Intrinsic value of Everi Holdings Inc. - EVRI

Previous Close

$9.60

  Intrinsic Value

$1.37

stock screener

  Rating & Target

str. sell

-86%

Previous close

$9.60

 
Intrinsic value

$1.37

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of EVRI 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 0.7

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  479
  490
  503
  517
  533
  550
  569
  589
  611
  634
  659
  686
  715
  745
  777
  811
  847
  885
  926
  968
  1,013
  1,060
  1,110
  1,163
  1,218
  1,276
  1,338
  1,402
  1,470
  1,542
Variable operating expenses, $m
  438
  446
  455
  465
  476
  489
  502
  517
  532
  549
  475
  494
  514
  536
  559
  584
  610
  637
  666
  697
  729
  763
  799
  837
  877
  918
  963
  1,009
  1,058
  1,109
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
  438
  446
  455
  465
  476
  489
  502
  517
  532
  549
  475
  494
  514
  536
  559
  584
  610
  637
  666
  697
  729
  763
  799
  837
  877
  918
  963
  1,009
  1,058
  1,109
Operating income, $m
  42
  45
  48
  52
  57
  61
  67
  72
  79
  85
  185
  192
  200
  209
  218
  227
  238
  248
  260
  272
  284
  297
  311
  326
  342
  358
  375
  393
  412
  432
EBITDA, $m
  206
  211
  216
  222
  229
  236
  244
  253
  262
  272
  283
  295
  307
  320
  334
  348
  364
  380
  397
  416
  435
  455
  477
  499
  523
  548
  574
  602
  631
  662
Interest expense (income), $m
  93
  83
  66
  68
  71
  74
  77
  81
  84
  89
  93
  98
  104
  109
  115
  122
  128
  135
  143
  151
  159
  168
  178
  188
  198
  209
  221
  233
  246
  260
  274
Earnings before tax, $m
  -41
  -21
  -20
  -18
  -17
  -15
  -14
  -12
  -10
  -8
  87
  89
  91
  94
  96
  99
  102
  105
  109
  112
  116
  120
  124
  128
  132
  137
  142
  147
  153
  158
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  23
  24
  25
  25
  26
  27
  28
  28
  29
  30
  31
  32
  33
  35
  36
  37
  38
  40
  41
  43
Net income, $m
  -41
  -21
  -20
  -18
  -17
  -15
  -14
  -12
  -10
  -8
  63
  65
  67
  68
  70
  72
  75
  77
  79
  82
  84
  87
  90
  93
  97
  100
  104
  107
  111
  116

