Intrinsic value of Funko Cl A - FNKO

Previous Close

$19.84

  Intrinsic Value

$24.66

stock screener

  Rating & Target

buy

+24%

Previous close

$19.84

 
Intrinsic value

$24.66

 
Up/down potential

+24%

 
Rating

buy

We calculate the intrinsic value of FNKO 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 2017), $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 0.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  20.90
  19.31
  17.88
  16.59
  15.43
  14.39
  13.45
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.95
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
Revenue, $m
  624
  744
  877
  1,023
  1,181
  1,351
  1,532
  1,726
  1,930
  2,145
  2,372
  2,608
  2,856
  3,114
  3,383
  3,663
  3,954
  4,257
  4,571
  4,898
  5,237
  5,590
  5,958
  6,339
  6,737
  7,150
  7,581
  8,031
  8,499
  8,988
Variable operating expenses, $m
  552
  652
  762
  882
  1,013
  1,153
  1,303
  1,463
  1,632
  1,810
  1,961
  2,157
  2,361
  2,575
  2,797
  3,029
  3,269
  3,520
  3,780
  4,050
  4,331
  4,622
  4,926
  5,242
  5,570
  5,912
  6,269
  6,640
  7,027
  7,431
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
  552
  652
  762
  882
  1,013
  1,153
  1,303
  1,463
  1,632
  1,810
  1,961
  2,157
  2,361
  2,575
  2,797
  3,029
  3,269
  3,520
  3,780
  4,050
  4,331
  4,622
  4,926
  5,242
  5,570
  5,912
  6,269
  6,640
  7,027
  7,431
Operating income, $m
  72
  93
  116
  141
  168
  198
  229
  263
  298
  335
  411
  452
  495
  539
  586
  634
  685
  737
  792
  848
  907
  968
  1,032
  1,098
  1,166
  1,238
  1,313
  1,391
  1,472
  1,556
EBITDA, $m
  154
  184
  217
  253
  292
  335
  380
  427
  478
  531
  587
  646
  707
  771
  838
  907
  979
  1,054
  1,132
  1,213
  1,297
  1,385
  1,475
  1,570
  1,668
  1,771
  1,878
  1,989
  2,105
  2,226
Interest expense (income), $m
  12
  32
  46
  62
  79
  98
  119
  142
  165
  191
  218
  246
  276
  307
  340
  373
  409
  446
  484
  524
  565
  608
  653
  699
  747
  798
  850
  904
  961
  1,020
  1,082
Earnings before tax, $m
  40
  47
  54
  62
  70
  78
  88
  97
  107
  118
  165
  176
  188
  200
  212
  225
  239
  253
  268
  283
  299
  315
  332
  350
  369
  388
  408
  430
  452
  475
Tax expense, $m
  11
  13
  15
  17
  19
  21
  24
  26
  29
  32
  44
  47
  51
  54
  57
  61
  65
  68
  72
  76
  81
  85
  90
  95
  100
  105
  110
  116
  122
  128
Net income, $m
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  120
  128
  137
  146
  155
  165
  174
  185
  195
  207
  218
  230
  243
  256
  269
  283
  298
  314
  330
  346

