Intrinsic value of Marathon Patent Group, Inc. - MARA

Previous Close

$0.62

  Intrinsic Value

$0.07

stock screener

  Rating & Target

str. sell

-88%

Previous close

$0.62

 
Intrinsic value

$0.07

 
Up/down potential

-88%

 
Rating

str. sell

We calculate the intrinsic value of MARA 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 0.0

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  45
  55
  65
  76
  89
  102
  117
  132
  149
  166
  184
  203
  224
  245
  266
  289
  313
  338
  363
Variable operating expenses, $m
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  45
  55
  65
  76
  89
  102
  117
  132
  149
  166
  184
  203
  224
  245
  266
  289
  313
  338
  363
Fixed operating expenses, $m
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  18
  19
  19
  20
  20
  21
  21
  21
  22
  22
  23
  23
  24
  24
  25
Total operating expenses, $m
  15
  16
  18
  19
  22
  25
  29
  33
  40
  46
  54
  62
  72
  83
  94
  107
  121
  136
  152
  169
  187
  205
  224
  246
  267
  289
  312
  337
  362
  388
Operating income, $m
  -13
  -14
  -14
  -14
  -14
  -15
  -15
  -15
  -16
  -16
  -17
  -17
  -17
  -18
  -18
  -18
  -19
  -19
  -20
  -20
  -21
  -21
  -21
  -22
  -22
  -23
  -23
  -24
  -24
  -25
EBITDA, $m
  -13
  -13
  -13
  -14
  -14
  -14
  -14
  -14
  -13
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -4
  -3
  -2
  0
  2
  3
  5
  7
  9
  11
  13
Interest expense (income), $m
  2
  0
  1
  1
  3
  4
  7
  10
  13
  18
  23
  29
  37
  45
  55
  65
  77
  90
  104
  119
  134
  151
  169
  188
  208
  228
  250
  272
  296
  320
  345
Earnings before tax, $m
  -13
  -14
  -15
  -17
  -19
  -21
  -25
  -29
  -33
  -39
  -46
  -54
  -63
  -72
  -83
  -96
  -109
  -123
  -138
  -155
  -172
  -190
  -209
  -229
  -251
  -273
  -296
  -319
  -344
  -370
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
  -13
  -14
  -15
  -17
  -19
  -21
  -25
  -29
  -33
  -39
  -46
  -54
  -63
  -72
  -83
  -96
  -109
  -123
  -138
  -155
  -172
  -190
  -209
  -229
  -251
  -273
  -296
  -319
  -344
  -370

