Intrinsic value of Chicken Soup for the Soul Entertainment - CSSE

Previous Close

$9.32

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$9.32

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of CSSE 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 2017), $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
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  31.30
  28.67
  26.30
  24.17
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.25
  12.43
  11.69
  11.02
  10.41
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
Revenue, $m
  14
  19
  23
  29
  36
  43
  51
  60
  70
  81
  92
  104
  117
  131
  145
  160
  176
  193
  210
  228
  246
  266
  286
  307
  329
  351
  375
  399
  425
  451
Variable operating expenses, $m
  11
  14
  18
  22
  27
  32
  38
  45
  52
  60
  68
  77
  87
  97
  108
  119
  131
  143
  156
  169
  183
  197
  212
  228
  244
  261
  278
  296
  315
  335
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
  11
  14
  18
  22
  27
  32
  38
  45
  52
  60
  68
  77
  87
  97
  108
  119
  131
  143
  156
  169
  183
  197
  212
  228
  244
  261
  278
  296
  315
  335
Operating income, $m
  4
  5
  6
  7
  9
  11
  13
  15
  18
  21
  24
  27
  30
  34
  37
  41
  45
  50
  54
  59
  64
  69
  74
  79
  85
  91
  97
  103
  110
  116
EBITDA, $m
  9
  11
  14
  18
  22
  26
  31
  37
  43
  49
  56
  64
  72
  80
  89
  98
  108
  118
  128
  139
  151
  162
  175
  188
  201
  215
  229
  244
  260
  276
Interest expense (income), $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
  0
Earnings before tax, $m
  4
  5
  6
  7
  9
  11
  13
  15
  18
  21
  24
  27
  30
  34
  37
  41
  45
  50
  54
  59
  64
  69
  74
  79
  85
  91
  97
  103
  110
  116
Tax expense, $m
  1
  1
  2
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  21
  23
  24
  26
  28
  30
  31
Net income, $m
  3
  3
  4
  5
  7
  8
  10
  11
  13
  15
  17
  20
  22
  25
  27
  30
  33
  36
  40
  43
  46
  50
  54
  58
  62
  66
  71
  75
  80
  85

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
  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
Adjusted assets (=assets-cash), $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
Revenue / Adjusted assets
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Average production assets, $m
  51
  66
  83
  103
  126
  152
  180
  212
  247
  284
  325
  368
  413
  462
  512
  566
  622
  680
  741
  804
  870
  939
  1,010
  1,084
  1,161
  1,241
  1,324
  1,410
  1,500
  1,594
Working capital, $m
  7
  9
  11
  14
  17
  21
  25
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  94
  103
  111
  120
  130
  140
  150
  161
  172
  183
  195
  208
  221
Total debt, $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 liabilities, $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 equity, $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 liabilities and equity, $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
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  3
  4
  5
  7
  8
  10
  11
  13
  15
  17
  20
  22
  25
  27
  30
  33
  36
  40
  43
  46
  50
  54
  58
  62
  66
  71
  75
  80
  85
Depreciation, amort., depletion, $m
  5
  7
  8
  10
  13
  15
  18
  21
  25
  29
  32
  37
  41
  46
  51
  57
  62
  68
  74
  80
  87
  94
  101
  108
  116
  124
  132
  141
  150
  159
Funds from operations, $m
  8
  10
  13
  16
  19
  23
  28
  33
  38
  44
  50
  56
  63
  71
  79
  87
  95
  104
  114
  123
  133
  144
  155
  166
  178
  190
  203
  216
  230
  244
Change in working capital, $m
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
Cash from operations, $m
  6
  8
  10
  13
  16
  20
  24
  28
  33
  38
  44
  50
  57
  64
  72
  79
  88
  96
  105
  115
  124
  134
  145
  156
  167
  179
  192
  204
  218
  231
Maintenance CAPEX, $m
  -4
  -5
  -7
  -8
  -10
  -13
  -15
  -18
  -21
  -25
  -28
  -32
  -37
  -41
  -46
  -51
  -57
  -62
  -68
  -74
  -80
  -87
  -94
  -101
  -108
  -116
  -124
  -132
  -141
  -150
New CAPEX, $m
  -13
  -15
  -17
  -20
  -23
  -26
  -29
  -32
  -35
  -37
  -40
  -43
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
Cash from investing activities, $m
  -17
  -20
  -24
  -28
  -33
  -39
  -44
  -50
  -56
  -62
  -68
  -75
  -83
  -89
  -97
  -104
  -113
  -120
  -129
  -137
  -146
  -156
  -165
  -175
  -185
  -196
  -207
  -218
  -231
  -244
Free cash flow, $m
  -11
  -12
  -13
  -15
  -17
  -19
  -20
  -22
  -23
  -24
  -25
  -25
  -25
  -26
  -25
  -25
  -25
  -24
  -24
  -23
  -22
  -21
  -20
  -19
  -18
  -17
  -16
  -15
  -13
  -12
Issuance/(repayment) of debt, $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
Issuance/(repurchase) of shares, $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 financing (excl. dividends), $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 cash flow (excl. dividends), $m
  -11
  -12
  -13
  -15
  -17
  -19
  -20
  -22
  -23
  -24
  -25
  -25
  -25
  -26
  -25
  -25
  -25
  -24
  -24
  -23
  -22
  -21
  -20
  -19
  -18
  -17
  -16
  -15
  -13
  -12
Retained Cash Flow (-), $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
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
  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
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
  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
Current shareholders' claim on cash, %
  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
  100.0

