Intrinsic value of Townsquare Media Cl A - TSQ

Previous Close

$7.57

  Intrinsic Value

$24.65

stock screener

  Rating & Target

str. buy

+226%

Previous close

$7.57

 
Intrinsic value

$24.65

 
Up/down potential

+226%

 
Rating

str. buy

We calculate the intrinsic value of TSQ 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, %
  17.23
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
Revenue, $m
  517
  532
  549
  567
  586
  608
  630
  655
  681
  709
  739
  770
  804
  839
  876
  916
  958
  1,002
  1,049
  1,098
  1,150
  1,204
  1,262
  1,322
  1,386
  1,453
  1,523
  1,597
  1,675
  1,757
  1,843
Variable operating expenses, $m
 
  391
  402
  415
  428
  443
  458
  475
  493
  512
  532
  524
  547
  571
  596
  623
  652
  682
  713
  747
  782
  819
  858
  899
  943
  988
  1,036
  1,087
  1,140
  1,195
  1,254
Fixed operating expenses, $m
 
  66
  67
  69
  71
  72
  74
  76
  78
  80
  82
  84
  86
  88
  90
  93
  95
  97
  100
  102
  105
  107
  110
  113
  116
  119
  122
  125
  128
  131
  134
Total operating expenses, $m
  443
  457
  469
  484
  499
  515
  532
  551
  571
  592
  614
  608
  633
  659
  686
  716
  747
  779
  813
  849
  887
  926
  968
  1,012
  1,059
  1,107
  1,158
  1,212
  1,268
  1,326
  1,388
Operating income, $m
  74
  75
  79
  83
  87
  93
  98
  104
  110
  117
  125
  162
  171
  180
  190
  200
  211
  223
  235
  249
  263
  277
  293
  310
  327
  346
  365
  386
  408
  431
  455
EBITDA, $m
  98
  127
  131
  136
  141
  147
  154
  161
  168
  177
  185
  195
  205
  215
  227
  239
  252
  265
  280
  295
  311
  328
  346
  365
  386
  407
  429
  453
  478
  505
  533
Interest expense (income), $m
  32
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  70
  73
  77
  81
  85
  90
  94
  99
  104
  110
  116
  122
Earnings before tax, $m
  40
  44
  47
  50
  53
  56
  60
  65
  69
  74
  80
  115
  121
  128
  135
  143
  151
  160
  169
  179
  189
  200
  212
  224
  237
  251
  266
  281
  298
  315
  333
Tax expense, $m
  17
  12
  13
  13
  14
  15
  16
  17
  19
  20
  22
  31
  33
  35
  36
  39
  41
  43
  46
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  85
  90
Net income, $m
  23
  32
  34
  36
  39
  41
  44
  47
  51
  54
  58
  84
  89
  93
  99
  104
  110
  117
  123
  130
  138
  146
  155
  164
  173
  183
  194
  205
  217
  230
  243

