Intrinsic value of Capital Senior Living Corporation - CSU

Previous Close

$4.07

  Intrinsic Value

$0.28

stock screener

  Rating & Target

str. sell

-93%

Previous close

$4.07

 
Intrinsic value

$0.28

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of CSU 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
  469
  480
  492
  506
  522
  538
  557
  577
  598
  621
  645
  672
  700
  729
  761
  794
  829
  867
  906
  948
  991
  1,038
  1,087
  1,138
  1,192
  1,249
  1,309
  1,373
  1,439
  1,509
Variable operating expenses, $m
  452
  462
  474
  487
  502
  518
  536
  555
  576
  598
  622
  647
  674
  702
  732
  765
  799
  834
  872
  913
  955
  999
  1,046
  1,096
  1,148
  1,203
  1,261
  1,322
  1,386
  1,453
Fixed operating expenses, $m
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
Total operating expenses, $m
  461
  471
  484
  497
  512
  528
  546
  566
  587
  609
  633
  659
  686
  714
  744
  778
  812
  847
  886
  927
  969
  1,014
  1,061
  1,111
  1,164
  1,219
  1,277
  1,339
  1,403
  1,470
Operating income, $m
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  39
EBITDA, $m
  72
  74
  76
  78
  80
  83
  86
  89
  93
  97
  101
  105
  109
  114
  119
  125
  131
  137
  144
  150
  158
  165
  174
  182
  191
  201
  211
  222
  233
  244
Interest expense (income), $m
  41
  55
  52
  53
  55
  57
  58
  60
  63
  65
  68
  71
  73
  77
  80
  84
  87
  92
  96
  100
  105
  110
  116
  121
  127
  133
  140
  147
  154
  162
  170
Earnings before tax, $m
  -47
  -44
  -45
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -131
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
  -47
  -44
  -45
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -131

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
  1,173
  1,200
  1,231
  1,265
  1,304
  1,346
  1,392
  1,441
  1,495
  1,552
  1,614
  1,679
  1,749
  1,823
  1,901
  1,985
  2,073
  2,166
  2,265
  2,369
  2,479
  2,595
  2,717
  2,845
  2,981
  3,123
  3,273
  3,431
  3,598
  3,772
Adjusted assets (=assets-cash), $m
  1,173
  1,200
  1,231
  1,265
  1,304
  1,346
  1,392
  1,441
  1,495
  1,552
  1,614
  1,679
  1,749
  1,823
  1,901
  1,985
  2,073
  2,166
  2,265
  2,369
  2,479
  2,595
  2,717
  2,845
  2,981
  3,123
  3,273
  3,431
  3,598
  3,772
Revenue / Adjusted assets
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
Average production assets, $m
  1,101
  1,127
  1,155
  1,188
  1,224
  1,264
  1,307
  1,353
  1,403
  1,457
  1,515
  1,576
  1,642
  1,711
  1,785
  1,863
  1,946
  2,034
  2,126
  2,224
  2,327
  2,436
  2,550
  2,671
  2,798
  2,932
  3,073
  3,221
  3,377
  3,541
Working capital, $m
  -39
  -40
  -41
  -43
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
  -127
Total debt, $m
  964
  989
  1,016
  1,048
  1,082
  1,120
  1,161
  1,206
  1,254
  1,306
  1,361
  1,420
  1,483
  1,549
  1,620
  1,695
  1,774
  1,858
  1,947
  2,041
  2,140
  2,244
  2,354
  2,469
  2,591
  2,720
  2,855
  2,997
  3,146
  3,304
Total liabilities, $m
  1,056
  1,080
  1,108
  1,139
  1,173
  1,211
  1,253
  1,297
  1,345
  1,397
  1,452
  1,511
  1,574
  1,641
  1,711
  1,786
  1,866
  1,950
  2,038
  2,132
  2,231
  2,335
  2,445
  2,561
  2,683
  2,811
  2,946
  3,088
  3,238
  3,395
Total equity, $m
  117
  120
  123
  127
  130
  135
  139
  144
  149
  155
  161
  168
  175
  182
  190
  198
  207
  217
  226
  237
  248
  259
  272
  285
  298
  312
  327
  343
  360
  377
Total liabilities and equity, $m
  1,173
  1,200
  1,231
  1,266
  1,303
  1,346
  1,392
  1,441
  1,494
  1,552
  1,613
  1,679
  1,749
  1,823
  1,901
  1,984
  2,073
  2,167
  2,264
  2,369
  2,479
  2,594
  2,717
  2,846
  2,981
  3,123
  3,273
  3,431
  3,598
  3,772
Debt-to-equity ratio
  8.220
  8.240
  8.260
  8.280
  8.300
  8.320
  8.340
  8.370
  8.390
  8.410
  8.430
  8.460
  8.480
  8.500
  8.520
  8.540
  8.560
  8.580
  8.600
  8.610
  8.630
  8.650
  8.660
  8.680
  8.690
  8.710
  8.720
  8.730
  8.750
  8.760
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
  -47
  -44
  -45
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -131
Depreciation, amort., depletion, $m
  64
  65
  67
  69
  71
  73
  76
  79
  82
  85
  88
  92
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  155
  163
  170
  179
  187
  196
  206
Funds from operations, $m
  17
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  48
  50
  52
  55
  58
  61
  64
  67
  71
  75
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from operations, $m
  18
  23
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  49
  51
  54
  57
  59
  63
  66
  69
  73
  76
  80
Maintenance CAPEX, $m
  -63
  -64
  -65
  -67
  -69
  -71
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -95
  -99
  -104
  -108
  -113
  -118
  -124
  -129
  -135
  -142
  -148
  -155
  -163
  -170
  -179
  -187
  -196
New CAPEX, $m
  -22
  -25
  -29
  -33
  -36
  -40
  -43
  -47
  -50
  -54
  -58
  -61
  -65
  -70
  -74
  -78
  -83
  -88
  -93
  -98
  -103
  -109
  -115
  -121
  -127
  -134
  -141
  -148
  -156
  -164
Cash from investing activities, $m
  -85
  -89
  -94
  -100
  -105
  -111
  -116
  -123
  -129
  -136
  -143
  -149
  -157
  -165
  -173
  -182
  -191
  -201
  -211
  -222
  -232
  -244
  -257
  -269
  -282
  -297
  -311
  -327
  -343
  -360
Free cash flow, $m
  -67
  -67
  -71
  -75
  -80
  -85
  -89
  -94
  -99
  -105
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -156
  -164
  -173
  -181
  -190
  -200
  -210
  -220
  -231
  -242
  -254
  -267
  -280
Issuance/(repayment) of debt, $m
  -58
  24
  28
  31
  35
  38
  41
  45
  48
  52
  55
  59
  63
  67
  71
  75
  79
  84
  89
  94
  99
  104
  110
  116
  122
  128
  135
  142
  150
  157
Issuance/(repurchase) of shares, $m
  129
  46
  48
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  118
  124
  130
  136
  142
  149
Cash from financing (excl. dividends), $m  
  71
  70
  76
  80
  86
  91
  96
  102
  107
  114
  119
  126
  133
  140
  147
  154
  162
  170
  179
  188
  198
  207
  218
  229
  240
  252
  265
  278
  292
  306
Total cash flow (excl. dividends), $m
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
Retained Cash Flow (-), $m
  -129
  -46
  -48
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -124
  -130
  -136
  -142
  -149
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
  -125
  -42
  -43
  -44
  -45
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -117
  -123
Discount rate, %
  14.20
  14.91
  15.66
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
  25.50
  26.78
  28.12
  29.52
  31.00
  32.55
  34.17
  35.88
  37.68
  39.56
  41.54
  43.62
  45.80
  48.09
  50.49
  53.02
  55.67
  58.45
PV of cash for distribution, $m
  -109
  -32
  -28
  -24
  -20
  -17
  -14
  -12
  -9
  -7
  -6
  -4
  -3
  -2
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  49.7
  44.8
  40.3
  36.3
  32.6
  29.3
  26.4
  23.7
  21.3
  19.1
  17.1
  15.4
  13.8
  12.4
  11.1
  9.9
  8.9
  8.0
  7.2
  6.4
  5.8
  5.2
  4.6
  4.2
  3.7
  3.3
  3.0
  2.7
  2.4
  2.2

