Intrinsic value of Great Elm Capital Group, Inc. - GEC

Previous Close

$3.56

  Intrinsic Value

$1.98

stock screener

  Rating & Target

sell

-45%

Previous close

$3.56

 
Intrinsic value

$1.98

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of GEC 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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  10
  15
  22
  32
  45
  62
  84
  110
  142
  179
  222
  271
  327
  389
  458
  533
  613
  700
  793
  892
  996
  1,106
  1,221
  1,341
  1,467
  1,599
  1,735
  1,878
  2,026
  2,179
Variable operating expenses, $m
  19
  30
  44
  64
  91
  125
  168
  220
  283
  358
  444
  543
  654
  779
  916
  1,065
  1,227
  1,401
  1,586
  1,784
  1,992
  2,211
  2,442
  2,683
  2,935
  3,197
  3,471
  3,755
  4,051
  4,359
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
  19
  30
  44
  64
  91
  125
  168
  220
  283
  358
  444
  543
  654
  779
  916
  1,065
  1,227
  1,401
  1,586
  1,784
  1,992
  2,211
  2,442
  2,683
  2,935
  3,197
  3,471
  3,755
  4,051
  4,359
Operating income, $m
  -10
  -15
  -22
  -32
  -45
  -62
  -84
  -110
  -142
  -179
  -222
  -271
  -327
  -389
  -458
  -533
  -613
  -700
  -793
  -892
  -996
  -1,106
  -1,221
  -1,341
  -1,467
  -1,599
  -1,735
  -1,878
  -2,026
  -2,179
EBITDA, $m
  -9
  -13
  -20
  -29
  -41
  -57
  -76
  -100
  -128
  -162
  -201
  -246
  -296
  -353
  -415
  -482
  -556
  -634
  -719
  -808
  -902
  -1,002
  -1,106
  -1,215
  -1,329
  -1,448
  -1,572
  -1,701
  -1,835
  -1,974
Interest expense (income), $m
  0
  3
  6
  9
  13
  19
  27
  37
  50
  66
  85
  107
  133
  163
  196
  234
  275
  320
  368
  421
  476
  536
  598
  664
  734
  806
  882
  961
  1,043
  1,128
  1,217
Earnings before tax, $m
  -13
  -20
  -31
  -45
  -65
  -89
  -121
  -160
  -207
  -264
  -329
  -405
  -490
  -586
  -692
  -807
  -933
  -1,069
  -1,214
  -1,368
  -1,532
  -1,704
  -1,885
  -2,075
  -2,273
  -2,480
  -2,696
  -2,920
  -3,154
  -3,397
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
  -13
  -20
  -31
  -45
  -65
  -89
  -121
  -160
  -207
  -264
  -329
  -405
  -490
  -586
  -692
  -807
  -933
  -1,069
  -1,214
  -1,368
  -1,532
  -1,704
  -1,885
  -2,075
  -2,273
  -2,480
  -2,696
  -2,920
  -3,154
  -3,397

