Intrinsic value of Liberty Broadband Corporation - LBRDA

Previous Close

$93.18

  Intrinsic Value

$14.61

stock screener

  Rating & Target

str. sell

-84%

Previous close

$93.18

 
Intrinsic value

$14.61

 
Up/down potential

-84%

 
Rating

str. sell

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 16.9

 

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, %
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
Revenue, $m
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
  48
  50
  52
  55
  58
  60
  63
  66
  70
  73
  77
  80
  84
Variable operating expenses, $m
  67
  70
  73
  76
  79
  82
  86
  89
  93
  98
  102
  107
  112
  117
  122
  128
  134
  141
  148
  155
  162
  170
  178
  187
  196
  206
  216
  227
  238
  249
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
  67
  70
  73
  76
  79
  82
  86
  89
  93
  98
  102
  107
  112
  117
  122
  128
  134
  141
  148
  155
  162
  170
  178
  187
  196
  206
  216
  227
  238
  249
Operating income, $m
  -45
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -98
  -102
  -107
  -112
  -118
  -124
  -130
  -136
  -143
  -150
  -157
  -165
EBITDA, $m
  -45
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -98
  -102
  -107
  -112
  -118
  -124
  -130
  -136
  -143
  -150
  -157
  -165
Interest expense (income), $m
  14
  28
  24
  27
  30
  34
  37
  41
  45
  49
  54
  59
  64
  69
  75
  81
  87
  94
  101
  108
  116
  124
  132
  141
  151
  161
  171
  182
  194
  206
  219
Earnings before tax, $m
  -73
  -71
  -75
  -80
  -86
  -92
  -98
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -231
  -245
  -259
  -275
  -291
  -307
  -325
  -344
  -363
  -384
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
  -73
  -71
  -75
  -80
  -86
  -92
  -98
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -231
  -245
  -259
  -275
  -291
  -307
  -325
  -344
  -363
  -384

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
  11,407
  11,844
  12,311
  12,810
  13,342
  13,906
  14,505
  15,140
  15,813
  16,524
  17,275
  18,068
  18,905
  19,788
  20,719
  21,699
  22,732
  23,819
  24,964
  26,168
  27,435
  28,768
  30,169
  31,643
  33,193
  34,821
  36,533
  38,332
  40,223
  42,209
Adjusted assets (=assets-cash), $m
  11,407
  11,844
  12,311
  12,810
  13,342
  13,906
  14,505
  15,140
  15,813
  16,524
  17,275
  18,068
  18,905
  19,788
  20,719
  21,699
  22,732
  23,819
  24,964
  26,168
  27,435
  28,768
  30,169
  31,643
  33,193
  34,821
  36,533
  38,332
  40,223
  42,209
Revenue / Adjusted assets
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
  0.002
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
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
Total debt, $m
  449
  504
  562
  624
  691
  761
  836
  916
  1,000
  1,089
  1,182
  1,282
  1,386
  1,497
  1,613
  1,736
  1,865
  2,001
  2,144
  2,294
  2,453
  2,619
  2,794
  2,979
  3,172
  3,376
  3,590
  3,815
  4,051
  4,299
Total liabilities, $m
  1,426
  1,480
  1,539
  1,601
  1,668
  1,738
  1,813
  1,893
  1,977
  2,065
  2,159
  2,259
  2,363
  2,474
  2,590
  2,712
  2,841
  2,977
  3,120
  3,271
  3,429
  3,596
  3,771
  3,955
  4,149
  4,353
  4,567
  4,792
  5,028
  5,276
Total equity, $m
  9,981
  10,363
  10,772
  11,209
  11,674
  12,168
  12,692
  13,248
  13,836
  14,458
  15,116
  15,810
  16,542
  17,315
  18,129
  18,987
  19,890
  20,842
  21,843
  22,897
  24,006
  25,172
  26,398
  27,688
  29,043
  30,469
  31,966
  33,541
  35,195
  36,933
Total liabilities and equity, $m
  11,407
  11,843
  12,311
  12,810
  13,342
  13,906
  14,505
  15,141
  15,813
  16,523
  17,275
  18,069
  18,905
  19,789
  20,719
  21,699
  22,731
  23,819
  24,963
  26,168
  27,435
  28,768
  30,169
  31,643
  33,192
  34,822
  36,533
  38,333
  40,223
  42,209
Debt-to-equity ratio
  0.040
  0.050
  0.050
  0.060
  0.060
  0.060
  0.070
  0.070
  0.070
  0.080
  0.080
  0.080
  0.080
  0.090
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.120
  0.120
Adjusted equity ratio
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875
  0.875

