Intrinsic value of Beasley Broadcast Group, Inc. - BBGI

Previous Close

$3.02

  Intrinsic Value

$3.74

stock screener

  Rating & Target

buy

+24%

Previous close

$3.02

 
Intrinsic value

$3.74

 
Up/down potential

+24%

 
Rating

buy

We calculate the intrinsic value of BBGI 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, %
  29.10
  26.69
  24.52
  22.57
  20.81
  19.23
  17.81
  16.53
  15.37
  14.34
  13.40
  12.56
  11.81
  11.13
  10.51
  9.96
  9.47
  9.02
  8.62
  8.26
  7.93
  7.64
  7.37
  7.14
  6.92
  6.73
  6.56
  6.40
  6.26
  6.14
Revenue, $m
  332
  420
  523
  642
  775
  924
  1,089
  1,269
  1,464
  1,673
  1,898
  2,136
  2,388
  2,654
  2,933
  3,225
  3,531
  3,849
  4,181
  4,526
  4,885
  5,258
  5,646
  6,048
  6,467
  6,902
  7,355
  7,826
  8,316
  8,826
Variable operating expenses, $m
  280
  353
  438
  535
  646
  769
  904
  1,053
  1,214
  1,387
  1,566
  1,763
  1,971
  2,191
  2,421
  2,662
  2,914
  3,177
  3,451
  3,736
  4,032
  4,340
  4,660
  4,993
  5,338
  5,697
  6,071
  6,460
  6,864
  7,285
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
  280
  353
  438
  535
  646
  769
  904
  1,053
  1,214
  1,387
  1,566
  1,763
  1,971
  2,191
  2,421
  2,662
  2,914
  3,177
  3,451
  3,736
  4,032
  4,340
  4,660
  4,993
  5,338
  5,697
  6,071
  6,460
  6,864
  7,285
Operating income, $m
  52
  68
  86
  106
  130
  156
  184
  216
  250
  286
  331
  373
  417
  463
  512
  563
  616
  672
  730
  790
  853
  918
  986
  1,056
  1,129
  1,205
  1,284
  1,366
  1,452
  1,541
EBITDA, $m
  72
  91
  113
  139
  168
  200
  235
  274
  316
  362
  410
  462
  516
  574
  634
  697
  763
  832
  904
  979
  1,056
  1,137
  1,221
  1,308
  1,398
  1,492
  1,590
  1,692
  1,798
  1,908
Interest expense (income), $m
  6
  17
  25
  35
  47
  60
  74
  91
  109
  129
  151
  174
  199
  225
  253
  282
  313
  346
  379
  415
  451
  489
  529
  570
  613
  658
  704
  752
  803
  855
  909
Earnings before tax, $m
  35
  42
  50
  60
  70
  81
  93
  107
  121
  136
  157
  174
  192
  210
  230
  250
  271
  293
  315
  339
  363
  389
  415
  442
  471
  501
  531
  564
  597
  632
Tax expense, $m
  9
  11
  14
  16
  19
  22
  25
  29
  33
  37
  43
  47
  52
  57
  62
  67
  73
  79
  85
  91
  98
  105
  112
  119
  127
  135
  144
  152
  161
  171
Net income, $m
  26
  31
  37
  44
  51
  59
  68
  78
  88
  99
  115
  127
  140
  154
  168
  182
  198
  214
  230
  247
  265
  284
  303
  323
  344
  365
  388
  411
  436
  461

