Intrinsic value of Global Eagle Entertainment Inc. - ENT

Previous Close

$1.15

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$1.15

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of ENT 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, %
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
Revenue, $m
  670
  723
  777
  834
  894
  955
  1,019
  1,086
  1,155
  1,227
  1,302
  1,380
  1,462
  1,547
  1,635
  1,728
  1,825
  1,926
  2,031
  2,141
  2,257
  2,378
  2,504
  2,636
  2,775
  2,920
  3,072
  3,231
  3,398
  3,573
Variable operating expenses, $m
  874
  941
  1,011
  1,084
  1,159
  1,238
  1,319
  1,404
  1,493
  1,585
  1,661
  1,761
  1,865
  1,973
  2,086
  2,204
  2,327
  2,456
  2,591
  2,731
  2,879
  3,033
  3,194
  3,363
  3,539
  3,724
  3,918
  4,122
  4,334
  4,558
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
  874
  941
  1,011
  1,084
  1,159
  1,238
  1,319
  1,404
  1,493
  1,585
  1,661
  1,761
  1,865
  1,973
  2,086
  2,204
  2,327
  2,456
  2,591
  2,731
  2,879
  3,033
  3,194
  3,363
  3,539
  3,724
  3,918
  4,122
  4,334
  4,558
Operating income, $m
  -204
  -219
  -234
  -249
  -266
  -283
  -300
  -319
  -338
  -358
  -359
  -380
  -403
  -426
  -451
  -476
  -503
  -530
  -560
  -590
  -622
  -655
  -690
  -726
  -764
  -804
  -846
  -890
  -936
  -984
EBITDA, $m
  -109
  -118
  -127
  -136
  -146
  -156
  -166
  -177
  -188
  -200
  -212
  -225
  -238
  -252
  -267
  -282
  -298
  -314
  -331
  -349
  -368
  -388
  -408
  -430
  -453
  -476
  -501
  -527
  -554
  -583
Interest expense (income), $m
  19
  66
  61
  68
  76
  83
  91
  99
  108
  117
  126
  136
  146
  156
  167
  179
  190
  203
  216
  229
  243
  258
  274
  290
  307
  325
  343
  363
  383
  404
  427
Earnings before tax, $m
  -270
  -280
  -302
  -325
  -349
  -374
  -400
  -427
  -455
  -484
  -495
  -526
  -559
  -593
  -629
  -667
  -706
  -746
  -789
  -833
  -880
  -929
  -980
  -1,033
  -1,089
  -1,148
  -1,209
  -1,273
  -1,340
  -1,411
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
  -270
  -280
  -302
  -325
  -349
  -374
  -400
  -427
  -455
  -484
  -495
  -526
  -559
  -593
  -629
  -667
  -706
  -746
  -789
  -833
  -880
  -929
  -980
  -1,033
  -1,089
  -1,148
  -1,209
  -1,273
  -1,340
  -1,411

