Intrinsic value of Drive Shack Inc. - DS

Previous Close

$4.76

  Intrinsic Value

$0.43

stock screener

  Rating & Target

str. sell

-91%

Previous close

$4.76

 
Intrinsic value

$0.43

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of DS 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 0.3

 

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, %
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
Revenue, $m
  314
  335
  357
  380
  404
  429
  455
  482
  510
  540
  571
  603
  636
  671
  708
  746
  786
  828
  872
  918
  966
  1,017
  1,070
  1,125
  1,183
  1,244
  1,308
  1,375
  1,445
  1,518
Variable operating expenses, $m
  325
  347
  369
  393
  417
  443
  469
  497
  526
  556
  581
  614
  648
  684
  721
  760
  801
  844
  888
  935
  984
  1,036
  1,089
  1,146
  1,205
  1,267
  1,332
  1,400
  1,471
  1,546
Fixed operating expenses, $m
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
Total operating expenses, $m
  354
  376
  399
  424
  448
  475
  502
  530
  560
  591
  617
  650
  685
  722
  760
  800
  842
  885
  930
  978
  1,028
  1,081
  1,135
  1,193
  1,253
  1,316
  1,382
  1,451
  1,524
  1,600
Operating income, $m
  -40
  -41
  -42
  -43
  -44
  -46
  -47
  -48
  -49
  -51
  -46
  -48
  -49
  -50
  -52
  -54
  -55
  -57
  -59
  -60
  -62
  -64
  -66
  -68
  -70
  -72
  -75
  -77
  -79
  -82
EBITDA, $m
  -1
  0
  2
  3
  4
  6
  8
  9
  11
  13
  15
  17
  19
  21
  24
  26
  29
  32
  35
  38
  41
  45
  48
  52
  56
  61
  65
  70
  75
  80
Interest expense (income), $m
  12
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  25
  28
  30
  32
  34
  37
  39
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  77
  81
  86
Earnings before tax, $m
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -147
  -154
  -160
  -168
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
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -147
  -154
  -160
  -168

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
  493
  526
  561
  598
  635
  675
  715
  758
  802
  849
  897
  948
  1,000
  1,056
  1,113
  1,173
  1,236
  1,302
  1,371
  1,444
  1,519
  1,599
  1,682
  1,769
  1,860
  1,956
  2,056
  2,161
  2,272
  2,387
Adjusted assets (=assets-cash), $m
  493
  526
  561
  598
  635
  675
  715
  758
  802
  849
  897
  948
  1,000
  1,056
  1,113
  1,173
  1,236
  1,302
  1,371
  1,444
  1,519
  1,599
  1,682
  1,769
  1,860
  1,956
  2,056
  2,161
  2,272
  2,387
Revenue / Adjusted assets
  0.637
  0.637
  0.636
  0.635
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.637
  0.636
  0.636
  0.635
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
Average production assets, $m
  278
  297
  317
  337
  358
  381
  404
  428
  453
  479
  506
  535
  564
  595
  628
  662
  697
  735
  774
  814
  857
  902
  949
  998
  1,049
  1,103
  1,160
  1,219
  1,281
  1,347
Working capital, $m
  -72
  -77
  -82
  -87
  -93
  -98
  -104
  -110
  -117
  -124
  -131
  -138
  -146
  -154
  -162
  -171
  -180
  -190
  -200
  -210
  -221
  -233
  -245
  -258
  -271
  -285
  -299
  -315
  -331
  -348
Total debt, $m
  193
  219
  247
  275
  304
  335
  367
  401
  435
  472
  510
  549
  590
  633
  679
  726
  775
  827
  881
  937
  997
  1,059
  1,124
  1,192
  1,263
  1,338
  1,417
  1,499
  1,586
  1,676
Total liabilities, $m
  386
  412
  440
  468
  497
  528
  560
  594
  628
  665
  703
  742
  783
  826
  872
  919
  968
  1,020
  1,074
  1,130
  1,190
  1,252
  1,317
  1,385
  1,456
  1,531
  1,610
  1,692
  1,779
  1,869
Total equity, $m
  107
  114
  122
  130
  138
  146
  155
  164
  174
  184
  195
  206
  217
  229
  242
  255
  268
  283
  298
  313
  330
  347
  365
  384
  404
  424
  446
  469
  493
  518
Total liabilities and equity, $m
  493
  526
  562
  598
  635
  674
  715
  758
  802
  849
  898
  948
  1,000
  1,055
  1,114
  1,174
  1,236
  1,303
  1,372
  1,443
  1,520
  1,599
  1,682
  1,769
  1,860
  1,955
  2,056
  2,161
  2,272
  2,387
Debt-to-equity ratio
  1.800
  1.920
  2.020
  2.120
  2.210
  2.290
  2.370
  2.440
  2.500
  2.560
  2.620
  2.670
  2.720
  2.770
  2.810
  2.850
  2.890
  2.930
  2.960
  2.990
  3.020
  3.050
  3.080
  3.110
  3.130
  3.150
  3.180
  3.200
  3.220
  3.240
Adjusted equity ratio
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -147
  -154
  -160
  -168
Depreciation, amort., depletion, $m
  39
  41
  44
  46
  49
  52
  54
  57
  60
  63
  61
  64
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
  126
  133
  140
  147
  154
  162
Funds from operations, $m
  -10
  -10
  -10
  -10
  -10
  -10
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -10
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -9
  -9
  -8
  -8
  -7
  -7
  -6
  -5
Change in working capital, $m
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
Cash from operations, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  -1
  0
  1
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
Maintenance CAPEX, $m
  -31
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -109
  -114
  -120
  -126
  -133
  -140
  -147
  -154
New CAPEX, $m
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -57
  -59
  -62
  -65
Cash from investing activities, $m
  -49
  -53
  -56
  -58
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -99
  -104
  -110
  -116
  -121
  -128
  -134
  -141
  -148
  -156
  -163
  -171
  -180
  -190
  -199
  -209
  -219
Free cash flow, $m
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -106
  -111
  -116
  -122
  -127
  -133
  -139
  -146
  -152
  -159
  -167
  -174
  -182
  -190
  -199
  -208
Issuance/(repayment) of debt, $m
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  79
  82
  86
  91
Issuance/(repurchase) of shares, $m
  56
  59
  62
  64
  67
  71
  74
  77
  80
  84
  82
  86
  90
  94
  99
  103
  108
  113
  118
  124
  129
  135
  141
  148
  154
  161
  169
  176
  184
  193
Cash from financing (excl. dividends), $m  
  81
  85
  89
  92
  97
  102
  106
  110
  115
  120
  120
  126
  131
  137
  144
  150
  157
  165
  172
  181
  188
  197
  206
  216
  225
  236
  248
  258
  270
  284
Total cash flow (excl. dividends), $m
  27
  27
  28
  29
  30
  31
  32
  33
  35
  36
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
  65
  68
  72
  75
Retained Cash Flow (-), $m
  -56
  -59
  -62
  -64
  -67
  -71
  -74
  -77
  -80
  -84
  -82
  -86
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -124
  -129
  -135
  -141
  -148
  -154
  -161
  -169
  -176
  -184
  -193
Prev. year cash balance distribution, $m
  71
  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
  42
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -118
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
  40
  -29
  -29
  -29
  -29
  -29
  -28
  -27
  -26
  -25
  -24
  -23
  -21
  -20
  -18
  -16
  -15
  -13
  -11
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  76.8
  59.3
  46.0
  35.8
  28.0
  22.0
  17.3
  13.7
  10.8
  8.6
  6.9
  5.6
  4.5
  3.7
  3.0
  2.4
  2.0
  1.6
  1.3
  1.1
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.2

