Intrinsic value of Sabre Corporation - SABR

Previous Close

$22.86

  Intrinsic Value

$23.14

stock screener

  Rating & Target

hold

+1%

Previous close

$22.86

 
Intrinsic value

$23.14

 
Up/down potential

+1%

 
Rating

hold

We calculate the intrinsic value of SABR 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 6.3

 

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, %
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
Revenue, $m
  4,053
  4,248
  4,453
  4,670
  4,897
  5,136
  5,387
  5,652
  5,929
  6,221
  6,528
  6,850
  7,189
  7,545
  7,918
  8,311
  8,724
  9,157
  9,612
  10,090
  10,592
  11,119
  11,673
  12,255
  12,865
  13,507
  14,180
  14,888
  15,631
  16,411
Variable operating expenses, $m
  3,004
  3,134
  3,270
  3,413
  3,564
  3,722
  3,889
  4,064
  4,249
  4,442
  4,329
  4,543
  4,767
  5,003
  5,251
  5,511
  5,785
  6,072
  6,374
  6,691
  7,024
  7,374
  7,741
  8,126
  8,531
  8,957
  9,403
  9,873
  10,365
  10,882
Fixed operating expenses, $m
  445
  454
  464
  475
  485
  496
  507
  518
  529
  541
  553
  565
  577
  590
  603
  616
  630
  644
  658
  672
  687
  702
  718
  733
  749
  766
  783
  800
  818
  836
Total operating expenses, $m
  3,449
  3,588
  3,734
  3,888
  4,049
  4,218
  4,396
  4,582
  4,778
  4,983
  4,882
  5,108
  5,344
  5,593
  5,854
  6,127
  6,415
  6,716
  7,032
  7,363
  7,711
  8,076
  8,459
  8,859
  9,280
  9,723
  10,186
  10,673
  11,183
  11,718
Operating income, $m
  604
  660
  719
  782
  848
  918
  992
  1,070
  1,152
  1,238
  1,646
  1,743
  1,845
  1,952
  2,065
  2,184
  2,309
  2,441
  2,580
  2,727
  2,881
  3,044
  3,215
  3,395
  3,585
  3,784
  3,994
  4,215
  4,448
  4,693
EBITDA, $m
  1,180
  1,248
  1,321
  1,397
  1,478
  1,563
  1,653
  1,747
  1,847
  1,953
  2,064
  2,181
  2,304
  2,434
  2,571
  2,715
  2,867
  3,026
  3,195
  3,372
  3,558
  3,754
  3,961
  4,178
  4,407
  4,647
  4,901
  5,167
  5,447
  5,742
Interest expense (income), $m
  152
  184
  196
  210
  223
  238
  253
  269
  286
  304
  323
  343
  363
  385
  408
  432
  457
  484
  512
  541
  572
  604
  638
  674
  711
  750
  792
  835
  880
  928
  978
Earnings before tax, $m
  420
  464
  510
  559
  610
  665
  722
  783
  847
  915
  1,304
  1,379
  1,459
  1,544
  1,632
  1,726
  1,825
  1,929
  2,039
  2,155
  2,277
  2,406
  2,541
  2,684
  2,834
  2,993
  3,159
  3,335
  3,520
  3,714
Tax expense, $m
  113
  125
  138
  151
  165
  179
  195
  211
  229
  247
  352
  372
  394
  417
  441
  466
  493
  521
  551
  582
  615
  650
  686
  725
  765
  808
  853
  900
  950
  1,003
Net income, $m
  307
  339
  372
  408
  445
  485
  527
  572
  619
  668
  952
  1,007
  1,065
  1,127
  1,192
  1,260
  1,332
  1,408
  1,489
  1,573
  1,662
  1,756
  1,855
  1,959
  2,069
  2,185
  2,306
  2,434
  2,569
  2,711

