Intrinsic value of Gilat Satellite Networks - GILT

Previous Close

$9.38

  Intrinsic Value

$0.77

stock screener

  Rating & Target

str. sell

-92%

Previous close

$9.38

 
Intrinsic value

$0.77

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of GILT 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 0.5

 

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
  288
  295
  303
  311
  321
  331
  342
  354
  368
  382
  397
  413
  430
  448
  468
  488
  510
  533
  557
  582
  609
  638
  668
  700
  733
  768
  805
  844
  885
  928
Variable operating expenses, $m
  287
  294
  301
  309
  319
  329
  340
  352
  365
  378
  388
  404
  421
  439
  458
  478
  499
  521
  545
  570
  596
  624
  654
  685
  717
  752
  788
  826
  866
  908
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
  287
  294
  301
  309
  319
  329
  340
  352
  365
  378
  388
  404
  421
  439
  458
  478
  499
  521
  545
  570
  596
  624
  654
  685
  717
  752
  788
  826
  866
  908
Operating income, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
EBITDA, $m
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
Interest expense (income), $m
  1
  4
  5
  5
  6
  8
  9
  10
  12
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  44
  47
  51
  55
  59
  64
  68
  73
  78
  84
Earnings before tax, $m
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -51
  -55
  -59
  -64
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
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -51
  -55
  -59
  -64

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
  394
  403
  413
  425
  438
  452
  467
  484
  502
  521
  542
  564
  587
  612
  639
  667
  696
  728
  761
  796
  833
  871
  912
  956
  1,001
  1,049
  1,100
  1,153
  1,208
  1,267
Adjusted assets (=assets-cash), $m
  394
  403
  413
  425
  438
  452
  467
  484
  502
  521
  542
  564
  587
  612
  639
  667
  696
  728
  761
  796
  833
  871
  912
  956
  1,001
  1,049
  1,100
  1,153
  1,208
  1,267
Revenue / Adjusted assets
  0.731
  0.732
  0.734
  0.732
  0.733
  0.732
  0.732
  0.731
  0.733
  0.733
  0.732
  0.732
  0.733
  0.732
  0.732
  0.732
  0.733
  0.732
  0.732
  0.731
  0.731
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.733
  0.732
Average production assets, $m
  110
  112
  115
  118
  122
  126
  130
  135
  140
  145
  151
  157
  163
  170
  178
  185
  194
  202
  212
  221
  232
  242
  254
  266
  278
  292
  306
  321
  336
  352
Working capital, $m
  17
  18
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
Total debt, $m
  20
  24
  29
  34
  40
  46
  52
  60
  67
  76
  85
  94
  105
  116
  127
  139
  152
  166
  180
  195
  212
  229
  246
  265
  285
  306
  328
  351
  375
  401
Total liabilities, $m
  172
  176
  180
  185
  191
  197
  204
  211
  219
  227
  236
  246
  256
  267
  278
  291
  304
  317
  332
  347
  363
  380
  398
  417
  437
  457
  479
  503
  527
  552
Total equity, $m
  222
  227
  233
  240
  247
  255
  264
  273
  283
  294
  306
  318
  331
  345
  360
  376
  393
  410
  429
  449
  470
  492
  515
  539
  565
  592
  620
  650
  682
  715
Total liabilities and equity, $m
  394
  403
  413
  425
  438
  452
  468
  484
  502
  521
  542
  564
  587
  612
  638
  667
  697
  727
  761
  796
  833
  872
  913
  956
  1,002
  1,049
  1,099
  1,153
  1,209
  1,267
Debt-to-equity ratio
  0.090
  0.110
  0.120
  0.140
  0.160
  0.180
  0.200
  0.220
  0.240
  0.260
  0.280
  0.300
  0.320
  0.330
  0.350
  0.370
  0.390
  0.400
  0.420
  0.440
  0.450
  0.460
  0.480
  0.490
  0.500
  0.520
  0.530
  0.540
  0.550
  0.560
Adjusted equity ratio
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -51
  -55
  -59
  -64
Depreciation, amort., depletion, $m
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  35
Funds from operations, $m
  13
  13
  12
  12
  11
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  0
  -1
  -3
  -4
  -6
  -8
  -10
  -12
  -14
  -16
  -19
  -21
  -24
  -26
  -29
Change in working capital, $m
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
Cash from operations, $m
  13
  12
  12
  11
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  0
  -1
  -2
  -4
  -6
  -8
  -9
  -11
  -14
  -16
  -18
  -21
  -23
  -26
  -29
  -32
Maintenance CAPEX, $m
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
New CAPEX, $m
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
Cash from investing activities, $m
  -13
  -14
  -14
  -14
  -16
  -16
  -16
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -43
  -45
  -47
  -49
Free cash flow, $m
  0
  -1
  -2
  -3
  -4
  -6
  -7
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -24
  -26
  -29
  -32
  -35
  -38
  -41
  -45
  -49
  -53
  -57
  -61
  -66
  -71
  -76
  -81
Issuance/(repayment) of debt, $m
  3
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
Issuance/(repurchase) of shares, $m
  6
  8
  10
  11
  13
  15
  16
  18
  20
  23
  20
  23
  25
  28
  31
  34
  37
  40
  44
  47
  51
  55
  60
  64
  69
  74
  79
  85
  91
  97
Cash from financing (excl. dividends), $m  
  9
  12
  15
  16
  19
  21
  23
  25
  28
  31
  29
  33
  35
  39
  43
  46
  50
  54
  58
  62
  67
  72
  78
  83
  89
  95
  101
  108
  115
  123
Total cash flow (excl. dividends), $m
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  36
  37
  39
  41
Retained Cash Flow (-), $m
  -6
  -8
  -10
  -11
  -13
  -15
  -16
  -18
  -20
  -23
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -40
  -44
  -47
  -51
  -55
  -60
  -64
  -69
  -74
  -79
  -85
  -91
  -97
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
  3
  3
  3
  2
  1
  0
  -1
  -2
  -3
  -4
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -40
  -44
  -48
  -51
  -56
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  3
  3
  2
  2
  1
  0
  0
  -1
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  98.8
  97.2
  95.5
  93.6
  91.5
  89.2
  86.9
  84.4
  81.8
  79.1
  76.8
  74.5
  72.1
  69.6
  67.1
  64.5
  61.9
  59.4
  56.8
  54.2
  51.7
  49.3
  46.8
  44.5
  42.2
  40.0
  37.8
  35.7
  33.7
  31.8