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
  125
  193
  288
  418
  590
  811
  1,088
  1,429
  1,839
  2,322
  2,884
  3,526
  4,250
  5,056
  5,945
  6,916
  7,966
  9,095
  10,301
  11,581
  12,935
  14,360
  15,856
  17,422
  19,057
  20,762
  22,538
  24,386
  26,307
  28,304
Adjusted assets (=assets-cash), $m
  125
  193
  288
  418
  590
  811
  1,088
  1,429
  1,839
  2,322
  2,884
  3,526
  4,250
  5,056
  5,945
  6,916
  7,966
  9,095
  10,301
  11,581
  12,935
  14,360
  15,856
  17,422
  19,057
  20,762
  22,538
  24,386
  26,307
  28,304
Revenue / Adjusted assets
  0.080
  0.078
  0.076
  0.077
  0.076
  0.076
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
Average production assets, $m
  6
  9
  14
  21
  29
  40
  54
  70
  91
  114
  142
  174
  209
  249
  293
  341
  393
  448
  508
  571
  637
  708
  781
  859
  939
  1,023
  1,111
  1,202
  1,296
  1,395
Working capital, $m
  -7
  -11
  -16
  -23
  -33
  -45
  -60
  -79
  -101
  -128
  -159
  -194
  -234
  -279
  -328
  -381
  -439
  -501
  -568
  -639
  -713
  -792
  -874
  -960
  -1,051
  -1,145
  -1,243
  -1,344
  -1,450
  -1,560
Total debt, $m
  102
  161
  242
  354
  501
  690
  928
  1,220
  1,571
  1,986
  2,467
  3,017
  3,638
  4,329
  5,091
  5,922
  6,823
  7,790
  8,824
  9,921
  11,081
  12,302
  13,584
  14,926
  16,327
  17,789
  19,311
  20,894
  22,541
  24,252
Total liabilities, $m
  107
  165
  247
  358
  505
  695
  933
  1,225
  1,576
  1,990
  2,471
  3,022
  3,642
  4,333
  5,095
  5,927
  6,827
  7,795
  8,828
  9,925
  11,085
  12,307
  13,588
  14,930
  16,332
  17,793
  19,315
  20,899
  22,545
  24,257
Total equity, $m
  18
  28
  41
  60
  84
  116
  156
  204
  263
  332
  412
  504
  608
  723
  850
  989
  1,139
  1,301
  1,473
  1,656
  1,850
  2,053
  2,267
  2,491
  2,725
  2,969
  3,223
  3,487
  3,762
  4,047
Total liabilities and equity, $m
  125
  193
  288
  418
  589
  811
  1,089
  1,429
  1,839
  2,322
  2,883
  3,526
  4,250
  5,056
  5,945
  6,916
  7,966
  9,096
  10,301
  11,581
  12,935
  14,360
  15,855
  17,421
  19,057
  20,762
  22,538
  24,386
  26,307
  28,304
Debt-to-equity ratio
  5.750
  5.830
  5.890
  5.920
  5.940
  5.960
  5.960
  5.970
  5.980
  5.980
  5.980
  5.980
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
  5.990
Adjusted equity ratio
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  -20
  -31
  -45
  -65
  -89
  -121
  -160
  -207
  -264
  -329
  -405
  -490
  -586
  -692
  -807
  -933
  -1,069
  -1,214
  -1,368
  -1,532
  -1,704
  -1,885
  -2,075
  -2,273
  -2,480
  -2,696
  -2,920
  -3,154
  -3,397
Depreciation, amort., depletion, $m
  1
  1
  2
  3
  4
  6
  8
  10
  13
  17
  21
  26
  31
  37
  43
  50
  58
  66
  75
  84
  94
  104
  115
  126
  138
  150
  163
  177
  191
  205
Funds from operations, $m
  -12
  -19
  -29
  -42
  -60
  -84
  -113
  -150
  -194
  -247
  -308
  -379
  -459
  -549
  -648
  -757
  -875
  -1,003
  -1,139
  -1,284
  -1,438
  -1,600
  -1,770
  -1,949
  -2,135
  -2,330
  -2,533
  -2,744
  -2,963
  -3,191
Change in working capital, $m
  -3
  -4
  -5
  -7
  -9
  -12
  -15
  -19
  -23
  -27
  -31
  -35
  -40
  -44
  -49
  -54
  -58
  -62
  -66
  -71
  -75
  -79
  -82
  -86
  -90
  -94
  -98
  -102
  -106
  -110
Cash from operations, $m
  -9
  -15
  -24
  -35
  -51
  -71
  -98
  -131
  -172
  -220
  -277
  -344
  -419
  -505
  -599
  -704
  -818
  -941
  -1,073
  -1,214
  -1,363
  -1,521
  -1,688
  -1,862
  -2,045
  -2,236
  -2,435
  -2,642
  -2,857
  -3,081
Maintenance CAPEX, $m
  -1
  -1
  -1
  -2
  -3
  -4
  -6
  -8
  -10
  -13
  -17
  -21
  -26
  -31
  -37
  -43
  -50
  -58
  -66
  -75
  -84
  -94
  -104
  -115
  -126
  -138
  -150
  -163
  -177
  -191
New CAPEX, $m
  -2
  -3
  -5
  -6
  -8
  -11
  -14
  -17
  -20
  -24
  -28
  -32
  -36
  -40
  -44
  -48
  -52
  -56
  -59
  -63
  -67
  -70
  -74
  -77
  -81
  -84
  -88
  -91
  -95
  -98
Cash from investing activities, $m
  -3
  -4
  -6
  -8
  -11
  -15
  -20
  -25
  -30
  -37
  -45
  -53
  -62
  -71
  -81
  -91
  -102
  -114
  -125
  -138
  -151
  -164
  -178
  -192
  -207
  -222
  -238
  -254
  -272
  -289
Free cash flow, $m
  -12
  -19
  -30
  -44
  -62
  -87
  -117
  -156
  -202
  -257
  -322
  -396
  -481
  -575
  -680
  -795
  -919
