Intrinsic value of JAKKS Pacific, Inc. - JAKK

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$0.61

  Intrinsic Value

$0.61

stock screener

  Rating & Target

hold

-1%

Previous close

$0.61

 
Intrinsic value

$0.61

 
Up/down potential

-1%

 
Rating

hold

We calculate the intrinsic value of JAKK 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 0.0

 

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
  625
  640
  656
  675
  695
  717
  742
  768
  797
  827
  860
  895
  932
  972
  1,014
  1,058
  1,105
  1,155
  1,207
  1,263
  1,321
  1,383
  1,448
  1,517
  1,589
  1,665
  1,745
  1,829
  1,918
  2,011
Variable operating expenses, $m
  123
  125
  128
  132
  136
  140
  145
  150
  155
  161
  165
  172
  179
  187
  195
  203
  212
  222
  232
  243
  254
  266
  278
  292
  305
  320
  335
  352
  369
  387
Fixed operating expenses, $m
  575
  588
  601
  614
  628
  642
  656
  670
  685
  700
  715
  731
  747
  764
  780
  797
  815
  833
  851
  870
  889
  909
  929
  949
  970
  991
  1,013
  1,035
  1,058
  1,082
Total operating expenses, $m
  698
  713
  729
  746
  764
  782
  801
  820
  840
  861
  880
  903
  926
  951
  975
  1,000
  1,027
  1,055
  1,083
  1,113
  1,143
  1,175
  1,207
  1,241
  1,275
  1,311
  1,348
  1,387
  1,427
  1,469
Operating income, $m
  -73
  -74
  -73
  -72
  -69
  -64
  -59
  -52
  -43
  -34
  -21
  -8
  6
  21
  38
  57
  78
  100
  124
  150
  178
  208
  241
  276
  313
  353
  396
  442
  491
  543
EBITDA, $m
  -59
  -59
  -59
  -57
  -53
  -49
  -43
  -35
  -26
  -16
  -5
  9
  23
  39
  57
  77
  98
  121
  146
  173
  203
  234
  268
  304
  343
  384
  429
  476
  526
  580
Interest expense (income), $m
  10
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
Earnings before tax, $m
  -81
  -83
  -83
  -81
  -79
  -75
  -70
  -64
  -56
  -47
  -34
  -23
  -10
  5
  21
  39
  58
  79
  102
  127
  154
  183
  214
  247
  283
  321
  362
  406
  452
  502
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  6
  10
  16
  21
  28
  34
  41
  49
  58
  67
  76
  87
  98
  110
  122
  136
Net income, $m
  -81
  -83
  -83
  -81
  -79
  -75
  -70
  -64
  -56
  -47
  -34
  -23
  -10
  4
  15
  28
  42
  58
  75
  93
  112
  133
  156
  180
  206
  234
  264
  296
  330
  367

