Intrinsic value of Liberty TripAdvisor Holdings Series B - LTRPB

Previous Close

$13.90

  Intrinsic Value

$23.82

stock screener

  Rating & Target

str. buy

+71%

  Value-price divergence*

0%

Previous close

$13.90

 
Intrinsic value

$23.82

 
Up/down potential

+71%

 
Rating

str. buy

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LTRPB 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 2016), $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 1.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -2.11
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  1,532
  1,659
  1,791
  1,929
  2,072
  2,220
  2,374
  2,535
  2,702
  2,875
  3,055
  3,243
  3,439
  3,643
  3,856
  4,078
  4,309
  4,551
  4,804
  5,068
  5,344
  5,632
  5,934
  6,250
  6,581
  6,928
  7,290
  7,670
  8,069
  8,486
  8,923
Variable operating expenses, $m
 
  1,612
  1,711
  1,814
  1,921
  2,032
  2,148
  2,268
  2,392
  2,522
  2,658
  2,429
  2,575
  2,728
  2,888
  3,054
  3,227
  3,408
  3,597
  3,795
  4,002
  4,218
  4,444
  4,681
  4,928
  5,188
  5,460
  5,744
  6,042
  6,355
  6,683
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
  1,509
  1,612
  1,711
  1,814
  1,921
  2,032
  2,148
  2,268
  2,392
  2,522
  2,658
  2,429
  2,575
  2,728
  2,888
  3,054
  3,227
  3,408
  3,597
  3,795
  4,002
  4,218
  4,444
  4,681
  4,928
  5,188
  5,460
  5,744
  6,042
  6,355
  6,683
Operating income, $m
  23
  47
  80
  115
  151
  188
  227
  267
  309
  353
  398
  814
  864
  915
  968
  1,024
  1,082
  1,143
  1,206
  1,273
  1,342
  1,414
  1,490
  1,570
  1,653
  1,740
  1,831
  1,926
  2,026
  2,131
  2,241
EBITDA, $m
  245
  514
  555
  598
  642
  688
  736
  786
  838
  891
  947
  1,006
  1,066
  1,129
  1,195
  1,264
  1,336
  1,411
  1,489
  1,571
  1,657
  1,746
  1,840
  1,938
  2,040
  2,148
  2,260
  2,378
  2,501
  2,631
  2,766
Interest expense (income), $m
  10
  19
  18
  36
  54
  73
  93
  114
  135
  158
  181
  205
  230
  256
  284
  312
  342
  373
  406
  439
  475
  512
  550
  591
  633
  678
  724
  773
  824
  877
  933
Earnings before tax, $m
  46
  28
  63
  79
  97
  115
  134
  153
  174
  195
  217
  609
  633
  658
  684
  712
  740
  770
  801
  833
  867
  903
  940
  979
  1,019
  1,062
  1,107
  1,154
  1,203
  1,254
  1,308
Tax expense, $m
  -1
  8
  17
  21
  26
  31
  36
  41
  47
  53
  59
  165
  171
  178
  185
  192
  200
  208
  216
  225
  234
  244
  254
  264
  275
  287
  299
  311
  325
  339
  353
Net income, $m
  21
  20
  46
  58
  71
  84
  98
  112
  127
  142
  158
  445
  462
  481
  500
  520
  540
  562
  585
  608
  633
  659
  686
  714
  744
  775
  808
  842
  878
  915
  955