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
  880
  1,115
  1,388
  1,702
  2,056
  2,451
  2,888
  3,365
  3,882
  4,439
  5,034
  5,666
  6,335
  7,040
  7,780
  8,555
  9,365
  10,210
  11,090
  12,005
  12,957
  13,947
  14,975
  16,044
  17,154
  18,309
  19,509
  20,758
  22,058
  23,411
Adjusted assets (=assets-cash), $m
  880
  1,115
  1,388
  1,702
  2,056
  2,451
  2,888
  3,365
  3,882
  4,439
  5,034
  5,666
  6,335
  7,040
  7,780
  8,555
  9,365
  10,210
  11,090
  12,005
  12,957
  13,947
  14,975
  16,044
  17,154
  18,309
  19,509
  20,758
  22,058
  23,411
Revenue / Adjusted assets
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
Average production assets, $m
  414
  525
  654
  801
  968
  1,154
  1,360
  1,584
  1,828
  2,090
  2,370
  2,668
  2,983
  3,315
  3,664
  4,028
  4,410
  4,808
  5,222
  5,653
  6,101
  6,567
  7,051
  7,555
  8,077
  8,621
  9,186
  9,774
  10,386
  11,024
Working capital, $m
  37
  47
  59
  72
  87
  104
  122
  142
  164
  187
  213
  239
  268
  297
  329
  361
  395
  431
  468
  507
  547
  589
  632
  677
  724
  773
  824
  876
  931
  989
Total debt, $m
  362
  502
  665
  852
  1,063
  1,298
  1,558
  1,843
  2,151
  2,483
  2,837
  3,214
  3,613
  4,033
  4,474
  4,936
  5,419
  5,922
  6,447
  6,992
  7,560
  8,150
  8,762
  9,399
  10,061
  10,749
  11,465
  12,209
  12,984
  13,790
Total liabilities, $m
  525
  665
  827
  1,014
  1,225
  1,461
  1,721
  2,006
  2,314
  2,646
  3,000
  3,377
  3,776
  4,196
  4,637
  5,099
  5,582
  6,085
  6,609
  7,155
  7,722
  8,312
  8,925
  9,562
  10,224
  10,912
  11,628
  12,372
  13,146
  13,953
Total equity, $m
  356
  450
  561
  687
  831
  990
  1,167
  1,359
  1,568
  1,793
  2,034
  2,289
  2,559
  2,844
  3,143
  3,456
  3,784
  4,125
  4,480
  4,850
  5,235
  5,634
  6,050
  6,482
  6,930
  7,397
  7,882
  8,386
  8,911
  9,458
Total liabilities and equity, $m
  881
  1,115
  1,388
  1,701
  2,056
  2,451
  2,888
  3,365
  3,882
  4,439
  5,034
  5,666
  6,335
  7,040
  7,780
  8,555
  9,366
  10,210
  11,089
  12,005
  12,957
  13,946
  14,975
  16,044
  17,154
  18,309
  19,510
  20,758
  22,057
  23,411
Debt-to-equity ratio
  1.020
  1.110
  1.190
  1.240
  1.280
  1.310
  1.340
  1.360
  1.370
  1.380
  1.400
  1.400
  1.410
  1.420
  1.420
  1.430
  1.430
  1.440
  1.440
  1.440
  1.440
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.460
  1.460
  1.460
Adjusted equity ratio
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  26
  31
  37
  44
  51
  59
  68
  78
  88
  99
  115
  127
  140
  154
  168
  182
  198
  214
  230
  247
  265
  284
  303
  323
  344
  365
  388
  411
  436
  461
Depreciation, amort., depletion, $m
  20
  23
  28
  33
  38
  44
  51
  59
  67
  75
  79
  89
  99
  111
  122
  134
  147
  160
  174
  188
  203
  219
  235
  252
  269
  287
  306
  326
  346
  367
Funds from operations, $m
  45
  54
  64
  76
  89
  104
  119
  136
  155
  175
  194
  216
  240
  264
  290
  317
  345
  374
  404
  436
  469
  503
  538
  575
  613
  653
  694
  737
  782
  829
Change in working capital, $m
  8
  10
  12
  13
  15
  17
  18
  20
  22
  24
  25
  27
  28
  30
  31
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
Cash from operations, $m
  37
  44
  53
  63
  74
  87
  101
  116
  133
  151
  169
  189
  211
  234
  259
  284
  310
  338
  367
  397
  428
  461
  495
  530
  566
  604
  644
  685
  727
  772
Maintenance CAPEX, $m
  -11
  -14
  -18
  -22
  -27
  -32
  -38
  -45
  -53
  -61
  -70
  -79
  -89
  -99
  -111
  -122
  -134
  -147
  -160
  -174
  -188
  -203
  -219
  -235
  -252
  -269
  -287
  -306
  -326
  -346
New CAPEX, $m
  -93
  -111
  -129
  -148
  -167
  -186
  -206
  -225
  -244
  -262
  -280
  -298
  -315
  -332
  -349
  -365
  -381
  -398
  -414
  -431
  -448
  -466
  -484
  -503
  -523
  -544
  -565
  -588
  -612
  -637
Cash from investing activities, $m
  -104
  -125
  -147
  -170
  -194
  -218
  -244
  -270
  -297
  -323
  -350
  -377
  -404
  -431
  -460
  -487
  -515
  -545
  -574
  -605
  -636
  -669
  -703
  -738
  -775
  -813
  -852
  -894
  -938
  -983
Free cash flow, $m
  -67
  -80
  -93
  -107
  -119
  -132
  -143
  -154
  -163
  -172
  -181
  -187
  -193
  -197
  -200
  -203
  -205
  -207
  -207
  -208
  -208
  -208
  -208
  -209
  -209
  -209
  -209
  -210
  -211
  -212
Issuance/(repayment) of debt, $m
  118
  140
  163
  187
  211
  236
  260
  284
  308
  332
  355
  377
  399
  420
  441
  462
  483
  503
  524
  546
  567
  590
  613
  637
  662
  688
  716
  744
  775
  807
Issuance/(repurchase) of shares, $m
  55
  64
  74
  83
  92
  100
  108
  115
  121
  126
  125
  128
  130
  131
  131
  131
  129
  128
  125
  123
  119
  116
  112
  109
  105
  101
  97
  93
  89
  85
Cash from financing (excl. dividends), $m  
  173
  204
  237
  270
  303
  336
  368
  399
  429
  458
  480
  505
  529
  551
  572
  593
  612
  631
  649
  669
  686
  706
  725
  746
  767
  789
  813
  837
  864
  892
Total cash flow (excl. dividends), $m
  106
  124
  143
  163
  184
  205
  225
  246
  266
  286
  299
  318
  336
  354
  372
  390
  407
  425
  442
  460
  478
  497
  517
  537
  558
  580
  603
  628
  653
  680
Retained Cash Flow (-), $m
  -81
  -95
  -110
  -127
  -143
  -160
  -176
  -193
  -209
  -225
  -240
  -255
  -270
  -285
  -299
  -313
  -327
  -341
  -355
  -370
  -385
  -400
  -415
  -432
  -449
  -466
  -485
  -505
  -525
  -547
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
  26
  29
  33
  37
  41
  45
  49
  53
  57
  61
  59
  62
  66
  69
  73
  76
  80
  83
  87
  90
  94
  98
  101
  105
  110
  114
  118
  123
  128
  133
Discount rate, %
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
  24
  25
  25
  26
  26
  25
  24
  23
  21
  19
  15
  13
  12
  10
  8
  7
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  77.8
  61.9
  50.2
  41.4
  34.8
  29.6
  25.6
  22.5
  19.9
  17.9
  16.3
  14.9
  13.8
  12.9
  12.1
  11.4
  10.8
  10.3
  9.9
  9.5
  9.2
  8.9
  8.7
  8.4
  8.3
  8.1
  7.9
  7.8
  7.7
  7.6

