Intrinsic value of LightInTheBox Holding ADR - LITB

Previous Close

$1.35

  Intrinsic Value

$0.36

stock screener

  Rating & Target

str. sell

-74%

Previous close

$1.35

 
Intrinsic value

$0.36

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of LITB 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 0.1

 

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, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  350
  381
  414
  448
  483
  520
  558
  598
  639
  682
  726
  773
  821
  871
  924
  978
  1,035
  1,094
  1,156
  1,221
  1,289
  1,359
  1,433
  1,510
  1,591
  1,676
  1,764
  1,857
  1,954
  2,056
Variable operating expenses, $m
  361
  393
  427
  462
  498
  536
  575
  616
  659
  703
  749
  796
  846
  898
  952
  1,008
  1,067
  1,128
  1,192
  1,258
  1,328
  1,401
  1,477
  1,557
  1,640
  1,727
  1,818
  1,914
  2,014
  2,119
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
  361
  393
  427
  462
  498
  536
  575
  616
  659
  703
  749
  796
  846
  898
  952
  1,008
  1,067
  1,128
  1,192
  1,258
  1,328
  1,401
  1,477
  1,557
  1,640
  1,727
  1,818
  1,914
  2,014
  2,119
Operating income, $m
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
EBITDA, $m
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
Earnings before tax, $m
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -42
  -45
  -48
  -50
  -53
  -56
  -60
  -63
  -66
  -70
  -74
  -78
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
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -42
  -45
  -48
  -50
  -53
  -56
  -60
  -63
  -66
  -70
  -74
  -78

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
  101
  110
  119
  129
  139
  149
  160
  172
  184
  196
  209
  222
  236
  250
  265
  281
  297
  315
  332
  351
  370
  391
  412
  434
  457
  482
  507
  534
  562
  591
Adjusted assets (=assets-cash), $m
  101
  110
  119
  129
  139
  149
  160
  172
  184
  196
  209
  222
  236
  250
  265
  281
  297
  315
  332
  351
  370
  391
  412
  434
  457
  482
  507
  534
  562
  591
Revenue / Adjusted assets
  3.465
  3.464
  3.479
  3.473
  3.475
  3.490
  3.488
  3.477
  3.473
  3.480
  3.474
  3.482
  3.479
  3.484
  3.487
  3.480
  3.485
  3.473
  3.482
  3.479
  3.484
  3.476
  3.478
  3.479
  3.481
  3.477
  3.479
  3.478
  3.477
  3.479
Average production assets, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
Working capital, $m
  -24
  -27
  -29
  -31
  -34
  -36
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -65
  -68
  -72
  -77
  -81
  -85
  -90
  -95
  -100
  -106
  -111
  -117
  -123
  -130
  -137
  -144
Total debt, $m
  5
  10
  16
  21
  27
  33
  40
  46
  53
  60
  68
  75
  83
  92
  100
  110
  119
  129
  139
  150
  161
  173
  185
  198
  212
  226
  240
  256
  272
  289
Total liabilities, $m
  58
  63
  69
  75
  80
  87
  93
  99
  106
  113
  121
  129
  137
  145
  154
  163
  172
  182
  192
  203
  214
  226
  238
  251
  265
  279
  294
  309
  325
  342
Total equity, $m
  42
  46
  50
  54
  58
  63
  68
  72
  77
  83
  88
  94
  99
  105
  112
  118
  125
  132
  140
  148
  156
  164
  173
  183
  193
  203
  213
  225
  236
  249
Total liabilities and equity, $m
  100
  109
  119
  129
  138
  150
  161
  171
  183
  196
  209
  223
  236
  250
  266
  281
  297
  314
  332
  351
  370
  390
  411
  434
  458
  482
  507
  534
  561
  591
Debt-to-equity ratio
  0.120
  0.220
  0.310
  0.390
  0.460
  0.530
  0.590
  0.640
  0.690
  0.730
  0.770
  0.810
  0.840
  0.870
  0.900
  0.930
  0.950
  0.970
  0.990
  1.010
  1.030
  1.050
  1.070
  1.080
  1.100
  1.110
  1.130
  1.140
  1.150
  1.160
Adjusted equity ratio
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421
  0.421

