Intrinsic value of Match Group, Inc. - MTCH

Previous Close

$72.09

  Intrinsic Value

$50.76

stock screener

  Rating & Target

sell

-30%

Previous close

$72.09

 
Intrinsic value

$50.76

 
Up/down potential

-30%

 
Rating

sell

We calculate the intrinsic value of MTCH 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 20.1

 

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, %
  20.70
  19.13
  17.72
  16.45
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
Revenue, $m
  2,088
  2,488
  2,928
  3,410
  3,932
  4,493
  5,092
  5,729
  6,403
  7,112
  7,857
  8,637
  9,452
  10,302
  11,187
  12,108
  13,066
  14,061
  15,096
  16,170
  17,288
  18,449
  19,657
  20,913
  22,221
  23,582
  25,000
  26,479
  28,020
  29,628
Variable operating expenses, $m
  1,049
  1,221
  1,411
  1,619
  1,844
  2,086
  2,345
  2,619
  2,910
  3,216
  3,389
  3,726
  4,077
  4,444
  4,825
  5,223
  5,636
  6,065
  6,511
  6,975
  7,457
  7,958
  8,479
  9,021
  9,585
  10,172
  10,784
  11,421
  12,086
  12,780
Fixed operating expenses, $m
  294
  301
  307
  314
  321
  328
  335
  343
  350
  358
  366
  374
  382
  391
  399
  408
  417
  426
  435
  445
  455
  465
  475
  486
  496
  507
  518
  530
  541
  553
Total operating expenses, $m
  1,343
  1,522
  1,718
  1,933
  2,165
  2,414
  2,680
  2,962
  3,260
  3,574
  3,755
  4,100
  4,459
  4,835
  5,224
  5,631
  6,053
  6,491
  6,946
  7,420
  7,912
  8,423
  8,954
  9,507
  10,081
  10,679
  11,302
  11,951
  12,627
  13,333
Operating income, $m
  745
  966
  1,210
  1,477
  1,766
  2,078
  2,412
  2,767
  3,143
  3,538
  4,102
  4,538
  4,993
  5,468
  5,963
  6,477
  7,013
  7,570
  8,149
  8,751
  9,376
  10,026
  10,703
  11,407
  12,140
  12,903
  13,699
  14,528
  15,393
  16,295
EBITDA, $m
  925
  1,152
  1,403
  1,677
  1,975
  2,296
  2,639
  3,003
  3,389
  3,796
  4,223
  4,671
  5,139
  5,626
  6,135
  6,664
  7,214
  7,787
  8,381
  9,000
  9,642
  10,311
  11,006
  11,729
  12,482
  13,266
  14,084
  14,936
  15,824
  16,752
Interest expense (income), $m
  82
  82
  98
  121
  147
  174
  204
  237
  271
  308
  347
  388
  431
  476
  523
  572
  623
  676
  731
  788
  848
  910
  974
  1,041
  1,111
  1,183
  1,259
  1,337
  1,419
  1,504
  1,593
Earnings before tax, $m
  663
  867
  1,088
  1,330
  1,592
  1,874
  2,175
  2,496
  2,834
  3,191
  3,714
  4,107
  4,517
  4,945
  5,391
  5,855
  6,337
  6,839
  7,360
  7,902
  8,466
  9,052
  9,662
  10,296
  10,956
  11,644
  12,361
  13,109
  13,888
  14,702
Tax expense, $m
  179
  234
  294
  359
  430
  506
  587
  674
  765
  862
  1,003
  1,109
  1,220
  1,335
  1,456
  1,581
  1,711
  1,847
  1,987
  2,134
  2,286
  2,444
  2,609
  2,780
  2,958
  3,144
  3,338
  3,539
  3,750
  3,970
Net income, $m
  484
  633
  795
  971
  1,162
  1,368
  1,588
  1,822
  2,069
  2,330
  2,712
  2,998
  3,298
  3,610
  3,935
  4,274
  4,626
  4,992
  5,373
  5,769
  6,180
  6,608
  7,053
  7,516
  7,998
  8,500
  9,024
  9,569
  10,139
  10,733

