Intrinsic value of Cambium Learning Group - ABCD

Previous Close

$14.42

  Intrinsic Value

$2.52

stock screener

  Rating & Target

str. sell

-83%

Previous close

$14.42

 
Intrinsic value

$2.52

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of ABCD 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 0001), $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 0.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  161
  165
  169
  174
  179
  185
  191
  198
  206
  214
  222
  231
  241
  251
  262
  273
  285
  298
  312
  326
  341
  357
  374
  391
  410
  430
  450
  472
  495
  519
Variable operating expenses, $m
  99
  101
  104
  106
  109
  113
  117
  121
  125
  129
  130
  135
  141
  146
  153
  159
  167
  174
  182
  190
  199
  208
  218
  229
  240
  251
  263
  276
  289
  303
Fixed operating expenses, $m
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
Total operating expenses, $m
  141
  144
  148
  151
  155
  160
  165
  170
  175
  180
  182
  188
  195
  202
  210
  217
  226
  235
  244
  253
  264
  274
  286
  298
  311
  323
  337
  351
  366
  382
Operating income, $m
  20
  21
  22
  23
  24
  26
  27
  29
  31
  33
  40
  43
  46
  49
  52
  55
  59
  63
  68
  72
  77
  82
  88
  94
  100
  106
  113
  121
  129
  137
EBITDA, $m
  35
  36
  37
  38
  40
  41
  43
  46
  48
  51
  54
  57
  60
  64
  68
  72
  76
  81
  86
  92
  98
  104
  110
  117
  125
  132
  141
  149
  158
  168
Interest expense (income), $m
  6
  4
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  16
  17
  18
  19
  21
  22
  24
  25
Earnings before tax, $m
  17
  19
  20
  21
  22
  23
  24
  25
  27
  28
  35
  37
  39
  41
  44
  47
  50
  53
  56
  60
  64
  68
  72
  77
  82
  87
  93
  99
  105
  112
Tax expense, $m
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
Net income, $m
  12
  14
  15
  15
  16
  17
  17
  18
  19
  21
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  53
  56
  60
  64
  68
  72
  77
  81

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
Total assets, $m
  162
  166
  170
  175
  180
  186
  192
  199
  206
  214
  223
  232
  241
  251
  262
  274
  286
  299
  312
  327
  342
  358
  375
  393
  411
  431
  452
  473
  496
  520
Adjusted assets (=assets-cash), $m
  162
  166
  170
  175
  180
  186
  192
  199
  206
  214
  223
  232
  241
  251
  262
  274
  286
  299
  312
  327
  342
  358
  375
  393
  411
  431
  452
  473
  496
  520
Revenue / Adjusted assets
  0.994
  0.994
  0.994
  0.994
  0.994
  0.995
  0.995
  0.995
  1.000
  1.000
  0.996
  0.996
  1.000
  1.000
  1.000
  0.996
  0.997
  0.997
  1.000
  0.997
  0.997
  0.997
  0.997
  0.995
  0.998
  0.998
  0.996
  0.998
  0.998
  0.998
Average production assets, $m
  49
  50
  51
  52
  54
  56
  58
  60
  62
  64
  67
  70
  72
  75
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  136
  142
  149
  156
Working capital, $m
  -76
  -78
  -80
  -83
  -85
  -88
  -91
  -94
  -97
  -101
  -105
  -109
  -114
  -119
  -124
  -129
  -135
  -141
  -148
  -154
  -162
  -169
  -177
  -186
  -194
  -204
  -213
  -224
  -235
  -246
Total debt, $m
  21
  24
  28
  32
  37
  42
  48
  54
  61
  68
  75
  83
  92
  101
  111
  121
  132
  144
  156
  169
  183
  197
  212
  228
  245
  263
  281
  301
  322
  343
Total liabilities, $m
  146
  149
  153
  157
  162
  167
  173
  179
  186
  193
  200
  208
  217
  226
  236
  246
  257
  269
  281
  294
  308
  322
  337
  353
  370
  388
  406
  426
  447
  468
Total equity, $m
  16
  17
  17
  17
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
Total liabilities and equity, $m
  162
  166
  170
  174
  180
  186
  192
  199
  207
  214
  222
  231
  241
  251
  262
  273
  286
  299
  312
  327
  342
  358
  374
  392
  411
  431
  451
  473
  497
  520
Debt-to-equity ratio
  1.270
  1.450
  1.640
  1.840
  2.050
  2.270
  2.490
  2.710
  2.940
  3.160
  3.380
  3.600
  3.820
  4.030
  4.230
  4.430
  4.630
  4.820
  5.000
  5.170
  5.340
  5.510
  5.660
  5.810
  5.960
  6.100
  6.230
  6.360
  6.480
  6.600
Adjusted equity ratio
  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
  12
  14
  15
  15
  16
  17
  17
  18
  19
  21
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  53
  56
  60
  64
  68
  72
  77
  81
Depreciation, amort., depletion, $m
  14
  15
  15
  15
  16
  16
  16
  17
  17
  18
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  21
  22
  24
  25
  26
  27
  28
  30
  31
Funds from operations, $m
  27
  29
  30
  30
  31
  32
  34
  35
  37
  38
  39
  41
  43
  45
  48
  51
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  95
  100
  106
  113
Change in working capital, $m
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
Cash from operations, $m
  28
  31
  32
  33
  34
  35
  37
  38
  40
  42
  43
  45
  48
  50
  53
  56
  59
  63
  66
  70
  74
  79
  83
  88
  93
  99
  105
  111
  117
  124
Maintenance CAPEX, $m
  -10
  -10
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
Cash from investing activities, $m
  -11
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -14
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -26
  -27
  -30
  -31
  -32
  -34
  -35
  -37
Free cash flow, $m
  18
  20
  20
  21
  22
  23
  24
  25
  26
  27
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  53
  57
  60
  64
  68
  72
  77
  82
  87
Issuance/(repayment) of debt, $m
  -27
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Issuance/(repurchase) of shares, $m
  18
  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  
  -9
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Total cash flow (excl. dividends), $m
  9
  23
  24
  25
  26
  28
  29
  31
  33
  34
  35
  37
  39
  42
  44
  47
  50
  53
  56
  60
  64
  68
  72
  76
  81
  86
  91
  97
  103
  109
Retained Cash Flow (-), $m
  -30
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
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
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -22
  23
  24
  25
  26
  27
  29
  30
  32
  34
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  62
  66
  70
  74
  79
  84
  89
  94
  100
  106
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  -21
  20
  20
  19
  19
  18
  17
  16
  16
  15
  13
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Cambium Learning Group, Inc. is an educational solutions and services company. The Company's product lines include Learning A-Z (www.learninga-z.com), ExploreLearning (www.explorelearning.com), Voyager Sopris Learning (www.voyagersopris.com) and Kurzweil Education (www.kurzweiledu.com). It operates through three segments: Learning A-Z, Voyager Sopris Learning and ExploreLearning. The product lines provide technology solutions for online learning and professional support; intervention and supplemental instructional materials; professional development and school-improvement services; valid assessments, and materials. Learning A-Z is a preK-6 educational technology provider of digitally delivered resources and tools that support instruction and student growth in reading, writing, and science. Voyager Sopris Learning segment includes its Voyager Sopris Learning and Kurzweil Education brands. ExploreLearning develops online solutions to improve student learning in math and science.

