Intrinsic value of ILG - ILG

Previous Close

$34.13

  Intrinsic Value

$16.09

stock screener

  Rating & Target

str. sell

-53%

Previous close

$34.13

 
Intrinsic value

$16.09

 
Up/down potential

-53%

 
Rating

str. sell

We calculate the intrinsic value of ILG 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 4.2

 

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, %
  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
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  1,866
  1,951
  2,041
  2,136
  2,235
  2,340
  2,451
  2,568
  2,691
  2,820
  2,956
  3,099
  3,250
  3,408
  3,575
  3,750
  3,934
  4,127
  4,331
  4,544
  4,769
  5,005
  5,252
  5,513
  5,786
  6,073
  6,375
  6,692
  7,025
  7,374
Variable operating expenses, $m
  1,606
  1,675
  1,747
  1,823
  1,904
  1,989
  2,078
  2,172
  2,271
  2,376
  2,385
  2,501
  2,622
  2,750
  2,884
  3,025
  3,174
  3,330
  3,494
  3,666
  3,847
  4,038
  4,238
  4,448
  4,668
  4,900
  5,143
  5,399
  5,668
  5,950
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
  1,606
  1,675
  1,747
  1,823
  1,904
  1,989
  2,078
  2,172
  2,271
  2,376
  2,385
  2,501
  2,622
  2,750
  2,884
  3,025
  3,174
  3,330
  3,494
  3,666
  3,847
  4,038
  4,238
  4,448
  4,668
  4,900
  5,143
  5,399
  5,668
  5,950
Operating income, $m
  260
  277
  294
  312
  331
  352
  373
  396
  420
  445
  571
  599
  628
  659
  691
  725
  760
  797
  837
  878
  921
  967
  1,015
  1,065
  1,118
  1,173
  1,232
  1,293
  1,357
  1,425
EBITDA, $m
  418
  437
  457
  478
  501
  524
  549
  575
  603
  631
  662
  694
  728
  763
  800
  840
  881
  924
  970
  1,018
  1,068
  1,121
  1,176
  1,234
  1,296
  1,360
  1,427
  1,498
  1,573
  1,651
Interest expense (income), $m
  24
  61
  66
  72
  77
  83
  89
  95
  102
  109
  117
  124
  133
  141
  151
  160
  170
  181
  192
  204
  216
  229
  243
  257
  272
  288
  305
  322
  341
  360
  380
Earnings before tax, $m
  199
  210
  222
  235
  249
  263
  278
  294
  310
  328
  447
  466
  487
  508
  531
  554
  579
  605
  633
  662
  692
  724
  758
  793
  830
  869
  910
  952
  997
  1,045
Tax expense, $m
  54
  57
  60
  63
  67
  71
  75
  79
  84
  89
  121
  126
  131
  137
  143
  150
  156
  163
  171
  179
  187
  195
  205
  214
  224
  235
  246
  257
  269
  282
Net income, $m
  145
  153
  162
  172
  182
  192
  203
  214
  227
  239
  326
  340
  355
  371
  387
  405
  423
  442
  462
  483
  505
  529
  553
  579
  606
  634
  664
  695
  728
  763