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
  1,577
  1,613
  1,655
  1,701
  1,753
  1,809
  1,871
  1,938
  2,010
  2,087
  2,169
  2,257
  2,351
  2,451
  2,556
  2,668
  2,787
  2,912
  3,045
  3,185
  3,332
  3,488
  3,652
  3,825
  4,007
  4,199
  4,401
  4,613
  4,836
  5,071
Adjusted assets (=assets-cash), $m
  1,577
  1,613
  1,655
  1,701
  1,753
  1,809
  1,871
  1,938
  2,010
  2,087
  2,169
  2,257
  2,351
  2,451
  2,556
  2,668
  2,787
  2,912
  3,045
  3,185
  3,332
  3,488
  3,652
  3,825
  4,007
  4,199
  4,401
  4,613
  4,836
  5,071
Revenue / Adjusted assets
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
Average production assets, $m
  600
  614
  629
  647
  667
  688
  712
  737
  764
  794
  825
  858
  894
  932
  972
  1,015
  1,060
  1,108
  1,158
  1,211
  1,267
  1,327
  1,389
  1,455
  1,524
  1,597
  1,674
  1,754
  1,839
  1,929
Working capital, $m
  -278
  -284
  -291
  -299
  -309
  -318
  -329
  -341
  -354
  -367
  -382
  -397
  -414
  -431
  -450
  -470
  -491
  -513
  -536
  -561
  -587
  -614
  -643
  -673
  -705
  -739
  -775
  -812
  -851
  -893
Total debt, $m
  925
  958
  995
  1,037
  1,084
  1,135
  1,190
  1,250
  1,315
  1,384
  1,458
  1,538
  1,622
  1,712
  1,807
  1,908
  2,014
  2,127
  2,246
  2,372
  2,505
  2,645
  2,793
  2,949
  3,113
  3,285
  3,467
  3,658
  3,859
  4,070
Total liabilities, $m
  1,419
  1,452
  1,489
  1,531
  1,578
  1,628
  1,684
  1,744
  1,809
  1,878
  1,952
  2,032
  2,116
  2,206
  2,301
  2,402
  2,508
  2,621
  2,740
  2,866
  2,999
  3,139
  3,287
  3,443
  3,606
  3,779
  3,961
  4,152
  4,353
  4,564
Total equity, $m
  158
  161
  165
  170
  175
  181
  187
  194
  201
  209
  217
  226
  235
  245
  256
  267
  279
  291
  304
  318
  333
  349
  365
  383
  401
  420
  440
  461
  484
  507
Total liabilities and equity, $m
  1,577
  1,613
  1,654
  1,701
  1,753
  1,809
  1,871
  1,938
  2,010
  2,087
  2,169
  2,258
  2,351
  2,451
  2,557
  2,669
  2,787
  2,912
  3,044
  3,184
  3,332
  3,488
  3,652
  3,826
  4,007
  4,199
  4,401
  4,613
  4,837
  5,071
Debt-to-equity ratio
  5.870
  5.940
  6.010
  6.100
  6.180
  6.270
  6.360
  6.450
  6.540
  6.630
  6.720
  6.810
  6.900
  6.980
  7.070
  7.150
  7.230
  7.300
  7.380
  7.450
  7.520
  7.580
  7.650
  7.710
  7.770
  7.820
  7.880
  7.930
  7.980
  8.030
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
  -41
  -21
  -20
  -18
  -17
  -15
  -14
  -12
  -10
  -8
  63
  65
  67
  68
  70
  72
  75
  77
  79
  82
  84
  87
  90
  93
  97
  100
  104
  107
  111
  116
Depreciation, amort., depletion, $m
  164
  166
  168
  170
  172
  175
  178
  181
  184
  187
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  165
  173
  181
  190
  199
  209
  219
  230
Funds from operations, $m
  123
  145
  148
  151
  155
  159
  164
  168
  174
  179
  161
  167
  173
  179
  186
  193
  201
  209
  217
  226
  235
  245
  256
  266
  278
  290
  303
  316
  330
  345
Change in working capital, $m
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
Cash from operations, $m
  129
  151
  155
  160
  164
  169
  175
  180
  186
  193
  176
  183
  190
  197
  205
  213
  222
  231
  240
  251
  261
  273
  284
  297
  310
  324
  338
  354
  370
  387
Maintenance CAPEX, $m
  -70
  -71
  -73
  -75
  -77
  -79
  -82
  -85
  -88
  -91
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -126
  -132
  -138
  -144
  -151
  -158
  -165
  -173
  -181
  -190
  -199
  -209
  -219
New CAPEX, $m
  -12
  -14
  -16
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -36
  -38
  -40
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -89
Cash from investing activities, $m
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -115
  -120
  -125
  -131
  -138
  -144
  -151
  -159
  -166
  -174
  -182
  -191
  -200
  -210
  -220
  -231
  -242
  -254
  -267
  -280
  -294
  -308
Free cash flow, $m
  47
  66
  66
  67
  68
  68
  69
  70
  71
  72
  50
  51
  52
  53
  54
  55
  56
  57
  58
  60
  61
  62
  64
  66
  68
  70
  72
  74
  76
  78
Issuance/(repayment) of debt, $m
  -238
  33
  37
  42
  46
  51
  55
  60
  65
  69
  74
  79
  84
  90
  95
  101
  107
  113
  119
  126
  133
  140
  148
  156
  164
  173
  182
  191
  201
  211
Issuance/(repurchase) of shares, $m
  308
  25
  24
  23
  22
  21
  20
  19
  17
  16
  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  
  70
  58
  61
  65
  68
  72
  75
  79
  82
  85
  74
  79
  84
  90
  95
  101
  107
  113
  119
  126
  133
  140
  148
  156
  164
  173
  182
  191
  201
  211
Total cash flow (excl. dividends), $m
  117
  123
  128
  132
  136
  140
  145
  149
  153
  158
  124
  130
  136
  142
  149
  155
  162
  170
  177
  185
  194
  203
  212
  221
  232
  242
  253
  265
  277
  290
Retained Cash Flow (-), $m
  -308
  -25
  -24
  -23
  -22
  -21
  -20
  -19
  -17
  -16
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
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
  -191
  99
  104
  109
  114
  119
  125
  130
  136
  142
  116
  121
  127
  132
  138
  144
  151
  157
  164
  171
  179
  187
  195
  204
  213
  223
  233
  244
  255
  266
Discount rate, %
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
  -175
  82
  77
  72
  67
  61
  55
  49
  43
  37
  25
  21
  17
  14
  11
  9
  7
  5
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  43.3
  37.7
  33.1
  29.3
  26.1
  23.5
  21.4
  19.6
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2
  18.2

