Intrinsic value of Eldorado Resorts, Inc. - ERI

Previous Close

$51.70

  Intrinsic Value

$623.62

stock screener

  Rating & Target

str. buy

+999%

Previous close

$51.70

 
Intrinsic value

$623.62

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of ERI 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 4.0

 

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, %
  56.30
  51.17
  46.55
  42.40
  38.66
  35.29
  32.26
  29.54
  27.08
  24.87
  22.89
  21.10
  19.49
  18.04
  16.74
  15.56
  14.51
  13.56
  12.70
  11.93
  11.24
  10.61
  10.05
  9.55
  9.09
  8.68
  8.31
  7.98
  7.68
  7.42
Revenue, $m
  3,214
  4,858
  7,119
  10,138
  14,057
  19,018
  25,154
  32,583
  41,408
  51,708
  63,542
  76,949
  91,945
  108,531
  126,695
  146,412
  167,650
  190,376
  214,553
  240,149
  267,134
  295,486
  325,187
  356,232
  388,621
  422,364
  457,482
  494,003
  531,966
  571,418
Variable operating expenses, $m
  1,849
  2,648
  3,747
  5,213
  7,117
  9,527
  12,507
  16,116
  20,403
  25,407
  30,867
  37,380
  44,665
  52,722
  61,545
  71,123
  81,440
  92,480
  104,225
  116,659
  129,767
  143,540
  157,968
  173,049
  188,783
  205,174
  222,234
  239,975
  258,416
  277,581
Fixed operating expenses, $m
  479
  490
  501
  512
  523
  534
  546
  558
  570
  583
  596
  609
  622
  636
  650
  664
  679
  694
  709
  725
  741
  757
  774
  791
  808
  826
  844
  863
  882
  901
Total operating expenses, $m
  2,328
  3,138
  4,248
  5,725
  7,640
  10,061
  13,053
  16,674
  20,973
  25,990
  31,463
  37,989
  45,287
  53,358
  62,195
  71,787
  82,119
  93,174
  104,934
  117,384
  130,508
  144,297
  158,742
  173,840
  189,591
  206,000
  223,078
  240,838
  259,298
  278,482
Operating income, $m
  885
  1,720
  2,872
  4,413
  6,417
  8,957
  12,100
  15,909
  20,434
  25,718
  32,079
  38,960
  46,658
  55,173
  64,500
  74,624
  85,531
  97,202
  109,619
  122,766
  136,626
  151,189
  166,445
  182,392
  199,030
  216,364
  234,404
  253,165
  272,668
  292,936
EBITDA, $m
  1,360
  2,290
  3,574
  5,290
  7,521
  10,349
  13,848
  18,088
  23,126
  29,007
  35,767
  43,426
  51,994
  61,472
  71,853
  83,121
  95,261
  108,251
  122,071
  136,703
  152,130
  168,338
  185,318
  203,067
  221,584
  240,877
  260,955
  281,836
  303,542
  326,099
Interest expense (income), $m
  48
  228
  376
  587
  877
  1,264
  1,766
  2,402
  3,188
  4,141
  5,272
  6,592
  8,109
  9,827
  11,749
  13,875
  16,203
  18,730
  21,452
  24,365
  27,464
  30,745
  34,204
  37,837
  41,644
  45,623
  49,775
  54,100
  58,601
  63,282
  68,148
Earnings before tax, $m
  657
  1,344
  2,285
  3,536
  5,153
  7,191
  9,698
  12,720
  16,293
  20,446
  25,487
  30,851
  36,831
  43,424
  50,624
  58,421
  66,800
  75,749
  85,254
  95,301
  105,881
  116,985
  128,608
  140,748
  153,407
  166,589
  180,304
  194,565
  209,386
  224,788
Tax expense, $m
  177
  363
  617
  955
  1,391
  1,941
  2,619
  3,434
  4,399
  5,521
  6,882
  8,330
  9,944
  11,725
  13,669
  15,774
  18,036
  20,452
  23,019
  25,731
  28,588
  31,586
  34,724
  38,002
  41,420
  44,979
  48,682
  52,532
  56,534
  60,693
Net income, $m
  480
  981
  1,668
  2,582
  3,762
  5,249
  7,080
  9,286
  11,894
  14,926
  18,606
  22,521
  26,887
  31,700
  36,956
  42,647
  48,764
  55,297
  62,235
  69,570
  77,293
  85,399
  93,884
  102,746
  111,987
  121,610
  131,622
  142,032
  152,852
  164,095

