Intrinsic value of A-Mark Precious Metals, Inc. - AMRK

Previous Close

$12.35

  Intrinsic Value

$2.05

stock screener

  Rating & Target

str. sell

-83%

Previous close

$12.35

 
Intrinsic value

$2.05

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of AMRK 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
  7,758
  7,937
  8,141
  8,370
  8,623
  8,902
  9,205
  9,533
  9,887
  10,266
  10,672
  11,105
  11,566
  12,056
  12,576
  13,127
  13,711
  14,328
  14,980
  15,668
  16,394
  17,160
  17,967
  18,818
  19,714
  20,657
  21,650
  22,695
  23,794
  24,950
Variable operating expenses, $m
  7,750
  7,929
  8,132
  8,361
  8,615
  8,893
  9,195
  9,523
  9,876
  10,255
  10,660
  11,093
  11,553
  12,043
  12,562
  13,113
  13,696
  14,312
  14,963
  15,651
  16,376
  17,141
  17,948
  18,797
  19,692
  20,634
  21,626
  22,670
  23,767
  24,922
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
  7,750
  7,929
  8,132
  8,361
  8,615
  8,893
  9,195
  9,523
  9,876
  10,255
  10,660
  11,093
  11,553
  12,043
  12,562
  13,113
  13,696
  14,312
  14,963
  15,651
  16,376
  17,141
  17,948
  18,797
  19,692
  20,634
  21,626
  22,670
  23,767
  24,922
Operating income, $m
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
EBITDA, $m
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
Interest expense (income), $m
  9
  17
  18
  18
  19
  21
  22
  23
  24
  26
  28
  30
  31
  33
  36
  38
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  79
  84
  89
  94
Earnings before tax, $m
  -10
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
  -52
  -55
  -58
  -62
  -66
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
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
  -52
  -55
  -58
  -62
  -66

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
  758
  775
  795
  818
  842
  870
  899
  931
  966
  1,003
  1,042
  1,085
  1,130
  1,178
  1,229
  1,282
  1,339
  1,400
  1,463
  1,531
  1,601
  1,676
  1,755
  1,838
  1,926
  2,018
  2,115
  2,217
  2,324
  2,437
Adjusted assets (=assets-cash), $m
  758
  775
  795
  818
  842
  870
  899
  931
  966
  1,003
  1,042
  1,085
  1,130
  1,178
  1,229
  1,282
  1,339
  1,400
  1,463
  1,531
  1,601
  1,676
  1,755
  1,838
  1,926
  2,018
  2,115
  2,217
  2,324
  2,437
Revenue / Adjusted assets
  10.235
  10.241
  10.240
  10.232
  10.241
  10.232
  10.239
  10.240
  10.235
  10.235
  10.242
  10.235
  10.235
  10.234
  10.233
  10.239
  10.240
  10.234
  10.239
  10.234
  10.240
  10.239
  10.238
  10.238
  10.236
  10.236
  10.236
  10.237
  10.238
  10.238
Average production assets, $m
  16
  16
  16
  17
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
Working capital, $m
  233
  238
  244
  251
  259
  267
  276
  286
  297
  308
  320
  333
  347
  362
  377
  394
  411
  430
  449
  470
  492
  515
  539
  565
  591
  620
  649
  681
  714
  748
Total debt, $m
  326
  342
  360
  380
  402
  426
  453
  482
  513
  546
  582
  620
  661
  704
  750
  798
  849
  904
  961
  1,021
  1,085
  1,153
  1,223
  1,298
  1,377
  1,460
  1,547
  1,639
  1,736
  1,837
Total liabilities, $m
  682
  698
  716
  736
  758
  783
  809
  838
  869
  903
  938
  976
  1,017
  1,060
  1,106
  1,154
  1,205
  1,260
  1,317
  1,377
  1,441
  1,509
  1,580
  1,654
  1,733
  1,816
  1,903
  1,995
  2,092
  2,193
Total equity, $m
  76
  78
  80
  82
  84
  87
  90
  93
  97
  100
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  168
  176
  184
  193
  202
  211
  222
  232
  244
Total liabilities and equity, $m
  758
  776
  796
  818
  842
  870
  899
  931
  966
  1,003
  1,042
  1,084
  1,130
  1,178
  1,229
  1,282
  1,339
  1,400
  1,463
  1,530
  1,601
  1,677
  1,756
  1,838
  1,926
  2,018
  2,114
  2,217
  2,324
  2,437
Debt-to-equity ratio
  4.300
  4.410
  4.520
  4.640
  4.770
  4.900
  5.040
  5.180
  5.310
  5.450
  5.580
  5.720
  5.850
  5.980
  6.100
  6.220
  6.340
  6.460
  6.570
  6.670
  6.780
  6.880
  6.970
  7.060
  7.150
  7.240
  7.320
  7.390
  7.470
  7.540
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
  -10
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
  -52
  -55
  -58
  -62
  -66
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Funds from operations, $m
  -7
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -38
  -41
  -44
  -46
  -50
  -53
  -56
  -60
Change in working capital, $m
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
Cash from operations, $m
  -11
  -12
  -14
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -55
  -58
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -95
Maintenance CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
New CAPEX, $m
  -1
  0
  0
  0
  -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
  -2
Cash from investing activities, $m
  -3
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
Free cash flow, $m
  -14
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38
  -41
  -43
  -46
  -50
  -53
  -56
  -60
  -64
  -68
  -72
  -77
  -81
  -86
  -92
  -97
  -103
Issuance/(repayment) of debt, $m
  5
  16
  18
  20
  22
  24
  27
  29
  31
  33
  36
  38
  41
  43
  46
  48
  51
  54
  57
  61
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
Issuance/(repurchase) of shares, $m
  20
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  54
  57
  61
  65
  69
  73
  77
Cash from financing (excl. dividends), $m  
  25
  27
  30
  33
  36
  39
  44
  47
  50
  54
  58
  61
  66
  70
  75
  79
  85
  90
  96
  102
  108
  114
  121
  129
  136
  144
  152
  161
  170
  179
Total cash flow (excl. dividends), $m
  10
  13
  14
  16
  18
  19
  21
  22
  24
  26
  27
  29
  30
  32
  34
  36
  38
  41
  43
  45
  48
  50
  53
  56
  59
  62
  65
  69
  72
  76
Retained Cash Flow (-), $m
  -20
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -27
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -73
  -77
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
  -9
  1
  2
  3
  3
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  3
  3
  2
  2
  1
  1
  0
  0
  -1
Discount rate, %
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
  -9
  1
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  81.5
  73.2
  65.4
  58.1
  51.3
  45.1
  39.4
  34.2
  29.6
  25.4
  21.9
  18.7
  15.9
  13.4
  11.3
  9.5
  7.9
  6.6
  5.4
  4.5
  3.7
  3.0
  2.5
  2.0
  1.6
  1.3
  1.0
  0.8
  0.7
  0.5