Everi Holdings Inc. is a holding company. The Company operates through subsidiaries, including Everi Games Holding Inc. (Everi Games Holding) and Everi Payments Inc. (Everi Payments or Payments). The Company operates through two segments: Games and Payments. The Company provides video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions, and compliance and efficiency software. Its games segment provides solutions directly to gaming establishments to offer its patrons gaming entertainment related experiences. The Payments segment provides solutions directly to gaming establishments to offer their patrons cash access related services and products, including access to cash at gaming facilities through automatic teller machine (ATM) cash withdrawals, credit card cash access transactions and point of sale debit card transactions.

FINANCIAL RATIOS  of  Everi Holdings Inc. (EVRI)

Valuation Ratios
P/E Ratio -2.5
Price to Sales 0.7
Price to Book -5.9
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow 12.4
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5.2%
Cap. Spend. - 3 Yr. Gr. Rate 42.1%
Financial Strength
Quick Ratio 12
Current Ratio 0
LT Debt to Equity -1029.6%
Total Debt to Equity -1038.9%
Interest Coverage -1
Management Effectiveness
Return On Assets -9.7%
Ret/ On Assets - 3 Yr. Avg. -2.2%
Return On Total Capital -21.7%
Ret/ On T. Cap. - 3 Yr. Avg. -9.4%
Return On Equity -1717.2%
Return On Equity - 3 Yr. Avg. -589.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 36.1%
Gross Margin - 3 Yr. Avg. 33.4%
EBITDA Margin 2.3%
EBITDA Margin - 3 Yr. Avg. 10.8%
Operating Margin -13.9%
Oper. Margin - 3 Yr. Avg. -3.8%
Pre-Tax Margin -25.4%
Pre-Tax Margin - 3 Yr. Avg. -12.3%
Net Profit Margin -29%
Net Profit Margin - 3 Yr. Avg. -13.2%
Effective Tax Rate -14.2%
Eff/ Tax Rate - 3 Yr. Avg. 13.5%
Payout Ratio 0%

EVRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EVRI stock intrinsic value calculation we used $470 million for the last fiscal year's total revenue generated by Everi Holdings Inc.. The default revenue input number comes from 0001 income statement of Everi Holdings 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 EVRI stock valuation model: a) initial revenue growth rate of 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 9.3%, whose default value for EVRI is calculated based on our internal credit rating of Everi Holdings 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 Everi Holdings 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 EVRI stock the variable cost ratio is equal to 91.7%.

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 EVRI 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 7.1% for Everi Holdings Inc..

Corporate tax rate of 27% is the nominal tax rate for Everi Holdings 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 EVRI 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 EVRI are equal to 125.1%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Everi Holdings 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 EVRI is equal to -57.9%. 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 - $-108.895 million for Everi Holdings 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 70.320 million for Everi Holdings 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 Everi Holdings Inc. at the current share price and the inputted number of shares is $0.7 billion.

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