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
  9,234
  13,959
  20,458
  29,132
  40,393
  54,649
  72,281
  93,630
  118,988
  148,585
  182,592
  221,117
  264,209
  311,872
  364,066
  420,723
  481,753
  547,056
  616,532
  690,083
  767,627
  849,097
  934,447
  1,023,656
  1,116,726
  1,213,690
  1,314,602
  1,419,548
  1,528,637
  1,642,006
Adjusted assets (=assets-cash), $m
  9,234
  13,959
  20,458
  29,132
  40,393
  54,649
  72,281
  93,630
  118,988
  148,585
  182,592
  221,117
  264,209
  311,872
  364,066
  420,723
  481,753
  547,056
  616,532
  690,083
  767,627
  849,097
  934,447
  1,023,656
  1,116,726
  1,213,690
  1,314,602
  1,419,548
  1,528,637
  1,642,006
Revenue / Adjusted assets
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
Average production assets, $m
  5,036
  7,612
  11,156
  15,886
  22,027
  29,801
  39,416
  51,058
  64,886
  81,026
  99,571
  120,578
  144,077
  170,069
  198,531
  229,427
  262,708
  298,319
  336,205
  376,313
  418,599
  463,026
  509,569
  558,216
  608,969
  661,844
  716,874
  774,102
  833,590
  895,412
Working capital, $m
  -157
  -238
  -349
  -497
  -689
  -932
  -1,233
  -1,597
  -2,029
  -2,534
  -3,114
  -3,770
  -4,505
  -5,318
  -6,208
  -7,174
  -8,215
  -9,328
  -10,513
  -11,767
  -13,090
  -14,479
  -15,934
  -17,455
  -19,042
  -20,696
  -22,417
  -24,206
  -26,066
  -27,999
Total debt, $m
  6,967
  10,870
  16,238
  23,402
  32,704
  44,479
  59,043
  76,677
  97,623
  122,071
  150,161
  181,982
  217,576
  256,945
  300,058
  346,856
  397,267
  451,208
  508,594
  569,348
  633,399
  700,693
  771,192
  844,879
  921,755
  1,001,847
  1,085,201
  1,171,886
  1,261,994
  1,355,636
Total liabilities, $m
  7,628
  11,531
  16,898
  24,063
  33,365
  45,140
  59,704
  77,338
  98,284
  122,731
  150,821
  182,642
  218,237
  257,606
  300,719
  347,517
  397,928
  451,869
  509,255
  570,009
  634,060
  701,354
  771,853
  845,539
  922,416
  1,002,508
  1,085,862
  1,172,547
  1,262,654
  1,356,297
Total equity, $m
  1,607
  2,429
  3,560
  5,069
  7,028
  9,509
  12,577
  16,292
  20,704
  25,854
  31,771
  38,474
  45,972
  54,266
  63,347
  73,206
  83,825
  95,188
  107,277
  120,074
  133,567
  147,743
  162,594
  178,116
  194,310
  211,182
  228,741
  247,001
  265,983
  285,709
Total liabilities and equity, $m
  9,235
  13,960
  20,458
  29,132
  40,393
  54,649
  72,281
  93,630
  118,988
  148,585
  182,592
  221,116
  264,209
  311,872
  364,066
  420,723
  481,753
  547,057
  616,532
  690,083
  767,627
  849,097
  934,447
  1,023,655
  1,116,726
  1,213,690
  1,314,603
  1,419,548
  1,528,637
  1,642,006
Debt-to-equity ratio
  4.340
  4.480
  4.560
  4.620
  4.650
  4.680
  4.690
  4.710
  4.720
  4.720
  4.730
  4.730
  4.730
  4.730
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
  4.740
Adjusted equity ratio
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  480
  981
  1,668
  2,582
  3,762
  5,249
  7,080
  9,286
  11,894
  14,926
  18,606
  22,521
  26,887
  31,700
  36,956
  42,647
  48,764
  55,297
  62,235
  69,570
  77,293
  85,399
  93,884
  102,746
  111,987
  121,610
  131,622
  142,032
  152,852
  164,095
Depreciation, amort., depletion, $m
  475
  570
  701
  877
  1,104
  1,392
  1,748
  2,179
  2,691
  3,289
  3,688
  4,466
  5,336
  6,299
  7,353
  8,497
  9,730
  11,049
  12,452
  13,938
  15,504
  17,149
  18,873
  20,675
  22,554
  24,513
  26,551
  28,670
  30,874
  33,163
Funds from operations, $m
  954
  1,551
  2,370
  3,458
  4,866
  6,641
  8,828
  11,465
  14,586
  18,215
  22,293
  26,987
  32,223
  37,999
  44,309
  51,144
  58,494
  66,346
  74,687
  83,508
  92,797
  102,548
  112,757
  123,421
  134,541
  146,123
  158,173
  170,703
  183,726
  197,259
Change in working capital, $m
  -57
  -81
  -111
  -148
  -192
  -243
  -301
  -364
  -432
  -505
