Intrinsic value of A-Mark Precious Metals - AMRK

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$12.61

  Intrinsic Value

$12.46

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  Rating & Target

hold

-1%

Previous close

$12.61

 
Intrinsic value

$12.46

 
Up/down potential

-1%

 
Rating

hold

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, %
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  8,059
  9,209
  10,438
  11,743
  13,124
  14,579
  16,106
  17,704
  19,375
  21,116
  22,931
  24,818
  26,781
  28,821
  30,942
  33,145
  35,435
  37,815
  40,290
  42,866
  45,546
  48,336
  51,243
  54,273
  57,433
  60,729
  64,170
  67,763
  71,516
  75,439
Variable operating expenses, $m
  8,043
  9,190
  10,416
  11,719
  13,097
  14,548
  16,072
  17,667
  19,333
  21,072
  22,880
  24,764
  26,723
  28,758
  30,874
  33,072
  35,357
  37,732
  40,202
  42,772
  45,446
  48,231
  51,131
  54,155
  57,307
  60,596
  64,030
  67,615
  71,360
  75,274
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
  8,043
  9,190
  10,416
  11,719
  13,097
  14,548
  16,072
  17,667
  19,333
  21,072
  22,880
  24,764
  26,723
  28,758
  30,874
  33,072
  35,357
  37,732
  40,202
  42,772
  45,446
  48,231
  51,131
  54,155
  57,307
  60,596
  64,030
  67,615
  71,360
  75,274
Operating income, $m
  16
  19
  22
  24
  27
  31
  34
  37
  41
  45
  50
  54
  59
  63
  68
  72
  77
  83
  88
  94
  100
  106
  112
  119
  126
  133
  140
  148
  156
  165
EBITDA, $m
  18
  21
  24
  27
  30
  33
  37
  41
  44
  48
  52
  57
  61
  66
  71
  76
  81
  87
  92
  98
  104
  111
  117
  124
  131
  139
  147
  155
  164
  173
Interest expense (income), $m
  9
  17
  20
  24
  27
  31
  35
  39
  44
  48
  53
  58
  63
  69
  75
  80
  87
  93
  100
  107
  114
  121
  129
  137
  146
  154
  163
  173
  183
  193
  204
Earnings before tax, $m
  -1
  -1
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
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
  -1
  -1
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39

