Intrinsic value of Glu Mobile Inc. - GLUU

Previous Close

$4.45

  Intrinsic Value

$27.49

stock screener

  Rating & Target

str. buy

+518%

Previous close

$4.45

 
Intrinsic value

$27.49

 
Up/down potential

+518%

 
Rating

str. buy

We calculate the intrinsic value of GLUU 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 0.6

 

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, %
  19.20
  17.78
  16.50
  15.35
  14.32
  13.38
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
Revenue, $m
  437
  515
  600
  692
  792
  898
  1,010
  1,129
  1,255
  1,386
  1,524
  1,669
  1,819
  1,976
  2,138
  2,308
  2,484
  2,667
  2,857
  3,055
  3,260
  3,474
  3,696
  3,928
  4,169
  4,420
  4,681
  4,954
  5,238
  5,535
Variable operating expenses, $m
  115
  135
  158
  182
  207
  235
  264
  295
  328
  362
  397
  434
  473
  514
  556
  600
  646
  694
  743
  795
  848
  904
  962
  1,022
  1,085
  1,150
  1,218
  1,289
  1,363
  1,440
Fixed operating expenses, $m
  316
  323
  330
  337
  345
  352
  360
  368
  376
  384
  393
  401
  410
  419
  428
  438
  447
  457
  467
  478
  488
  499
  510
  521
  532
  544
  556
  568
  581
  594
Total operating expenses, $m
  431
  458
  488
  519
  552
  587
  624
  663
  704
  746
  790
  835
  883
  933
  984
  1,038
  1,093
  1,151
  1,210
  1,273
  1,336
  1,403
  1,472
  1,543
  1,617
  1,694
  1,774
  1,857
  1,944
  2,034
Operating income, $m
  6
  57
  113
  174
  240
  310
  386
  466
  551
  640
  735
  833
  936
  1,042
  1,154
  1,270
  1,390
  1,516
  1,647
  1,783
  1,924
  2,071
  2,225
  2,385
  2,552
  2,726
  2,907
  3,097
  3,295
  3,501
EBITDA, $m
  11
  62
  119
  180
  247
  318
  395
  476
  561
  652
  746
  845
  949
  1,057
  1,169
  1,286
  1,408
  1,535
  1,667
  1,805
  1,948
  2,096
  2,252
  2,413
  2,582
  2,757
  2,941
  3,132
  3,332
  3,541
Interest expense (income), $m
  0
  0
  1
  3
  5
  7
  9
  11
  13
  15
  18
  21
  23
  26
  29
  32
  36
  39
  43
  46
  50
  54
  58
  63
  67
  72
  77
  82
  87
  93
  98
Earnings before tax, $m
  6
  56
  110
  169
  233
  302
  375
  453
  536
  622
  715
  810
  909
  1,013
  1,121
  1,234
  1,351
  1,473
  1,600
  1,732
  1,870
  2,013
  2,162
  2,318
  2,480
  2,649
  2,825
  3,010
  3,202
  3,403
Tax expense, $m
  2
  15
  30
  46
  63
  82
  101
  122
  145
  168
  193
  219
  246
  274
  303
  333
  365
  398
  432
  468
  505
  544
  584
  626
  670
  715
  763
  813
  865
  919
Net income, $m
  5
  41
  80
  123
  170
  220
  274
  331
  391
  454
  522
  591
  664
  740
  819
  901
  986
  1,075
  1,168
  1,265
  1,365
  1,470
  1,578
  1,692
  1,810
  1,934
  2,062
  2,197
  2,337
  2,484