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
  932
  1,005
  1,081
  1,160
  1,243
  1,329
  1,418
  1,510
  1,606
  1,707
  1,811
  1,920
  2,033
  2,151
  2,275
  2,403
  2,538
  2,678
  2,825
  2,978
  3,139
  3,307
  3,483
  3,667
  3,859
  4,061
  4,273
  4,494
  4,726
  4,970
Adjusted assets (=assets-cash), $m
  932
  1,005
  1,081
  1,160
  1,243
  1,329
  1,418
  1,510
  1,606
  1,707
  1,811
  1,920
  2,033
  2,151
  2,275
  2,403
  2,538
  2,678
  2,825
  2,978
  3,139
  3,307
  3,483
  3,667
  3,859
  4,061
  4,273
  4,494
  4,726
  4,970
Revenue / Adjusted assets
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
Average production assets, $m
  414
  447
  480
  516
  552
  590
  630
  671
  714
  758
  805
  853
  903
  956
  1,011
  1,068
  1,128
  1,190
  1,255
  1,323
  1,395
  1,469
  1,547
  1,629
  1,715
  1,805
  1,898
  1,997
  2,100
  2,208
Working capital, $m
  -47
  -51
  -54
  -58
  -63
  -67
  -71
  -76
  -81
  -86
  -91
  -97
  -102
  -108
  -114
  -121
  -128
  -135
  -142
  -150
  -158
  -166
  -175
  -185
  -194
  -204
  -215
  -226
  -238
  -250
Total debt, $m
  571
  637
  706
  777
  852
  929
  1,009
  1,092
  1,179
  1,269
  1,363
  1,461
  1,563
  1,669
  1,780
  1,896
  2,017
  2,143
  2,275
  2,414
  2,558
  2,709
  2,867
  3,033
  3,206
  3,388
  3,578
  3,778
  3,987
  4,206
Total liabilities, $m
  838
  904
  973
  1,044
  1,119
  1,196
  1,276
  1,359
  1,446
  1,536
  1,630
  1,728
  1,830
  1,936
  2,047
  2,163
  2,284
  2,410
  2,542
  2,681
  2,825
  2,976
  3,134
  3,300
  3,473
  3,655
  3,845
  4,045
  4,254
  4,473
Total equity, $m
  93
  100
  108
  116
  124
  133
  142
  151
  161
  171
  181
  192
  203
  215
  227
  240
  254
  268
  282
  298
  314
  331
  348
  367
  386
  406
  427
  449
  473
  497
Total liabilities and equity, $m
  931
  1,004
  1,081
  1,160
  1,243
  1,329
  1,418
  1,510
  1,607
  1,707
  1,811
  1,920
  2,033
  2,151
  2,274
  2,403
  2,538
  2,678
  2,824
  2,979
  3,139
  3,307
  3,482
  3,667
  3,859
  4,061
  4,272
  4,494
  4,727
  4,970
Debt-to-equity ratio
  6.130
  6.340
  6.530
  6.700
  6.850
  6.990
  7.120
  7.230
  7.340
  7.440
  7.530
  7.610
  7.690
  7.760
  7.830
  7.890
  7.950
  8.000
  8.050
  8.100
  8.150
  8.190
  8.230
  8.270
  8.310
  8.340
  8.380
  8.410
  8.440
  8.460
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
  -270
  -280
  -302
  -325
  -349
  -374
  -400
  -427
  -455
  -484
  -495
  -526
  -559
  -593
  -629
  -667
  -706
  -746
  -789
  -833
  -880
  -929
  -980
  -1,033
  -1,089
  -1,148
  -1,209
  -1,273
  -1,340
  -1,411
Depreciation, amort., depletion, $m
  95
  101
  107
  113
  120
  127
  134
  142
  149
  157
  146
  155
  164
  174
  184
  194
  205
  216
  228
  241
  254
  267
  281
  296
  312
  328
  345
  363
  382
  402
Funds from operations, $m
  -176
  -179
  -195
  -212
  -229
  -247
  -266
  -285
  -305
  -326
  -348
  -371
  -395
  -420
  -445
  -472
  -501
  -530
  -561
  -593
  -626
  -662
  -698
  -737
  -777
  -819
  -864
  -910
  -959
  -1,010
Change in working capital, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from operations, $m
  -172
  -175
  -191
  -208
  -225
  -243
  -261
  -280
  -300
  -321
  -343
  -366
  -389
  -414
  -439
  -466
  -494
  -523
  -553
  -585
  -618
  -653
  -690
  -728
  -767
  -809
  -853
  -899
  -947
  -997
Maintenance CAPEX, $m
  -70
  -75
  -81
  -87
  -94
  -100
  -107
  -115
  -122
  -130
  -138
  -146
  -155
  -164
  -174
  -184
  -194
  -205
  -216
  -228
  -241
  -254
  -267
  -281
  -296
  -312
  -328
  -345
  -363
  -382
New CAPEX, $m
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -98
  -103
  -108
Cash from investing activities, $m
  -102
  -108
  -115
  -122
  -131
  -138
  -147
  -156
  -165
  -175
  -184
  -194
  -205
  -217
  -229
  -241
  -254
  -267
  -281
  -296
  -312
  -329
  -345
  -363
  -382
  -402
  -422
  -443
  -466
  -490
Free cash flow, $m
  -273
  -283
  -306
  -330
  -355
  -381
  -408
  -436
  -465
  -496
  -527
  -560
  -595
  -630
  -668
  -707
  -748
  -790
  -835
  -882
  -930
  -981
  -1,035
  -1,091
  -1,149
  -1,211
  -1,275
  -1,342
  -1,413
  -1,487
Issuance/(repayment) of debt, $m
  -48
  66
  69
  71
  74
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  166
  173
  182
  190
  199
  209
  219
Issuance/(repurchase) of shares, $m
  389
  287
  310
  333
  357
  382
  409
  436
  464
  494
  505
  537
  570
  605
  641
  679
  719
  760
  804
  849
  896
  946
  997
  1,051
  1,108
  1,168
  1,230
  1,295
  1,364
  1,435
Cash from financing (excl. dividends), $m  
  341
  353
  379
  404
  431
  459
  489
  519
  551
  584
  599
  635
  672
  711
  752
  795
  840
  886
  936
  987
  1,040
  1,097
  1,155
  1,217
  1,281
  1,350
  1,420
  1,494
  1,573
  1,654
Total cash flow (excl. dividends), $m
  68
  70
  72
  74
  76
  78
  81
  83
  86
  88
  72
  75
  78
  81
  85
  88
  92
  96
  101
  105
  110
  115
  121
  126
  132
  139
  145
  152
  159
  167
Retained Cash Flow (-), $m
  -389
  -287
  -310
  -333
  -357
  -382
  -409
  -436
  -464
  -494
  -505
  -537
  -570
  -605
  -641
  -679
  -719
  -760
  -804
  -849
  -896
  -946
  -997
  -1,051
  -1,108
  -1,168
  -1,230
  -1,295
  -1,364
  -1,435
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
  -321
  -217
  -238
  -259
  -281
  -304
  -328
  -353
  -379
  -405
  -433
  -462
  -493
  -524
  -557
  -591
  -627
  -664
  -703
  -743
  -786
  -830
  -877
  -925
  -976
  -1,029
  -1,085
  -1,143
  -1,204
  -1,268
Discount rate, %
  15.20
  15.96
  16.76
  17.60
  18.48
  19.40
  20.37
  21.39
  22.46
  23.58
  24.76
  26.00
  27.30
  28.66
  30.09
  31.60
  33.18
  34.84
  36.58
  38.41
  40.33
  42.35
  44.46
  46.69
  49.02
  51.47
  54.05
  56.75
  59.59
  62.57
PV of cash for distribution, $m
  -278
  -161
  -149
  -135
  -120
  -105
  -90
  -75
  -61
  -49
  -38
  -29
  -21
  -15
  -11
  -7
  -5
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  12.3
  3.0
  0.7
  0.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Global Eagle Entertainment Inc. is a provider of aircraft connectivity systems, operations solutions and media content to the travel industry. The Company's segments include Connectivity and Content. Its Connectivity segment provides airline partners and their passengers with Wireless Fidelity (Wi-Fi) connectivity over Ku-band satellite transmissions, and to a lesser extent operations solutions to airline customers. Its Content segment selects, manages and distributes wholly owned and licensed media content, video and music programming, applications, digital advertising solutions and games to over 150 airlines across the world, as well as to maritime and other away-from-home non-theatrical markets. The Company, through its product and services platform, provide airlines with a range of in-flight solutions, including Wi-Fi, movies, television, music, interactive software, as well as portable in-flight entertainment (IFE) solutions, content management services and e-commerce solutions.