FINANCIAL RATIOS  of  Cambium Learning Group (ABCD)

Valuation Ratios
P/E Ratio 66.6
Price to Sales 4.4
Price to Book -10.9
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 27.8
Growth Rates
Sales Growth Rate 4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 4.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity -109.8%
Total Debt to Equity -121.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 11.3%
Ret/ On Assets - 3 Yr. Avg. 9.1%
Return On Total Capital 48.8%
Ret/ On T. Cap. - 3 Yr. Avg. 11.9%
Return On Equity -14.8%
Return On Equity - 3 Yr. Avg. 0.3%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 68.4%
Gross Margin - 3 Yr. Avg. 65.1%
EBITDA Margin 25.7%
EBITDA Margin - 3 Yr. Avg. 24.6%
Operating Margin 11.8%
Oper. Margin - 3 Yr. Avg. 8.3%
Pre-Tax Margin 7.2%
Pre-Tax Margin - 3 Yr. Avg. 0.1%
Net Profit Margin 6.6%
Net Profit Margin - 3 Yr. Avg. -0.4%
Effective Tax Rate 9.1%
Eff/ Tax Rate - 3 Yr. Avg. -0.7%
Payout Ratio 0%

ABCD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABCD stock intrinsic value calculation we used $158.184 million for the last fiscal year's total revenue generated by Cambium Learning Group. The default revenue input number comes from 0001 income statement of Cambium Learning Group. 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 ABCD stock valuation model: a) initial revenue growth rate of 2% 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 5.6%, whose default value for ABCD is calculated based on our internal credit rating of Cambium Learning Group, 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 Cambium Learning Group.
    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 ABCD stock the variable cost ratio is equal to 61.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $41 million in the base year in the intrinsic value calculation for ABCD 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 7.9% for Cambium Learning Group.

Corporate tax rate of 27% is the nominal tax rate for Cambium Learning Group. 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 ABCD 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 ABCD are equal to 30.1%.

Life of production assets of 3.5 years is the average useful life of capital assets used in Cambium Learning Group 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 ABCD is equal to -47.4%. 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 - $-14.292 million for Cambium Learning Group - 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 47.257 million for Cambium Learning Group 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 Cambium Learning Group at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ iKeepSafe certifies Learning A-Z Products   [Nov-08-18 06:00AM  GlobeNewswire]
▶ Dallas education tech company acquired at $685M valuation   [11:45AM  American City Business Journals]
▶ Cambium Learning: 2Q Earnings Snapshot   [04:23PM  Associated Press]
▶ Cambium Learning Group, Inc. to Host Earnings Call   [May-14-18 06:30AM  ACCESSWIRE]
▶ Cambium Learning: 1Q Earnings Snapshot   [06:10AM  Associated Press]
▶ Cambium Learning Group, Inc. to Host Earnings Call   [Mar-07-18 07:15AM  ACCESSWIRE]
▶ Cambium Learning posts 4Q profit   [06:27AM  Associated Press]
▶ Cambium Learning posts 3Q profit   [06:06AM  Associated Press]
▶ Learning A-Z Reaches More Than 6 Billion Digital Books Read   [Oct-24-17 06:00AM  GlobeNewswire]
▶ Voyager Sopris Learning Names New VP of Research   [Sep-21-17 06:00AM  GlobeNewswire]
▶ 3 Top Education Stocks to Buy in 2017   [Sep-18-17 07:03AM  Motley Fool]
▶ Cambium Learning posts 2Q profit   [Aug-10-17 09:24PM  Associated Press]
▶ ExploreLearning announces new free Gizmos accounts   [Aug-08-17 06:00AM  GlobeNewswire]
▶ Cambium Learning posts 1Q profit   [06:22AM  Associated Press]

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