Intrinsic value of Liberty TripAdvisor Holdings Series A - LTRPA

Previous Close

$18.52

  Intrinsic Value

$31.38

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  Rating & Target

str. buy

+69%

Previous close

$18.52

 
Intrinsic value

$31.38

 
Up/down potential

+69%

 
Rating

str. buy

We calculate the intrinsic value of LTRPA 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 1.3

 

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
  1,600
  1,637
  1,679
  1,727
  1,779
  1,836
  1,899
  1,967
  2,039
  2,118
  2,201
  2,291
  2,386
  2,487
  2,594
  2,708
  2,828
  2,956
  3,090
  3,232
  3,382
  3,540
  3,706
  3,882
  4,067
  4,261
  4,466
  4,682
  4,908
  5,147
Variable operating expenses, $m
  1,568
  1,595
  1,625
  1,659
  1,697
  1,739
  1,784
  1,833
  1,886
  1,943
  1,593
  1,658
  1,727
  1,800
  1,878
  1,960
  2,047
  2,139
  2,236
  2,339
  2,448
  2,562
  2,683
  2,810
  2,943
  3,084
  3,232
  3,388
  3,552
  3,725
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
  1,568
  1,595
  1,625
  1,659
  1,697
  1,739
  1,784
  1,833
  1,886
  1,943
  1,593
  1,658
  1,727
  1,800
  1,878
  1,960
  2,047
  2,139
  2,236
  2,339
  2,448
  2,562
  2,683
  2,810
  2,943
  3,084
  3,232
  3,388
  3,552
  3,725
Operating income, $m
  32
  42
  54
  67
  82
  97
  115
  133
  153
  175
  608
  633
  659
  687
  717
  748
  781
  816
  854
  893
  934
  978
  1,024
  1,072
  1,123
  1,177
  1,234
  1,293
  1,356
  1,422
EBITDA, $m
  554
  567
  582
  598
  616
  636
  658
  681
  706
  734
  763
  794
  827
  862
  899
  938
  980
  1,024
  1,070
  1,120
  1,172
  1,226
  1,284
  1,345
  1,409
  1,476
  1,547
  1,622
  1,700
  1,783
Interest expense (income), $m
  10
  38
  21
  27
  34
  42
  50
  59
  69
  80
  92
  104
  117
  132
  147
  163
  180
  198
  218
  238
  260
  282
  306
  331
  358
  386
  416
  447
  480
  514
  550
Earnings before tax, $m
  -6
  21
  27
  33
  40
  47
  56
  64
  74
  84
  504
  515
  527
  540
  554
  568
  583
  599
  616
  633
  652
  672
  692
  714
  737
  762
  787
  814
  842
  872
Tax expense, $m
  0
  6
  7
  9
  11
  13
  15
  17
  20
  23
  136
  139
  142
  146
  149
  153
  157
  162
  166
  171
  176
  181
  187
  193
  199
  206
  212
  220
  227
  235
Net income, $m
  -6
  15
  20
  24
  29
  35
  41
  47
  54
  61
  368
  376
  385
  394
  404
  414
  425
  437
  449
  462
  476
  490
  505
  521
  538
  556
  574
  594
  615
  636

