Intrinsic value of Clear Channel Outdoor Holdings, Inc. - CCO

Previous Close

$2.62

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.62

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of CCO 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 1.0

 

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, %
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  2,793
  2,872
  2,960
  3,056
  3,161
  3,274
  3,396
  3,527
  3,667
  3,816
  3,975
  4,144
  4,323
  4,512
  4,713
  4,926
  5,150
  5,387
  5,637
  5,900
  6,178
  6,471
  6,779
  7,104
  7,445
  7,805
  8,183
  8,581
  8,999
  9,439
Variable operating expenses, $m
  2,506
  2,571
  2,644
  2,724
  2,810
  2,904
  3,005
  3,113
  3,229
  3,353
  3,291
  3,431
  3,580
  3,737
  3,903
  4,079
  4,265
  4,461
  4,668
  4,886
  5,116
  5,359
  5,614
  5,883
  6,165
  6,463
  6,776
  7,106
  7,452
  7,816
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
  2,506
  2,571
  2,644
  2,724
  2,810
  2,904
  3,005
  3,113
  3,229
  3,353
  3,291
  3,431
  3,580
  3,737
  3,903
  4,079
  4,265
  4,461
  4,668
  4,886
  5,116
  5,359
  5,614
  5,883
  6,165
  6,463
  6,776
  7,106
  7,452
  7,816
Operating income, $m
  287
  301
  316
  332
  350
  370
  391
  413
  437
  463
  683
  712
  743
  776
  810
  847
  885
  926
  969
  1,014
  1,062
  1,112
  1,165
  1,221
  1,280
  1,342
  1,407
  1,475
  1,547
  1,623
EBITDA, $m
  711
  731
  753
  778
  804
  833
  864
  898
  933
  971
  1,012
  1,055
  1,100
  1,149
  1,200
  1,254
  1,311
  1,371
  1,435
  1,502
  1,573
  1,647
  1,725
  1,808
  1,895
  1,986
  2,083
  2,184
  2,290
  2,402
Interest expense (income), $m
  368
  391
  197
  206
  216
  227
  238
  251
  264
  279
  294
  311
  328
  347
  367
  388
  410
  433
  458
  484
  512
  541
  572
  604
  638
  674
  712
  752
  794
  838
  884
Earnings before tax, $m
  -103
  103
  110
  116
  124
  132
  140
  149
  159
  169
  373
  384
  396
  409
  423
  437
  452
  468
  485
  502
  521
  540
  561
  583
  605
  629
  655
  681
  709
  738
Tax expense, $m
  0
  28
  30
  31
  33
  36
  38
  40
  43
  46
  101
  104
  107
  110
  114
  118
  122
  126
  131
  136
  141
  146
  151
  157
  163
  170
  177
  184
  191
  199
Net income, $m
  -103
  75
  80
  85
  90
  96
  102
  109
  116
  123
  272
  280
  289
  299
  308
  319
  330
  341
  354
  367
  380
  394
  410
  425
  442
  460
  478
  497
  518
  539

