Intrinsic value of Rubicon Project - RUBI

Previous Close

$4.12

  Intrinsic Value

$0.68

stock screener

  Rating & Target

str. sell

-83%

Previous close

$4.12

 
Intrinsic value

$0.68

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of RUBI 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 0.2

 

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
  159
  162
  166
  171
  176
  182
  188
  195
  202
  210
  218
  227
  237
  247
  257
  268
  280
  293
  306
  320
  335
  351
  367
  385
  403
  422
  443
  464
  487
  510
Variable operating expenses, $m
  173
  177
  181
  186
  192
  198
  205
  212
  220
  228
  234
  244
  254
  265
  276
  288
  301
  314
  329
  344
  360
  377
  394
  413
  433
  453
  475
  498
  522
  548
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
  173
  177
  181
  186
  192
  198
  205
  212
  220
  228
  234
  244
  254
  265
  276
  288
  301
  314
  329
  344
  360
  377
  394
  413
  433
  453
  475
  498
  522
  548
Operating income, $m
  -14
  -14
  -15
  -15
  -16
  -16
  -16
  -17
  -17
  -18
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
EBITDA, $m
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  2
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
  22
  23
  25
Earnings before tax, $m
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
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
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62

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
  390
  399
  409
  421
  433
  447
  463
  479
  497
  516
  536
  558
  581
  606
  632
  660
  689
  720
  753
  787
  824
  862
  903
  946
  991
  1,038
  1,088
  1,140
  1,196
  1,254
Adjusted assets (=assets-cash), $m
  390
  399
  409
  421
  433
  447
  463
  479
  497
  516
  536
  558
  581
  606
  632
  660
  689
  720
  753
  787
  824
  862
  903
  946
  991
  1,038
  1,088
  1,140
  1,196
  1,254
Revenue / Adjusted assets
  0.408
  0.406
  0.406
  0.406
  0.406
  0.407
  0.406
  0.407
  0.406
  0.407
  0.407
  0.407
  0.408
  0.408
  0.407
  0.406
  0.406
  0.407
  0.406
  0.407
  0.407
  0.407
  0.406
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
Average production assets, $m
  72
  74
  75
  78
  80
  82
  85
  88
  92
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  145
  152
  159
  166
  174
  183
  191
  201
  210
  220
  231
Working capital, $m
  -43
  -43
  -45
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -108
  -113
  -119
  -124
  -130
  -137
Total debt, $m
  4
  9
  15
  21
  28
  36
  45
  54
  65
  76
  87
  100
  113
  127
  142
  158
  174
  192
  211
  231
  251
  273
  296
  321
  347
  374
  402
  432
  464
  497
Total liabilities, $m
  223
  228
  234
  240
  247
  255
  264
  274
  284
  295
  306
  319
  332
  346
  361
  377
  393
  411
  430
  450
  470
  492
  515
  540
  566
  593
  621
  651
  683
  716
Total equity, $m
  167
  171
  175
  180
  186
  192
  198
  205
  213
  221
  230
  239
  249
  260
  271
  283
  296
  309
  323
  338
  353
  370
  387
  406
  425
  445
  467
  489
  513
  538
Total liabilities and equity, $m
  390
  399
  409
  420
  433
  447
  462
  479
  497
  516
  536
  558
  581
  606
  632
  660
  689
  720
  753
  788
  823
  862
  902
  946
  991
  1,038
  1,088
  1,140
  1,196
  1,254
Debt-to-equity ratio
  0.020
  0.050
  0.080
  0.120
  0.150
  0.190
  0.230
  0.270
  0.300
  0.340
  0.380
  0.420
  0.450
  0.490
  0.520
  0.560
  0.590
  0.620
  0.650
  0.680
  0.710
  0.740
  0.770
  0.790
  0.820
  0.840
  0.860
  0.880
  0.900
  0.920
Adjusted equity ratio
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
Depreciation, amort., depletion, $m
  17
  17
  18
  18
  19
  19
  20
  20
  21
  22
  20
  21
  21
  22
  23
  24
  25
  27
  28
  29
  30
  32
  33
  35
  37
  38
  40
  42
  44
  46
Funds from operations, $m
  3
  3
  2
  2
  2
  2
  1
  1
  1
  0
  0
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -14
  -15
  -16
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from operations, $m
  4
  4
  4
  3
  3
  3
  3
  3
  3
  2
  2
  2
  1
  1
  0
  0
  0
  -1
  -1
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
Maintenance CAPEX, $m
  -14
  -14
  -15
  -15
  -16
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
New CAPEX, $m
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Cash from investing activities, $m
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -46
  -47
  -50
  -52
  -55
Free cash flow, $m
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -51
  -55
  -58
  -61
  -65
Issuance/(repayment) of debt, $m
  4
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  32
  33
Issuance/(repurchase) of shares, $m
  17
  19
  20
  21
  22
  23
  25
  26
  28
  30
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  63
  66
  70
  74
  78
  83
  87
Cash from financing (excl. dividends), $m  
  21
  24
  26
  28
  29
  31
  34
  35
  38
  41
  41
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  92
  97
  102
  108
  115
  120
Total cash flow (excl. dividends), $m
  9
  11
  12
  14
  15
  16
  17
  18
  20
  21
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  50
  53
  56
Retained Cash Flow (-), $m
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -74
  -78
  -83
  -87
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
  -8
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -31
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
  -8
  -7
  -6
  -6
  -6
  -5
  -5
  -5
  -5
  -5
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  92.5
  85.1
  78.1
  71.4
  65.1
  59.2
  53.7
  48.6
  43.9
  39.6
  35.9
  32.5
  29.3
  26.4
  23.8
  21.4
  19.1
  17.1
  15.3
  13.6
  12.2
  10.8
  9.6
  8.5
  7.5
  6.7
  5.9
  5.2
  4.6
  4.1