Gilat Satellite Networks Ltd. is a provider of satellite-based broadband communications. The Company operates through three segments: Commercial, Mobility and Services divisions. The Company designs and manufactures satellite ground segment and networking communications equipment, which it sells to its customers either as network components (modems, Block Up converters (BUCs), antennas) or as complete network solutions (which include hubs and related terminals and services) or turnkey projects. The equipment that the Company develops includes commercial Very Small Aperture Terminals (VSAT) systems, defense and homeland security satellite communications systems, solid-state power amplifiers (SSPAs), BUCs, low-profile antennas, on-the-Move/on-the-Pause terminals and modems. The Company's equipment is used by satellite operators, service providers, telecommunications operators, system integrators, government and defense organizations, large corporations and enterprises.

FINANCIAL RATIOS  of  Gilat Satellite Networks (GILT)

Valuation Ratios
P/E Ratio -102.4
Price to Sales 1.8
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 46.6
Price to Free Cash Flow 73.2
Growth Rates
Sales Growth Rate 41.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 8
Current Ratio 0.6
LT Debt to Equity 8.1%
Total Debt to Equity 10.5%
Interest Coverage -3
Management Effectiveness
Return On Assets -1%
Ret/ On Assets - 3 Yr. Avg. -5.2%
Return On Total Capital -2.3%
Ret/ On T. Cap. - 3 Yr. Avg. -8.2%
Return On Equity -2.6%
Return On Equity - 3 Yr. Avg. -9.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 26.8%
Gross Margin - 3 Yr. Avg. 29.9%
EBITDA Margin 3.6%
EBITDA Margin - 3 Yr. Avg. -1.8%
Operating Margin 0.4%
Oper. Margin - 3 Yr. Avg. -6.4%
Pre-Tax Margin -1.4%
Pre-Tax Margin - 3 Yr. Avg. -8.9%
Net Profit Margin -1.8%
Net Profit Margin - 3 Yr. Avg. -9.6%
Effective Tax Rate -25%
Eff/ Tax Rate - 3 Yr. Avg. 57.7%
Payout Ratio 0%

GILT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GILT stock intrinsic value calculation we used $282.756 million for the last fiscal year's total revenue generated by Gilat Satellite Networks. The default revenue input number comes from 0001 income statement of Gilat Satellite Networks. 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 GILT 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 4.3%, whose default value for GILT is calculated based on our internal credit rating of Gilat Satellite Networks, 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 Gilat Satellite Networks.
    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 GILT stock the variable cost ratio is equal to 99.6%.

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 GILT 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 22.3% for Gilat Satellite Networks.

Corporate tax rate of 27% is the nominal tax rate for Gilat Satellite Networks. 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 GILT 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 GILT are equal to 38%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Gilat Satellite Networks 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 GILT is equal to 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 - $218.322 million for Gilat Satellite Networks - 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 54.8 million for Gilat Satellite Networks 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 Gilat Satellite Networks at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
CMTL Comtech Teleco 26.10 75.76  str.buy
VSAT ViaSat 67.67 7.07  str.sell
LLL L3 Technologie 189.63 259.41  buy
GD General Dynami 171.22 416.37  str.buy
SATS EchoStar 39.97 161.65  str.buy

COMPANY NEWS

▶ Gilat: 3Q Earnings Snapshot   [Nov-12-18 07:58AM  Associated Press]
▶ Gilat: 2Q Earnings Snapshot   [Aug-07-18 07:36AM  Associated Press]
▶ Gilat to Report Second Quarter 2018 Results on August 7   [Jul-17-18 07:27AM  PR Newswire]
▶ Gilat: 1Q Earnings Snapshot   [06:49AM  Associated Press]
▶ Gilat to Report First Quarter 2018 Results on May 15   [Apr-17-18 06:50AM  PR Newswire]
▶ Gilat Announces Filing of 2017 Annual Report   [Mar-20-18 10:12AM  PR Newswire]
▶ Gilat posts 4Q profit   [08:23AM  Associated Press]
▶ Gilat posts 3Q profit   [Nov-14-17 07:10AM  Associated Press]
▶ Gilat posts 2Q profit   [Aug-08-17 11:59PM  Associated Press]
▶ Gilat to Report Second Quarter 2017 Results on August 8   [Jul-17-17 06:02AM  GlobeNewswire]
▶ Gilat reports 1Q loss   [07:18AM  Associated Press]
▶ Gilat to Report First Quarter 2017 Results on May 16   [Apr-20-17 06:15AM  GlobeNewswire]
▶ Gilat Announces Filing of 2016 Annual Report   [Mar-29-17 03:12PM  GlobeNewswire]
▶ Gilat posts 4Q profit   [Feb-14-17 10:32AM  Associated Press]

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