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  52
  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
  1,081
  1,060
  1,093
  1,129
  1,168
  1,210
  1,256
  1,304
  1,357
  1,412
  1,471
  1,534
  1,601
  1,671
  1,746
  1,825
  1,908
  1,996
  2,089
  2,187
  2,290
  2,399
  2,513
  2,633
  2,760
  2,894
  3,034
  3,181
  3,337
  3,500
  3,671
Adjusted assets (=assets-cash), $m
  1,029
  1,060
  1,093
  1,129
  1,168
  1,210
  1,256
  1,304
  1,357
  1,412
  1,471
  1,534
  1,601
  1,671
  1,746
  1,825
  1,908
  1,996
  2,089
  2,187
  2,290
  2,399
  2,513
  2,633
  2,760
  2,894
  3,034
  3,181
  3,337
  3,500
  3,671
Revenue / Adjusted assets
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
Average production assets, $m
  653
  672
  693
  716
  740
  767
  796
  827
  860
  895
  933
  973
  1,015
  1,060
  1,107
  1,157
  1,210
  1,266
  1,324
  1,386
  1,452
  1,521
  1,593
  1,670
  1,750
  1,835
  1,924
  2,017
  2,116
  2,219
  2,328
Working capital, $m
  58
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
Total debt, $m
  571
  585
  607
  631
  657
  685
  715
  748
  783
  820
  859
  901
  945
  992
  1,042
  1,094
  1,150
  1,208
  1,270
  1,335
  1,404
  1,476
  1,553
  1,633
  1,717
  1,806
  1,900
  1,998
  2,101
  2,210
  2,324
Total liabilities, $m
  691
  706
  728
  752
  778
  806
  836
  869
  904
  941
  980
  1,022
  1,066
  1,113
  1,163
  1,215
  1,271
  1,329
  1,391
  1,456
  1,525
  1,597
  1,674
  1,754
  1,838
  1,927
  2,021
  2,119
  2,222
  2,331
  2,445
Total equity, $m
  389
  354
  365
  377
  390
  404
  419
  436
  453
  472
  491
  512
  535
  558
  583
  609
  637
  667
  698
  730
  765
  801
  839
  880
  922
  966
  1,013
  1,063
  1,114
  1,169
  1,226
Total liabilities and equity, $m
  1,080
  1,060
  1,093
  1,129
  1,168
  1,210
  1,255
  1,305
  1,357
  1,413
  1,471
  1,534
  1,601
  1,671
  1,746
  1,824
  1,908
  1,996
  2,089
  2,186
  2,290
  2,398
  2,513
  2,634
  2,760
  2,893
  3,034
  3,182
  3,336
  3,500
  3,671
Debt-to-equity ratio
  1.468
  1.650
  1.660
  1.670
  1.680
  1.690
  1.710
  1.720
  1.730
  1.740
  1.750
  1.760
  1.770
  1.780
  1.790
  1.800
  1.800
  1.810
  1.820
  1.830
  1.840
  1.840
  1.850
  1.860
  1.860
  1.870
  1.870
  1.880
  1.890
  1.890
  1.900
Adjusted equity ratio
  0.328
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  23
  32
  34
  36
  39
  41
  44
  47
  51
  54
  58
  84
  89
  93
  99
  104
  110
  117
  123
  130
  138
  146
  155
  164
  173
  183
  194
  205
  217
  230
  243
Depreciation, amort., depletion, $m
  24
  52
  52
  53
  54
  55
  56
  57
  58
  59
  60
  32
  34
  35
  37
  39
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
  67
  71
  74
  78
Funds from operations, $m
  44
  84
  86
  89
  93
  96
  100
  104
  109
  113
  119
  116
  122
  129
  136
  143
  151
  159
  167
  177
  186
  197
  208
  219
  232
  245
  258
  273
  288
  304
  321
Change in working capital, $m
  -16
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  60
  84
  86
  89
  92
  95
  99
  103
  108
  113
  118
  116
  122
  128
  135
  142
  150
  158
  166
  175
  185
  195
  206
  218
  230
  243
  256
  271
  286
  302
  319
Maintenance CAPEX, $m
  0
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -71
  -74
New CAPEX, $m
  -21
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -73
  -76
  -80
  -85
  -89
  -94
  -98
  -103
  -109
Cash from investing activities, $m
  -21
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -74
  -79
  -82
  -87
  -92
  -96
  -101
  -106
  -111
  -117
  -124
  -129
  -136
  -143
  -150
  -158
  -165
  -174
  -183
Free cash flow, $m
  39
  43
  43
  43
  43
  44
  45
  46
  47
  49
  51
  45
  47
  49
  52
  55
  58
  62
  65
  69
  74
  78
  83
  88
  94
  100
  106
  113
  120
  128
  136
Issuance/(repayment) of debt, $m
  -19
  21
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
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  
  -20
  21
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
Total cash flow (excl. dividends), $m
  18
  64
  65
  67
  69
  72
  75
  78
  82
  86
  90
  86
  91
  96
  102
  107
  114
  120
  127
  134
  142
  151
  159
  169
  178
  189
  200
  211
  224
  237
  250
Retained Cash Flow (-), $m
  -26
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -54
  -57
Prev. year cash balance distribution, $m
 