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
  5,264
  5,385
  5,524
  5,679
  5,851
  6,040
  6,246
  6,469
  6,709
  6,966
  7,242
  7,535
  7,848
  8,181
  8,534
  8,908
  9,304
  9,722
  10,165
  10,632
  11,125
  11,644
  12,192
  12,769
  13,377
  14,017
  14,691
  15,400
  16,146
  16,930
Adjusted assets (=assets-cash), $m
  5,264
  5,385
  5,524
  5,679
  5,851
  6,040
  6,246
  6,469
  6,709
  6,966
  7,242
  7,535
  7,848
  8,181
  8,534
  8,908
  9,304
  9,722
  10,165
  10,632
  11,125
  11,644
  12,192
  12,769
  13,377
  14,017
  14,691
  15,400
  16,146
  16,930
Revenue / Adjusted assets
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
Average production assets, $m
  2,740
  2,803
  2,875
  2,956
  3,045
  3,144
  3,251
  3,367
  3,492
  3,626
  3,769
  3,922
  4,085
  4,258
  4,441
  4,636
  4,842
  5,060
  5,290
  5,533
  5,790
  6,060
  6,345
  6,646
  6,962
  7,295
  7,646
  8,015
  8,403
  8,811
Working capital, $m
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
Total debt, $m
  396
  505
  630
  769
  924
  1,094
  1,279
  1,480
  1,696
  1,928
  2,175
  2,440
  2,722
  3,021
  3,338
  3,675
  4,031
  4,408
  4,806
  5,227
  5,670
  6,138
  6,631
  7,150
  7,697
  8,274
  8,880
  9,518
  10,189
  10,895
Total liabilities, $m
  4,738
  4,847
  4,972
  5,111
  5,266
  5,436
  5,621
  5,822
  6,038
  6,270
  6,517
  6,782
  7,064
  7,363
  7,680
  8,017
  8,373
  8,750
  9,148
  9,569
  10,012
  10,480
  10,973
  11,492
  12,039
  12,616
  13,222
  13,860
  14,531
  15,237
Total equity, $m
  526
  539
  552
  568
  585
  604
  625
  647
  671
  697
  724
  754
  785
  818
  853
  891
  930
  972
  1,016
  1,063
  1,112
  1,164
  1,219
  1,277
  1,338
  1,402
  1,469
  1,540
  1,615
  1,693
Total liabilities and equity, $m
  5,264
  5,386
  5,524
  5,679
  5,851
  6,040
  6,246
  6,469
  6,709
  6,967
  7,241
  7,536
  7,849
  8,181
  8,533
  8,908
  9,303
  9,722
  10,164
  10,632
  11,124
  11,644
  12,192
  12,769
  13,377
  14,018
  14,691
  15,400
  16,146
  16,930
Debt-to-equity ratio
  0.750
  0.940
  1.140
  1.350
  1.580
  1.810
  2.050
  2.290
  2.530
  2.770
  3.000
  3.240
  3.470
  3.690
  3.910
  4.130
  4.330
  4.530
  4.730
  4.920
  5.100
  5.270
  5.440
  5.600
  5.750
  5.900
  6.040
  6.180
  6.310
  6.440
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  15
  20
  24
  29
  35
  41
  47
  54
  61
  368
  376
  385
  394
  404
  414
  425
  437
  449
  462
  476
  490
  505
  521
  538
  556
  574
  594
  615
  636
Depreciation, amort., depletion, $m
  522
  525
  528
  531
  535
  539
  543
  548
  553
  558
  154
  161
  167
  174
  182
  190
  198
  207
  217
  227
  237
  248
  260
  272
  285
  299
  313
  328
  344
  361
Funds from operations, $m
  516
  540
  547
  555
  564
  573
  584
  595
  607
  619
  522
  537
  552
  569
  586
  604
  624
  644
  666
  689
  713
  739
  766
  794
  824
  855
  888
  923
  959
  997
Change in working capital, $m
  0
  0
  0
  0
  -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
Cash from operations, $m
  516
  540
  548
  556
  564
  574
  584
  595
  607
  620
  523
  538
  553
  570
  587
  606
  625
  646
  668
  691
  715
  740
  767
  796
  825
  857
  890
  925
  961
  1,000
Maintenance CAPEX, $m
  -110
  -112
  -115
  -118
  -121
  -125
  -129
  -133
  -138
  -143
  -149
  -154
  -161
  -167
  -174
  -182
  -190
  -198
  -207
  -217
  -227
  -237
  -248
  -260
  -272
  -285
  -299
  -313
  -328
  -344
New CAPEX, $m
  -54
  -63
  -72
  -81
  -90
  -98
  -107
  -116
  -125
  -134
  -143
  -153
  -163
  -173
  -184
  -195
  -206
  -218
  -230
  -243
  -256
  -270
  -285
  -300
  -316
  -333
  -351
  -369
  -388
  -408
Cash from investing activities, $m
  -164
  -175
  -187
  -199
  -211
  -223
  -236
  -249
  -263
  -277
  -292
  -307
  -324
  -340
  -358
  -377
  -396
  -416
  -437
  -460
  -483
  -507
  -533
  -560
  -588
  -618
  -650
  -682
  -716
  -752
Free cash flow, $m
  352
  365
  361
  357
  354
  351
  348
  346
  345
  343
  231
  230
  230
  229
  229
  229
  229
  229
  230
  231
  231
  233
  234
  235
  237
  238
  240
  242
  245
  247
Issuance/(repayment) of debt, $m
  -315
  109
  125
  140
  155
  170
  185
  200
  216
  232
  248
  265
  282
  299
  318
  337
  356
  377
  398
  420
  444
  468
  493
  519
  547
  576
  606
  638
  671
  706
Issuance/(repurchase) of shares, $m
  432
  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  
  117
  109
  125
  140
  155
  170
  185
  200
  216
  232
  248
  265
  282
  299
  318
  337
  356
  377
  398
  420
  444
  468
  493
  519
  547
  576
  606
  638
  671
  706
Total cash flow (excl. dividends), $m
  469
  474
  485
  497
  509
  521
  534
  547
  561
  575
  479
  495
  511
  529
  547
  566
  585
  606
  628
  651
  675
  700
  727
  755
  784
  814
  847
  880
  916
  953
Retained Cash Flow (-), $m
  -432
  -12
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -75
  -78
Prev. year cash balance distribution, $m
  323
  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
  360
  462
  471
  481
  491
  502
  513
  524
  537
  549
  452
  466
  480
  495
  511
  528
  546
  564
  584
  604
  626
  648
  672
  697
  723
  750
  779
  810
  841
  875
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
  345
  423
  410
  396
  381
  364
  347
  328
  308
  288
  214
  199
  183
  166
  150
  134
  119
  104
  90
  77
  65
  54
  44
  35
  28
  22
  17
  13
  9
  7
Current shareholders' claim on cash, %
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4
  42.4