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
  12
  19
  29
  42
  59
  81
  108
  142
  183
  231
  287
  351
  423
  503
  591
  688
  793
  905
  1,025
  1,152
  1,287
  1,429
  1,577
  1,733
  1,896
  2,065
  2,242
  2,426
  2,617
  2,816
Adjusted assets (=assets-cash), $m
  12
  19
  29
  42
  59
  81
  108
  142
  183
  231
  287
  351
  423
  503
  591
  688
  793
  905
  1,025
  1,152
  1,287
  1,429
  1,577
  1,733
  1,896
  2,065
  2,242
  2,426
  2,617
  2,816
Revenue / Adjusted assets
  0.167
  0.105
  0.138
  0.119
  0.136
  0.123
  0.130
  0.127
  0.131
  0.130
  0.129
  0.128
  0.130
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
  0.129
Average production assets, $m
  5
  8
  12
  17
  24
  33
  44
  58
  74
  94
  117
  143
  172
  205
  241
  280
  322
  368
  417
  469
  524
  581
  642
  705
  771
  840
  912
  987
  1,065
  1,146
Working capital, $m
  -12
  -19
  -28
  -41
  -57
  -79
  -106
  -139
  -179
  -226
  -280
  -343
  -413
  -491
  -578
  -672
  -774
  -884
  -1,001
  -1,125
  -1,257
  -1,395
  -1,540
  -1,692
  -1,851
  -2,017
  -2,190
  -2,369
  -2,556
  -2,750
Total debt, $m
  3
  10
  18
  30
  45
  65
  90
  120
  157
  200
  251
  308
  373
  445
  525
  612
  706
  807
  915
  1,029
  1,150
  1,278
  1,412
  1,552
  1,699
  1,851
  2,010
  2,176
  2,348
  2,527
Total liabilities, $m
  11
  17
  26
  37
  53
  73
  97
  128
  165
  208
  258
  316
  380
  453
  532
  619
  713
  814
  922
  1,037
  1,158
  1,286
  1,420
  1,560
  1,706
  1,859
  2,018
  2,183
  2,355
  2,534
Total equity, $m
  1
  2
  3
  4
  6
  8
  11
  14
  18
  23
  29
  35
  42
  50
  59
  69
  79
  90
  102
  115
  129
  143
  158
  173
  190
  207
  224
  243
  262
  282
Total liabilities and equity, $m
  12
  19
  29
  41
  59
  81
  108
  142
  183
  231
  287
  351
  422
  503
  591
  688
  792
  904
  1,024
  1,152
  1,287
  1,429
  1,578
  1,733
  1,896
  2,066
  2,242
  2,426
  2,617
  2,816
Debt-to-equity ratio
  2.820
  5.000
  6.320
  7.160
  7.690
  8.050
  8.290
  8.460
  8.580
  8.670
  8.730
  8.780
  8.820
  8.850
  8.870
  8.890
  8.900
  8.920
  8.930
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
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
  -13
  -14
  -15
  -17
  -19
  -21
  -25
  -29
  -33
  -39
  -46
  -54
  -63
  -72
  -83
  -96
  -109
  -123
  -138
  -155
  -172
  -190
  -209
  -229
  -251
  -273
  -296
  -319
  -344
  -370
Depreciation, amort., depletion, $m
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  17
  19
  21
  24
  26
  28
  30
  33
  35
  38
Funds from operations, $m
  -13
  -14
  -15
  -16
  -18
  -20
  -23
  -27
  -31
  -36
  -42
  -49
  -57
  -66
  -75
  -86
  -98
  -111
  -124
  -139
  -154
  -171
  -188
  -206
  -225
  -245
  -265
  -287
  -309
  -332
Change in working capital, $m
  -5
  -7
  -9
  -13
  -17
  -21
  -27
  -33
  -40
  -47
  -55
  -62
  -70
  -78
  -86
  -94
  -102
  -110
  -117
  -124
  -131
  -138
  -145
  -152
  -159
  -166
  -173
  -180
  -187
  -194
Cash from operations, $m
  -9
  -7
  -6
  -4
  -1
  1
  4
  6
  9
  11
  12
  13
  14
  13
  11
  8
  4
  -1
  -7
  -15
  -23
  -32
  -43
  -54
  -66
  -79
  -93
  -107
  -122
  -138
Maintenance CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -14
  -16
  -17
  -19
  -21
  -24
  -26
  -28
  -30
  -33
  -35
New CAPEX, $m
  -2
  -3
  -4
  -5
  -7
  -9
  -11
  -14
  -17
  -20
  -23
  -26
  -29
  -33
  -36
  -39
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -81
Cash from investing activities, $m
  -2
  -3
  -4
  -5
  -8
  -10
  -12
  -15
  -19
  -22
  -26
  -30
  -34
  -39
  -43
  -47
  -52
  -57
  -61
  -66
  -71
  -75
  -80
  -84
  -90
  -95
  -100
  -105
  -111
  -116
Free cash flow, $m
  -11
  -10
  -10
  -9
  -9
  -9
  -9
  -9
  -10
  -11
  -13
  -16
  -21
  -26
  -32
  -39
  -48
  -57
  -68
  -80
  -93
  -107
  -123
  -139
  -156
  -174
  -192
  -212
  -233
  -254
Issuance/(repayment) of debt, $m
  3
  6
  9
  12
  15
  20
  25
  31
  37
  43
  50
  57
  65
  72
  80
  87
  94
  101
  108
  115
  121
  128
  134
  140
  146
  153
  159
  165
  172
  179
Issuance/(repurchase) of shares, $m
  14
  15
  16
  18
  21
  24
  27
  32
  38
  44
  52
  60
  70
  80
  92
  105
  119
  134
  150
  167
  185
  204
  224
  245
  267
  290
  313
  338
  363
  390
Cash from financing (excl. dividends), $m  
  17
  21
  25
  30
  36
  44
  52
  63
  75
  87
  102
  117
  135
  152
  172
  192
  213
  235
  258
  282
  306
  332
  358
  385
  413
  443
  472
  503
  535
  569
Total cash flow (excl. dividends), $m
  8
  11
  15
  20
  27
  35
  44
  54
  65
  76
  88
  101
  114
  127
  140
  153
  165
  178
  190
  202
  213
  224
  236
  247
  258
  269
  280
  291
  303
  315
Retained Cash Flow (-), $m
  -14
  -15
  -16
  -18
  -21
  -24
  -27
  -32
  -38
  -44
  -52
  -60
  -70
  -80
  -92
  -105
  -119
  -134
  -150
  -167
  -185
  -204
  -224
  -245
  -267
  -290
  -313
  -338
  -363
  -390
Prev. year cash balance distribution, $m
  7
  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
  0
  -4
  -1
  2
  6
  11
  16
  22
  27
  32
  37
  41
  44
  47
  48
  48
  46
  44
  40
  34
  28
  20
  11
  2
  -9
  -21
  -33
  -47
  -61
  -75
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
  0
  -4
  -1
  2
  5
  8
  11
  14
  15
  17
  18
  18
  17
  16
  14
  12
  10
  8
  6
  4
  3
  2
  1
  0
  0
  -1
  -1
  -1
  -1
  -1
Current shareholders' claim on cash, %
  1.6
  0.2
  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
  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