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
  2,477
  2,951
  3,474
  4,045
  4,664
  5,329
  6,040
  6,796
  7,595
  8,437
  9,321
  10,246
  11,213
  12,221
  13,271
  14,363
  15,499
  16,680
  17,907
  19,182
  20,507
  21,885
  23,318
  24,808
  26,359
  27,974
  29,656
  31,410
  33,239
  35,146
Adjusted assets (=assets-cash), $m
  2,477
  2,951
  3,474
  4,045
  4,664
  5,329
  6,040
  6,796
  7,595
  8,437
  9,321
  10,246
  11,213
  12,221
  13,271
  14,363
  15,499
  16,680
  17,907
  19,182
  20,507
  21,885
  23,318
  24,808
  26,359
  27,974
  29,656
  31,410
  33,239
  35,146
Revenue / Adjusted assets
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
Average production assets, $m
  965
  1,149
  1,353
  1,575
  1,816
  2,076
  2,353
  2,647
  2,958
  3,286
  3,630
  3,990
  4,367
  4,760
  5,168
  5,594
  6,036
  6,496
  6,974
  7,471
  7,987
  8,523
  9,081
  9,662
  10,266
  10,895
  11,550
  12,233
  12,945
  13,688
Working capital, $m
  -240
  -286
  -337
  -392
  -452
  -517
  -586
  -659
  -736
  -818
  -904
  -993
  -1,087
  -1,185
  -1,287
  -1,392
  -1,503
  -1,617
  -1,736
  -1,860
  -1,988
  -2,122
  -2,261
  -2,405
  -2,555
  -2,712
  -2,875
  -3,045
  -3,222
  -3,407
Total debt, $m
  1,818
  2,244
  2,715
  3,229
  3,786
  4,385
  5,025
  5,705
  6,424
  7,182
  7,977
  8,810
  9,680
  10,587
  11,532
  12,515
  13,538
  14,601
  15,705
  16,853
  18,045
  19,285
  20,574
  21,916
  23,312
  24,765
  26,280
  27,858
  29,503
  31,220
Total liabilities, $m
  2,229
  2,656
  3,126
  3,640
  4,197
  4,796
  5,436
  6,117
  6,836
  7,593
  8,389
  9,221
  10,091
  10,999
  11,944
  12,927
  13,949
  15,012
  16,116
  17,264
  18,457
  19,696
  20,986
  22,327
  23,723
  25,177
  26,691
  28,269
  29,915
  31,632
Total equity, $m
  248
  295
  347
  404
  466
  533
  604
  680
  760
  844
  932
  1,025
  1,121
  1,222
  1,327
  1,436
  1,550
  1,668
  1,791
  1,918
  2,051
  2,188
  2,332
  2,481
  2,636
  2,797
  2,966
  3,141
  3,324
  3,515
Total liabilities and equity, $m
  2,477
  2,951
  3,473
  4,044
  4,663
  5,329
  6,040
  6,797
  7,596
  8,437
  9,321
  10,246
  11,212
  12,221
  13,271
  14,363
  15,499
  16,680
  17,907
  19,182
  20,508
  21,884
  23,318
  24,808
  26,359
  27,974
  29,657
  31,410
  33,239
  35,147
Debt-to-equity ratio
  7.340
  7.610
  7.820
  7.980
  8.120
  8.230
  8.320
  8.390
  8.460
  8.510
  8.560
  8.600
  8.630
  8.660
  8.690
  8.710
  8.730
  8.750
  8.770
  8.790
  8.800
  8.810
  8.820
  8.830
  8.840
  8.850
  8.860
  8.870
  8.880
  8.880
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
  484
  633
  795
  971
  1,162
  1,368
  1,588
  1,822
  2,069
  2,330
  2,712
  2,998
  3,298
  3,610
  3,935
  4,274
  4,626
  4,992
  5,373
  5,769
  6,180
  6,608
  7,053
  7,516
  7,998
  8,500
  9,024
  9,569
  10,139
  10,733
Depreciation, amort., depletion, $m
  180
  187
  193
  201
  209
  217
  227
  236
  247
  258
  121
  133
  146
  159
  172
  186
  201
  217
  232
  249
  266
  284
  303
  322
  342
  363
  385
  408
  432
  456
Funds from operations, $m
  664
  820
  988
  1,172
  1,371
  1,585
  1,815
  2,058
  2,316
  2,587
  2,833
  3,131
  3,443
  3,769
  4,108
  4,460
  4,827
  5,209
  5,606
  6,018
  6,446
  6,892
  7,356
  7,838