Liberty TripAdvisor Holdings, Inc. is a holding company. Through its interests in subsidiaries and other companies, the Company is primarily engaged in the online travel research and online commerce industries. The Company's subsidiaries include TripAdvisor, Inc. (TripAdvisor), which owns and operates a portfolio of online travel brands, and BuySeasons, Inc., which owns and operates BuyCostumes.com and the Celebrate Express (BuySeasons) family of Websites. TripAdvisor is a travel site focusing on helping people around the world to plan and book a trip. TripAdvisor manages its business in two segments: Hotel, including click-based advertising, display-based advertising and subscription-based advertising, and Non-Hotel, including its attractions, restaurants and vacation rental businesses. BuySeasons is an online retailer and supplier of costumes, accessories, seasonal decor and party supplies.

FINANCIAL RATIOS  of  Liberty TripAdvisor Holdings Series A (LTRPA)

Valuation Ratios
P/E Ratio 66.1
Price to Sales 0.9
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 4.6
Price to Free Cash Flow 6.1
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34.8%
Cap. Spend. - 3 Yr. Gr. Rate 4%
Financial Strength
Quick Ratio 10
Current Ratio 0.1
LT Debt to Equity 69.1%
Total Debt to Equity 79.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital 1.5%
Ret/ On T. Cap. - 3 Yr. Avg. -0.8%
Return On Equity 2.6%
Return On Equity - 3 Yr. Avg. -1.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 31.7%
EBITDA Margin 18.1%
EBITDA Margin - 3 Yr. Avg. 20.8%
Operating Margin 1.5%
Oper. Margin - 3 Yr. Avg. 2.5%
Pre-Tax Margin 3%
Pre-Tax Margin - 3 Yr. Avg. 2.2%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. -0.9%
Effective Tax Rate -2.2%
Eff/ Tax Rate - 3 Yr. Avg. -57.5%
Payout Ratio 0%

LTRPA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LTRPA stock intrinsic value calculation we used $1569 million for the last fiscal year's total revenue generated by Liberty TripAdvisor Holdings Series A. The default revenue input number comes from 0001 income statement of Liberty TripAdvisor Holdings Series 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 LTRPA 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 4.3%, whose default value for LTRPA is calculated based on our internal credit rating of Liberty TripAdvisor Holdings Series 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 TripAdvisor Holdings Series 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 LTRPA stock the variable cost ratio is equal to 98.5%.

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 LTRPA 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 TripAdvisor Holdings Series A.

Corporate tax rate of 27% is the nominal tax rate for Liberty TripAdvisor Holdings Series 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 LTRPA 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 LTRPA are equal to 171.2%.

Life of production assets of 24.4 years is the average useful life of capital assets used in Liberty TripAdvisor Holdings Series 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 LTRPA is equal to -1%. 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 - $424 million for Liberty TripAdvisor Holdings Series 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 72.127 million for Liberty TripAdvisor Holdings Series 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 TripAdvisor Holdings Series A at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Liberty TripAdvisor: 3Q Earnings Snapshot   [Nov-08-18 02:26PM  Associated Press]
▶ Liberty TripAdvisor: 1Q Earnings Snapshot   [May-10-18 05:13AM  Associated Press]
▶ Colorado: The state that gives out the most negative hotel reviews   [Jan-19-18 10:16AM  American City Business Journals]
▶ Liberty TripAdvisor reports 3Q loss   [Nov-08-17 03:41PM  Associated Press]
▶ TripAdvisor CEO: Trump immigration ban 'heartless and discriminatory'   [02:20PM  American City Business Journals]
▶ [$$] Liberty Media: Better Than Berkshire   [Oct-01-16 12:01AM  at Barrons.com]

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