  45
  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
 
  99
  54
  55
  56
  58
  60
  62
  65
  67
  70
  66
  69
  73
  77
  81
  86
  91
  96
  102
  108
  114
  121
  128
  136
  144
  153
  162
  172
  182
  193
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  91
  45
  42
  38
  35
  32
  28
  25
  22
  20
  15
  13
  11
  9
  7
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  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
  100.0

Townsquare Media, Inc. is a media, entertainment and digital marketing solutions company principally focused on small and mid-sized markets across the United States. The Company operates through two segments: Local Advertising and Live Events. The Company's Local Advertising segment offers broadcast, digital and mobile advertising within its local markets. The Company's Live Events segment consists of a range of live events, which the Company creates, promotes and produces, including music concerts, multi-day music festivals, fairs, consumer expositions and trade shows, athletic events, lifestyle events and other forms of entertainment. The Company reports the remainder of its business in its Other Media and Entertainment category, which principally provides digital marketing solutions, e-commerce solutions and digital advertising services nationally. The Company's assets include radio stations, live events, and digital, mobile, video and social media properties.

FINANCIAL RATIOS  of  Townsquare Media Cl A (TSQ)

Valuation Ratios
P/E Ratio 7.1
Price to Sales 0.3
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 2.7
Price to Free Cash Flow 4.2
Growth Rates
Sales Growth Rate 17.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 40%
Cap. Spend. - 3 Yr. Gr. Rate 16%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 145%
Total Debt to Equity 146.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital 2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 25.5%
Gross Margin - 3 Yr. Avg. 28.5%
EBITDA Margin 18.6%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. 12.5%
Pre-Tax Margin 7.7%
Pre-Tax Margin - 3 Yr. Avg. 3.4%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate 42.5%
Eff/ Tax Rate - 3 Yr. Avg. -32.1%
Payout Ratio 0%

TSQ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TSQ stock intrinsic value calculation we used $517 million for the last fiscal year's total revenue generated by Townsquare Media Cl A. The default revenue input number comes from 2016 income statement of Townsquare Media 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 TSQ stock valuation model: a) initial revenue growth rate of 2.9% 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 8.8%, whose default value for TSQ is calculated based on our internal credit rating of Townsquare Media 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 Townsquare Media 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 TSQ stock the variable cost ratio is equal to 73.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $64 million in the base year in the intrinsic value calculation for TSQ 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 5.5% for Townsquare Media Cl A.

Corporate tax rate of 27% is the nominal tax rate for Townsquare Media 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 TSQ 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 TSQ are equal to 126.3%.

Life of production assets of 39.4 years is the average useful life of capital assets used in Townsquare Media 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 TSQ is equal to 2.5%. 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 - $389 million for Townsquare Media 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 18.478 million for Townsquare Media 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 Townsquare Media Cl A at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Townsquare misses Street 3Q forecasts   [Nov-07-17 07:23AM  Associated Press]
▶ New Strong Sell Stocks for October 9th   [Oct-09-17 07:45AM  Zacks]
▶ Townsquare meets 2Q profit forecasts   [Aug-09-17 12:43PM  Associated Press]
▶ Townsquare Announces Acquisition Of 6 Radio Stations   [Jul-07-17 09:00AM  PR Newswire]
▶ Townsquare reports 1Q loss   [May-09-17 08:56AM  Associated Press]
▶ Townsquare Announces Successful Loan Repricing   [Feb-08-17 04:15PM  PR Newswire]
▶ Townsquare Hires Andy Meyer To Lead Video Programming   [Jan-09-17 08:00AM  PR Newswire]
▶ Is Townsquare Media Inc (TSQ) Worthy of Your Portfolio?   [Dec-20-16 02:42PM  at Insider Monkey]
▶ [$$] Madison Square Garden Takes 12% Stake in Townsquare Media   [08:55AM  at The Wall Street Journal]
▶ Townsquare to Present at Upcoming Investor Conferences   [May-24-16 04:30PM  Business Wire]
▶ [$$] Barron's 2016 Roundtable, Part 3: 12 Stock Picks   [Jan-30-16 12:01AM  at Barrons.com]
Financial statements of TSQ
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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