  8,340
  8,864
  9,409
  9,977
  10,570
  11,189
Change in working capital, $m
  -41
  -46
  -51
  -55
  -60
  -65
  -69
  -73
  -77
  -82
  -86
  -90
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -128
  -134
  -139
  -144
  -150
  -157
  -163
  -170
  -177
  -185
Cash from operations, $m
  706
  866
  1,038
  1,227
  1,431
  1,650
  1,884
  2,131
  2,393
  2,669
  2,918
  3,221
  3,537
  3,866
  4,209
  4,566
  4,938
  5,323
  5,725
  6,141
  6,575
  7,026
  7,495
  7,983
  8,491
  9,020
  9,572
  10,147
  10,747
  11,374
Maintenance CAPEX, $m
  -27
  -32
  -38
  -45
  -53
  -61
  -69
  -78
  -88
  -99
  -110
  -121
  -133
  -146
  -159
  -172
  -186
  -201
  -217
  -232
  -249
  -266
  -284
  -303
  -322
  -342
  -363
  -385
  -408
  -432
New CAPEX, $m
  -165
  -185
  -204
  -222
  -241
  -259
  -277
  -294
  -311
  -328
  -344
  -360
  -376
  -393
  -409
  -425
  -442
  -460
  -478
  -497
  -516
  -537
  -558
  -580
  -604
  -629
  -655
  -683
  -712
  -743
Cash from investing activities, $m
  -192
  -217
  -242
  -267
  -294
  -320
  -346
  -372
  -399
  -427
  -454
  -481
  -509
  -539
  -568
  -597
  -628
  -661
  -695
  -729
  -765
  -803
  -842
  -883
  -926
  -971
  -1,018
  -1,068
  -1,120
  -1,175
Free cash flow, $m
  514
  649
  797
  959
  1,137
  1,330
  1,537
  1,759
  1,994
  2,243
  2,465
  2,739
  3,027
  3,328
  3,642
  3,969
  4,309
  4,662
  5,030
  5,412
  5,810
  6,223
  6,652
  7,099
  7,565
  8,049
  8,553
  9,079
  9,627
  10,199
Issuance/(repayment) of debt, $m
  302
  426
  471
  514
  557
  599
  640
  680
  719
  758
  795
  833
  870
  907
  945
  983
  1,022
  1,063
  1,104
  1,148
  1,193
  1,240
  1,289
  1,341
  1,396
  1,454
  1,514
  1,578
  1,646
  1,717
Issuance/(repurchase) of shares, $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 financing (excl. dividends), $m  
  302
  426
  471
  514
  557
  599
  640
  680
  719
  758
  795
  833
  870
  907
  945
  983
  1,022
  1,063
  1,104
  1,148
  1,193
  1,240
  1,289
  1,341
  1,396
  1,454
  1,514
  1,578
  1,646
  1,717
Total cash flow (excl. dividends), $m
  816
  1,075
  1,267
  1,474
  1,694
  1,929
  2,177
  2,439
  2,713
  3,000
  3,260
  3,572
  3,897
  4,235
  4,587
  4,952
  5,331
  5,725
  6,134
  6,560
  7,002
  7,463
  7,942
  8,441
  8,961
  9,502
  10,068
  10,657
  11,273
  11,916
Retained Cash Flow (-), $m
  -122
  -47
  -52
  -57
  -62
  -67
  -71
  -76
  -80
  -84
  -88
  -93
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -138
  -143
  -149
  -155
  -162
  -168
  -175
  -183
  -191
Prev. year cash balance distribution, $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 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
  695
  1,028
  1,215
  1,416
  1,633
  1,863
  2,106
  2,363
  2,633
  2,916
  3,171
  3,480
  3,801
  4,135
  4,482
  4,843
  5,217
  5,607
  6,012
  6,432
  6,870
  7,325
  7,799
  8,292
  8,805
  9,341
  9,899
  10,482
  11,090
  11,725
Discount rate, %
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
  642
  871
  937
  986
  1,015
  1,025
  1,015
  987
  941
  881
  799
  720
  637
  552
  469
  390
  318
  253
  196
  149
  110
  79
  56
  38
  25
  16
  10
  6
  3
  2
Current shareholders' claim on cash, %
  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
  100.0