Chicken Soup for the Soul Entertainment, Inc. is a provider of entertaining video content. The Company develops and produces and entertaining, video content packaged for distribution through television, online and mobile channels, including: The Sip, Web series run on APlus.com, and A Plus videos. The Company’s video content projects include Chicken Soup for the Soul’s Hidden Heroes (Hidden Heroes), Chicken Soup for the Soul’s Project Dad, Paycation Homes, Hilton Grand Vacation Sips, Emily Griffith Technical College Sips, and American Humane.

FINANCIAL RATIOS  of  Chicken Soup for the Soul Entertainment (CSSE)

Valuation Ratios
P/E Ratio 92.8
Price to Sales 11.6
Price to Book 23.2
Price to Tangible Book
Price to Cash Flow -46.4
Price to Free Cash Flow -13.3
Growth Rates
Sales Growth Rate 300%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 150%
Total Debt to Equity 150%
Interest Coverage 0
Management Effectiveness
Return On Assets 13.3%
Ret/ On Assets - 3 Yr. Avg. -17.8%
Return On Total Capital 20%
Ret/ On T. Cap. - 3 Yr. Avg. 6.7%
Return On Equity 50%
Return On Equity - 3 Yr. Avg. 16.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 62.5%
Gross Margin - 3 Yr. Avg. 37.5%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. -12.5%
Operating Margin 25%
Oper. Margin - 3 Yr. Avg. 8.3%
Pre-Tax Margin 12.5%
Pre-Tax Margin - 3 Yr. Avg. -12.5%
Net Profit Margin 12.5%
Net Profit Margin - 3 Yr. Avg. -12.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CSSE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSSE stock intrinsic value calculation we used $11 million for the last fiscal year's total revenue generated by Chicken Soup for the Soul Entertainment . The default revenue input number comes from 2017 income statement of Chicken Soup for the Soul Entertainment . 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 CSSE stock valuation model: a) initial revenue growth rate of 31.3% 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 4.3%, whose default value for CSSE is calculated based on our internal credit rating of Chicken Soup for the Soul Entertainment , 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 Chicken Soup for the Soul Entertainment .
    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 CSSE stock the variable cost ratio is equal to 75.1%.

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 CSSE 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 Chicken Soup for the Soul Entertainment .

Corporate tax rate of 27% is the nominal tax rate for Chicken Soup for the Soul Entertainment . 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 CSSE stock is equal to 6%.

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 CSSE are equal to 353.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Chicken Soup for the Soul Entertainment 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 CSSE is equal to 48.9%. 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 - $0 million for Chicken Soup for the Soul Entertainment - 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 10 million for Chicken Soup for the Soul Entertainment 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 Chicken Soup for the Soul Entertainment at the current share price and the inputted number of shares is $0.1 billion.

COMPANY NEWS

▶ CSSE: Q1 2018 Shows First Full Quarter of Screen Media Acquisition   [May-11-18 02:35PM  Zacks Small Cap Research]
▶ Top NasdaqGS Undervalued Stock   [May-06-18 10:02AM  Simply Wall St.]
▶ CSSE: Year End Results Show Revenue Growth of 35% to $11 Million   [Mar-29-18 11:30AM  Zacks Small Cap Research]
▶ Chicken Soup Takes a Spill   [Feb-15-18 10:18AM  Barrons.com]
▶ Financially Strong And High Growth Stocks   [Jan-22-18 11:02AM  Simply Wall St.]
▶ CSSE: Low Cost TV Programming Spurs Huge Demand From Networks   [Oct-03-17 02:30PM  Zacks Small Cap Research]
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