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
  375
  442
  514
  593
  678
  769
  866
  968
  1,075
  1,188
  1,306
  1,430
  1,559
  1,693
  1,832
  1,978
  2,129
  2,285
  2,448
  2,618
  2,794
  2,977
  3,167
  3,366
  3,572
  3,787
  4,011
  4,245
  4,489
  4,743
Adjusted assets (=assets-cash), $m
  375
  442
  514
  593
  678
  769
  866
  968
  1,075
  1,188
  1,306
  1,430
  1,559
  1,693
  1,832
  1,978
  2,129
  2,285
  2,448
  2,618
  2,794
  2,977
  3,167
  3,366
  3,572
  3,787
  4,011
  4,245
  4,489
  4,743
Revenue / Adjusted assets
  1.165
  1.165
  1.167
  1.167
  1.168
  1.168
  1.166
  1.166
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
Average production assets, $m
  94
  111
  130
  150
  171
  194
  218
  244
  271
  299
  329
  360
  393
  427
  462
  499
  537
  576
  617
  660
  704
  750
  798
  848
  900
  955
  1,011
  1,070
  1,131
  1,196
Working capital, $m
  -68
  -80
  -93
  -107
  -123
  -139
  -157
  -175
  -194
  -215
  -236
  -259
  -282
  -306
  -331
  -358
  -385
  -413
  -443
  -474
  -505
  -538
  -573
  -609
  -646
  -685
  -726
  -768
  -812
  -858
Total debt, $m
  26
  55
  87
  122
  159
  198
  240
  285
  332
  381
  432
  486
  542
  601
  662
  725
  791
  859
  930
  1,004
  1,081
  1,161
  1,244
  1,330
  1,420
  1,514
  1,612
  1,714
  1,820
  1,931
Total liabilities, $m
  163
  192
  224
  259
  296
  335
  377
  422
  469
  518
  570
  623
  680
  738
  799
  862
  928
  996
  1,068
  1,141
  1,218
  1,298
  1,381
  1,467
  1,557
  1,651
  1,749
  1,851
  1,957
  2,068
Total equity, $m
  211
  249
  290
  335
  383
  434
  488
  546
  606
  670
  737
  806
  879
  955
  1,034
  1,115
  1,201
  1,289
  1,381
  1,476
  1,576
  1,679
  1,786
  1,898
  2,015
  2,136
  2,262
  2,394
  2,532
  2,675
Total liabilities and equity, $m
  374
  441
  514
  594
  679
  769
  865
  968
  1,075
  1,188
  1,307
  1,429
  1,559
  1,693
  1,833
  1,977
  2,129
  2,285
  2,449
  2,617
  2,794
  2,977
  3,167
  3,365
  3,572
  3,787
  4,011
  4,245
  4,489
  4,743
Debt-to-equity ratio
  0.120
  0.220
  0.300
  0.360
  0.410
  0.460
  0.490
  0.520
  0.550
  0.570
  0.590
  0.600
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
  0.690
  0.700
  0.700
  0.700
  0.710
  0.710
  0.720
  0.720
  0.720
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
  5
  41
  80
  123
  170
  220
  274
  331
  391
  454
  522
  591
  664
  740
  819
  901
  986
  1,075
  1,168
  1,265
  1,365
  1,470
  1,578
  1,692
  1,810
  1,934
  2,062
  2,197
  2,337
  2,484
Depreciation, amort., depletion, $m
  5
  5
  6
  6
  7
  8
  9
  10
  10
  11
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  23
  25
  27
  28
  30
  32
  34
  36
  38
  40
Funds from operations, $m
  9
  46
  86
  130
  177
  228
  283
  340
  401
  466
  533
  603
  677
  754
  834
  917
  1,004
  1,095
  1,189
  1,287
  1,388
  1,495
  1,605
  1,720
  1,840
  1,965
  2,096
  2,233
  2,375
  2,524
Change in working capital, $m
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
Cash from operations, $m
  20
  58
  99
  144
  193
  245
  300
  359
  421
  486
  554
  626
  700
  778
  859
  944
  1,032
  1,123
  1,218
  1,317
  1,420
  1,528
  1,640
  1,756
  1,878
  2,004
  2,137
  2,275
  2,419
  2,570
Maintenance CAPEX, $m
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
New CAPEX, $m
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
Cash from investing activities, $m
  -18
  -20
  -22
  -24
  -26
  -29
  -30
  -33
  -35
  -37
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -60
  -64
  -66
  -69
  -73
  -77
  -80
  -84
  -88
  -93
  -97
  -102
Free cash flow, $m
  2
  38
  77
  120
  166
  216
  269
  326
  386
  449
  514
  583
  656
  731
  810
  892
  977
  1,066
  1,158
  1,254
  1,354
  1,458
  1,566
  1,679
  1,797
  1,920
  2,048
  2,182
  2,322
  2,468
Issuance/(repayment) of debt, $m
  26
  29
  32
  34
  37
  40
  42
  45
  47
  49
  52
  54
  56
  59
  61
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  106
  111
Issuance/(repurchase) of shares, $m
  29
  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  
  55
  29
  32
  34
  37
  40
  42
  45
  47
  49
  52
  54
  56
  59
  61
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  106
  111
Total cash flow (excl. dividends), $m
  58
  67
  109
  154
  203
  256
  311
  370
  433
  498
  566
  637
  712
  790
  871
  955
  1,043
  1,134
  1,229
  1,328
  1,431
  1,538
  1,650
  1,766
  1,887
  2,014
  2,146
  2,284
  2,428
  2,579
Retained Cash Flow (-), $m
  -34
  -38
  -41
  -45
  -48
  -51
  -54
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -99
  -103
  -107
  -112
  -116
  -121
  -126
  -132
  -137
  -144
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
  24
  29
  68
  110
  155
  204
  257
  313
  372
  434
  499
  568
  639
  714
  792
  873
  958
  1,046
  1,137
  1,232
  1,331
  1,435
  1,542
  1,654
  1,771
  1,893
  2,020
  2,152
  2,291
  2,436
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
  23
  27
  59
  90
  120
  148
  174
  196
  214
  228
  237
  242
  243
  240
  233
  222
  208
  193
  175
  157
  138
  119
  101
  84
  69
  55
  43
  33
  25
  18
Current shareholders' claim on cash, %
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6
  95.6