Capital Senior Living Corporation is an operator of senior housing communities in the United States. The Company provides senior living services to the elderly, including independent living and assisted living services, and provides home care services at one of its communities. Its continuum of care integrates independent living and assisted living and is bridged by home care through independent home care agencies or its home care agency, sustains residents' autonomy and independence based on their physical and mental abilities. As of December 31, 2016, it operated 129 senior housing communities in 23 states with an aggregate capacity of approximately 16,500 residents, including 79 senior housing communities, which it owned and 50 senior housing communities it leased. As of December 31, 2016, it also operated one home care agency. It offers assisted living care and services, including personal care services, around the clock staffing, support services and supplemental services.

FINANCIAL RATIOS  of  Capital Senior Living Corporation (CSU)

Valuation Ratios
P/E Ratio -4.3
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow 2.3
Price to Free Cash Flow -12
Growth Rates
Sales Growth Rate 8.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 47.6%
Cap. Spend. - 3 Yr. Gr. Rate 34.7%
Financial Strength
Quick Ratio 2
Current Ratio 0.3
LT Debt to Equity 786.3%
Total Debt to Equity 802.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.2%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital -2.8%
Ret/ On T. Cap. - 3 Yr. Avg. -2.5%
Return On Equity -22.1%
Return On Equity - 3 Yr. Avg. -16.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 16.3%
EBITDA Margin - 3 Yr. Avg. 16.2%
Operating Margin 3.1%
Oper. Margin - 3 Yr. Avg. 3.8%
Pre-Tax Margin -6.3%
Pre-Tax Margin - 3 Yr. Avg. -5.1%
Net Profit Margin -6.3%
Net Profit Margin - 3 Yr. Avg. -5.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -4%
Payout Ratio 0%

CSU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSU stock intrinsic value calculation we used $460 million for the last fiscal year's total revenue generated by Capital Senior Living Corporation. The default revenue input number comes from 0001 income statement of Capital Senior Living Corporation. 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 CSU 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 14.2%, whose default value for CSU is calculated based on our internal credit rating of Capital Senior Living Corporation, 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 Capital Senior Living Corporation.
    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 CSU stock the variable cost ratio is equal to 96.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9 million in the base year in the intrinsic value calculation for CSU 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 Capital Senior Living Corporation.

Corporate tax rate of 27% is the nominal tax rate for Capital Senior Living Corporation. 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 CSU 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 CSU are equal to 234.7%.

Life of production assets of 17.2 years is the average useful life of capital assets used in Capital Senior Living Corporation 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 CSU is equal to -8.4%. 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 - $35.265 million for Capital Senior Living Corporation - 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 31.317 million for Capital Senior Living Corporation 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 Capital Senior Living Corporation at the current share price and the inputted number of shares is $0.1 billion.

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