  -1,054
  -1,198
  -1,351
  -1,514
  -1,685
  -1,866
  -2,054
  -2,252
  -2,458
  -2,673
  -2,896
  -3,129
  -3,370
Issuance/(repayment) of debt, $m
  40
  58
  82
  111
  147
  189
  238
  292
  351
  415
  481
  550
  620
  691
  762
  832
  900
  968
  1,033
  1,097
  1,160
  1,221
  1,282
  1,342
  1,402
  1,461
  1,522
  1,584
  1,646
  1,711
Issuance/(repurchase) of shares, $m
  20
  30
  45
  64
  89
  121
  161
  209
  266
  333
  410
  496
  594
  701
  819
  946
  1,083
  1,230
  1,386
  1,551
  1,725
  1,908
  2,099
  2,299
  2,507
  2,724
  2,950
  3,185
  3,429
  3,682
Cash from financing (excl. dividends), $m  
  60
  88
  127
  175
  236
  310
  399
  501
  617
  748
  891
  1,046
  1,214
  1,392
  1,581
  1,778
  1,983
  2,198
  2,419
  2,648
  2,885
  3,129
  3,381
  3,641
  3,909
  4,185
  4,472
  4,769
  5,075
  5,393
Total cash flow (excl. dividends), $m
  47
  69
  97
  132
  174
  224
  281
  345
  415
  490
  569
  650
  733
  817
  901
  983
  1,064
  1,144
  1,221
  1,297
  1,371
  1,444
  1,515
  1,586
  1,657
  1,728
  1,799
  1,872
  1,946
  2,023
Retained Cash Flow (-), $m
  -20
  -30
  -45
  -64
  -89
  -121
  -161
  -209
  -266
  -333
  -410
  -496
  -594
  -701
  -819
  -946
  -1,083
  -1,230
  -1,386
  -1,551
  -1,725
  -1,908
  -2,099
  -2,299
  -2,507
  -2,724
  -2,950
  -3,185
  -3,429
  -3,682
Prev. year cash balance distribution, $m
  53
  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
  81
  39
  52
  68
  85
  103
  120
  136
  149
  157
  159
  154
  140
  116
  82
  37
  -19
  -86
  -165
  -254
  -354
  -464
  -584
  -713
  -850
  -997
  -1,151
  -1,313
  -1,482
  -1,659
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  77
  35
  44
  53
  61
  68
  73
  74
  73
  68
  61
  51
  40
  28
  17
  6
  -3
  -10
  -15
  -18
  -19
  -19
  -18
  -16
  -13
  -11
  -9
  -6
  -5
  -3
Current shareholders' claim on cash, %
  45.0
  20.7
  9.7
  4.7
  2.3
  1.2
  0.6
  0.3
  0.2
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Great Elm Capital Group, Inc. does not have significant operations. Previously, it was involved in developing patents for allowing mobile devices to connect to the Internet and enabling mobile communications. The company focuses on investment management business. The company was formerly known as Unwired Planet, Inc. and changed its name to Great Elm Capital Group, Inc. in June 2016. Great Elm Capital Group, Inc. was founded in 1994 and is based in Boston, Massachusetts.

FINANCIAL RATIOS  of  Great Elm Capital Group, Inc. (GEC)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

GEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GEC stock intrinsic value calculation we used $6 million for the last fiscal year's total revenue generated by Great Elm Capital Group, Inc.. The default revenue input number comes from 0001 income statement of Great Elm Capital Group, 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 GEC stock valuation model: a) initial revenue growth rate of 60% 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 5.6%, whose default value for GEC is calculated based on our internal credit rating of Great Elm Capital Group, 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 Great Elm Capital Group, 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 GEC stock the variable cost ratio is equal to 200%.

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 GEC 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 Great Elm Capital Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Great Elm Capital Group, 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 GEC 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 GEC are equal to 64%.

Life of production assets of 6.8 years is the average useful life of capital assets used in Great Elm Capital Group, 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 GEC is equal to -71.6%. 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 - $64.364 million for Great Elm Capital Group, 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 26.003 million for Great Elm Capital Group, 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 Great Elm Capital Group, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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