Intrinsic value of Liberty Broadband Cl A - LBRDA

Previous Close

$82.68

  Intrinsic Value

$99.66

stock screener

  Rating & Target

buy

+21%

Previous close

$82.68

 
Intrinsic value

$99.66

 
Up/down potential

+21%

 
Rating

buy

We calculate the intrinsic value of LBRDA 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 2.2

 

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, %
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  14
  16
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
Variable operating expenses, $m
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
Fixed operating expenses, $m
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  42
  43
  44
  45
  46
  47
  48
  49
  51
  52
  53
  54
  55
  56
  58
Total operating expenses, $m
  42
  43
  45
  47
  48
  51
  53
  55
  56
  59
  61
  64
  66
  69
  72
  73
  76
  79
  82
  85
  89
  92
  95
  100
  103
  107
  111
  115
  119
  124
Operating income, $m
  -27
  -28
  -28
  -28
  -29
  -29
  -30
  -30
  -30
  -31
  -31
  -31
  -32
  -32
  -33
  -33
  -33
  -34
  -34
  -35
  -35
  -35
  -36
  -36
  -36
  -37
  -37
  -37
  -37
  -38
EBITDA, $m
  -27
  -28
  -28
  -28
  -29
  -29
  -30
  -30
  -30
  -31
  -31
  -31
  -32
  -32
  -33
  -33
  -33
  -34
  -34
  -35
  -35
  -35
  -36
  -36
  -36
  -37
  -37
  -37
  -37
  -38
Interest expense (income), $m
  14
  27
  43
  52
  61
  71
  81
  91
  102
  113
  124
  136
  148
  161
  175
  189
  203
  219
  234
  251
  268
  286
  305
  325
  345
  367
  389
  413
  437
  463
  490
Earnings before tax, $m
  -54
  -71
  -80
  -90
  -100
  -110
  -120
  -131
  -143
  -155
  -167
  -180
  -193
  -207
  -221
  -236
  -252
  -268
  -285
  -303
  -321
  -340
  -360
  -381
  -403
  -426
  -449
  -474
  -500
  -528
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
  -54
  -71
  -80
  -90
  -100
  -110
  -120
  -131
  -143
  -155
  -167
  -180
  -193
  -207
  -221
  -236
  -252
  -268
  -285
  -303
  -321
  -340
  -360
  -381
  -403
  -426
  -449
  -474
  -500
  -528

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
  14,362
  15,688
  17,069
  18,507
  20,004
  21,559
  23,175
  24,855
  26,601
  28,415
  30,301
  32,263
  34,305
  36,430
  38,643
  40,949
  43,353
  45,861
  48,477
  51,209
  54,062
  57,043
  60,159
  63,418
  66,827
  70,393
  74,127
  78,036
  82,130
  86,418
Adjusted assets (=assets-cash), $m
  14,362
  15,688
  17,069
  18,507
  20,004
  21,559
  23,175
  24,855
  26,601
  28,415
  30,301
  32,263
  34,305
  36,430
  38,643
  40,949
  43,353
  45,861
  48,477
  51,209
  54,062
  57,043
  60,159
  63,418
  66,827
  70,393
  74,127
  78,036
  82,130
  86,418
Revenue / Adjusted assets
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
  0.001
Average production assets, $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
Working capital, $m
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
Total debt, $m
  805
  966
  1,135
  1,310
  1,493
  1,683
  1,880
  2,085
  2,298
  2,519
  2,749
  2,989
  3,238
  3,497
  3,767
  4,048
  4,342
  4,648
  4,967
  5,300
  5,648
  6,012
  6,392
  6,789
  7,205
  7,640
  8,096
  8,573
  9,072
  9,595
Total liabilities, $m
  1,752
  1,914
  2,082
  2,258
  2,440
  2,630
  2,827
  3,032
  3,245
  3,467
  3,697
  3,936
  4,185
  4,444
  4,714
  4,996
  5,289
  5,595
  5,914
  6,248
  6,596
  6,959
  7,339
  7,737
  8,153
  8,588
  9,043
  9,520
  10,020
  10,543
Total equity, $m
  12,610
  13,774
  14,987
  16,250
  17,563
  18,929
  20,348
  21,823
  23,355
  24,948
  26,605
  28,327
  30,120
  31,985
  33,929
  35,953
  38,064
  40,266
  42,563
  44,962
  47,467
  50,084
  52,820
  55,681
  58,674
  61,805
  65,083
  68,515
  72,110
  75,875
Total liabilities and equity, $m
  14,362
  15,688
  17,069
  18,508
  20,003
  21,559
  23,175
  24,855
  26,600
  28,415
  30,302
  32,263
  34,305
  36,429
  38,643
  40,949
  43,353
  45,861
  48,477
  51,210
  54,063
  57,043
  60,159
  63,418
  66,827
  70,393
  74,126
  78,035
  82,130
  86,418
Debt-to-equity ratio
  0.060
  0.070
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
Adjusted equity ratio
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878
  0.878