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
  762
  909
  1,071
  1,249
  1,442
  1,649
  1,871
  2,107
  2,356
  2,619
  2,896
  3,185
  3,487
  3,802
  4,131
  4,473
  4,828
  5,197
  5,581
  5,980
  6,395
  6,826
  7,274
  7,740
  8,226
  8,731
  9,257
  9,805
  10,377
  10,974
Adjusted assets (=assets-cash), $m
  762
  909
  1,071
  1,249
  1,442
  1,649
  1,871
  2,107
  2,356
  2,619
  2,896
  3,185
  3,487
  3,802
  4,131
  4,473
  4,828
  5,197
  5,581
  5,980
  6,395
  6,826
  7,274
  7,740
  8,226
  8,731
  9,257
  9,805
  10,377
  10,974
Revenue / Adjusted assets
  0.819
  0.818
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
Average production assets, $m
  465
  555
  654
  762
  880
  1,006
  1,142
  1,286
  1,438
  1,598
  1,767
  1,943
  2,128
  2,320
  2,520
  2,729
  2,946
  3,171
  3,406
  3,649
  3,902
  4,165
  4,438
  4,723
  5,019
  5,327
  5,648
  5,983
  6,332
  6,696
Working capital, $m
  31
  37
  44
  51
  59
  68
  77
  86
  96
  107
  119
  130
  143
  156
  169
  183
  198
  213
  229
  245
  262
  280
  298
  317
  337
  358
  379
  402
  425
  449
Total debt, $m
  338
  454
  583
  724
  876
  1,041
  1,216
  1,403
  1,601
  1,809
  2,028
  2,257
  2,496
  2,746
  3,006
  3,277
  3,558
  3,851
  4,155
  4,471
  4,799
  5,141
  5,496
  5,865
  6,249
  6,649
  7,066
  7,500
  7,953
  8,426
Total liabilities, $m
  603
  720
  848
  989
  1,142
  1,306
  1,482
  1,669
  1,866
  2,075
  2,293
  2,522
  2,762
  3,012
  3,272
  3,542
  3,824
  4,116
  4,420
  4,736
  5,065
  5,406
  5,761
  6,130
  6,515
  6,915
  7,331
  7,766
  8,219
  8,691
Total equity, $m
  158
  189
  223
  260
  300
  343
  389
  438
  490
  545
  602
  662
  725
  791
  859
  930
  1,004
  1,081
  1,161
  1,244
  1,330
  1,420
  1,513
  1,610
  1,711
  1,816
  1,925
  2,040
  2,158
  2,283
Total liabilities and equity, $m
  761
  909
  1,071
  1,249
  1,442
  1,649
  1,871
  2,107
  2,356
  2,620
  2,895
  3,184
  3,487
  3,803
  4,131
  4,472
  4,828
  5,197
  5,581
  5,980
  6,395
  6,826
  7,274
  7,740
  8,226
  8,731
  9,256
  9,806
  10,377
  10,974
Debt-to-equity ratio
  2.130
  2.400
  2.620
  2.790
  2.920
  3.030
  3.130
  3.200
  3.270
  3.320
  3.370
  3.410
  3.440
  3.470
  3.500
  3.520
  3.540
  3.560
  3.580
  3.590
  3.610
  3.620
  3.630
  3.640
  3.650
  3.660
  3.670
  3.680
  3.680
  3.690
Adjusted equity ratio
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  120
  128
  137
  146
  155
  165
  174
  185
  195
  207
  218
  230
  243
  256
  269
  283
  298
  314
  330
  346
Depreciation, amort., depletion, $m
  83
  92
  102
  112
  124
  137
  150
  165
  180
  196
  177
  194
  213
  232
  252
  273
  295
  317
  341
  365
  390
  416
  444
  472
  502
  533
  565
  598
  633
  670
Funds from operations, $m
  112
  126
  141
  157
  175
  194
  214
  236
  258
  282
  297
  323
  350
  378
  407
  437
  469
  502
  536
  571
  608
  647
  687
  728
  771
  816
  863
  912
  963
  1,016
Change in working capital, $m
  5
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
Cash from operations, $m
  106
  120
  134
  150
  167
  186
  205
  226
  248
  271
  286
  311
  337
  365
  394
  423
  455
  487
  520
  555
  591
  629
  668
  709
  751
  795
  841
  889
  939
  992
Maintenance CAPEX, $m
  -38
  -46
  -55
  -65
  -76
  -88
  -101
  -114
  -129
  -144
  -160
  -177
  -194
  -213
  -232
  -252
  -273
  -295
  -317
  -341
  -365
  -390
  -416
  -444
  -472
  -502
  -533
  -565
  -598
  -633
New CAPEX, $m
  -80
  -90
  -99
  -108
  -118
  -127
  -135
  -144
  -152
  -160
  -169
  -176
  -184
  -192
  -200
  -209
  -217
  -225
  -234
  -243
  -253
  -263
  -273
  -284
  -296
  -308
  -321
  -335
  -349
  -364
Cash from investing activities, $m
  -118
  -136
  -154
  -173
  -194
  -215
  -236
  -258
  -281
  -304
  -329
  -353
  -378
  -405
  -432
  -461
  -490
  -520
  -551
  -584
  -618
  -653
  -689
  -728
  -768
  -810
  -854
  -900
  -947
  -997
Free cash flow, $m
  -12
  -16
  -20
  -24
  -27
  -29
  -31
  -32
  -33
  -33
  -43
  -42
  -41
  -40
  -39
  -37
  -35
  -33
  -31
  -29
  -27
  -24
  -22
  -19
  -17
  -15
  -12
  -10
  -8
  -6
Issuance/(repayment) of debt, $m
  104
  116
  129
  141
  153
  164
  176
  187
  198
  208
  219
  229
  239
  250
  260
  271
  281
  293
  304
  316
  328
  341
  355
  369
  384
  400
  417
  434
  453
  472
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  
  104
  116
  129
  141
  153
  164
  176
  187
  198
  208
  219
  229
  239
  250
  260
  271
  281
  293
  304
  316
  328
  341
  355
  369
  384
  400
  417
  434
  453
  472
Total cash flow (excl. dividends), $m
  92
  100
  108
  117
  126
  135
  145
  155
  165
  175
  176
  187
  198
  209
  221
  234
  246
  259
  273
  287
  302
  317
  333
  350
  367
  385
  404
  424
  445
  467
Retained Cash Flow (-), $m
  -27
  -31
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -57
  -60
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -97
  -101
  -105
  -109
  -114
  -119
  -124
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
  6
  7
  8
  10
  11
  13
  15
  17
  19
  21
  24
  26
  29
  31
  34
  37
  40
  43
  47
  50
  54
  58
  61
  66
  70
  74
  79
  83
  88
  93
Cash available for distribution, $m
  64
  69
  75
  80
  86
  92
  99
  106
  113
  120
  118
  127
  135
  144
  153
  162
  172
  183
  193
  204
  216
  228
  240
  253
  266
  280
  295
  310
  326
  343
Discount rate, %
  9.90
  10.40
  10.91
  11.46
  12.03
  12.64
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.83
  25.02
  26.27
  27.58
  28.96
  30.41
  31.93
  33.52
  35.20
  36.96
  38.81
  40.75
PV of cash for distribution, $m
  58
  57
  55
  52
  49
  45
  41
  37
  33
  29
  23
  19
  16
  13
  10
  8
  6
  5
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
  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