Glu Mobile Inc. develops, publishes and markets a portfolio of mobile games. The Company develops and publishes a portfolio of mobile games designed to appeal to a cross section of the users of smartphones and tablet devices. Its portfolio of mobile games is spread across various genres, including Fashion and Celebrity, Food, Sports and Action, Social Networking and Home. Its portfolio of games include Contract Killer, Cooking Dash, Covet Fashion, Deer Hunter, Design Home, QuizUp, Racing Rivals and Tap Sports Baseball, as well as games based on third party licensed brands, including Gordon Ramsay DASH, Kendall & Kylie, and Kim Kardashian: Hollywood. The Company works directly with other application developers to include advertising for their applications in its games, and the developers pay them based on either the number of impressions in its games or the number of users downloading the developer's application.

FINANCIAL RATIOS  of  Glu Mobile Inc. (GLUU)

Valuation Ratios
P/E Ratio -6.9
Price to Sales 3
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow -29.8
Price to Free Cash Flow -22.9
Growth Rates
Sales Growth Rate -19.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -23.4%
Ret/ On Assets - 3 Yr. Avg. -6.9%
Return On Total Capital -32.3%
Ret/ On T. Cap. - 3 Yr. Avg. -9.3%
Return On Equity -32.3%
Return On Equity - 3 Yr. Avg. -9.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 42.3%
Gross Margin - 3 Yr. Avg. 53.5%
EBITDA Margin -34.8%
EBITDA Margin - 3 Yr. Avg. -9.5%
Operating Margin -38.8%
Oper. Margin - 3 Yr. Avg. -13.4%
Pre-Tax Margin -43.8%
Pre-Tax Margin - 3 Yr. Avg. -15.4%
Net Profit Margin -43.3%
Net Profit Margin - 3 Yr. Avg. -14.2%
Effective Tax Rate 1.1%
Eff/ Tax Rate - 3 Yr. Avg. -233%
Payout Ratio 0%

GLUU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GLUU stock intrinsic value calculation we used $367 million for the last fiscal year's total revenue generated by Glu Mobile Inc.. The default revenue input number comes from 0001 income statement of Glu Mobile 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 GLUU stock valuation model: a) initial revenue growth rate of 19.2% 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 GLUU is calculated based on our internal credit rating of Glu Mobile 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 Glu Mobile 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 GLUU stock the variable cost ratio is equal to 26.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $309 million in the base year in the intrinsic value calculation for GLUU 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 Glu Mobile Inc..

Corporate tax rate of 27% is the nominal tax rate for Glu Mobile 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 GLUU 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 GLUU are equal to 21.6%.

Life of production assets of 37.4 years is the average useful life of capital assets used in Glu Mobile 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 GLUU is equal to -15.5%. 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 - $177.313 million for Glu Mobile 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 144.456 million for Glu Mobile 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 Glu Mobile Inc. at the current share price and the inputted number of shares is $0.6 billion.

RELATED COMPANIES Price Int.Val. Rating
GOOGL Alphabet Inc. 1,179.21 985.65  hold
AAPL Apple Inc. 206.50 166.34  hold
FB Facebook, Inc. 183.70 350.44  str.buy
ZNGA Zynga Inc. 5.57 1.04  str.sell
EA Electronic Art 89.56 166.95  str.buy
ATVI Activision Bli 46.66 44.96  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.