Match Group, Inc., incorporated on February 13, 2009, is a provider of dating products. The Company operates in the Dating segment. The Dating segment consists of all of its dating businesses across the globe. As of March 31, 2017, the Company operated a portfolio of over 45 brands, including Match, Tinder, PlentyOfFish, Meetic, OkCupid, Pairs, Twoo, OurTime, BlackPeopleMeet and LoveScout24, each designed to manage its users' likelihood of finding a romantic connection. As of March 31, 2017, the Company offered its dating products in 42 languages across more than 190 countries.

FINANCIAL RATIOS  of  Match Group, Inc. (MTCH)

Valuation Ratios
P/E Ratio 107.8
Price to Sales 15.1
Price to Book 37.1
Price to Tangible Book
Price to Cash Flow 78.8
Price to Free Cash Flow 99.6
Growth Rates
Sales Growth Rate 19.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 69%
Cap. Spend. - 3 Yr. Gr. Rate 19.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.6
LT Debt to Equity 236.6%
Total Debt to Equity 236.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 11.7%
Ret/ On Assets - 3 Yr. Avg. 10.4%
Return On Total Capital 10.8%
Ret/ On T. Cap. - 3 Yr. Avg. 12%
Return On Equity 44.1%
Return On Equity - 3 Yr. Avg. 28.1%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 80.9%
Gross Margin - 3 Yr. Avg. 83.3%
EBITDA Margin 30.1%
EBITDA Margin - 3 Yr. Avg. 27.4%
Operating Margin 25%
Oper. Margin - 3 Yr. Avg. 23.2%
Pre-Tax Margin 19%
Pre-Tax Margin - 3 Yr. Avg. 20.3%
Net Profit Margin 14%
Net Profit Margin - 3 Yr. Avg. 14.1%
Effective Tax Rate 25.9%
Eff/ Tax Rate - 3 Yr. Avg. 30.1%
Payout Ratio 0%

MTCH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTCH stock intrinsic value calculation we used $1730 million for the last fiscal year's total revenue generated by Match Group, Inc.. The default revenue input number comes from 0001 income statement of Match 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 MTCH stock valuation model: a) initial revenue growth rate of 20.7% 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 8.2%, whose default value for MTCH is calculated based on our internal credit rating of Match 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 Match 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 MTCH stock the variable cost ratio is equal to 51.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $288 million in the base year in the intrinsic value calculation for MTCH 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 Match Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Match 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 MTCH 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 MTCH are equal to 46.2%.

Life of production assets of 44.9 years is the average useful life of capital assets used in Match 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 MTCH is equal to -11.5%. 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 - $125.864 million for Match 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 278.364 million for Match 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 Match Group, Inc. at the current share price and the inputted number of shares is $20.1 billion.

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