Intrinsic value of Full House Resorts - FLL

Previous Close

$2.60

  Intrinsic Value

$0.18

stock screener

  Rating & Target

str. sell

-93%

Previous close

$2.60

 
Intrinsic value

$0.18

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of FLL 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, %
  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
  164
  168
  173
  177
  183
  189
  195
  202
  210
  218
  226
  235
  245
  256
  267
  278
  291
  304
  318
  332
  348
  364
  381
  399
  418
  438
  459
  481
  504
  529
Variable operating expenses, $m
  158
  162
  166
  171
  176
  181
  187
  194
  201
  208
  213
  222
  231
  241
  251
  262
  274
  286
  300
  313
  328
  343
  359
  376
  394
  413
  433
  454
  476
  499
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
  158
  162
  166
  171
  176
  181
  187
  194
  201
  208
  213
  222
  231
  241
  251
  262
  274
  286
  300
  313
  328
  343
  359
  376
  394
  413
  433
  454
  476
  499
Operating income, $m
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
EBITDA, $m
  17
  18
  18
  19
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
Interest expense (income), $m
  8
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  33
  35
  37
  38
Earnings before tax, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
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
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8

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
  174
  178
  183
  188
  194
  200
  207
  214
  222
  231
  240
  250
  260
  271
  283
  295
  308
  322
  337
  352
  369
  386
  404
  423
  443
  464
  487
  510
  535
  561
Adjusted assets (=assets-cash), $m
  174
  178
  183
  188
  194
  200
  207
  214
  222
  231
  240
  250
  260
  271
  283
  295
  308
  322
  337
  352
  369
  386
  404
  423
  443
  464
  487
  510
  535
  561
Revenue / Adjusted assets
  0.943
  0.944
  0.945
  0.941
  0.943
  0.945
  0.942
  0.944
  0.946
  0.944
  0.942
  0.940
  0.942
  0.945
  0.943
  0.942
  0.945
  0.944
  0.944
  0.943
  0.943
  0.943
  0.943
  0.943
  0.944
  0.944
  0.943
  0.943
  0.942
  0.943
Average production assets, $m
  132
  135
  138
  142
  146
  151
  156
  162
  168
  174
  181
  188
  196
  204
  213
  223
  233
  243
  254
  266
  278
  291
  305
  319
  334
  350
  367
  385
  404
  423
Working capital, $m
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
Total debt, $m
  102
  105
  109
  112
  116
  121
  125
  131
  136
  142
  149
  155
  163
  170
  179
  187
  197
  206
  217
  227
  239
  251
  264
  277
  291
  306
  322
  339
  356
  374
Total liabilities, $m
  123
  125
  129
  132
  136
  141
  145
  151
  156
  162
  169
  176
  183
  191
  199
  207
  217
  226
  237
  248
  259
  271
  284
  297
  312
  327
  342
  359
  376
  394
Total equity, $m
  52
  53
  54
  56
  58
  59
  61
  64
  66
  69
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  109
  115
  120
  126
  132
  138
  145
  152
  159
  167
Total liabilities and equity, $m
  175
  178
  183
  188
  194
  200
  206
  215
  222
  231
  240
  250
  260
  272
  283
  295
  309
  322
  337
  353
  368
  386
  404
  423
  444
  465
  487
  511
  535
  561
Debt-to-equity ratio
  1.980
  1.990
  2.000
  2.010
  2.020
  2.030
  2.040
  2.050
  2.060
  2.070
  2.080
  2.100
  2.110
  2.120
  2.130
  2.140
  2.150
  2.160
  2.170
  2.170
  2.180
  2.190
  2.200
  2.210
  2.210
  2.220
  2.230
  2.230
  2.240
  2.250
Adjusted equity ratio
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
Depreciation, amort., depletion, $m
  11
  11
  11
  12
  12
  12
  12
  13
  13
  14
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Funds from operations, $m
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
Change in working capital, $m
  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
  -1
  -2
  -2
Cash from operations, $m
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
Maintenance CAPEX, $m
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
Cash from investing activities, $m
  -11
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
Free cash flow, $m
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
Issuance/(repayment) of debt, $m
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
Issuance/(repurchase) of shares, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
Cash from financing (excl. dividends), $m  
  9
  9
  9
  10
  11
  11
  12
  12
  14
  14
  11
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  24
  26
  28
  30
  31
  32
  34
Total cash flow (excl. dividends), $m
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
Retained Cash Flow (-), $m
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
Prev. year cash balance distribution, $m
  1
  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
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
Discount rate, %
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  92.2
  85.1
  78.3
  72.1
  66.2
  60.8
  55.9
  51.3
  47.0
  43.1
  40.8
  38.6
  36.4
  34.4
  32.4
  30.5
  28.6
  26.9
  25.2
  23.6
  22.1
  20.7
  19.3
  18.0
  16.8
  15.7
  14.6
  13.6
  12.7
  11.8