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
  378
  386
  396
  408
  420
  433
  448
  464
  481
  500
  520
  541
  563
  587
  612
  639
  668
  698
  729
  763
  798
  836
  875
  916
  960
  1,006
  1,054
  1,105
  1,159
  1,215
Adjusted assets (=assets-cash), $m
  378
  386
  396
  408
  420
  433
  448
  464
  481
  500
  520
  541
  563
  587
  612
  639
  668
  698
  729
  763
  798
  836
  875
  916
  960
  1,006
  1,054
  1,105
  1,159
  1,215
Revenue / Adjusted assets
  1.653
  1.658
  1.657
  1.654
  1.655
  1.656
  1.656
  1.655
  1.657
  1.654
  1.654
  1.654
  1.655
  1.656
  1.657
  1.656
  1.654
  1.655
  1.656
  1.655
  1.655
  1.654
  1.655
  1.656
  1.655
  1.655
  1.656
  1.655
  1.655
  1.655
Average production assets, $m
  58
  59
  61
  63
  65
  67
  69
  71
  74
  77
  80
  83
  87
  90
  94
  98
  103
  107
  112
  117
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
Working capital, $m
  110
  113
  115
  119
  122
  126
  131
  135
  140
  146
  151
  158
  164
  171
  178
  186
  194
  203
  212
  222
  233
  243
  255
  267
  280
  293
  307
  322
  338
  354
Total debt, $m
  165
  171
  179
  187
  196
  207
  218
  230
  242
  256
  271
  287
  304
  321
  340
  360
  382
  404
  428
  453
  479
  507
  536
  567
  600
  634
  670
  708
  748
  790
Total liabilities, $m
  282
  289
  296
  304
  314
  324
  335
  347
  360
  373
  388
  404
  421
  439
  457
  478
  499
  521
  545
  570
  596
  624
  654
  685
  717
  751
  788
  826
  866
  908
Total equity, $m
  96
  98
  100
  103
  106
  110
  113
  117
  122
  126
  131
  137
  143
  149
  155
  162
  169
  177
  185
  193
  202
  211
  221
  232
  243
  255
  267
  280
  293
  307
Total liabilities and equity, $m
  378
  387
  396
  407
  420
  434
  448
  464
  482
  499
  519
  541
  564
  588
  612
  640
  668
  698
  730
  763
  798
  835
  875
  917
  960
  1,006
  1,055
  1,106
  1,159
  1,215
Debt-to-equity ratio
  1.730
  1.750
  1.780
  1.820
  1.850
  1.880
  1.920
  1.950
  1.990
  2.030
  2.060
  2.100
  2.130
  2.160
  2.200
  2.230
  2.260
  2.290
  2.320
  2.350
  2.370
  2.400
  2.420
  2.450
  2.470
  2.490
  2.510
  2.530
  2.550
  2.570
Adjusted equity ratio
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -81
  -83
  -83
  -81
  -79
  -75
  -70
  -64
  -56
  -47
  -34
  -23
  -10
  4
  15
  28
  42
  58
  75
  93
  112
  133
  156
  180
  206
  234
  264
  296
  330
  367
Depreciation, amort., depletion, $m
  14
  14
  15
  15
  15
  16
  16
  17
  17
  18
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
Funds from operations, $m
  -67
  -68
  -68
  -66
  -64
  -59
  -54
  -47
  -39
  -29
  -18
  -6
  8
  22
  34
  48
  63
  79
  97
  116
  137
  159
  183
  208
  236
  265
  297
  330
  366
  404
Change in working capital, $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 operations, $m
  -69
  -71
  -71
  -70
  -67
  -63
  -58
  -52
  -44
  -35
  -24
  -12
  1
  15
  27
  40
  55
  71
  88
  106
  126
  148
  171
  196
  223
  252
  283
  315
  350
  388
Maintenance CAPEX, $m
  -11
  -12
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
Cash from investing activities, $m
  -12
  -13
  -14
  -14
  -15
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -27
  -28
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -45
Free cash flow, $m
  -82
  -84
  -84
  -84
  -82
  -78
  -74
  -68
  -61
  -52
  -43
  -31
  -19
  -6
  5
  17
  31
  45
  61
  79
  98
  118
  140
  163
  188
  215
  244
  275
  308
  343
Issuance/(repayment) of debt, $m
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
Issuance/(repurchase) of shares, $m
  83
  85
  85
  84
  82
  78
  74
  68
  60
  52
  39
  28
  15
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  88
  91
  92
  92
  91
  88
  85
  80
  73
  66
  54
  44
  32
  20
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
Total cash flow (excl. dividends), $m
  7
  7
  8
  9
  10
  10
  11
  12
  12
  13
  12
  12
  13
  14
  24
  37
  52
  68
  85
  104
  124
  146
  169
  194
  221
  250
  280
  313
  348
  385
Retained Cash Flow (-), $m
  -83
  -85
  -85
  -84
  -82
  -78
  -74
  -68
  -60
  -52
  -39
  -28
  -15
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
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
  -76
  -77
  -77
  -75
  -72
  -68
  -63
  -56
  -48
  -38
  -28
  -16
  -2
  8
  17
  30
  45
  60
  77
  95
  115
  136
  159
  184
  210
  238
  268
  300
  335
  371
Discount rate, %
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
  -71
  -67
  -61
  -54
  -47
  -40
  -33
  -26
  -19
  -13
  -8
  -4
  0
  1
  2
  3
  4
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  44.0
  19.4
  8.7
  3.9
  1.8
  0.9
  0.5
  0.2
  0.1
  0.1
  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
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JAKKS Pacific, Inc. is a multi-line, multi-brand toy company. The Company designs, produces, markets and distributes toys and related products, pet toys, consumables and related products, electronics and related products, kids indoor and outdoor furniture, and other consumer products. The Company operates through two business segments: traditional toys and electronics, and role play, novelty and seasonal toys. The traditional toys and electronics segment includes action figures, vehicles, playsets, plush products, dolls, accessories, electronic products, construction toys, infant and pre-school toys, foot to floor ride-on vehicles, wagons and pet products and related products. The role play, novelty and seasonal segment includes role play and dress-up products, novelty toys, seasonal and outdoor products, indoor and outdoor kids' furniture and Halloween and everyday costume play.

FINANCIAL RATIOS  of  JAKKS Pacific, Inc. (JAKK)

Valuation Ratios
P/E Ratio 11.8
Price to Sales 0
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 0.7
Price to Free Cash Flow 5.9
Growth Rates
Sales Growth Rate -5.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.7%
Cap. Spend. - 3 Yr. Gr. Rate 8.4%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 151.5%
Total Debt to Equity 159%
Interest Coverage 2
Management Effectiveness
Return On Assets 0.6%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 0.7%
Return On Equity - 3 Yr. Avg. 10.4%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 31.5%
Gross Margin - 3 Yr. Avg. 30.5%
EBITDA Margin 5.4%
EBITDA Margin - 3 Yr. Avg. 6.7%
Operating Margin 2.4%
Oper. Margin - 3 Yr. Avg. 3.9%
Pre-Tax Margin 0.7%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin 0.1%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate 80%
Eff/ Tax Rate - 3 Yr. Avg. 35.6%
Payout Ratio 0%

JAKK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JAKK stock intrinsic value calculation we used $613 million for the last fiscal year's total revenue generated by JAKKS Pacific, Inc.. The default revenue input number comes from 0001 income statement of JAKKS Pacific, 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 JAKK 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 7.3%, whose default value for JAKK is calculated based on our internal credit rating of JAKKS Pacific, 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 JAKKS Pacific, 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 JAKK stock the variable cost ratio is equal to 19.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $563 million in the base year in the intrinsic value calculation for JAKK 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 JAKKS Pacific, Inc..

Corporate tax rate of 27% is the nominal tax rate for JAKKS Pacific, 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 JAKK 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 JAKK are equal to 9.3%.

Life of production assets of 4.4 years is the average useful life of capital assets used in JAKKS Pacific, 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 JAKK is equal to 17.6%. 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 - $93.544 million for JAKKS Pacific, 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 29.167 million for JAKKS Pacific, 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 JAKKS Pacific, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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