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
  4,639
  4,771
  4,917
  5,077
  5,250
  5,439
  5,641
  5,858
  6,091
  6,339
  6,603
  6,883
  7,180
  7,496
  7,829
  8,182
  8,555
  8,948
  9,363
  9,801
  10,263
  10,749
  11,261
  11,800
  12,368
  12,965
  13,593
  14,253
  14,948
  15,679
Adjusted assets (=assets-cash), $m
  4,639
  4,771
  4,917
  5,077
  5,250
  5,439
  5,641
  5,858
  6,091
  6,339
  6,603
  6,883
  7,180
  7,496
  7,829
  8,182
  8,555
  8,948
  9,363
  9,801
  10,263
  10,749
  11,261
  11,800
  12,368
  12,965
  13,593
  14,253
  14,948
  15,679
Revenue / Adjusted assets
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
  0.602
Average production assets, $m
  2,377
  2,444
  2,519
  2,601
  2,690
  2,786
  2,890
  3,001
  3,120
  3,247
  3,383
  3,526
  3,679
  3,840
  4,011
  4,192
  4,383
  4,584
  4,797
  5,021
  5,258
  5,507
  5,769
  6,045
  6,336
  6,642
  6,964
  7,302
  7,658
  8,032
Working capital, $m
  106
  109
  112
  116
  120
  124
  129
  134
  139
  145
  151
  157
  164
  171
  179
  187
  196
  205
  214
  224
  235
  246
  258
  270
  283
  297
  311
  326
  342
  359
Total debt, $m
  2,669
  2,787
  2,918
  3,062
  3,219
  3,388
  3,570
  3,766
  3,975
  4,198
  4,436
  4,688
  4,956
  5,239
  5,540
  5,857
  6,193
  6,547
  6,920
  7,314
  7,730
  8,167
  8,628
  9,113
  9,624
  10,161
  10,727
  11,321
  11,947
  12,604
Total liabilities, $m
  4,175
  4,294
  4,425
  4,569
  4,725
  4,895
  5,077
  5,273
  5,482
  5,705
  5,942
  6,195
  6,462
  6,746
  7,046
  7,364
  7,699
  8,053
  8,427
  8,821
  9,236
  9,674
  10,135
  10,620
  11,131
  11,668
  12,233
  12,828
  13,453
  14,111
Total equity, $m
  464
  477
  492
  508
  525
  544
  564
  586
  609
  634
  660
  688
  718
  750
  783
  818
  855
  895
  936
  980
  1,026
  1,075
  1,126
  1,180
  1,237
  1,296
  1,359
  1,425
  1,495
  1,568
Total liabilities and equity, $m
  4,639
  4,771
  4,917
  5,077
  5,250
  5,439
  5,641
  5,859
  6,091
  6,339
  6,602
  6,883
  7,180
  7,496
  7,829
  8,182
  8,554
  8,948
  9,363
  9,801
  10,262
  10,749
  11,261
  11,800
  12,368
  12,964
  13,592
  14,253
  14,948
  15,679
Debt-to-equity ratio
  5.750
  5.840
  5.940
  6.030
  6.130
  6.230
  6.330
  6.430
  6.530
  6.620
  6.720
  6.810
  6.900
  6.990
  7.080
  7.160
  7.240
  7.320
  7.390
  7.460
  7.530
  7.600
  7.660
  7.720
  7.780
  7.840
  7.890
  7.940
  7.990
  8.040
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
  -103
  75
  80
  85
  90
  96
  102
  109
  116
  123
  272
  280
  289
  299
  308
  319
  330
  341
  354
  367
  380
  394
  410
  425
  442
  460
  478
  497
  518
  539
Depreciation, amort., depletion, $m
  424
  430
  438
  445
  454
  464
  474
  484
  496
  508
  328
  342
  357
  373
  389
  407
  425
  445
  466
  487
  510
  535
  560
  587
  615
  645
  676
  709
  743
  780
Funds from operations, $m
  320
  506
  518
  530
  544
  560
  576
  593
  612
  632
  600
  623
  646
  671
  698
  726
  755
  787
  819
  854
  891
  929
  970
  1,012
  1,057
  1,104
  1,154
  1,206
  1,261
  1,319
Change in working capital, $m
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
Cash from operations, $m
  318
  503
  514
  527
  541
  555
  571
  588
  606
  626
  594
  616
  640
  664
  690
  718
  747
  778
  810
  844
  880
  918
  958
  1,000
  1,044
  1,091
  1,140
  1,191
  1,245
  1,302
Maintenance CAPEX, $m
  -225
  -231
  -237
  -245
  -252
  -261
  -271
  -281
  -291
  -303
  -315
  -328
  -342
  -357
  -373
  -389
  -407
  -425
  -445
  -466
  -487
  -510
  -535
  -560
  -587
  -615
  -645
  -676
  -709
  -743
New CAPEX, $m
  -61
  -67
  -75
  -82
  -89
  -96
  -104
  -111
  -119
  -127
  -135
  -144
  -152
  -161
  -171
  -181
  -191
  -202
  -213
  -224
  -236
  -249
  -262
  -276
  -291
  -306
  -322
  -338
  -356
  -374
Cash from investing activities, $m
  -286
  -298
  -312
  -327
  -341
  -357
  -375
  -392
  -410
  -430
  -450
  -472
  -494
  -518
  -544
  -570
  -598
  -627
  -658
  -690
  -723
  -759
  -797
  -836
  -878
  -921
  -967
  -1,014
  -1,065
  -1,117
Free cash flow, $m
  32
  204
  202
  200
  199
  198
  197
  196
  196
  196
  144
  144
  145
  146
  146
  148
  149
  150
  152
  154
  156
  158
  161
  164
  167
  170
  173
  177
  180
  184
Issuance/(repayment) of debt, $m
  -2,609
  119
  131
  144
  157
  169
  182
  196
  209
  223
  238
  252
  268
  284
  300
  318
  335
  354
  374
  394
  415
  438
  461
  485
  511
  537
  565
  595
  625
  657
Issuance/(repurchase) of shares, $m
  2,829
  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  
  220
  119
  131
  144
  157
  169
  182
  196
  209
  223
  238
  252
  268
  284
  300
  318
  335
  354
  374
  394
  415
  438
  461
  485
  511
  537
  565
  595
  625
  657
Total cash flow (excl. dividends), $m
  252
  323
  333
  344
  355
  367
  379
  392
  405
  419
  381
  397
  413
  429
  447
  465
  484
  505
  526
  548
  571
  596
  622
  649
  677
  707
  738
  771
  806
  842
Retained Cash Flow (-), $m
  -2,829
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
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
  -2,577
  310
  319
  328
  338
  348
  359
  370
  382
  394
  355
  369
  383
  398
  413
  430
  447
  465
  484
  504
  525
  547
  571
  595
  620
  647
  676
  705
  736
  769
Discount rate, %
  15.30
  16.07
  16.87
  17.71
  18.60
  19.53
  20.50
  21.53
  22.61
  23.74
  24.92
  26.17
  27.48
  28.85
  30.29
  31.81
  33.40
  35.07
  36.82
  38.66
  40.60
  42.63
  44.76
  46.99
  49.34
  51.81
  54.40
  57.12
  59.98
  62.98
PV of cash for distribution, $m
  -2,235
  230
  200
  171
  144
  119
  97
  78
  61
  47
  31
  23
  16
  11
  8
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  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