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
  6,085
  6,378
  6,687
  7,011
  7,353
  7,712
  8,089
  8,486
  8,903
  9,341
  9,802
  10,286
  10,794
  11,328
  11,890
  12,479
  13,098
  13,749
  14,432
  15,150
  15,904
  16,696
  17,527
  18,400
  19,317
  20,281
  21,292
  22,354
  23,469
  24,641
Adjusted assets (=assets-cash), $m
  6,085
  6,378
  6,687
  7,011
  7,353
  7,712
  8,089
  8,486
  8,903
  9,341
  9,802
  10,286
  10,794
  11,328
  11,890
  12,479
  13,098
  13,749
  14,432
  15,150
  15,904
  16,696
  17,527
  18,400
  19,317
  20,281
  21,292
  22,354
  23,469
  24,641
Revenue / Adjusted assets
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
Average production assets, $m
  2,513
  2,634
  2,761
  2,895
  3,036
  3,184
  3,340
  3,504
  3,676
  3,857
  4,047
  4,247
  4,457
  4,678
  4,909
  5,153
  5,409
  5,677
  5,959
  6,256
  6,567
  6,894
  7,237
  7,598
  7,977
  8,374
  8,792
  9,230
  9,691
  10,175
Working capital, $m
  -284
  -297
  -312
  -327
  -343
  -360
  -377
  -396
  -415
  -435
  -457
  -480
  -503
  -528
  -554
  -582
  -611
  -641
  -673
  -706
  -741
  -778
  -817
  -858
  -901
  -945
  -993
  -1,042
  -1,094
  -1,149
Total debt, $m
  3,635
  3,880
  4,137
  4,407
  4,692
  4,991
  5,305
  5,635
  5,983
  6,348
  6,731
  7,135
  7,558
  8,003
  8,471
  8,962
  9,478
  10,020
  10,589
  11,187
  11,815
  12,474
  13,167
  13,894
  14,658
  15,460
  16,303
  17,188
  18,117
  19,092
Total liabilities, $m
  5,069
  5,313
  5,570
  5,841
  6,125
  6,424
  6,738
  7,069
  7,416
  7,781
  8,165
  8,568
  8,992
  9,437
  9,904
  10,395
  10,911
  11,453
  12,022
  12,620
  13,248
  13,907
  14,600
  15,328
  16,091
  16,894
  17,736
  18,621
  19,550
  20,526
Total equity, $m
  1,016
  1,065
  1,117
  1,171
  1,228
  1,288
  1,351
  1,417
  1,487
  1,560
  1,637
  1,718
  1,803
  1,892
  1,986
  2,084
  2,187
  2,296
  2,410
  2,530
  2,656
  2,788
  2,927
  3,073
  3,226
  3,387
  3,556
  3,733
  3,919
  4,115
Total liabilities and equity, $m
  6,085
  6,378
  6,687
  7,012
  7,353
  7,712
  8,089
  8,486
  8,903
  9,341
  9,802
  10,286
  10,795
  11,329
  11,890
  12,479
  13,098
  13,749
  14,432
  15,150
  15,904
  16,695
  17,527
  18,401
  19,317
  20,281
  21,292
  22,354
  23,469
  24,641
Debt-to-equity ratio
  3.580
  3.640
  3.700
  3.760
  3.820
  3.880
  3.930
  3.980
  4.020
  4.070
  4.110
  4.150
  4.190
  4.230
  4.270
  4.300
  4.330
  4.360
  4.390
  4.420
  4.450
  4.470
  4.500
  4.520
  4.540
  4.560
  4.580
  4.600
  4.620
  4.640
Adjusted equity ratio
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167
  0.167

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  307
  339
  372
  408
  445
  485
  527
  572
  619
  668
  952
  1,007
  1,065
  1,127
  1,192
  1,260
  1,332
  1,408
  1,489
  1,573
  1,662
  1,756
  1,855
  1,959
  2,069
  2,185
  2,306
  2,434
  2,569
  2,711
Depreciation, amort., depletion, $m
  576
  588
  601
  615
  630
  645
  661
  678
  696
  714
  417
  438
  459
  482
  506
  531
  558
  585
  614
  645
  677
  711
  746
  783
  822
  863
  906
  952
  999
  1,049
Funds from operations, $m
  882
  927
  973
  1,023
  1,075
  1,130
  1,188
  1,249
  1,314
  1,382
  1,369
  1,445
  1,525
  1,609
  1,698
  1,791
  1,890
  1,994
  2,103
  2,218
  2,339
  2,467
  2,601
  2,743
  2,891
  3,048
  3,213
  3,386
  3,568
  3,760
Change in working capital, $m
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
Cash from operations, $m
  895
  940
  988
  1,038
  1,091
  1,147
  1,206
  1,268
  1,334
  1,403
  1,390
  1,467
  1,548
  1,634
  1,724
  1,819
  1,919
  2,024
  2,135
  2,252
  2,374
  2,504
  2,640
  2,783
  2,934
  3,093
  3,260
  3,436
  3,620
  3,815
Maintenance CAPEX, $m
  -247
  -259
  -272
  -285
  -298
  -313
  -328
  -344
  -361
  -379
  -398
  -417
  -438
  -459
  -482
  -506
  -531
  -558
  -585
  -614
  -645
  -677
  -711
  -746
  -783
  -822
  -863
  -906
  -952
  -999
New CAPEX, $m
  -117
  -121
  -127
  -134
  -141
  -148
  -156
  -164
  -172
  -181
  -190
  -200
  -210
  -221
  -232
  -243
  -256
  -269
  -282
  -296
  -311
  -327
  -343
  -361
  -379
  -398
  -418
  -439
  -461
  -484
Cash from investing activities, $m
  -364
  -380
  -399
  -419
  -439
  -461
  -484
  -508
  -533
  -560
  -588
  -617
  -648
  -680
  -714
  -749
  -787
  -827
  -867
  -910
  -956
  -1,004
  -1,054
  -1,107
  -1,162
  -1,220
  -1,281
  -1,345
  -1,413
  -1,483
Free cash flow, $m
  531
  560
  589
  619
  651
  686
  722
  760
  800
  843
  803
  850
  901
  954
  1,010
  1,069
  1,132
  1,198
  1,267
  1,341
  1,418
  1,500
  1,586
  1,677
  1,772
  1,873
  1,979
  2,091
  2,208
  2,332
Issuance/(repayment) of debt, $m
  229
  244
  257
  270
  284
  299
  314
  330
  347
  365
  384
  403
  424
  445
  468
  491
  516
  542
  569
  598
  628
  659
  693
  727
  764
  802
  843
  885
  929
  976
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  
  229
  244
  257
  270
  284
  299
  314
  330
  347
  365
  384
  403
  424
  445
  468
  491
  516
  542
  569
  598
  628
  659
  693
  727
  764
  802
  843
  885
  929
  976
Total cash flow (excl. dividends), $m
  761
  805
  846
  890
  936
  985
  1,036
  1,090
  1,148
  1,208
  1,186
  1,253
  1,324
  1,399
  1,477
  1,560
  1,648
  1,740
  1,837
  1,939
  2,046
  2,159
  2,279
  2,404
  2,536
  2,675
  2,821
  2,975
  3,137
  3,308
Retained Cash Flow (-), $m
  -49
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
  -94
  -98
  -103
  -109
  -114
  -120
  -126
  -132
  -139
  -146
  -153
  -161
  -169
  -177
  -186
  -196
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
  712
  756
  794
  835
  879
  925
  973
  1,024
  1,078
  1,135
  1,109
  1,173
  1,239
  1,310
  1,384
  1,462
  1,544
  1,631
  1,723
  1,819
  1,920
  2,027
  2,140
  2,258
  2,383
  2,514
  2,652
  2,798
  2,951
  3,112
Discount rate, %
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
  655
  634
  604
  569
  532
  492
  450
  407
  363
  320
  258
  222
  188
  156
  128
  102
  80
  62
  47
  34
  24
  17
  12
  8
  5
  3
  2
  1
  1
  0
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

