Intrinsic value of Sonos, Inc. - SONO

Previous Close

$14.50

  Intrinsic Value

$114.19

stock screener

  Rating & Target

str. buy

+687%

Previous close

$14.50

 
Intrinsic value

$114.19

 
Up/down potential

+687%

 
Rating

str. buy

We calculate the intrinsic value of SONO 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 1.5

 

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
  1,819
  2,811
  4,203
  6,099
  8,605
  11,829
  15,878
  20,849
  26,828
  33,886
  42,079
  51,445
  62,009
  73,778
  86,750
  100,911
  116,241
  132,716
  150,307
  168,990
  188,740
  209,535
  231,361
  254,207
  278,069
  302,952
  328,866
  355,827
  383,860
  412,997
Variable operating expenses, $m
  1,734
  2,679
  4,006
  5,812
  8,200
  11,273
  15,132
  19,869
  25,567
  32,293
  40,101
  49,027
  59,094
  70,311
  82,673
  96,169
  110,778
  126,478
  143,243
  161,048
  179,869
  199,687
  220,487
  242,259
  265,000
  288,714
  313,409
  339,103
  365,819
  393,587
Fixed operating expenses, $m
  64
  66
  67
  69
  70
  72
  73
  75
  77
  78
  80
  82
  84
  85
  87
  89
  91
  93
  95
  97
  99
  102
  104
  106
  109
  111
  113
  116
  118
  121
Total operating expenses, $m
  1,798
  2,745
  4,073
  5,881
  8,270
  11,345
  15,205
  19,944
  25,644
  32,371
  40,181
  49,109
  59,178
  70,396
  82,760
  96,258
  110,869
  126,571
  143,338
  161,145
  179,968
  199,789
  220,591
  242,365
  265,109
  288,825
  313,522
  339,219
  365,937
  393,708
Operating income, $m
  21
  66
  130
  218
  334
  484
  673
  905
  1,184
  1,514
  1,898
  2,336
  2,831
  3,382
  3,990
  4,654
  5,372
  6,144
  6,969
  7,845
  8,771
  9,746
  10,770
  11,842
  12,961
  14,128
  15,343
  16,608
  17,923
  19,290
EBITDA, $m
  50
  111
  197
  314
  470
  671
  924
  1,234
  1,608
  2,050
  2,563
  3,149
  3,811
  4,548
  5,361
  6,248
  7,209
  8,241
  9,344
  10,515
  11,753
  13,057
  14,426
  15,858
  17,354
  18,914
  20,539
  22,230
  23,988
  25,815
Interest expense (income), $m
  0
  5
  30
  68
  121
  193
  288
  411
  565
  754
  981
  1,249
  1,560
  1,916
  2,318
  2,765
  3,258
  3,796
  4,378
  5,005
  5,673
  6,383
  7,133
  7,924
  8,753
  9,621
  10,528
  11,473
  12,458
  13,483
  14,548
Earnings before tax, $m
  17
  36
  62
  97
  141
  196
  262
  340
  431
  534
  649
  776
  915
  1,064
  1,225
  1,396
  1,576
  1,766
  1,965
  2,172
  2,388
  2,613
  2,846
  3,088
  3,340
  3,600
  3,870
  4,150
  4,440
  4,742
Tax expense, $m
  4
  10
  17
  26
  38
  53
  71
  92
  116
  144
  175
  209
  247
  287
  331
  377
  426
  477
  530
  586
  645
  706
  769
  834
  902
  972
  1,045
  1,120
  1,199
  1,280
Net income, $m
  12
  26
  45
  71
  103
  143
  191
  248
  314
  389
  474
  566
  668
  777
  894
  1,019
  1,151
  1,289
  1,434
  1,586
  1,743
  1,908
  2,078
  2,255
  2,438
  2,628
  2,825
  3,029
  3,241
  3,462