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
  3,856
  4,032
  4,217
  4,412
  4,618
  4,836
  5,065
  5,306
  5,560
  5,827
  6,108
  6,404
  6,715
  7,042
  7,386
  7,748
  8,128
  8,528
  8,948
  9,389
  9,853
  10,340
  10,852
  11,390
  11,955
  12,548
  13,172
  13,826
  14,514
  15,236
Adjusted assets (=assets-cash), $m
  3,856
  4,032
  4,217
  4,412
  4,618
  4,836
  5,065
  5,306
  5,560
  5,827
  6,108
  6,404
  6,715
  7,042
  7,386
  7,748
  8,128
  8,528
  8,948
  9,389
  9,853
  10,340
  10,852
  11,390
  11,955
  12,548
  13,172
  13,826
  14,514
  15,236
Revenue / Adjusted assets
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
Average production assets, $m
  1,152
  1,204
  1,259
  1,318
  1,379
  1,444
  1,512
  1,584
  1,660
  1,740
  1,824
  1,912
  2,005
  2,103
  2,206
  2,314
  2,427
  2,547
  2,672
  2,804
  2,942
  3,088
  3,241
  3,401
  3,570
  3,747
  3,933
  4,129
  4,334
  4,550
Working capital, $m
  286
  299
  312
  327
  342
  358
  375
  393
  412
  431
  452
  474
  497
  521
  547
  574
  602
  632
  663
  695
  730
  766
  804
  843
  885
  929
  975
  1,024
  1,075
  1,128
Total debt, $m
  1,231
  1,326
  1,427
  1,534
  1,646
  1,764
  1,889
  2,021
  2,159
  2,305
  2,458
  2,619
  2,789
  2,967
  3,155
  3,352
  3,559
  3,777
  4,006
  4,246
  4,499
  4,764
  5,043
  5,337
  5,644
  5,968
  6,308
  6,664
  7,039
  7,433
Total liabilities, $m
  2,102
  2,197
  2,298
  2,405
  2,517
  2,635
  2,760
  2,892
  3,030
  3,176
  3,329
  3,490
  3,660
  3,838
  4,026
  4,223
  4,430
  4,648
  4,877
  5,117
  5,370
  5,635
  5,914
  6,208
  6,515
  6,839
  7,179
  7,535
  7,910
  8,304
Total equity, $m
  1,755
  1,834
  1,919
  2,008
  2,101
  2,200
  2,304
  2,414
  2,530
  2,651
  2,779
  2,914
  3,055
  3,204
  3,361
  3,525
  3,698
  3,880
  4,071
  4,272
  4,483
  4,705
  4,938
  5,182
  5,439
  5,710
  5,993
  6,291
  6,604
  6,933
Total liabilities and equity, $m
  3,857
  4,031
  4,217
  4,413
  4,618
  4,835
  5,064
  5,306
  5,560
  5,827
  6,108
  6,404
  6,715
  7,042
  7,387
  7,748
  8,128
  8,528
  8,948
  9,389
  9,853
  10,340
  10,852
  11,390
  11,954
  12,549
  13,172
  13,826
  14,514
  15,237
Debt-to-equity ratio
  0.700
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
  0.840
  0.850
  0.870
  0.880
  0.900
  0.910
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.050
  1.060
  1.070
  1.070
Adjusted equity ratio
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  145
  153
  162
  172
  182
  192
  203
  214
  227
  239
  326
  340
  355
  371
  387
  405
  423
  442
  462
  483
  505
  529
  553
  579
  606
  634
  664
  695
  728
  763
Depreciation, amort., depletion, $m
  158
  160
  163
  166
  169
  172
  176
  179
  183
  187
  91
  95
  100
  105
  110
  115
  121
  127
  133
  139
  146
  154
  161
  169
  178
  186
  196
  205
  216
  226
Funds from operations, $m
  303
  314
  325
  338
  351
  364
  379
  394
  410
  426
  417
  435
  455
  475
  497
  520
  544
  569
  595
  623
  652
  682
  714
  748
  783
  821
  860
  901
  944
  989
Change in working capital, $m
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
Cash from operations, $m
  291
  301
  312
  323
  335
  348
  362
  376
  391
  407
  396
  414
  432
  451
  472
  493
  515
  539
  564
  590
  617
  646
  676
  708
  742
  777
  813
  852
  893
  936
Maintenance CAPEX, $m
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -139
  -146
  -154
  -161
  -169
  -178
  -186
  -196
  -205
  -216
New CAPEX, $m
  -50
  -52
  -55
  -58
  -62
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -119
  -125
  -132
  -138
  -146
  -153
  -161
  -169
  -177
  -186
  -196
  -205
  -216
Cash from investing activities, $m
  -105
  -109
  -115
  -121
  -128
  -134
  -140
  -147
  -155
  -163
  -171
  -179
  -188
  -198
  -208
  -218
  -229
  -240
  -252
  -265
  -277
  -292
  -307
  -322
  -338
  -355
  -372
  -392
  -410
  -432
Free cash flow, $m
  186
  191
  196
  202
  208
  215
  221
  229
  236
  244
  226
  234
  244
  254
  264
  275
  287
  299
  312
  325
  339
  354
  370
  386
  404
  422
  441
  461
  482
  504
Issuance/(repayment) of debt, $m
  94
  96
  101
  107
  112
  118
  125
  131
  138
  146
  153
  161
  170
  178
  188
  197
  207
  218
  229
  241
  253
  266
  279
  293
  308
  323
  340
  357
  375
  394
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  
  94
  96
  101
  107
  112
  118
  125
  131
  138
  146
  153
  161
  170
  178
  188
  197
  207
  218
  229
  241
  253
  266
  279
  293
  308
  323
  340
  357
  375
  394
Total cash flow (excl. dividends), $m
  280
  287
  297
  309
  321
  333
  346
  360
  375
  390
  379
  396
  413
  432
  452
  472
  494
  517
  541
  566
  592
  620
  649
  679
  712
  745
  781
  818
  857
  898
Retained Cash Flow (-), $m
  -76
  -80
  -84
  -89
  -94
  -99
  -104
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -165
  -173
  -182
  -191
  -201
  -211
  -222
  -233
  -245
  -257
  -270
  -284
  -298
  -313
  -329
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
  204
  207
  213
  220
  227
  234
  242
  250
  259
  268
  251
  261
  272
  283
  295
  308
  321
  335
  349
  365
  381
  398
  416
  435
  454
  475
  497
  520
  544
  569
Discount rate, %
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
  192
  181
  173
  164
  155
  145
  135
  124
  113
  103
  83
  74
  65
  56
  48
  40
  34
  27
  22
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
  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