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
  513
  586
  665
  748
  836
  928
  1,026
  1,127
  1,234
  1,345
  1,460
  1,580
  1,705
  1,835
  1,970
  2,111
  2,257
  2,408
  2,566
  2,730
  2,900
  3,078
  3,263
  3,456
  3,657
  3,867
  4,086
  4,315
  4,554
  4,804
Adjusted assets (=assets-cash), $m
  513
  586
  665
  748
  836
  928
  1,026
  1,127
  1,234
  1,345
  1,460
  1,580
  1,705
  1,835
  1,970
  2,111
  2,257
  2,408
  2,566
  2,730
  2,900
  3,078
  3,263
  3,456
  3,657
  3,867
  4,086
  4,315
  4,554
  4,804
Revenue / Adjusted assets
  15.710
  15.715
  15.696
  15.699
  15.699
  15.710
  15.698
  15.709
  15.701
  15.700
  15.706
  15.708
  15.707
  15.706
  15.707
  15.701
  15.700
  15.704
  15.701
  15.702
  15.706
  15.704
  15.704
  15.704
  15.705
  15.704
  15.705
  15.704
  15.704
  15.703
Average production assets, $m
  8
  9
  10
  12
  13
  15
  16
  18
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  48
  51
  54
  57
  61
  64
  68
  72
  75
Working capital, $m
  274
  313
  355
  399
  446
  496
  548
  602
  659
  718
  780
  844
  911
  980
  1,052
  1,127
  1,205
  1,286
  1,370
  1,457
  1,549
  1,643
  1,742
  1,845
  1,953
  2,065
  2,182
  2,304
  2,432
  2,565
Total debt, $m
  373
  435
  501
  571
  646
  724
  806
  892
  982
  1,075
  1,173
  1,274
  1,380
  1,489
  1,603
  1,722
  1,845
  1,973
  2,106
  2,244
  2,388
  2,538
  2,695
  2,857
  3,027
  3,204
  3,389
  3,582
  3,784
  3,995
Total liabilities, $m
  433
  495
  561
  631
  705
  784
  866
  952
  1,041
  1,135
  1,232
  1,334
  1,439
  1,549
  1,663
  1,781
  1,905
  2,032
  2,166
  2,304
  2,448
  2,598
  2,754
  2,917
  3,087
  3,264
  3,449
  3,642
  3,844
  4,055
Total equity, $m
  80
  91
  104
  117
  130
  145
  160
  176
  192
  210
  228
  247
  266
  286
  307
  329
  352
  376
  400
  426
  452
  480
  509
  539
  571
  603
  637
  673
  710
  749
Total liabilities and equity, $m
  513
  586
  665
  748
  835
  929
  1,026
  1,128
  1,233
  1,345
  1,460
  1,581
  1,705
  1,835
  1,970
  2,110
  2,257
  2,408
  2,566
  2,730
  2,900
  3,078
  3,263
  3,456
  3,658
  3,867
  4,086
  4,315
  4,554
  4,804
Debt-to-equity ratio
  4.660
  4.760
  4.830
  4.900
  4.950
  5.000
  5.040
  5.070
  5.100
  5.130
  5.150
  5.170
  5.190
  5.200
  5.220
  5.230
  5.240
  5.250
  5.260
  5.270
  5.280
  5.290
  5.290
  5.300
  5.310
  5.310
  5.320
  5.320
  5.330
  5.330
Adjusted equity ratio
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  -1
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
Depreciation, amort., depletion, $m
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Funds from operations, $m
  1
  1
  0
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -32
Change in working capital, $m
  36
  39
  42
  44
  47
  49
  52
  54
  57
  59
  62
  64
  67
  69
  72
  75
  78
  81
  84
  88
  91
  95
  99
  103
  107
  112
  117
  122
  128
  133
Cash from operations, $m
  -35
  -38
  -41
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -98
  -103
  -108
  -113
  -119
  -124
  -130
  -137
  -143
  -150
  -157
  -165
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
New CAPEX, $m
  2
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from investing activities, $m
  1
  -2
  -2
  -2
  -2
  -2
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -11
  -11
  -11
Free cash flow, $m
  -34
  -40
  -44
  -47
  -50
  -54
  -57
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
Issuance/(repayment) of debt, $m
  58
  62
  66
  70
  74
  78
  82
  86
  90
  94
  98
  101
  106
  110
  114
  118
  123
  128
  133
  138
  144
  150
  156
  163
  170
  177
  185
  193
  202
  211
Issuance/(repurchase) of shares, $m
  11
  13
  14
  16
  17
  19
  20
  22
  24
  25
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  48
  51
  54
  57
  60
  64
  67
  71
  74
  78
Cash from financing (excl. dividends), $m  
  69
  75
  80
  86
  91
  97
  102
  108
  114
  119
  124
  129
  136
  142
  148
  154
  161
  169
  176
  184
  192
  201
  210
  220
  230
  241
  252
  264
  276
  289
Total cash flow (excl. dividends), $m
  35
  34
  37
  39
  41
  43
  45
  47
  49
  51
  52
  54
  57
  59
  61
  63
  66
  69
  71
  74
  77
  80
  84
  87
  91
  95
  99
  103
  108
  113
Retained Cash Flow (-), $m
  -11
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
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
  23
  22
  22
  23
  24
  24
  25
  25
  26
  26
  26
  26
  27
  27
  27
  27
  28
  28
  28
  28
  29
  29
  30
  30
  31
  31
  32
  33
  34
  34
Discount rate, %
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
  21
  18
  17
  15
  14
  12
  11
  9
  8
  6
  5
  4
  3
  3
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  88.8
  78.9
  70.3
  62.9
  56.4
  50.6
  45.6
  41.2
  37.2
  33.7
  30.7
  28.0
  25.6
  23.4
  21.4
  19.6
  18.0
  16.5
  15.1
  13.9
  12.7
  11.7
  10.8
  9.9
  9.1
  8.4
  7.7
  7.1
  6.5
  6.0

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 (AMRK)

Valuation Ratios
P/E Ratio 12.7
Price to Sales 0
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow -8.9
Price to Free Cash Flow -7.4
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 $6989.624 million for the last fiscal year's total revenue generated by A-Mark Precious Metals. The default revenue input number comes from 0001 income statement of A-Mark Precious Metals. 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 15.3% 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 9.6%, whose default value for AMRK is calculated based on our internal credit rating of A-Mark Precious Metals, 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.
    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 99.8%.

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.

Corporate tax rate of 27% is the nominal tax rate for A-Mark Precious Metals. 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 0.1%.

Life of production assets of 9.7 years is the average useful life of capital assets used in A-Mark Precious Metals 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 3.4%. 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 - $69.591 million for A-Mark Precious Metals - 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 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 at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ A-Mark: Fiscal 1Q Earnings Snapshot   [05:03AM  Associated Press]
▶ A-Mark: Fiscal 4Q Earnings Snapshot   [Sep-18-18 04:38PM  Associated Press]
▶ A-Mark: Fiscal 3Q Earnings Snapshot   [May-08-18 07:05PM  Associated Press]
▶ A-Mark Precious Metals Renews $260 Million Credit Facility   [Mar-20-18 04:41PM  GlobeNewswire]
▶ A-Mark reports 2Q loss   [Feb-08-18 07:01PM  Associated Press]
▶ 7 High-Yield Stocks With Falling Prices   [Dec-19-17 11:09AM  GuruFocus.com]
▶ A-Mark posts 1Q profit   [Nov-16-17 05:12AM  Associated Press]
▶ New Strong Sell Stocks for October 3rd   [Oct-03-17 08:21AM  Zacks]
▶ New Strong Sell Stocks for September 27th   [Sep-27-17 07:24AM  Zacks]
▶ A-Mark posts 4Q profit   [Sep-12-17 09:31PM  Associated Press]
▶ A-Mark Precious Metals Renews $275 Million Credit Facility   [Aug-18-17 04:05PM  GlobeNewswire]
▶ A-Mark posts 3Q profit   [May-09-17 06:44PM  Associated Press]
▶ A-Mark posts 2Q profit   [Feb-07-17 06:21PM  Associated Press]

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