Intrinsic value of A.H. Belo Corporation - AHC

Previous Close

$3.61

  Intrinsic Value

$0.62

stock screener

  Rating & Target

str. sell

-83%

Previous close

$3.61

 
Intrinsic value

$0.62

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of AHC 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 0.1

 

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
  206
  211
  216
  222
  229
  236
  244
  253
  263
  273
  283
  295
  307
  320
  334
  349
  364
  381
  398
  416
  435
  456
  477
  500
  524
  549
  575
  603
  632
  663
Variable operating expenses, $m
  195
  199
  204
  210
  216
  223
  231
  239
  248
  257
  266
  277
  288
  300
  313
  327
  341
  357
  373
  390
  408
  427
  447
  469
  491
  514
  539
  565
  592
  621
Fixed operating expenses, $m
  21
  22
  22
  23
  23
  24
  24
  25
  26
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  35
  35
  36
  37
  38
  39
  39
  40
Total operating expenses, $m
  216
  221
  226
  233
  239
  247
  255
  264
  274
  283
  293
  304
  316
  328
  342
  357
  371
  388
  405
  422
  441
  461
  482
  504
  527
  551
  577
  604
  631
  661
Operating income, $m
  -10
  -10
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -9
  -9
  -9
  -8
  -8
  -8
  -8
  -7
  -7
  -6
  -6
  -5
  -5
  -4
  -4
  -3
  -2
  -1
  0
  1
EBITDA, $m
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  18
  20
  22
  24
  26
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
Earnings before tax, $m
  -10
  -11
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -12
  -10
  -10
  -10
  -11
  -11
  -11
  -10
  -10
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -9
  -9
  -8
  -8
  -7
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
Net income, $m
  -10
  -11
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -12
  -10
  -10
  -10
  -11
  -11
  -11
  -10
  -10
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -9
  -9
  -8
  -8
  -7

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
  121
  124
  127
  131
  135
  139
  144
  149
  154
  160
  167
  173
  180
  188
  196
  205
  214
  224
  234
  244
  256
  268
  280
  294
  308
  322
  338
  354
  371
  389
Adjusted assets (=assets-cash), $m
  121
  124
  127
  131
  135
  139
  144
  149
  154
  160
  167
  173
  180
  188
  196
  205
  214
  224
  234
  244
  256
  268
  280
  294
  308
  322
  338
  354
  371
  389
Revenue / Adjusted assets
  1.702
  1.702
  1.701
  1.695
  1.696
  1.698
  1.694
  1.698
  1.708
  1.706
  1.695
  1.705
  1.706
  1.702
  1.704
  1.702
  1.701
  1.701
  1.701
  1.705
  1.699
  1.701
  1.704
  1.701
  1.701
  1.705
  1.701
  1.703
  1.704
  1.704
Average production assets, $m
  39
  39
  40
  42
  43
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  103
  108
  113
  118
  124
Working capital, $m
  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
  1
  1
  1
  1
Total debt, $m
  1
  3
  5
  7
  10
  12
  15
  18
  22
  25
  29
  33
  37
  42
  47
  52
  58
  63
  70
  76
  83
  90
  98
  106
  114
  123
  133
  142
  153
  164
Total liabilities, $m
  73
  75
  77
  79
  81
  84
  87
  90
  93
  97
  101
  105
  109
  114
  119
  124
  129
  135
  141
  148
  155
  162
  170
  178
  186
  195
  204
  214
  225
  236
Total equity, $m
  48
  49
  50
  52
  53
  55
  57
  59
  61
  63
  66
  68
  71
  74
  78
  81
  85
  88
  92
  97
  101
  106
  111
  116
  122
  127
  133
  140
  147
  154
Total liabilities and equity, $m
  121
  124
  127
  131
  134
  139
  144
  149
  154
  160
  167
  173
  180
  188
  197
  205
  214
  223
  233
  245
  256
  268
  281
  294
  308
  322
  337
  354
  372
  390
Debt-to-equity ratio
  0.030
  0.060
  0.100
  0.140
  0.180
  0.220
  0.270
  0.310
  0.350
  0.400
  0.440
  0.480
  0.530
  0.570
  0.610
  0.640
  0.680
  0.720
  0.750
  0.790
  0.820
  0.850
  0.880
  0.910
  0.940
  0.970
  0.990
  1.020
  1.040
  1.060
Adjusted equity ratio
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -10
  -11
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -12
  -10
  -10
  -10
  -11
  -11
  -11
  -10
  -10
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -9
  -9
  -8
  -8
  -7
Depreciation, amort., depletion, $m
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Funds from operations, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  1
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  18
Change in working capital, $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 from operations, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  17
Maintenance CAPEX, $m
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
Cash from investing activities, $m
  -9
  -9
  -9
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -13
  -15
  -15
  -16
  -17
  -17
  -18
  -20
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
Free cash flow, $m
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -12
  -12
  -12
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -12
  -12
  -12
Issuance/(repayment) of debt, $m
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
Issuance/(repurchase) of shares, $m
  11
  12
  12
  12
  13
  13
  13
  14
  14
  14
  13
  13
  13
  14
  14
  14
  14
  14
  14
  14
  15
  15
  15
  15
  15
  15
  15
  15
  14
  14
Cash from financing (excl. dividends), $m  
  12
  14
  14
  14
  15
  16
  16
  17
  17
  18
  17
  17
  17
  19
  19
  19
  20
  20
  20
  20
  22
  22
  23
  23
  23
  24
  24
  25
  24
  25
Total cash flow (excl. dividends), $m
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
Retained Cash Flow (-), $m
  -11
  -12
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -14
  -13
  -13
  -13
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
Prev. year cash balance distribution, $m
  24
  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
  16
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -7
  -7
  -7
  -7
  -6
  -6
  -5
  -5
  -4
  -4
  -3
  -3
  -2
  -1
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
  15
  -7
  -7
  -7
  -6
  -6
  -6
  -5
  -5
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  82.3
  67.4
  55.2
  45.1
  36.8
  30.1
  24.7
  20.2
  16.7
  13.7
  11.6
  9.8
  8.4
  7.1
  6.1
  5.3
  4.6
  4.0
  3.4
  3.0
  2.7
  2.3
  2.1
  1.9
  1.7
  1.5
  1.4
  1.2
  1.1
  1.0