  -580
  -657
  -735
  -813
  -890
  -966
  -1,041
  -1,114
  -1,185
  -1,254
  -1,322
  -1,389
  -1,455
  -1,521
  -1,587
  -1,653
  -1,721
  -1,790
  -1,860
  -1,933
Cash from operations, $m
  1,011
  1,632
  2,480
  3,606
  5,058
  6,884
  9,129
  11,829
  15,018
  18,720
  22,873
  27,644
  32,958
  38,811
  45,199
  52,111
  59,535
  67,459
  75,872
  84,762
  94,119
  103,938
  114,212
  124,942
  136,128
  147,776
  159,894
  172,492
  185,586
  199,192
Maintenance CAPEX, $m
  -119
  -187
  -282
  -413
  -588
  -816
  -1,104
  -1,460
  -1,891
  -2,403
  -3,001
  -3,688
  -4,466
  -5,336
  -6,299
  -7,353
  -8,497
  -9,730
  -11,049
  -12,452
  -13,938
  -15,504
  -17,149
  -18,873
  -20,675
  -22,554
  -24,513
  -26,551
  -28,670
  -30,874
New CAPEX, $m
  -1,814
  -2,577
  -3,544
  -4,730
  -6,141
  -7,774
  -9,615
  -11,642
  -13,828
  -16,140
  -18,545
  -21,008
  -23,499
  -25,991
  -28,462
  -30,896
  -33,281
  -35,611
  -37,886
  -40,109
  -42,286
  -44,427
  -46,543
  -48,647
  -50,753
  -52,876
  -55,029
  -57,229
  -59,488
  -61,822
Cash from investing activities, $m
  -1,933
  -2,764
  -3,826
  -5,143
  -6,729
  -8,590
  -10,719
  -13,102
  -15,719
  -18,543
  -21,546
  -24,696
  -27,965
  -31,327
  -34,761
  -38,249
  -41,778
  -45,341
  -48,935
  -52,561
  -56,224
  -59,931
  -63,692
  -67,520
  -71,428
  -75,430
  -79,542
  -83,780
  -88,158
  -92,696
Free cash flow, $m
  -923
  -1,132
  -1,345
  -1,537
  -1,671
  -1,705
  -1,590
  -1,273
  -701
  176
  1,328
  2,948
  4,993
  7,484
  10,438
  13,862
  17,757
  22,118
  26,937
  32,201
  37,896
  44,007
  50,520
  57,422
  64,700
  72,346
  80,352
  88,713
  97,427
  106,497
Issuance/(repayment) of debt, $m
  2,745
  3,903
  5,368
  7,164
  9,302
  11,775
  14,564
  17,634
  20,945
  24,448
  28,090
  31,821
  35,594
  39,369
  43,112
  46,798
  50,411
  53,941
  57,387
  60,753
  64,051
  67,294
  70,499
  73,686
  76,877
  80,092
  83,354
  86,685
  90,108
  93,642
Issuance/(repurchase) of shares, $m
  98
  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  
  2,843
  3,903
  5,368
  7,164
  9,302
  11,775
  14,564
  17,634
  20,945
  24,448
  28,090
  31,821
  35,594
  39,369
  43,112
  46,798
  50,411
  53,941
  57,387
  60,753
  64,051
  67,294
  70,499
  73,686
  76,877
  80,092
  83,354
  86,685
  90,108
  93,642
Total cash flow (excl. dividends), $m
  1,921
  2,771
  4,022
  5,627
  7,631
  10,070
  12,974
  16,362
  20,245
  24,624
  29,418
  34,769
  40,587
  46,853
  53,550
  60,660
  68,168
  76,059
  84,324
  92,954
  101,947
  111,301
  121,019
  131,108
  141,577
  152,438
  163,706
  175,398
  187,535
  200,139
Retained Cash Flow (-), $m
  -578
  -822
  -1,131
  -1,509
  -1,960
  -2,480
  -3,068
  -3,715
  -4,412
  -5,150
  -5,917
  -6,703
  -7,498
  -8,293
  -9,082
  -9,858
  -10,619
  -11,363
  -12,089
  -12,798
  -13,493
  -14,176
  -14,851
  -15,522
  -16,194
  -16,872
  -17,559
  -18,261
  -18,981
  -19,726
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
  1,343
  1,949
  2,892
  4,118
  5,671
  7,589
  9,906
  12,647
  15,832
  19,474
  23,500
  28,066
  33,089
  38,560
  44,468
  50,802
  57,549
  64,696
  72,235
  80,157
  88,454
  97,125
  106,169
  115,586
  125,383
  135,566
  146,147
  157,137
  168,553
  180,413
Discount rate, %
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.84
  17.69
  18.57
  19.50
  20.47
  21.50
  22.57
  23.70
  24.88
  26.13
  27.44
  28.81
  30.25
  31.76
  33.35
  35.02
  36.77
  38.60
  40.53
  42.56
  44.69
  46.92
PV of cash for distribution, $m
  1,206
  1,555
  2,027
  2,508
  2,964
  3,359
  3,662
  3,847
  3,901
  3,822
  3,609
  3,310
  2,939
  2,525
  2,100
  1,690
  1,316
  991
  721
  507
  344
  225
  142
  86
  50
  28
  15
  8
  4
  2
Current shareholders' claim on cash, %
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6
  97.6