Sabre Corporation is a technology solutions provider to the global travel and tourism industry. The Company provides software and services to a range of travel suppliers and travel buyers. The Company operates through two business segments: Travel Network, and Airline and Hospitality Solutions. Travel Network is its global business-to-business travel marketplace and consists primarily of its global distribution system (GDS) and a set of solutions that integrate with its GDS to serve travel suppliers and travel buyers. Its Airline and Hospitality Solutions business offers a portfolio of software technology products and solutions, through software-as-a-service (SaaS) and hosted delivery model, to airlines, hoteliers and other travel suppliers. The Company connects travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines and tour operators, with travel buyers in a travel marketplace.

FINANCIAL RATIOS  of  Sabre Corporation (SABR)

Valuation Ratios
P/E Ratio 26.1
Price to Sales 1.9
Price to Book 10.2
Price to Tangible Book
Price to Cash Flow 9.3
Price to Free Cash Flow 18
Growth Rates
Sales Growth Rate 13.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.3%
Cap. Spend. - 3 Yr. Gr. Rate 9.3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 526%
Total Debt to Equity 553.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 43.9%
Return On Equity - 3 Yr. Avg. 59.1%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 32.3%
Gross Margin - 3 Yr. Avg. 33.6%
EBITDA Margin 26.5%
EBITDA Margin - 3 Yr. Avg. 26.2%
Operating Margin 13.5%
Oper. Margin - 3 Yr. Avg. 14.1%
Pre-Tax Margin 9.7%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 7.2%
Net Profit Margin - 3 Yr. Avg. 9.4%
Effective Tax Rate 26.5%
Eff/ Tax Rate - 3 Yr. Avg. 21.8%
Payout Ratio 59.3%

SABR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SABR stock intrinsic value calculation we used $3867 million for the last fiscal year's total revenue generated by Sabre Corporation. The default revenue input number comes from 0001 income statement of Sabre Corporation. 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 SABR stock valuation model: a) initial revenue growth rate of 4.8% 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 8.7%, whose default value for SABR is calculated based on our internal credit rating of Sabre Corporation, 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 Sabre Corporation.
    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 SABR stock the variable cost ratio is equal to 74.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $435 million in the base year in the intrinsic value calculation for SABR 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 Sabre Corporation.

Corporate tax rate of 27% is the nominal tax rate for Sabre Corporation. 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 SABR 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 SABR are equal to 62%.

Life of production assets of 9.7 years is the average useful life of capital assets used in Sabre Corporation 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 SABR is equal to -7%. 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 - $967.066 million for Sabre Corporation - 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 275.410 million for Sabre Corporation 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 Sabre Corporation at the current share price and the inputted number of shares is $6.3 billion.

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