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -54
  -71
  -80
  -90
  -100
  -110
  -120
  -131
  -143
  -155
  -167
  -180
  -193
  -207
  -221
  -236
  -252
  -268
  -285
  -303
  -321
  -340
  -360
  -381
  -403
  -426
  -449
  -474
  -500
  -528
Depreciation, amort., depletion, $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
Funds from operations, $m
  -54
  -71
  -80
  -90
  -100
  -110
  -120
  -131
  -143
  -155
  -167
  -180
  -193
  -207
  -221
  -236
  -252
  -268
  -285
  -303
  -321
  -340
  -360
  -381
  -403
  -426
  -449
  -474
  -500
  -528
Change in working capital, $m
  -1
  -1
  -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
  -2
  -3
Cash from operations, $m
  -53
  -70
  -79
  -89
  -99
  -109
  -119
  -130
  -142
  -154
  -166
  -179
  -192
  -206
  -220
  -235
  -251
  -267
  -284
  -301
  -319
  -338
  -358
  -379
  -401
  -424
  -447
  -472
  -498
  -525
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $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
Free cash flow, $m
  -53
  -70
  -79
  -89
  -99
  -109
  -119
  -130
  -142
  -154
  -166
  -179
  -192
  -206
  -220
  -235
  -251
  -267
  -284
  -301
  -319
  -338
  -358
  -379
  -401
  -424
  -447
  -472
  -498
  -525
Issuance/(repayment) of debt, $m
  307
  162
  169
  175
  183
  190
  197
  205
  213
  221
  230
  239
  249
  259
  270
  281
  293
  306
  319
  333
  348
  364
  380
  398
  416
  435
  455
  477
  499
  523
Issuance/(repurchase) of shares, $m
  2,248
  1,235
  1,293
  1,353
  1,413
  1,475
  1,540
  1,606
  1,676
  1,748
  1,823
  1,903
  1,986
  2,073
  2,165
  2,261
  2,363
  2,470
  2,582
  2,701
  2,826
  2,958
  3,096
  3,242
  3,396
  3,557
  3,727
  3,906
  4,095
  4,293
Cash from financing (excl. dividends), $m  
  2,555
  1,397
  1,462
  1,528
  1,596
  1,665
  1,737
  1,811
  1,889
  1,969
  2,053
  2,142
  2,235
  2,332
  2,435
  2,542
  2,656
  2,776
  2,901
  3,034
  3,174
  3,322
  3,476
  3,640
  3,812
  3,992
  4,182
  4,383
  4,594
  4,816
Total cash flow (excl. dividends), $m
  2,501
  1,326
  1,382
  1,439
  1,497
  1,556
  1,617
  1,681
  1,747
  1,815
  1,888
  1,963
  2,043
  2,126
  2,215
  2,307
  2,406
  2,509
  2,618
  2,733
  2,855
  2,983
  3,118
  3,261
  3,411
  3,569
  3,736
  3,911
  4,096
  4,291
Retained Cash Flow (-), $m
  -2,248
  -1,235
  -1,293
  -1,353
  -1,413
  -1,475
  -1,540
  -1,606
  -1,676
  -1,748
  -1,823
  -1,903
  -1,986
  -2,073
  -2,165
  -2,261
  -2,363
  -2,470
  -2,582
  -2,701
  -2,826
  -2,958
  -3,096
  -3,242
  -3,396
  -3,557
  -3,727
  -3,906
  -4,095
  -4,293
Prev. year cash balance distribution, $m
  71
  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
  325
  91
  89
  87
  84
  81
  78
  74
  71
  68
  64
  61
  57
  53
  50
  46
  43
  39
  36
  32
  29
  25
  22
  18
  15
  12
  8
  5
  2
  -2
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  307
  81
  74
  67
  60
  53
  46
  40
  34
  29
  24
  19
  16
  12
  10
  7
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  76.4
  67.1
  59.1
  52.4
  46.6
  41.6
  37.3
  33.5
  30.2
  27.3
  24.7
  22.4
  20.4
  18.5
  16.9
  15.4
  14.1
  12.9
  11.8
  10.8
  10.0
  9.1
  8.4
  7.7
  7.1
  6.5
  6.0
  5.5
  5.1
  4.7