Eldorado Resorts, Inc. is a gaming and hospitality company that owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. The Company's segments are Nevada, Louisiana, Eastern and Corporate. As of May 1, 2017, the Company owned and operated approximately 503,000 square feet of casino space with approximately 20,000 slot machines and video lottery terminals (VLTs), over 550 table and poker games, 45 restaurants and 6,500 hotel rooms. As of December 31, 2016, the Company owned and operated various properties, including Eldorado Resort Casino Reno (Eldorado Reno), Silver Legacy Resort Casino (Silver Legacy), Circus Circus Reno (Circus Reno), Eldorado Resort Casino Shreveport (Eldorado Shreveport), Mountaineer Casino, Racetrack & Resort (Mountaineer), Presque Isle Downs & Casino (Presque Isle Downs), and Eldorado Gaming Scioto Downs (Scioto Downs).

FINANCIAL RATIOS  of  Eldorado Resorts, Inc. (ERI)

Valuation Ratios
P/E Ratio 97.4
Price to Sales 2.7
Price to Book 8.2
Price to Tangible Book
Price to Cash Flow 24.9
Price to Free Cash Flow 47.8
Growth Rates
Sales Growth Rate 24%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 27%
Cap. Spend. - 3 Yr. Gr. Rate 46.4%
Financial Strength
Quick Ratio 12
Current Ratio 0
LT Debt to Equity 266.8%
Total Debt to Equity 268.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 9.9%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 16.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 37.3%
Gross Margin - 3 Yr. Avg. 36.9%
EBITDA Margin 16.7%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 10%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. 2.3%
Net Profit Margin 2.8%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 34.2%
Eff/ Tax Rate - 3 Yr. Avg. -42.3%
Payout Ratio 0%

ERI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ERI stock intrinsic value calculation we used $2056 million for the last fiscal year's total revenue generated by Eldorado Resorts, Inc.. The default revenue input number comes from 0001 income statement of Eldorado Resorts, 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 ERI stock valuation model: a) initial revenue growth rate of 56.3% 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 11.4%, whose default value for ERI is calculated based on our internal credit rating of Eldorado Resorts, 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 Eldorado Resorts, 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 ERI stock the variable cost ratio is equal to 62.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $469 million in the base year in the intrinsic value calculation for ERI 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 Eldorado Resorts, Inc..

Corporate tax rate of 27% is the nominal tax rate for Eldorado Resorts, 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 ERI 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 ERI are equal to 156.7%.

Life of production assets of 27 years is the average useful life of capital assets used in Eldorado Resorts, 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 ERI is equal to -4.9%. 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 - $1029.153 million for Eldorado Resorts, 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 77.419 million for Eldorado Resorts, 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 Eldorado Resorts, Inc. at the current share price and the inputted number of shares is $4.0 billion.

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