Intrinsic value of Emerald Expositions Events - EEX

Previous Close

$11.21

  Intrinsic Value

$24.98

stock screener

  Rating & Target

str. buy

+123%

Previous close

$11.21

 
Intrinsic value

$24.98

 
Up/down potential

+123%

 
Rating

str. buy

We calculate the intrinsic value of EEX 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 0.8

 

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, %
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
Revenue, $m
  358
  375
  394
  413
  433
  454
  476
  499
  524
  550
  577
  605
  635
  667
  700
  734
  771
  809
  849
  892
  936
  983
  1,031
  1,083
  1,137
  1,194
  1,253
  1,316
  1,381
  1,450
Variable operating expenses, $m
  240
  244
  248
  253
  258
  263
  268
  274
  279
  286
  138
  145
  152
  160
  168
  176
  185
  194
  204
  214
  224
  236
  247
  260
  272
  286
  300
  315
  331
  348
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
  240
  244
  248
  253
  258
  263
  268
  274
  279
  286
  138
  145
  152
  160
  168
  176
  185
  194
  204
  214
  224
  236
  247
  260
  272
  286
  300
  315
  331
  348
Operating income, $m
  118
  132
  145
  160
  175
  191
  208
  226
  244
  264
  439
  460
  483
  507
  532
  558
  586
  615
  646
  678
  712
  747
  784
  823
  864
  907
  953
  1,000
  1,050
  1,103
EBITDA, $m
  299
  313
  328
  344
  361
  379
  397
  417
  437
  458
  481
  505
  530
  556
  584
  613
  643
  675
  708
  744
  781
  819
  860
  903
  948
  995
  1,045
  1,097
  1,152
  1,209
Interest expense (income), $m
  46
  34
  36
  39
  42
  45
  48
  51
  55
  58
  62
  66
  70
  75
  80
  84
  90
  95
  101
  107
  113
  120
  126
  134
  141
  149
  158
  167
  176
  186
  196
Earnings before tax, $m
  85
  95
  106
  118
  130
  143
  157
  171
  186
  202
  372
  390
  408
  427
  448
  469
  491
  514
  539
  565
  592
  621
  650
  682
  715
  750
  786
  824
  864
  907
Tax expense, $m
  23
  26
  29
  32
  35
  39
  42
  46
  50
  55
  101
  105
  110
  115
  121
  127
  133
  139
  146
  153
  160
  168
  176
  184
  193
  202
  212
  223
  233
  245
Net income, $m
  62
  70
  78
  86
  95
  105
  115
  125
  136
  147
  272
  285
  298
  312
  327
  342
  358
  376
  394
  412
  432
  453
  475
  498
  522
  547
  574
  602
  631
  662

