Intrinsic value of Dover Motorsports, Inc. - DVD

Previous Close

$2.00

  Intrinsic Value

$0.43

stock screener

  Rating & Target

str. sell

-79%

Previous close

$2.00

 
Intrinsic value

$0.43

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of DVD 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, %
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.62
  8.25
  7.93
  7.64
  7.37
  7.14
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
Revenue, $m
  53
  60
  67
  75
  82
  91
  99
  108
  117
  127
  137
  148
  159
  170
  182
  194
  207
  220
  233
  248
  263
  278
  295
  311
  329
  348
  367
  387
  408
  430
Variable operating expenses, $m
  45
  51
  57
  63
  70
  77
  84
  92
  100
  108
  117
  126
  135
  145
  155
  165
  176
  187
  199
  211
  224
  237
  251
  265
  280
  296
  312
  329
  347
  366
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
  45
  51
  57
  63
  70
  77
  84
  92
  100
  108
  117
  126
  135
  145
  155
  165
  176
  187
  199
  211
  224
  237
  251
  265
  280
  296
  312
  329
  347
  366
Operating income, $m
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
EBITDA, $m
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  85
  89
  94
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
Earnings before tax, $m
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  37
  40
  42
  44
  47
  49
  52
  55
  57
Tax expense, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
Net income, $m
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42

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
  90
  101
  113
  125
  138
  152
  167
  182
  197
  214
  231
  248
  266
  285
  305
  326
  347
  369
  392
  417
  442
  468
  495
  523
  553
  584
  616
  650
  686
  723
Adjusted assets (=assets-cash), $m
  90
  101
  113
  125
  138
  152
  167
  182
  197
  214
  231
  248
  266
  285
  305
  326
  347
  369
  392
  417
  442
  468
  495
  523
  553
  584
  616
  650
  686
  723
Revenue / Adjusted assets
  0.589
  0.594
  0.593
  0.600
  0.594
  0.599
  0.593
  0.593
  0.594
  0.593
  0.593
  0.597
  0.598
  0.596
  0.597
  0.595
  0.597
  0.596
  0.594
  0.595
  0.595
  0.594
  0.596
  0.595
  0.595
  0.596
  0.596
  0.595
  0.595
  0.595
Average production assets, $m
  83
  93
  104
  116
  128
  141
  154
  168
  183
  198
  213
  230
  247
  264
  283
  302
  321
  342
  363
  386
  409
  433
  458
  485
  512
  541
  571
  602
  635
  669
Working capital, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
Total debt, $m
  2
  4
  7
  9
  12
  15
  18
  21
  24
  27
  31
  34
  38
  42
  46
  50
  54
  59
  64
  68
  74
  79
  84
  90
  96
  103
  109
  116
  123
  131
Total liabilities, $m
  18
  20
  23
  25
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  70
  75
  80
  85
  90
  95
  100
  106
  112
  119
  125
  132
  139
  147
Total equity, $m
  71
  80
  90
  100
  110
  121
  133
  145
  157
  170
  184
  198
  212
  227
  243
  260
  277
  294
  313
  332
  352
  373
  394
  417
  441
  466
  491
  518
  546
  576
Total liabilities and equity, $m
  89
  100
  113
  125
  138
  152
  167
  182
  197
  213
  231
  248
  266
  285
  305
  326
  347
  369
  393
  417
  442
  468
  494
  523
  553
  585
  616
  650
  685
  723
Debt-to-equity ratio
  0.030
  0.050
  0.080
  0.090
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.210
  0.220
  0.220
  0.220
  0.220
  0.220
  0.230
  0.230
Adjusted equity ratio
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
Depreciation, amort., depletion, $m
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  28
  30
Funds from operations, $m
  10
  11
  12
  13
  14
  16
  17
  19
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
  61
  65
  68
  72
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  10
  11
  12
  13
  15
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  36
  38
  40
  42
  45
  48
  50
  53
  56
  59
  62
  66
  69
  73
Maintenance CAPEX, $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
New CAPEX, $m
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
Cash from investing activities, $m
  -13
  -14
  -15
  -17
  -17
  -19
  -19
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -62
Free cash flow, $m
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  7
  8
  9
  10
  10
Issuance/(repayment) of debt, $m
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
Issuance/(repurchase) of shares, $m
  3
  3
  2
  2
  2
  2
  1
  1
  1
  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  
  5
  5
  4
  5
  5
  5
  4
  4
  4
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
Total cash flow (excl. dividends), $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
Retained Cash Flow (-), $m
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
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
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -10
  -10
  -10
  -10
  -10
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -11
  -12
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
  -7
  -7
  -7
  -7
  -7
  -7
  -6
  -6
  -6
  -6
  -5
  -5
  -4
  -4
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.4
  93.6
  91.3
  89.5
  88.0
  86.9
  86.1
  85.6
  85.4
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3
  85.3

Dover Motorsports, Inc. is a marketer and promoter of motorsports entertainment in the United States. The Company, through its subsidiaries, owns and operates Dover International Speedway in Dover, Delaware, and Nashville Superspeedway near Nashville, Tennessee. The Dover International Speedway is located in Dover, Delaware, on approximately 770 acres of land. The Nashville Superspeedway is a motorsports complex located on approximately 1,400 acres of land in Wilson County and Rutherford County, Tennessee. The Company promotes approximately six National Association for Stock Car Auto Racing (NASCAR)-sanctioned events at the Dover International Speedway, including two races in the NASCAR Sprint Cup Series professional stock car racing circuit, two races in the NASCAR XFINITY Series racing circuit, one race in the NASCAR Camping World Truck Series racing circuit and one race in the NASCAR K&N Pro Series East racing circuit.

FINANCIAL RATIOS  of  Dover Motorsports, Inc. (DVD)

Valuation Ratios
P/E Ratio 18.4
Price to Sales 1.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 18.4
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 200%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.6
LT Debt to Equity 7.4%
Total Debt to Equity 7.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 5%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.8%
Return On Equity 7.5%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 39.1%
Gross Margin - 3 Yr. Avg. 40.3%
EBITDA Margin 19.6%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin 15.2%
Oper. Margin - 3 Yr. Avg. 15.8%
Pre-Tax Margin 13%
Pre-Tax Margin - 3 Yr. Avg. 14.4%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 39.3%
Payout Ratio 50%

DVD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DVD stock intrinsic value calculation we used $47 million for the last fiscal year's total revenue generated by Dover Motorsports, Inc.. The default revenue input number comes from 0001 income statement of Dover Motorsports, 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 DVD stock valuation model: a) initial revenue growth rate of 13.4% 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 DVD is calculated based on our internal credit rating of Dover Motorsports, 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 Dover Motorsports, 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 DVD stock the variable cost ratio is equal to 85.1%.

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 DVD 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 Dover Motorsports, Inc..

Corporate tax rate of 27% is the nominal tax rate for Dover Motorsports, 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 DVD 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 DVD are equal to 155.6%.

Life of production assets of 22.3 years is the average useful life of capital assets used in Dover Motorsports, 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 DVD is equal to -4.8%. 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 - $62.888 million for Dover Motorsports, 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 36.652 million for Dover Motorsports, 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 Dover Motorsports, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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