A-Mark Precious Metals, Inc. is a precious metal trading company. The Company is a wholesaler of gold, silver, platinum and palladium bullion and related products, including bars, wafers, grain and coins. It distributes gold and silver coins and bars from sovereign and private mints; provides financing for the purchase of bullion and numismatics; offers storage for bullion, and offers complementary products, such as consignment, customized finance and liquidity programs, such as repurchase (Repo) accounts, and trade quotes in a variety of foreign currencies. It operates through various business units for accounting purposes, including Industrial, Coin and Bar, Trading, Finance, Collateral Finance Corporation, Transcontinental Depository Services and Logistics. It is an authorized distributor of gold and silver coins for sovereign mints and various private mints. The sovereign mints include the United States Mint, the Australian (Perth) Mint and the Austrian Mint, among others.

FINANCIAL RATIOS  of  A-Mark Precious Metals, Inc. (AMRK)

Valuation Ratios
P/E Ratio 12.4
Price to Sales 0
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow -8.7
Price to Free Cash Flow -7.2
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 458.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 3.1%
Return On Total Capital 1.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.6%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 13%
Asset Turnover 15.3
Profitability Ratios
Gross Margin 0.4%
Gross Margin - 3 Yr. Avg. 0.5%
EBITDA Margin 0.3%
EBITDA Margin - 3 Yr. Avg. 0.3%
Operating Margin 0.2%
Oper. Margin - 3 Yr. Avg. 0.2%
Pre-Tax Margin 0.2%
Pre-Tax Margin - 3 Yr. Avg. 0.2%
Net Profit Margin 0.1%
Net Profit Margin - 3 Yr. Avg. 0.1%
Effective Tax Rate 36.4%
Eff/ Tax Rate - 3 Yr. Avg. 34.1%
Payout Ratio 28.6%

AMRK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMRK stock intrinsic value calculation we used $7606 million for the last fiscal year's total revenue generated by A-Mark Precious Metals, Inc.. The default revenue input number comes from 0001 income statement of A-Mark Precious Metals, Inc.. 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 AMRK 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 9.2%, whose default value for AMRK is calculated based on our internal credit rating of A-Mark Precious Metals, Inc., 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-Mark Precious Metals, Inc..
    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 AMRK stock the variable cost ratio is equal to 99.9%.

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 AMRK 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-Mark Precious Metals, Inc..

Corporate tax rate of 27% is the nominal tax rate for A-Mark Precious Metals, Inc.. 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 AMRK 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 AMRK are equal to 0.2%.

Life of production assets of 8.2 years is the average useful life of capital assets used in A-Mark Precious Metals, Inc. 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 AMRK is equal to 3%. 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 - $65.698 million for A-Mark Precious Metals, Inc. - 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 7.031 million for A-Mark Precious Metals, Inc. 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-Mark Precious Metals, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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