Funko, Inc. is a pop culture consumer products company. The Company is engaged in selling a broad range of pop culture consumer products, featuring characters from a range of media and entertainment content, including movies, TV shows, video games, music and sports. Its products combine its proprietary brands and designs into properties it licenses from content providers. Its product categories include figures, plush, accessories and other. It also offers different types of bags and wallets. It offers its products under various brands, including Pop!, Mystery Minis, Dorbz, Pint Size Heroes, Rock Candy, Galactic or Hero Plushies, SuperCute, MyMoji and Loungefly. The Company has licensed properties into four categories: classic evergreen, movie release, current TV and current video game.

FINANCIAL RATIOS  of  Funko Cl A (FNKO)

Valuation Ratios
P/E Ratio 34
Price to Sales 2.2
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 18.7
Price to Free Cash Flow 32.8
Growth Rates
Sales Growth Rate 55.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 75%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 94%
Total Debt to Equity 100.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 6.4%
Ret/ On T. Cap. - 3 Yr. Avg. 4.1%
Return On Equity 11.7%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 34.2%
Gross Margin - 3 Yr. Avg. 23.3%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 7.8%
Operating Margin 10.3%
Oper. Margin - 3 Yr. Avg. 5.5%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 3.6%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

FNKO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FNKO stock intrinsic value calculation we used $516 million for the last fiscal year's total revenue generated by Funko Cl A. The default revenue input number comes from 2017 income statement of Funko Cl A. 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 FNKO stock valuation model: a) initial revenue growth rate of 20.9% 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 9.9%, whose default value for FNKO is calculated based on our internal credit rating of Funko Cl A, 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 Funko Cl A.
    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 FNKO stock the variable cost ratio is equal to 89.7%.

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 FNKO 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 13.6% for Funko Cl A.

Corporate tax rate of 27% is the nominal tax rate for Funko Cl A. 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 FNKO stock is equal to 1.1%.

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 FNKO are equal to 74.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Funko Cl A 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 FNKO is equal to 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 - $131 million for Funko Cl A - 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 23 million for Funko Cl A 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 Funko Cl A at the current share price and the inputted number of shares is $0.5 billion.

COMPANY NEWS

▶ Funko (FNKO) Stock Declines on in-Line Q2 Earnings   [Aug-09-18 06:09PM  InvestorPlace]
▶ Funko Stock Is Ready to Pop on the Pop Culture Toy Boom   [Aug-08-18 11:27AM  InvestorPlace]
▶ Why Funko, Inc. Shares Climbed 40% in July   [Aug-02-18 05:11PM  Motley Fool]
▶ Funko (FNKO) in Focus: Stock Moves 7.2% Higher   [Jul-24-18 08:50AM  Zacks]
▶ Could Funko Become the Next Hasbro or Mattel?   [Jul-19-18 06:03PM  Motley Fool]
▶ Funko Stock Soars on Fortnite Toys Deal   [11:12AM  InvestorPlace]
▶ Keep Your Eye on This Pop Culture Stock   [Jul-07-18 02:03PM  Motley Fool]
▶ Funko Unveils New 5 Star Collectible Figures   [May-16-18 08:30AM  GlobeNewswire]
▶ Funko Reports First Quarter 2018 Financial Results   [May-10-18 04:10PM  GlobeNewswire]
▶ Tech IPOs: How much longer can the good times last?   [Mar-28-18 10:54AM  Yahoo Finance Video]
▶ Funko Appoints Molly Hartney Chief Marketing Officer   [Mar-13-18 08:30AM  GlobeNewswire]
▶ Should You Buy Funko Inc (NASDAQ:FNKO) At This PE Ratio?   [Mar-05-18 01:31PM  Simply Wall St.]
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