Full House Resorts, Inc. owns, operates, develops, manages, and/or invests in casinos and related hospitality and entertainment facilities. The Company's casino/resort segments include the Silver Slipper Casino & Hotel in Hancock County, Mississippi; the Rising Star Casino Resort in Rising Sun, Indiana, and the Northern Nevada segment, which consists of the Grand Lodge Casino in Incline Village, Nevada and Stockman's Casino in Fallon, Nevada. The Company's Development/Management segment includes costs associated with casino-related development and management projects. The Company has a leased property, Grand Lodge Casino. The Rising Star Casino Resort is located on the banks of the Ohio River in Rising Sun, Indiana. The Silver Slipper Casino & Hotel is situated on the far west end of the Mississippi Gulf Coast in Bay St. Louis, Mississippi. The Grand Lodge Casino is located within Hyatt Regency in Incline Village, Nevada on the north shore of Lake Tahoe.

FINANCIAL RATIOS  of  Full House Resorts (FLL)

Valuation Ratios
P/E Ratio -11.9
Price to Sales 0.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow 14.9
Growth Rates
Sales Growth Rate 16.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -63.6%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 14
Current Ratio 0.1
LT Debt to Equity 178.6%
Total Debt to Equity 182.1%
Interest Coverage 1
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. -2.3%
Return On Total Capital -3.5%
Ret/ On T. Cap. - 3 Yr. Avg. -6.6%
Return On Equity -8.8%
Return On Equity - 3 Yr. Avg. -13.8%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 45.2%
Gross Margin - 3 Yr. Avg. 44.9%
EBITDA Margin 8.2%
EBITDA Margin - 3 Yr. Avg. 3.5%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. -1.7%
Pre-Tax Margin -2.7%
Pre-Tax Margin - 3 Yr. Avg. -7.5%
Net Profit Margin -3.4%
Net Profit Margin - 3 Yr. Avg. -7.2%
Effective Tax Rate -25%
Eff/ Tax Rate - 3 Yr. Avg. 9.8%
Payout Ratio 0%

FLL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FLL stock intrinsic value calculation we used $161.267 million for the last fiscal year's total revenue generated by Full House Resorts. The default revenue input number comes from 0001 income statement of Full House Resorts. 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 FLL 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 8.9%, whose default value for FLL is calculated based on our internal credit rating of Full House Resorts, 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 Full House Resorts.
    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 FLL stock the variable cost ratio is equal to 96.3%.

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 FLL 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 10.8% for Full House Resorts.

Corporate tax rate of 27% is the nominal tax rate for Full House Resorts. 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 FLL 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 FLL are equal to 80%.

Life of production assets of 16.9 years is the average useful life of capital assets used in Full House Resorts 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 FLL is equal to -6.7%. 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 - $52.048 million for Full House Resorts - 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 26.932 million for Full House Resorts 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 Full House Resorts at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Full House Resorts Announces Third Quarter Results   [Nov-07-18 04:05PM  GlobeNewswire]
▶ [$$] The Add-On Deal Roundup: Oct. 22   [Oct-22-18 07:15PM  The Wall Street Journal]
▶ 20 Small-Cap Stocks With Outsized Potential   [Oct-08-18 05:30AM  InvestorPlace]
▶ Full House Resorts Announces Strong Second Quarter Results   [Aug-09-18 04:05PM  GlobeNewswire]
▶ Full House Resorts Announces First Quarter Results   [May-11-18 09:00AM  GlobeNewswire]
▶ Full House Resorts Announces Registered Direct Offering   [Mar-22-18 04:11PM  GlobeNewswire]
▶ Full House Resorts Announces Fourth Quarter Results   [Mar-01-18 04:05PM  GlobeNewswire]
▶ Full House Resorts Announces Shelf Registration Filing   [Jan-02-18 07:28PM  GlobeNewswire]
▶ Full House Resorts Announces Solid Second Quarter Results   [Aug-14-17 04:05PM  GlobeNewswire]
▶ Grand Lodge Casino Further Elevates Guest Experience   [Jun-30-17 03:00PM  GlobeNewswire]
▶ Full House Resorts Announces First Quarter of 2017 Results   [May-10-17 04:05PM  GlobeNewswire]

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