Intrinsic value of New Media Investment Group Inc. - NEWM

Previous Close

$11.47

  Intrinsic Value

$14.51

stock screener

  Rating & Target

buy

+26%

Previous close

$11.47

 
Intrinsic value

$14.51

 
Up/down potential

+26%

 
Rating

buy

We calculate the intrinsic value of NEWM 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 0.7

 

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, %
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
Revenue, $m
  1,610
  1,698
  1,789
  1,885
  1,986
  2,091
  2,201
  2,316
  2,437
  2,564
  2,697
  2,836
  2,981
  3,134
  3,295
  3,463
  3,639
  3,824
  4,018
  4,222
  4,435
  4,659
  4,895
  5,142
  5,401
  5,673
  5,958
  6,258
  6,572
  6,903
Variable operating expenses, $m
  1,393
  1,465
  1,539
  1,618
  1,700
  1,786
  1,875
  1,969
  2,068
  2,171
  2,200
  2,313
  2,432
  2,557
  2,688
  2,825
  2,969
  3,119
  3,278
  3,444
  3,618
  3,801
  3,993
  4,194
  4,406
  4,628
  4,861
  5,105
  5,362
  5,631
Fixed operating expenses, $m
  149
  152
  156
  159
  163
  166
  170
  174
  178
  181
  185
  190
  194
  198
  202
  207
  211
  216
  221
  226
  231
  236
  241
  246
  252
  257
  263
  269
  274
  280
Total operating expenses, $m
  1,542
  1,617
  1,695
  1,777
  1,863
  1,952
  2,045
  2,143
  2,246
  2,352
  2,385
  2,503
  2,626
  2,755
  2,890
  3,032
  3,180
  3,335
  3,499
  3,670
  3,849
  4,037
  4,234
  4,440
  4,658
  4,885
  5,124
  5,374
  5,636
  5,911
Operating income, $m
  68
  81
  94
  108
  123
  139
  156
  173
  192
  211
  311
  333
  356
  379
  405
  431
  459
  488
  519
  552
  587
  623
  661
  701
  743
  788
  835
  884
  936
  991
EBITDA, $m
  207
  223
  240
  258
  276
  296
  317
  339
  361
  386
  411
  438
  466
  495
  526
  559
  593
  630
  668
  708
  750
  795
  842
  891
  943
  997
  1,055
  1,115
  1,179
  1,246
Interest expense (income), $m
  27
  40
  43
  47
  51
  55
  59
  64
  69
  73
  79
  84
  90
  96
  102
  108
  115
  123
  130
  138
  146
  155
  164
  174
  184
  194
  206
  217
  229
  242
  256
Earnings before tax, $m
  28
  37
  47
  57
  68
  80
  92
  105
  118
  133
  227
  243
  260
  277
  296
  316
  336
  358
  381
  406
  431
  459
  487
  517
  549
  582
  618
  655
  694
  735
Tax expense, $m
  8
  10
  13
  16
  18
  22
  25
  28
  32
  36
  61
  66
  70
  75
  80
  85
  91
  97
  103
  110
  116
  124
  132
  140
  148
  157
  167
  177
  187
  199
Net income, $m
  20
  27
  34
  42
  50
  58
  67
  76
  86
  97
  166
  177
  190
  203
  216
  230
  246
  262
  278
  296
  315
  335
  356
  378
  401
  425
  451
  478
  507
  537