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
  1,713
  1,796
  1,883
  1,974
  2,070
  2,171
  2,278
  2,389
  2,507
  2,630
  2,760
  2,896
  3,039
  3,190
  3,348
  3,514
  3,688
  3,871
  4,064
  4,266
  4,478
  4,701
  4,935
  5,181
  5,439
  5,711
  5,995
  6,294
  6,608
  6,938
Adjusted assets (=assets-cash), $m
  1,713
  1,796
  1,883
  1,974
  2,070
  2,171
  2,278
  2,389
  2,507
  2,630
  2,760
  2,896
  3,039
  3,190
  3,348
  3,514
  3,688
  3,871
  4,064
  4,266
  4,478
  4,701
  4,935
  5,181
  5,439
  5,711
  5,995
  6,294
  6,608
  6,938
Revenue / Adjusted assets
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
Average production assets, $m
  792
  830
  870
  913
  957
  1,004
  1,053
  1,105
  1,159
  1,216
  1,276
  1,339
  1,405
  1,475
  1,548
  1,624
  1,705
  1,790
  1,879
  1,972
  2,070
  2,173
  2,282
  2,395
  2,515
  2,640
  2,772
  2,910
  3,055
  3,208
Working capital, $m
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -217
  -228
  -239
  -251
  -263
  -276
  -290
  -304
  -320
  -335
  -352
  -370
  -388
  -407
  -428
  -449
  -471
  -495
  -520
  -546
  -573
Total debt, $m
  594
  638
  685
  734
  785
  839
  896
  956
  1,019
  1,085
  1,154
  1,227
  1,304
  1,384
  1,469
  1,557
  1,651
  1,749
  1,852
  1,960
  2,073
  2,193
  2,318
  2,449
  2,588
  2,733
  2,885
  3,045
  3,213
  3,389
Total liabilities, $m
  917
  961
  1,007
  1,056
  1,108
  1,162
  1,219
  1,278
  1,341
  1,407
  1,477
  1,549
  1,626
  1,707
  1,791
  1,880
  1,973
  2,071
  2,174
  2,282
  2,396
  2,515
  2,640
  2,772
  2,910
  3,055
  3,208
  3,368
  3,536
  3,712
Total equity, $m
  797
  835
  876
  918
  963
  1,010
  1,059
  1,111
  1,166
  1,223
  1,283
  1,347
  1,413
  1,483
  1,557
  1,634
  1,715
  1,800
  1,890
  1,984
  2,082
  2,186
  2,295
  2,409
  2,529
  2,655
  2,788
  2,927
  3,073
  3,226
Total liabilities and equity, $m
  1,714
  1,796
  1,883
  1,974
  2,071
  2,172
  2,278
  2,389
  2,507
  2,630
  2,760
  2,896
  3,039
  3,190
  3,348
  3,514
  3,688
  3,871
  4,064
  4,266
  4,478
  4,701
  4,935
  5,181
  5,439
  5,710
  5,996
  6,295
  6,609
  6,938
Debt-to-equity ratio
  0.750
  0.760
  0.780
  0.800
  0.820
  0.830
  0.850
  0.860
  0.870
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.020
  1.020
  1.030
  1.030
  1.040
  1.050
  1.050
Adjusted equity ratio
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  62
  70
  78
  86
  95
  105
  115
  125
  136
  147
  272
  285
  298
  312
  327
  342
  358
  376
  394
  412
  432
  453
  475
  498
  522
  547
  574
  602
  631
  662
Depreciation, amort., depletion, $m
  180
  182
  183
  184
  186
  187
  189
  191
  193
  194
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  84
  88
  92
  97
  102
  107
Funds from operations, $m
  242
  251
  261
  270
  281
  292
  303
  316
  328
  342
  314
  329
  345
  361
  378
  396
  415
  435
  456
  478
  501
  525
  551
  578
  606
  635
  666
  699
  733
  769
Change in working capital, $m
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
Cash from operations, $m
  249
  258
  268
  278
  289
  300
  312
  325
  338
  352
  325
  340
  357
  374
  391
  410
  430
  450
  472
  495
  519
  544
  570
  598
  627
  658
  690
  723
  759
  796
Maintenance CAPEX, $m
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
New CAPEX, $m
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -98
  -103
  -108
  -114
  -119
  -125
  -132
  -138
  -145
  -152
Cash from investing activities, $m
  -61
  -64
  -68
  -71
  -74
  -79
  -82
  -87
  -91
  -96
  -101
  -106
  -111
  -117
  -122
  -129
  -135
  -142
  -149
  -156
  -164
  -172
  -180
  -190
  -199
  -209
  -220
  -230
  -242
  -254
Free cash flow, $m
  188
  193
  200
  207
  214
  222
  230
  238
  247
  256
  225
  235
  246
  257
  269
  282
  295
  309
  323
  339
  355
  372
  390
  408
  428
  448
  470
  493
  517
  542
Issuance/(repayment) of debt, $m
  40
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  73
  77
  80
  85
  89
  93
  98
  103
  108
  114
  119
  125
  132
  138
  145
  152
  160
  168
  176
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  
  40
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  73
  77
  80
  85
  89
  93
  98
  103
  108
  114
  119
  125
  132
  138
  145
  152
  160
  168
  176
Total cash flow (excl. dividends), $m
  227
  238
  246
  256
  265
  276
  287
  298
  310
  322
  294
  308
  322
  338
  354
  371
  388
  407
  426
  447
  468
  491
  515
  540
  566
  593
  622
  653
  685
  718
Retained Cash Flow (-), $m
  -36
  -38
  -40
  -43
  -45
  -47
  -49
  -52
  -55
  -57
  -60
  -63
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -132
  -139
  -146
  -153
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
  192
  199
  206
  213
  221
  229
  237
  246
  255
  265
  234
  244
  256
  268
  280
  293
  307
  322
  337
  353
  370
  387
  406
  425
  446
  467
  490
  514
  539
  565
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  179
  173
  165
  156
  147
  137
  127
  116
  105
  95
  71
  63
  55
  47
  40
  33
  27
  22
  17
  14
  10
  8
  6
  4
  3
  2
  1
  1
  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