Liberty Broadband Corporation holds interest in Charter Communications, Inc. (Charter) and its subsidiary Skyhook Holding, Inc. (Skyhook). The Company's segments include Skyhook, Charter, and Corporate and other. Skyhook provides a wireless fidelity (Wi-Fi)-based location platform focused on providing positioning technology and contextual location intelligence solutions. Charter is an equity method investment that provides cable services in the United States, offering a range of entertainment, information and communications solutions to residential and commercial customers. Charter offers its customers subscription-based video services, including video on demand (VOD), high definition television, and digital video recorder service, Internet services and voice services. Skyhook's Wi-Fi location solution can be used to help carriers and emergency personnel offer E-9-1-1 services domestically. Charter offers broadband communications solutions for businesses and carrier organizations.

FINANCIAL RATIOS  of  Liberty Broadband Cl A (LBRDA)

Valuation Ratios
P/E Ratio 16.4
Price to Sales 484.7
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow -1252.2
Price to Free Cash Flow -1252.2
Growth Rates
Sales Growth Rate -65.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 2.3%
Total Debt to Equity 7.1%
Interest Coverage 106
Management Effectiveness
Return On Assets 14.1%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 14.5%
Ret/ On T. Cap. - 3 Yr. Avg. 2.7%
Return On Equity 15.8%
Return On Equity - 3 Yr. Avg. 3%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 33.3%
EBITDA Margin 4819.4%
EBITDA Margin - 3 Yr. Avg. 1492.8%
Operating Margin 2419.4%
Oper. Margin - 3 Yr. Avg. 762.7%
Pre-Tax Margin 4761.3%
Pre-Tax Margin - 3 Yr. Avg. 1463.9%
Net Profit Margin 2958.1%
Net Profit Margin - 3 Yr. Avg. 902.5%
Effective Tax Rate 37.9%
Eff/ Tax Rate - 3 Yr. Avg. 33.2%
Payout Ratio 0%

LBRDA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LBRDA stock intrinsic value calculation we used $13.092 million for the last fiscal year's total revenue generated by Liberty Broadband Cl A. The default revenue input number comes from 0001 income statement of Liberty Broadband Cl A. 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 LBRDA stock valuation model: a) initial revenue growth rate of 9.7% 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 5.8%, whose default value for LBRDA is calculated based on our internal credit rating of Liberty Broadband Cl A, 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 Liberty Broadband Cl A.
    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 LBRDA stock the variable cost ratio is equal to 76.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $30 million in the base year in the intrinsic value calculation for LBRDA 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 Liberty Broadband Cl A.

Corporate tax rate of 27% is the nominal tax rate for Liberty Broadband Cl A. 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 LBRDA 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 LBRDA are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Liberty Broadband Cl A 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 LBRDA is equal to -59.6%. 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 - $10486.901 million for Liberty Broadband Cl A - 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 26.308 million for Liberty Broadband Cl A 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 Liberty Broadband Cl A at the current share price and the inputted number of shares is $2.2 billion.

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COMPANY NEWS

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