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -73
  -71
  -75
  -80
  -86
  -92
  -98
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -231
  -245
  -259
  -275
  -291
  -307
  -325
  -344
  -363
  -384
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
  -73
  -71
  -75
  -80
  -86
  -92
  -98
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -231
  -245
  -259
  -275
  -291
  -307
  -325
  -344
  -363
  -384
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  -73
  -70
  -75
  -80
  -86
  -91
  -97
  -104
  -111
  -118
  -126
  -134
  -143
  -152
  -161
  -171
  -182
  -193
  -205
  -217
  -230
  -244
  -259
  -274
  -290
  -306
  -324
  -343
  -362
  -383
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
  -73
  -70
  -75
  -80
  -86
  -91
  -97
  -104
  -111
  -118
  -126
  -134
  -143
  -152
  -161
  -171
  -182
  -193
  -205
  -217
  -230
  -244
  -259
  -274
  -290
  -306
  -324
  -343
  -362
  -383
Issuance/(repayment) of debt, $m
  -74
  55
  58
  62
  66
  71
  75
  79
  84
  89
  94
  99
  105
  110
  116
  123
  129
  136
  143
  151
  158
  167
  175
  184
  194
  204
  214
  225
  236
  248
Issuance/(repurchase) of shares, $m
  -543
  453
  484
  517
  551
  586
  622
  660
  700
  741
  784
  829
  876
  925
  976
  1,030
  1,086
  1,145
  1,207
  1,272
  1,340
  1,411
  1,486
  1,564
  1,646
  1,733
  1,823
  1,918
  2,017
  2,122
Cash from financing (excl. dividends), $m  
  -617
  508
  542
  579
  617
  657
  697
  739
  784
  830
  878
  928
  981
  1,035
  1,092
  1,153
  1,215
  1,281
  1,350
  1,423
  1,498
  1,578
  1,661
  1,748
  1,840
  1,937
  2,037
  2,143
  2,253
  2,370
Total cash flow (excl. dividends), $m
  -689
  437
  468
  499
  532
  565
  600
  635
  673
  711
  752
  794
  838
  883
  931
  981
  1,033
  1,088
  1,145
  1,205
  1,268
  1,334
  1,402
  1,475
  1,550
  1,630
  1,713
  1,800
  1,892
  1,988
Retained Cash Flow (-), $m
  470
  -453
  -484
  -517
  -551
  -586
  -622
  -660
  -700
  -741
  -784
  -829
  -876
  -925
  -976
  -1,030
  -1,086
  -1,145
  -1,207
  -1,272
  -1,340
  -1,411
  -1,486
  -1,564
  -1,646
  -1,733
  -1,823
  -1,918
  -2,017
  -2,122
Prev. year cash balance distribution, $m
  75
  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
  470
  -16
  -17
  -18
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -35
  -38
  -41
  -45
  -49
  -53
  -57
  -62
  -67
  -72
  -78
  -83
  -90
  -96
  -103
  -110
  -118
  -126
  -134
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
  444
  -14
  -14
  -14
  -14
  -14
  -13
  -13
  -13
  -12
  -12
  -11
  -10
  -10
  -9
  -8
  -7
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  97.2
  94.5
  91.7
  89.0
  86.2
  83.6
  80.9
  78.3
  75.8
  73.3
  70.9
  68.5
  66.2
  63.9
  61.7
  59.6
  57.5
  55.5
  53.5
  51.6
  49.8
  48.0
  46.3
  44.6
  43.0
  41.5
  40.0
  38.5
  37.1

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 Corporation (LBRDA)

Valuation Ratios
P/E Ratio 18.5
Price to Sales 546.3
Price to Book 2
Price to Tangible Book
Price to Cash Flow -1411.2
Price to Free Cash Flow -1411.2
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 $22 million for the last fiscal year's total revenue generated by Liberty Broadband Corporation. The default revenue input number comes from 0001 income statement of Liberty Broadband Corporation. 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 3.7% 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 Corporation, 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 Corporation.
    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 295.5%.

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 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 Corporation.

Corporate tax rate of 27% is the nominal tax rate for Liberty Broadband Corporation. 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 Corporation 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 -30.6%. 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 - $10598.618 million for Liberty Broadband Corporation - 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 181.316 million for Liberty Broadband Corporation 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 Corporation at the current share price and the inputted number of shares is $16.9 billion.

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