Drive Shack Inc., formerly Newcastle Investment Corp., is a leisure company. The Company is an owner and operator of golf-related leisure and entertainment businesses. The Company’s portfolio consists of Drive Shack, which is engaged in developing nationwide network of golf entertainment venues; American Golf Corporation, which is a golf course company, and real estate-related assets. American Golf Corporation operates approximately 90 private, resort and public golf courses throughout the United States. It has a range of public and private golf courses in California, New York, and Georgia. It operates multiple facilities that provide golf, tennis, swimming and spa facilities, among others. Its online Pro Shop offers a range of golf gifts, such as personalized golf balls, golf luggage and accessories. Its public golf courses equipped with practice areas, golf shops, driving ranges, and food and beverage options.

FINANCIAL RATIOS  of  Drive Shack Inc. (DS)

Valuation Ratios
P/E Ratio 4.1
Price to Sales 0.8
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 106
Price to Free Cash Flow 106
Growth Rates
Sales Growth Rate -0.8%
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 0
Current Ratio NaN
LT Debt to Equity 74.3%
Total Debt to Equity 351.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital 7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 36%
Return On Equity - 3 Yr. Avg. 16.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 81%
Gross Margin - 3 Yr. Avg. 76.9%
EBITDA Margin 30.1%
EBITDA Margin - 3 Yr. Avg. 36.3%
Operating Margin 20.6%
Oper. Margin - 3 Yr. Avg. 6.4%
Pre-Tax Margin 20.1%
Pre-Tax Margin - 3 Yr. Avg. 13.9%
Net Profit Margin 19.8%
Net Profit Margin - 3 Yr. Avg. 11.1%
Effective Tax Rate 1.3%
Eff/ Tax Rate - 3 Yr. Avg. 0.4%
Payout Ratio 49.4%

DS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DS stock intrinsic value calculation we used $293 million for the last fiscal year's total revenue generated by Drive Shack Inc.. The default revenue input number comes from 0001 income statement of Drive Shack 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 DS stock valuation model: a) initial revenue growth rate of 7% 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 DS is calculated based on our internal credit rating of Drive Shack 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 Drive Shack 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 DS stock the variable cost ratio is equal to 103.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for DS 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 Drive Shack Inc..

Corporate tax rate of 27% is the nominal tax rate for Drive Shack 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 DS 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 DS are equal to 88.7%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Drive Shack 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 DS is equal to -22.9%. 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 - $171.051 million for Drive Shack 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 67.026 million for Drive Shack 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 Drive Shack Inc. at the current share price and the inputted number of shares is $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
DS Drive Shack In 4.76 0.42  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.