Beasley Broadcast Group, Inc. is a radio broadcasting company. The Company's primary business is operating radio stations throughout the United States. As of December 31, 2016, the Company owned and operated 63 radio stations in various radio markets, Atlanta and Augusta in Georgia; Boston, Massachusetts; Charlotte, North Carolina; Detroit, Michigan; Fayetteville, North Carolina; Fort Myers-Naples, Florida; Las Vegas, Nevada; Middlesex, New Jersey; Monmouth, New Jersey; Morristown, New Jersey; Philadelphia, Pennsylvania; Tampa-Saint Petersburg, Florida; West Palm Beach-Boca Raton, Florida, and Wilmington, Delaware. The Company operates its radio stations in clusters to capture a range of demographic listener groups.

FINANCIAL RATIOS  of  Beasley Broadcast Group, Inc. (BBGI)

Valuation Ratios
P/E Ratio 1.9
Price to Sales 0.6
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 5.1
Price to Free Cash Flow 6.2
Growth Rates
Sales Growth Rate 29.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -15.6%
Financial Strength
Quick Ratio 3
Current Ratio 0.6
LT Debt to Equity 122.3%
Total Debt to Equity 125.7%
Interest Coverage 10
Management Effectiveness
Return On Assets 10.7%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 13.9%
Ret/ On T. Cap. - 3 Yr. Avg. 11.7%
Return On Equity 28%
Return On Equity - 3 Yr. Avg. 22.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 29.2%
Gross Margin - 3 Yr. Avg. 29.3%
EBITDA Margin 49.6%
EBITDA Margin - 3 Yr. Avg. 26.7%
Operating Margin 45.3%
Oper. Margin - 3 Yr. Avg. 22.6%
Pre-Tax Margin 40.9%
Pre-Tax Margin - 3 Yr. Avg. 17.3%
Net Profit Margin 34.3%
Net Profit Margin - 3 Yr. Avg. 35.9%
Effective Tax Rate 16.1%
Eff/ Tax Rate - 3 Yr. Avg. 18.7%
Payout Ratio 8.5%

BBGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BBGI stock intrinsic value calculation we used $257 million for the last fiscal year's total revenue generated by Beasley Broadcast Group, Inc.. The default revenue input number comes from 0001 income statement of Beasley Broadcast Group, 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 BBGI stock valuation model: a) initial revenue growth rate of 29.1% 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%, whose default value for BBGI is calculated based on our internal credit rating of Beasley Broadcast Group, 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 Beasley Broadcast Group, 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 BBGI stock the variable cost ratio is equal to 84.8%.

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 BBGI 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% for Beasley Broadcast Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Beasley Broadcast Group, 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 BBGI 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 BBGI are equal to 124.9%.

Life of production assets of 88.4 years is the average useful life of capital assets used in Beasley Broadcast Group, 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 BBGI is equal to 11.2%. 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 - $275.034091 million for Beasley Broadcast Group, 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 27.571 million for Beasley Broadcast Group, 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 Beasley Broadcast Group, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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