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  772
  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
  7,282
  7,060
  7,623
  8,208
  8,816
  9,447
  10,104
  10,786
  11,496
  12,234
  13,002
  13,802
  14,635
  15,503
  16,408
  17,352
  18,338
  19,367
  20,442
  21,565
  22,739
  23,968
  25,253
  26,597
  28,005
  29,479
  31,023
  32,640
  34,335
  36,111
  37,972
Adjusted assets (=assets-cash), $m
  6,510
  7,060
  7,623
  8,208
  8,816
  9,447
  10,104
  10,786
  11,496
  12,234
  13,002
  13,802
  14,635
  15,503
  16,408
  17,352
  18,338
  19,367
  20,442
  21,565
  22,739
  23,968
  25,253
  26,597
  28,005
  29,479
  31,023
  32,640
  34,335
  36,111
  37,972
Revenue / Adjusted assets
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
  0.235
Average production assets, $m
  2,527
  2,736
  2,954
  3,181
  3,416
  3,661
  3,915
  4,180
  4,455
  4,741
  5,038
  5,348
  5,671
  6,008
  6,358
  6,724
  7,106
  7,505
  7,921
  8,357
  8,812
  9,288
  9,786
  10,307
  10,852
  11,423
  12,022
  12,648
  13,305
  13,993
  14,715
Working capital, $m
  575
  -126
  -136
  -147
  -157
  -169
  -180
  -193
  -205
  -218
  -232
  -246
  -261
  -277
  -293
  -310
  -328
  -346
  -365
  -385
  -406
  -428
  -451
  -475
  -500
  -526
  -554
  -583
  -613
  -645
  -678
Total debt, $m
  635
  510
  1,017
  1,543
  2,090
  2,659
  3,249
  3,864
  4,502
  5,166
  5,858
  6,577
  7,327
  8,109
  8,923
  9,773
  10,660
  11,586
  12,554
  13,565
  14,621
  15,727
  16,883
  18,094
  19,360
  20,687
  22,076
  23,532
  25,057
  26,655
  28,331
Total liabilities, $m
  6,479
  6,354
  6,861
  7,387
  7,934
  8,503
  9,093
  9,708
  10,346
  11,010
  11,702
  12,421
  13,171
  13,953
  14,767
  15,617
  16,504
  17,430
  18,398
  19,409
  20,465
  21,571
  22,727
  23,938
  25,204
  26,531
  27,920
  29,376
  30,901
  32,499
  34,175
Total equity, $m
  803
  706
  762
  821
  882
  945
  1,010
  1,079
  1,150
  1,223
  1,300
  1,380
  1,463
  1,550
  1,641
  1,735
  1,834
  1,937
  2,044
  2,157
  2,274
  2,397
  2,525
  2,660
  2,800
  2,948
  3,102
  3,264
  3,433
  3,611
  3,797
Total liabilities and equity, $m
  7,282
  7,060
  7,623
  8,208
  8,816
  9,448
  10,103
  10,787
  11,496
  12,233
  13,002
  13,801
  14,634
  15,503
  16,408
  17,352
  18,338
  19,367
  20,442
  21,566
  22,739
  23,968
  25,252
  26,598
  28,004
  29,479
  31,022
  32,640
  34,334
  36,110
  37,972
Debt-to-equity ratio
  0.791
  0.720
  1.330
  1.880
  2.370
  2.810
  3.220
  3.580
  3.920
  4.220
  4.510
  4.770
  5.010
  5.230
  5.440
  5.630
  5.810
  5.980
  6.140
  6.290
  6.430
  6.560
  6.690
  6.800
  6.910
  7.020
  7.120
  7.210
  7.300
  7.380
  7.460
Adjusted equity ratio
  0.005
  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
  21
  20
  46
  58
  71
  84
  98
  112
  127
  142
  158
  445
  462
  481
  500
  520
  540
  562
  585
  608
  633
  659
  686
  714
  744
  775
  808
  842
  878
  915
  955
Depreciation, amort., depletion, $m
  222
  467
  475
  483
  491
  500
  509
  519
  528
  539
  549
  191
  203
  215
  227
  240
  254
  268
  283
  298
  315
  332
  349
  368
  388
  408
  429
  452
  475
  500
  526
Funds from operations, $m
  346
  487
  521
  541
  562
  584
  607
  631
  655
  681
  708
  636
  665
  695
  727
  760
  794
  830
  868
  907
  948
  991
  1,036
  1,083
  1,132
  1,183
  1,237
  1,294
  1,353
  1,415
  1,480
Change in working capital, $m
  45
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
Cash from operations, $m
  301
  497
  531
  551
  573
  595
  619
  643
  668
  694
  722
  650
  680
  711
  743
  777
  812
  848
  887
  927
  969
  1,013
  1,059
  1,107
  1,157
  1,210
  1,265
  1,323
  1,383
  1,447
  1,514
Maintenance CAPEX, $m
  0
  -90
  -98
  -106
  -114
  -122
  -131
  -140
  -149
  -159
  -169
  -180
  -191
  -203
  -215
  -227
  -240
  -254
  -268
  -283
  -298
  -315
  -332
  -349
  -368
  -388
  -408
  -429
  -452
  -475
  -500
New CAPEX, $m
  -73
  -209
  -218
  -227
  -236
  -245
  -254
  -264
  -275
  -286
  -298
  -310
  -323
  -336
  -351
  -366
  -382
  -399
  -417
  -435
  -455
  -476
  -498
  -521
  -545
  -571
  -598
  -627
  -657
  -688
  -721
Cash from investing activities, $m
  -164
  -299
  -316
  -333
  -350
  -367
  -385
  -404
  -424
  -445
  -467
  -490
  -514
  -539
  -566
  -593
  -622
  -653
  -685
  -718
  -753
  -791
  -830
  -870
  -913
  -959
  -1,006
  -1,056
  -1,109
  -1,163
  -1,221
Free cash flow, $m
  137
  197
  215
  219
  224
  229
  234
  239
  244
  249
  255
  160
  166
  172
  178
  184
  190
  196
  202
  209
  215
  222
  229
  236
  243
  251
  259
  267
  275
  284
  292
Issuance/(repayment) of debt, $m
  1
  -45
  506
  526
  547
  568
  591
  614
  639
  664
  691
  720
  750
  781
  815
  850
  887
  926
  967
  1,011
  1,057
  1,105
  1,156
  1,210
  1,267
  1,327
  1,389
  1,456
  1,525
  1,598
  1,675
Issuance/(repurchase) of shares, $m
  -96
  575
  11
  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
Cash from financing (excl. dividends), $m  
  -110
  530
  517
  527
  547
  568
  591
  614
  639
  664
  691
  720
  750
  781
  815
  850
  887
  926
  967
  1,011
  1,057
  1,105
  1,156
  1,210
  1,267
  1,327
  1,389
  1,456
  1,525
  1,598
  1,675
Total cash flow (excl. dividends), $m
  10
  727
  732
  746
  771
  797
  824
  853
  882
  913
  946
  880
  916
  953
  992
  1,033
  1,077
  1,122
  1,170
  1,220
  1,272
  1,327
  1,385
  1,446
  1,510
  1,577
  1,648
  1,722
  1,800
  1,882
  1,968
Retained Cash Flow (-), $m
  5
  -595
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -83
  -87
  -91
  -94
  -99
  -103
  -107
  -112
  -117
  -123
  -128
  -134
  -141
  -147
  -154
  -162
  -169
  -178
  -186
Prev. year cash balance distribution, $m
 
