bancorp - 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 8 million for Two River Bancorp 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 Two River Bancorp at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Two River Bancorp: 1Q Earnings Snapshot   [Apr-19-18 08:08AM  Associated Press]
▶ Two River Bancorp posts 4Q profit   [Jan-30-18 08:11AM  Associated Press]
▶ Two River Bancorp posts 3Q profit   [Oct-24-17 08:15AM  Associated Press]
▶ Two River Bancorp posts 2Q profit   [Jul-25-17 04:57PM  Associated Press]
▶ ETFs with exposure to Two River Bancorp : June 9, 2017   [Jun-09-17 02:01PM  Capital Cube]
▶ Two River Bancorp posts 1Q profit   [Apr-25-17 08:26AM  Associated Press]
▶ Two River Bancorp posts 4Q profit   [08:10AM  Associated Press]
Financial statements of TRCB
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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