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
  1,523
  1,606
  1,693
  1,784
  1,879
  1,978
  2,082
  2,192
  2,306
  2,426
  2,551
  2,683
  2,821
  2,965
  3,117
  3,276
  3,443
  3,618
  3,801
  3,994
  4,196
  4,408
  4,631
  4,864
  5,110
  5,367
  5,637
  5,920
  6,218
  6,530
Adjusted assets (=assets-cash), $m
  1,523
  1,606
  1,693
  1,784
  1,879
  1,978
  2,082
  2,192
  2,306
  2,426
  2,551
  2,683
  2,821
  2,965
  3,117
  3,276
  3,443
  3,618
  3,801
  3,994
  4,196
  4,408
  4,631
  4,864
  5,110
  5,367
  5,637
  5,920
  6,218
  6,530
Revenue / Adjusted assets
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
Average production assets, $m
  755
  796
  839
  884
  931
  981
  1,032
  1,086
  1,143
  1,202
  1,265
  1,330
  1,398
  1,470
  1,545
  1,624
  1,707
  1,793
  1,884
  1,980
  2,080
  2,185
  2,296
  2,411
  2,533
  2,661
  2,794
  2,935
  3,082
  3,237
Working capital, $m
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  38
  39
  41
Total debt, $m
  480
  522
  565
  611
  659
  709
  761
  816
  874
  934
  997
  1,063
  1,133
  1,205
  1,282
  1,362
  1,446
  1,534
  1,626
  1,723
  1,825
  1,931
  2,043
  2,161
  2,284
  2,413
  2,549
  2,692
  2,842
  2,999
Total liabilities, $m
  766
  808
  852
  897
  945
  995
  1,047
  1,102
  1,160
  1,220
  1,283
  1,349
  1,419
  1,491
  1,568
  1,648
  1,732
  1,820
  1,912
  2,009
  2,111
  2,217
  2,329
  2,447
  2,570
  2,700
  2,835
  2,978
  3,128
  3,285
Total equity, $m
  757
  798
  841
  887
  934
  983
  1,035
  1,089
  1,146
  1,206
  1,268
  1,333
  1,402
  1,474
  1,549
  1,628
  1,711
  1,798
  1,889
  1,985
  2,085
  2,191
  2,302
  2,418
  2,539
  2,667
  2,802
  2,942
  3,090
  3,246
Total liabilities and equity, $m
  1,523
  1,606
  1,693
  1,784
  1,879
  1,978
  2,082
  2,191
  2,306
  2,426
  2,551
  2,682
  2,821
  2,965
  3,117
  3,276
  3,443
  3,618
  3,801
  3,994
  4,196
  4,408
  4,631
  4,865
  5,109
  5,367
  5,637
  5,920
  6,218
  6,531
Debt-to-equity ratio
  0.630
  0.650
  0.670
  0.690
  0.710
  0.720
  0.740
  0.750
  0.760
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.890
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
Adjusted equity ratio
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  27
  34
  42
  50
  58
  67
  76
  86
  97
  166
  177
  190
  203
  216
  230
  246
  262
  278
  296
  315
  335
  356
  378
  401
  425
  451
  478
  507
  537
Depreciation, amort., depletion, $m
  139
  142
  146
  149
  153
  157
  161
  165
  170
  174
  100
  105
  110
  116
  122
  128
  134
  141
  148
  156
  164
  172
  181
  190
  199
  209
  220
  231
  243
  255
Funds from operations, $m
  160
  170
  180
  191
  203
  215
  228
  242
  256
  271
  265
  282
  300
  318
  338
  358
  380
  403
  427
  452
  479
  507
  536
  567
  600
  635
  671
  709
  749
  792
Change in working capital, $m
  1
  1
  1
  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
Cash from operations, $m
  159
  169
  180
  191
  202
  215
  227
  241
  255
  270
  265
  281
  299
  317
  337
  357
  379
  402
  426
  451
  477
  505
  535
  566
  599
  633
  669
  707
  748
  790
Maintenance CAPEX, $m
  -56
  -59
  -63
  -66
  -70
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -105
  -110
  -116
  -122
  -128
  -134
  -141
  -148
  -156
  -164
  -172
  -181
  -190
  -199
  -209
  -220
  -231
  -243
New CAPEX, $m
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -116
  -122
  -128
  -134
  -141
  -148
  -155
Cash from investing activities, $m
  -95
  -100
  -106
  -111
  -117
  -122
  -129
  -135
  -143
  -149
  -157
  -165
  -173
  -182
  -191
  -201
  -211
  -221
  -232
  -243
  -256
  -269
  -282
  -297
  -312
  -327
  -343
  -361
  -379
  -398
Free cash flow, $m
  63
  69
  74
  80
  86
  92
  99
  106
  113
  121
  108
  117
  126
  136
  146
  157
  168
  181
  193
  207
  221
  237
  253
  269
  287
  306
  326
  347
  369
  392
Issuance/(repayment) of debt, $m
  39
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
  136
  143
  150
  157
Issuance/(repurchase) of shares, $m
  19
  14
  9
  3
  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  
  58
  56
  53
  49
  48
  50
  52
  55
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
  136
  143
  150
  157
Total cash flow (excl. dividends), $m
  122
  124
  126
  128
  133
  142
  151
  161
  171
  181
  171
  183
  195
  208
  222
  237
  252
  269
  286
  304
  323
  343
  364
  387
  411
  435
  462
  489
  519
  549
Retained Cash Flow (-), $m
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -62
  -65
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
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
  82
  83
  83
  83
  86
  93
  99
  106
  114
  122
  109
  117
  127
  136
  147
  158
  169
  182
  195
  208
  223
  238
  254
  271
  289
  308
  328
  349
  371
  394
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  78
  74
  69
  64
  61
  60
  58
  56
  54
  51
  40
  37
  34
  31
  28
  25
  22
  19
  16
  13
  10
  8
  7
  5
  4
  3
  2
  1
  1
  1
Current shareholders' claim on cash, %
  97.3
  95.5
  94.4
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0
  94.0