Emerald Expositions Events, Inc. (Emerald), formerly Expo Event Holdco, Inc, is an operator of business-to-business (B2B) trade shows. The Company operates across multiple sectors, which includes: Gift, Home and General Merchandise; Sports; Design and Construction; Technology; Jewelry; Other Trade Shows; and Other Events. The Company operates more than 50 trade shows, including 31 of the top 250 trade shows. It operates 13 trade shows in the Gift, Home and General Merchandise sector; 18 trade shows in Sports sector; five trade shows in Design and Construction; six trade shows in the Technology sector; six trade shows in Jewelry sector; and remaining 10 trade shows in other sectors . In 2016, its events connected over 500,000 global attendees and exhibitors and occupied over 6.5 million net square foot (NSF) of exhibition space.

FINANCIAL RATIOS  of  Emerald Expositions Events (EEX)

Valuation Ratios
P/E Ratio 31.5
Price to Sales 2.1
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow 7.7
Growth Rates
Sales Growth Rate 5.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 131.3%
Total Debt to Equity 133%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital 1.8%
Ret/ On T. Cap. - 3 Yr. Avg. 1.7%
Return On Equity 4.3%
Return On Equity - 3 Yr. Avg. 4.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 73.8%
Gross Margin - 3 Yr. Avg. 72.1%
EBITDA Margin 37.7%
EBITDA Margin - 3 Yr. Avg. 36.8%
Operating Margin 27.2%
Oper. Margin - 3 Yr. Avg. 25.3%
Pre-Tax Margin 11.1%
Pre-Tax Margin - 3 Yr. Avg. 7.6%
Net Profit Margin 6.8%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 38.9%
Eff/ Tax Rate - 3 Yr. Avg. 110.7%
Payout Ratio 0%

EEX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EEX stock intrinsic value calculation we used $341.7 million for the last fiscal year's total revenue generated by Emerald Expositions Events. The default revenue input number comes from 0001 income statement of Emerald Expositions Events. 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 EEX stock valuation model: a) initial revenue growth rate of 4.8% 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 7%, whose default value for EEX is calculated based on our internal credit rating of Emerald Expositions Events, 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 Emerald Expositions Events.
    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 EEX stock the variable cost ratio is equal to 69%.

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 EEX 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 6.1% for Emerald Expositions Events.

Corporate tax rate of 27% is the nominal tax rate for Emerald Expositions Events. 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 EEX 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 EEX are equal to 221.2%.

Life of production assets of 34.9 years is the average useful life of capital assets used in Emerald Expositions Events 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 EEX is equal to -39.5%. 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 - $761.2 million for Emerald Expositions Events - 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 73.052 million for Emerald Expositions Events 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 Emerald Expositions Events at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Emerald Expositions Reports Fiscal 2017 Financial Results   [Feb-22-18 06:20AM  Business Wire]
▶ Emerald Expositions Declares Quarterly Cash Dividend   [Jan-26-18 04:15PM  Business Wire]

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