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -42
  -45
  -48
  -50
  -53
  -56
  -60
  -63
  -66
  -70
  -74
  -78
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  1
  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
Funds from operations, $m
  -10
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
Cash from operations, $m
  -8
  -9
  -11
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -62
  -65
  -69
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
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
  -1
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
Free cash flow, $m
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -61
  -64
  -67
  -71
Issuance/(repayment) of debt, $m
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
Issuance/(repurchase) of shares, $m
  14
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  86
  90
Cash from financing (excl. dividends), $m  
  19
  21
  22
  25
  26
  28
  30
  32
  34
  36
  38
  41
  43
  45
  49
  51
  54
  57
  60
  64
  67
  71
  74
  79
  82
  87
  92
  96
  102
  107
Total cash flow (excl. dividends), $m
  10
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
Retained Cash Flow (-), $m
  -14
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -90
Prev. year cash balance distribution, $m
  17
  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
  13
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
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
  12
  -4
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -7
  -7
  -7
  -6
  -6
  -5
  -5
  -4
  -4
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  71.3
  50.8
  36.2
  25.8
  18.4
  13.1
  9.3
  6.6
  4.7
  3.4
  2.4
  1.7
  1.2
  0.9
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

LightInTheBox Holding Co., Ltd. (LightInTheBox) is an online retail company that delivers products directly to consumers around the world. The Company offers a range of products through www.lightinthebox.com, www.miniinthebox.com and its other Websites, as well as mobile applications, which are available in approximately 30 languages. It has over 687,800 product listings. The Company also offers a range of other products in its other general merchandise product category. Its major markets are Europe and North America. The Company's product offerings include apparel and other general merchandise. Its apparel category includes customized, special occasion apparel and fast fashion. Its other general merchandise category includes small accessories and gadgets, home and garden, electronics and communication devices and other products. The Company has additional Websites for specific products and geographic regions, including www.ouku.com for products targeting its Chinese customer base.

FINANCIAL RATIOS  of  LightInTheBox Holding ADR (LITB)

Valuation Ratios
P/E Ratio -20.7
Price to Sales 0.6
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow -12.4
Price to Free Cash Flow -12.4
Growth Rates
Sales Growth Rate -9.9%
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 NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -10.4%
Ret/ On Assets - 3 Yr. Avg. -28.5%
Return On Total Capital -28.1%
Ret/ On T. Cap. - 3 Yr. Avg. -88.9%
Return On Equity -28.1%
Return On Equity - 3 Yr. Avg. -88.9%
Asset Turnover 3.4
Profitability Ratios
Gross Margin 35.6%
Gross Margin - 3 Yr. Avg. 36.5%
EBITDA Margin -2.7%
EBITDA Margin - 3 Yr. Avg. -7.2%
Operating Margin -3.4%
Oper. Margin - 3 Yr. Avg. -7.9%
Pre-Tax Margin -3.1%
Pre-Tax Margin - 3 Yr. Avg. -7.7%
Net Profit Margin -3.1%
Net Profit Margin - 3 Yr. Avg. -7.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

LITB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LITB stock intrinsic value calculation we used $319.881 million for the last fiscal year's total revenue generated by LightInTheBox Holding ADR. The default revenue input number comes from 0001 income statement of LightInTheBox Holding ADR. 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 LITB stock valuation model: a) initial revenue growth rate of 9.4% 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 LITB is calculated based on our internal credit rating of LightInTheBox Holding ADR, 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 LightInTheBox Holding ADR.
    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 LITB stock the variable cost ratio is equal to 103.1%.

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 LITB 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 LightInTheBox Holding ADR.

Corporate tax rate of 27% is the nominal tax rate for LightInTheBox Holding ADR. 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 LITB 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 LITB are equal to 0.5%.

Life of production assets of 2.5 years is the average useful life of capital assets used in LightInTheBox Holding ADR 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 LITB is equal to -7%. 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 - $55.47 million for LightInTheBox Holding ADR - 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 38.17 million for LightInTheBox Holding ADR 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 LightInTheBox Holding ADR at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ LightInTheBox Announces Management Changes   [Jul-23-18 06:07AM  PR Newswire]
▶ LightInTheBox Announces Board and Management Changes   [Jun-28-18 08:09AM  PR Newswire]
▶ LightInTheBox Launches Cash on Delivery in India   [May-16-18 08:40AM  PR Newswire]
▶ LightInTheBox Launches Local Payment Services in India   [Apr-10-18 06:00AM  PR Newswire]
▶ 3 Stocks Move on Monday   [Jan-08-18 03:37PM  GuruFocus.com]
▶ LightInTheBox Accepts Bitcoin Payment   [05:00AM  PR Newswire]
▶ 5 Top China Stocks to Buy for 2017   [Dec-29-16 05:19PM  Zacks]
▶ LightInTheBox Announces Appointment of New Director   [Jun-08-16 07:00AM  PR Newswire]
▶ LIGHTINTHEBOX HOLDING CO., LTD. Financials   [01:04PM  EDGAR Online Financials]

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