ILG, Inc., formerly Interval Leisure Group, Inc., is a provider of professionally delivered vacation experiences. The Company is a global licensee for the Hyatt, Westin and Sheraton brands in vacation ownership. The Company operates through two segments: Exchange and Rental, and Vacation Ownership. Its Exchange and Rental segment offers access to vacation accommodations and other travel-related transactions and services to leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers and operating vacation rental properties. Its Vacation Ownership segment engages in the management of vacation ownership resorts; sales, marketing, and financing of vacation ownership interests, and related services to owners and associations. The Company offers leisure and travel-related products and services to owners of vacation interests and others primarily through various membership programs, as well as related services to resort developer clients.

FINANCIAL RATIOS  of  ILG (ILG)

Valuation Ratios
P/E Ratio 16.1
Price to Sales 3.1
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow -607.9
Price to Free Cash Flow -41.7
Growth Rates
Sales Growth Rate 94.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 375%
Cap. Spend. - 3 Yr. Gr. Rate 41.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 37%
Total Debt to Equity 44.1%
Interest Coverage 15
Management Effectiveness
Return On Assets 12.4%
Ret/ On Assets - 3 Yr. Avg. 8.6%
Return On Total Capital 17.1%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 26.5%
Return On Equity - 3 Yr. Avg. 22%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 49.2%
Gross Margin - 3 Yr. Avg. 53.6%
EBITDA Margin 30.2%
EBITDA Margin - 3 Yr. Avg. 26.6%
Operating Margin 25.7%
Oper. Margin - 3 Yr. Avg. 21.6%
Pre-Tax Margin 23.9%
Pre-Tax Margin - 3 Yr. Avg. 20.4%
Net Profit Margin 19.5%
Net Profit Margin - 3 Yr. Avg. 14.3%
Effective Tax Rate 17.6%
Eff/ Tax Rate - 3 Yr. Avg. 29.5%
Payout Ratio 19.6%

ILG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ILG stock intrinsic value calculation we used $1786 million for the last fiscal year's total revenue generated by ILG. The default revenue input number comes from 0001 income statement of ILG. 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 ILG stock valuation model: a) initial revenue growth rate of 4.5% 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 6.5%, whose default value for ILG is calculated based on our internal credit rating of ILG, 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 ILG.
    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 ILG stock the variable cost ratio is equal to 86.3%.

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 ILG 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 ILG.

Corporate tax rate of 27% is the nominal tax rate for ILG. 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 ILG 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 ILG are equal to 61.7%.

Life of production assets of 20.1 years is the average useful life of capital assets used in ILG 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 ILG is equal to 15.3%. 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 - $1679 million for ILG - 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 124.321 million for ILG 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 ILG at the current share price and the inputted number of shares is $4.2 billion.

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