FINANCIAL RATIOS  of  Global Eagle Entertainment Inc. (ENT)

Valuation Ratios
P/E Ratio -0.9
Price to Sales 0.2
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -2.7
Price to Free Cash Flow -1.1
Growth Rates
Sales Growth Rate 24.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 157.1%
Cap. Spend. - 3 Yr. Gr. Rate 37.5%
Financial Strength
Quick Ratio 26
Current Ratio 0.1
LT Debt to Equity 156.5%
Total Debt to Equity 157.2%
Interest Coverage -7
Management Effectiveness
Return On Assets -11.4%
Ret/ On Assets - 3 Yr. Avg. -7.2%
Return On Total Capital -18.9%
Ret/ On T. Cap. - 3 Yr. Avg. -12.1%
Return On Equity -34.6%
Return On Equity - 3 Yr. Avg. -17.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 30.9%
Gross Margin - 3 Yr. Avg. 30.9%
EBITDA Margin -15.5%
EBITDA Margin - 3 Yr. Avg. -3.4%
Operating Margin -30.6%
Oper. Margin - 3 Yr. Avg. -14.1%
Pre-Tax Margin -29.8%
Pre-Tax Margin - 3 Yr. Avg. -14.1%
Net Profit Margin -21.3%
Net Profit Margin - 3 Yr. Avg. -12.2%
Effective Tax Rate 28.5%
Eff/ Tax Rate - 3 Yr. Avg. -30.9%
Payout Ratio 0%

ENT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENT stock intrinsic value calculation we used $619 million for the last fiscal year's total revenue generated by Global Eagle Entertainment Inc.. The default revenue input number comes from 0001 income statement of Global Eagle Entertainment 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 ENT stock valuation model: a) initial revenue growth rate of 8.2% 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 15.2%, whose default value for ENT is calculated based on our internal credit rating of Global Eagle Entertainment 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 Global Eagle Entertainment 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 ENT stock the variable cost ratio is equal to 130.7%.

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 ENT 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 10.7% for Global Eagle Entertainment Inc..

Corporate tax rate of 27% is the nominal tax rate for Global Eagle Entertainment 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 ENT 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 ENT are equal to 61.8%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Global Eagle Entertainment 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 ENT is equal to -7%. 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 - $-25.475 million for Global Eagle Entertainment 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 91.698 million for Global Eagle Entertainment 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 Global Eagle Entertainment Inc. at the current share price and the inputted number of shares is $0.1 billion.

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