Marathon Patent Group Inc. (MARA) is engaged in acquiring patents and patent rights from owners or other ventures. The Company monetizes its portfolio of patents and patent rights by entering into license discussions. The Company owns around 378 United States and foreign patents, and patent rights across a range of technologies and markets. The Company owns around 22 patent applications across a range of technologies and markets.

FINANCIAL RATIOS  of  Marathon Patent Group, Inc. (MARA)

Valuation Ratios
P/E Ratio -0.1
Price to Sales 0.1
Price to Book -0.3
Price to Tangible Book
Price to Cash Flow 0.3
Price to Free Cash Flow 0.5
Growth Rates
Sales Growth Rate 94.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity -66.7%
Total Debt to Equity -211.1%
Interest Coverage -8
Management Effectiveness
Return On Assets -78.7%
Ret/ On Assets - 3 Yr. Avg. -37.4%
Return On Total Capital -118.4%
Ret/ On T. Cap. - 3 Yr. Avg. -53.5%
Return On Equity -1450%
Return On Equity - 3 Yr. Avg. -517.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 48.6%
Gross Margin - 3 Yr. Avg. 35.6%
EBITDA Margin -21.6%
EBITDA Margin - 3 Yr. Avg. -28.3%
Operating Margin -40.5%
Oper. Margin - 3 Yr. Avg. -72%
Pre-Tax Margin -45.9%
Pre-Tax Margin - 3 Yr. Avg. -70.3%
Net Profit Margin -78.4%
Net Profit Margin - 3 Yr. Avg. -59.1%
Effective Tax Rate -70.6%
Eff/ Tax Rate - 3 Yr. Avg. 10.9%
Payout Ratio 0%

MARA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MARA stock intrinsic value calculation we used $1 million for the last fiscal year's total revenue generated by Marathon Patent Group, Inc.. The default revenue input number comes from 0001 income statement of Marathon Patent Group, Inc.. 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 MARA stock valuation model: a) initial revenue growth rate of 60% 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 MARA is calculated based on our internal credit rating of Marathon Patent Group, Inc., 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 Marathon Patent Group, Inc..
    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 MARA stock the variable cost ratio is equal to 100%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13 million in the base year in the intrinsic value calculation for MARA 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 14.7% for Marathon Patent Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Marathon Patent Group, Inc.. 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 MARA 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 MARA are equal to 315.4%.

Life of production assets of 240.9 years is the average useful life of capital assets used in Marathon Patent Group, Inc. 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 MARA is equal to -757%. 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 - $7.388121 million for Marathon Patent Group, Inc. - 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 25.521 million for Marathon Patent Group, Inc. 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 Marathon Patent Group, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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