A. H. Belo Corporation is a local news and information publishing company. The Company is engaged in providing commercial printing, distribution and direct mail services, as well as media and digital marketing services. The Company operates through two segments: Publishing and Marketing, Event Marketing and Other Services (MEMO). The Company's Publishing segment includes its print operations associated with its newspapers, publications and related Websites. The Company's publishing segment includes the operations of The Dallas Morning News (www.dallasnews.com), a Texas newspaper, and the Denton Record-Chronicle (www.dentonrc.com), a daily newspaper operating in Denton, Texas. The Company's MEMO segment consists of marketing, event marketing and other businesses. It offers digital marketing solutions through Your Speakeasy, LLC (Speakeasy) and DMV Digital Holdings Company, Inc., and provides event promotion and marketing services through DMN CrowdSource LLC (CrowdSource).

FINANCIAL RATIOS  of  A.H. Belo Corporation (AHC)

Valuation Ratios
P/E Ratio -4.1
Price to Sales 0.3
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 78.3
Growth Rates
Sales Growth Rate -4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.5%
Cap. Spend. - 3 Yr. Gr. Rate 11.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -9.2%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital -18.4%
Ret/ On T. Cap. - 3 Yr. Avg. 10%
Return On Equity -18.4%
Return On Equity - 3 Yr. Avg. 10%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 90%
Gross Margin - 3 Yr. Avg. 88.8%
EBITDA Margin -3.5%
EBITDA Margin - 3 Yr. Avg. 10.9%
Operating Margin -9.2%
Oper. Margin - 3 Yr. Avg. -6.1%
Pre-Tax Margin -8.1%
Pre-Tax Margin - 3 Yr. Avg. 6.1%
Net Profit Margin -7.3%
Net Profit Margin - 3 Yr. Avg. 6.7%
Effective Tax Rate 9.5%
Eff/ Tax Rate - 3 Yr. Avg. 8.7%
Payout Ratio -36.8%

AHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AHC stock intrinsic value calculation we used $202 million for the last fiscal year's total revenue generated by A.H. Belo Corporation. The default revenue input number comes from 0001 income statement of A.H. Belo Corporation. 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 AHC 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 4.3%, whose default value for AHC is calculated based on our internal credit rating of A.H. Belo Corporation, 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 A.H. Belo Corporation.
    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 AHC stock the variable cost ratio is equal to 94.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $21 million in the base year in the intrinsic value calculation for AHC 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 A.H. Belo Corporation.

Corporate tax rate of 27% is the nominal tax rate for A.H. Belo Corporation. 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 AHC 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 AHC are equal to 18.7%.

Life of production assets of 4.4 years is the average useful life of capital assets used in A.H. Belo Corporation 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 AHC is equal to 0.2%. 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 - $70.586 million for A.H. Belo Corporation - 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 21.643 million for A.H. Belo Corporation 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 A.H. Belo Corporation at the current share price and the inputted number of shares is $0.1 billion.

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