Clear Channel Outdoor Holdings, Inc. is an outdoor advertising company. The Company provides clients with advertising opportunities through billboards, street furniture displays, transit displays and other out-of-home advertising displays, such as wallscapes and spectaculars. Its segments include Americas outdoor advertising (Americas) and International outdoor advertising (International). The Americas segment consists of operations primarily in the United States, Canada and Latin America. Its Americas assets consist of printed and digital billboards, street furniture and transit displays, airport displays and wallscapes and other spectaculars, which the Company owns or operates under lease management agreements. International segment primarily includes operations in Europe and Asia. The International assets consist of street furniture and transit displays, billboards, mall displays, Smartbike programs, and other spectaculars, which the Company owns or operates under lease agreements.

FINANCIAL RATIOS  of  Clear Channel Outdoor Holdings, Inc. (CCO)

Valuation Ratios
P/E Ratio 6.7
Price to Sales 0.4
Price to Book -0.9
Price to Tangible Book
Price to Cash Flow 3.1
Price to Free Cash Flow 12.2
Growth Rates
Sales Growth Rate -3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.1%
Cap. Spend. - 3 Yr. Gr. Rate 1.3%
Financial Strength
Quick Ratio 77
Current Ratio 0.1
LT Debt to Equity -472.7%
Total Debt to Equity -473.4%
Interest Coverage 2
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 11.7%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.3%
Return On Equity -15.3%
Return On Equity - 3 Yr. Avg. 2.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 46.9%
Gross Margin - 3 Yr. Avg. 46.6%
EBITDA Margin 35.3%
EBITDA Margin - 3 Yr. Avg. 28.8%
Operating Margin 23.6%
Oper. Margin - 3 Yr. Avg. 14.1%
Pre-Tax Margin 8.9%
Pre-Tax Margin - 3 Yr. Avg. 2.8%
Net Profit Margin 5.2%
Net Profit Margin - 3 Yr. Avg. 0.5%
Effective Tax Rate 32%
Eff/ Tax Rate - 3 Yr. Avg. -106.2%
Payout Ratio 536.2%

CCO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CCO stock intrinsic value calculation we used $2722 million for the last fiscal year's total revenue generated by Clear Channel Outdoor Holdings, Inc.. The default revenue input number comes from 0001 income statement of Clear Channel Outdoor Holdings, 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 CCO stock valuation model: a) initial revenue growth rate of 2.6% 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 15.3%, whose default value for CCO is calculated based on our internal credit rating of Clear Channel Outdoor Holdings, 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 Clear Channel Outdoor Holdings, 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 CCO stock the variable cost ratio is equal to 89.9%.

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 CCO 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 7.4% for Clear Channel Outdoor Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for Clear Channel Outdoor Holdings, 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 CCO 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 CCO are equal to 85.1%.

Life of production assets of 10.3 years is the average useful life of capital assets used in Clear Channel Outdoor Holdings, 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 CCO is equal to 3.8%. 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 - $-2262.014 million for Clear Channel Outdoor Holdings, 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 366.224 million for Clear Channel Outdoor Holdings, 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 Clear Channel Outdoor Holdings, Inc. at the current share price and the inputted number of shares is $1.0 billion.

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