New Media Investment Group Inc. is a holding company. The Company owns, operates and invests in local media assets. The Company's segments include Eastern US Publishing, Central US Publishing, Western US Publishing and BridgeTower. It focuses on owning and acquiring local media assets in small to mid-size markets. It is a publisher of local newspapers and related publications. As of December 25, 2016, its portfolio of media assets spanned across 538 markets and 36 states. As of December 25, 2016, its products included 631 community print publications, 538 Websites and two yellow page directories. Its directory portfolio includes Surewest Directories located in and around the Sacramento, California area, primarily in Roseville, California. The Roseville directory serves the local Roseville community. It also owns additional directory based in Mt. Shasta, California. Propel is its business services product line with digital products designed for small and midsized businesses (SMBs).

FINANCIAL RATIOS  of  New Media Investment Group Inc. (NEWM)

Valuation Ratios
P/E Ratio 19.2
Price to Sales 0.5
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 6.3
Price to Free Cash Flow 7.1
Growth Rates
Sales Growth Rate 4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10%
Cap. Spend. - 3 Yr. Gr. Rate 17.1%
Financial Strength
Quick Ratio 12
Current Ratio 0.1
LT Debt to Equity 44.9%
Total Debt to Equity 46.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 4.6%
Return On Equity - 3 Yr. Avg. 5.3%
Asset Turnover 1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 9.9%
EBITDA Margin - 3 Yr. Avg. 10.6%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 5.4%
Pre-Tax Margin 2.3%
Pre-Tax Margin - 3 Yr. Avg. 2.7%
Net Profit Margin 2.5%
Net Profit Margin - 3 Yr. Avg. 2.6%
Effective Tax Rate -10.3%
Eff/ Tax Rate - 3 Yr. Avg. -2%
Payout Ratio 187.5%

NEWM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NEWM stock intrinsic value calculation we used $1526 million for the last fiscal year's total revenue generated by New Media Investment Group Inc.. The default revenue input number comes from 0001 income statement of New Media Investment 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 NEWM stock valuation model: a) initial revenue growth rate of 5.5% 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 5.9%, whose default value for NEWM is calculated based on our internal credit rating of New Media Investment 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 New Media Investment 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 NEWM stock the variable cost ratio is equal to 86.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $146 million in the base year in the intrinsic value calculation for NEWM 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 9% for New Media Investment Group Inc..

Corporate tax rate of 27% is the nominal tax rate for New Media Investment 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 NEWM 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 NEWM are equal to 46.9%.

Life of production assets of 12.7 years is the average useful life of capital assets used in New Media Investment 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 NEWM is equal to 0.6%. 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 - $717.223 million for New Media Investment 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 60.511 million for New Media Investment 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 New Media Investment Group Inc. at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
LEE Lee Enterprise 3.33 3.64  hold
AHC A.H. Belo Corp 3.60 0.62  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.