The Rubicon Project, Inc. offers a technology solution to automate the purchase and sale of advertising for buyers and sellers. The Company's solution enables buyers and sellers to purchase and sell a range of advertising units, including display and video; utilizing various inventory types, including direct sale of inventory and real-time bidding (RTB), and across digital channels, including mobile Web, mobile application and desktop, as well as across various out of home channels, such as digital billboards. The Company's platform features applications for digital advertising sellers, including Websites, mobile applications and other digital media properties, to sell their advertising inventory; applications and services for buyers, including advertisers, agencies, agency trading desks (ATDs), demand side platforms (DSPs) and advertisement networks, to buy advertising inventory, and a marketplace over which such transactions are executed.

FINANCIAL RATIOS  of  Rubicon Project (RUBI)

Valuation Ratios
P/E Ratio -11.3
Price to Sales 0.7
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 3.4
Price to Free Cash Flow 7.5
Growth Rates
Sales Growth Rate 12.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.9%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -3.4%
Ret/ On Assets - 3 Yr. Avg. -4%
Return On Total Capital -6.2%
Ret/ On T. Cap. - 3 Yr. Avg. -10.2%
Return On Equity -6.2%
Return On Equity - 3 Yr. Avg. -10.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 73.7%
Gross Margin - 3 Yr. Avg. 78.1%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 4.4%
Operating Margin -9%
Oper. Margin - 3 Yr. Avg. -8.9%
Pre-Tax Margin -8.3%
Pre-Tax Margin - 3 Yr. Avg. -8.4%
Net Profit Margin -6.5%
Net Profit Margin - 3 Yr. Avg. -7.2%
Effective Tax Rate 21.7%
Eff/ Tax Rate - 3 Yr. Avg. 40.6%
Payout Ratio 0%

RUBI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RUBI stock intrinsic value calculation we used $155.545 million for the last fiscal year's total revenue generated by Rubicon Project. The default revenue input number comes from 0001 income statement of Rubicon Project. 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 RUBI 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 RUBI is calculated based on our internal credit rating of Rubicon Project, 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 Rubicon Project.
    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 RUBI stock the variable cost ratio is equal to 109%.

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 RUBI 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 Rubicon Project.

Corporate tax rate of 27% is the nominal tax rate for Rubicon Project. 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 RUBI 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 RUBI are equal to 45.3%.

Life of production assets of 2.7 years is the average useful life of capital assets used in Rubicon Project 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 RUBI is equal to -26.8%. 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 - $164.611 million for Rubicon Project - 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 50.75 million for Rubicon Project 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 Rubicon Project at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ P.A.W. Capital Partners Returns, AUM, and Holdings   [Nov-09-18 04:22PM  Insider Monkey]
▶ The Rubicon Project: 3Q Earnings Snapshot   [05:03AM  Associated Press]
▶ Rubicon Project Reports Third Quarter 2018 Results   [Nov-07-18 04:06PM  GlobeNewswire]
▶ Rubicon Project to Present at Financial Conference   [Nov-05-18 04:46PM  GlobeNewswire]
▶ Guardian, Ad-Tech Firm Settle Dispute   [Oct-12-18 08:43AM  The Wall Street Journal]
▶ The Rubicon Project: 2Q Earnings Snapshot   [07:02PM  Associated Press]
▶ The Rubicon Project: 1Q Earnings Snapshot   [May-03-18 07:47PM  Associated Press]
▶ The Rubicon Project reports 4Q loss   [Mar-14-18 06:09PM  Associated Press]
▶ Rubicon Project Q4 Earnings Outlook   [08:06AM  Benzinga]
▶ The Rubicon Project reports 3Q loss   [Nov-06-17 05:39AM  Associated Press]
▶ Rubicon Project Reports Third Quarter 2017 Results   [Nov-02-17 04:05PM  GlobeNewswire]
▶ The Rubicon Project reports 2Q loss   [Aug-01-17 06:56PM  Associated Press]
▶ [$$] Rubicon Project Acquires nToggle for $38.5 Million   [Jul-17-17 06:19PM  The Wall Street Journal]
▶ Rubicon Project Acquires nToggle   [06:00AM  GlobeNewswire]
▶ Rubicon Project: Creating a Bargain Price   [Jun-21-17 01:55PM  GuruFocus.com]
▶ The Guardian crosses Rubicon Project with breach-of-contract lawsuit   [May-19-17 01:40PM  American City Business Journals]
▶ Rubicon Project Selected by BT to Expand Digital Presence   [May-09-17 07:01AM  GlobeNewswire]
▶ The Rubicon Project reports 1Q loss   [May-03-17 07:27PM  Associated Press]

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