  692
  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
 
  824
  676
  688
  710
  734
  759
  784
  811
  840
  869
  800
  832
  866
  902
  939
  978
  1,019
  1,062
  1,107
  1,155
  1,204
  1,257
  1,312
  1,369
  1,430
  1,494
  1,560
  1,631
  1,704
  1,782
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
 
  790
  619
  598
  585
  569
  551
  530
  507
  482
  456
  380
  355
  329
  303
  276
  249
  222
  196
  170
  147
  125
  104
  86
  70
  56
  44
  33
  25
  19
  13
Current shareholders' claim on cash, %
  100
  19.1
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9
  18.9

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 B (LTRPB)

Valuation Ratios
P/E Ratio 49.6
Price to Sales 0.7
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 3.5
Price to Free Cash Flow 4.6
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%

LTRPB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LTRPB stock intrinsic value calculation we used $1532 million for the last fiscal year's total revenue generated by Liberty TripAdvisor Holdings Series B. The default revenue input number comes from 2016 income statement of Liberty TripAdvisor Holdings Series B. 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 LTRPB stock valuation model: a) initial revenue growth rate of 8.3% 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 LTRPB is calculated based on our internal credit rating of Liberty TripAdvisor Holdings Series B, 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 B.
    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 LTRPB stock the variable cost ratio is equal to 99%.

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 LTRPB 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 3.5% for Liberty TripAdvisor Holdings Series B.

Corporate tax rate of 27% is the nominal tax rate for Liberty TripAdvisor Holdings Series B. 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 LTRPB 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 LTRPB are equal to 164.9%.

Life of production assets of 28 years is the average useful life of capital assets used in Liberty TripAdvisor Holdings Series B 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 LTRPB is equal to -7.6%. 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 - $803 million for Liberty TripAdvisor Holdings Series B - 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 70.806 million for Liberty TripAdvisor Holdings Series B 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 B at the current share price and the inputted number of shares is $1.0 billion.

Financial statements of LTRPB
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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