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
  940
  1,453
  2,172
  3,152
  4,447
  6,113
  8,206
  10,775
  13,865
  17,512
  21,746
  26,587
  32,046
  38,128
  44,832
  52,151
  60,073
  68,587
  77,678
  87,333
  97,540
  108,287
  119,566
  131,373
  143,705
  156,564
  169,956
  183,890
  198,377
  213,435
Adjusted assets (=assets-cash), $m
  940
  1,453
  2,172
  3,152
  4,447
  6,113
  8,206
  10,775
  13,865
  17,512
  21,746
  26,587
  32,046
  38,128
  44,832
  52,151
  60,073
  68,587
  77,678
  87,333
  97,540
  108,287
  119,566
  131,373
  143,705
  156,564
  169,956
  183,890
  198,377
  213,435
Revenue / Adjusted assets
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
  1.935
Average production assets, $m
  144
  222
  332
  482
  680
  935
  1,254
  1,647
  2,119
  2,677
  3,324
  4,064
  4,899
  5,828
  6,853
  7,972
  9,183
  10,485
  11,874
  13,350
  14,910
  16,553
  18,277
  20,082
  21,967
  23,933
  25,980
  28,110
  30,325
  32,627
Working capital, $m
  -22
  -34
  -50
  -73
  -103
  -142
  -191
  -250
  -322
  -407
  -505
  -617
  -744
  -885
  -1,041
  -1,211
  -1,395
  -1,593
  -1,804
  -2,028
  -2,265
  -2,514
  -2,776
  -3,050
  -3,337
  -3,635
  -3,946
  -4,270
  -4,606
  -4,956
Total debt, $m
  267
  598
  1,062
  1,694
  2,529
  3,604
  4,953
  6,610
  8,603
  10,956
  13,687
  16,809
  20,330
  24,253
  28,577
  33,298
  38,408
  43,899
  49,763
  55,991
  62,574
  69,506
  76,781
  84,396
  92,350
  100,645
  109,282
  118,270
  127,614
  137,326
Total liabilities, $m
  606
  937
  1,401
  2,033
  2,868
  3,943
  5,293
  6,950
  8,943
  11,295
  14,026
  17,148
  20,670
  24,593
  28,917
  33,637
  38,747
  44,239
  50,102
  56,330
  62,913
  69,845
  77,120
  84,736
  92,690
  100,984
  109,622
  118,609
  127,953
  137,666
Total equity, $m
  334
  516
  771
  1,119
  1,579
  2,170
  2,913
  3,825
  4,922
  6,217
  7,720
  9,438
  11,376
  13,536
  15,915
  18,513
  21,326
  24,348
  27,576
  31,003
  34,627
  38,442
  42,446
  46,637
  51,015
  55,580
  60,335
  65,281
  70,424
  75,770
Total liabilities and equity, $m
  940
  1,453
  2,172
  3,152
  4,447
  6,113
  8,206
  10,775
  13,865
  17,512
  21,746
  26,586
  32,046
  38,129
  44,832
  52,150
  60,073
  68,587
  77,678
  87,333
  97,540
  108,287
  119,566
  131,373
  143,705
  156,564
  169,957
  183,890
  198,377
  213,436
Debt-to-equity ratio
  0.800
  1.160
  1.380
  1.510
  1.600
  1.660
  1.700
  1.730
  1.750
  1.760
  1.770
  1.780
  1.790
  1.790
  1.800
  1.800
  1.800
  1.800
  1.800
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
  1.810
Adjusted equity ratio
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  26
  45
  71
  103
  143
  191
  248
  314
  389
  474
  566
  668
  777
  894
  1,019
  1,151
  1,289
  1,434
  1,586
  1,743
  1,908
  2,078
  2,255
  2,438
  2,628
  2,825
  3,029
  3,241
  3,462
Depreciation, amort., depletion, $m
  29
  44
  66
  96
  136
  187
  251
  329
  424
  535
  665
  813
  980
  1,166
  1,371
  1,594
  1,837
  2,097
  2,375
  2,670
  2,982
  3,311
  3,655
  4,016
  4,393
  4,787
  5,196
  5,622
  6,065
  6,525
Funds from operations, $m
  41
  71
  112
  167
  239
  330
  442
  578
  738
  925
  1,138
  1,379
  1,647
  1,943
  2,265
  2,613
  2,987
  3,386
  3,809
  4,256
  4,726
  5,218
  5,733
  6,271
  6,831
  7,415
  8,021
  8,651
  9,306
  9,987
Change in working capital, $m
  -8
  -12
  -17
  -23
  -30
  -39
  -49
  -60
  -72
  -85
  -98
  -112
  -127
  -141
  -156
  -170
  -184
  -198
  -211
  -224
  -237
  -250
  -262
  -274
  -286
  -299
  -311
  -324
  -336
  -350
Cash from operations, $m
  49
  82
  129
  190
  269
  369
  491
  637
  810
  1,010
  1,237
  1,492
  1,774
  2,084
  2,421
  2,783
  3,171
  3,584
  4,020
  4,480
  4,963
  5,468
  5,995
  6,545
  7,118
  7,713
  8,332
  8,975
  9,643
  10,337
Maintenance CAPEX, $m
  -18
  -29
  -44
  -66
  -96
  -136
  -187
  -251
  -329
  -424
  -535
  -665
  -813
  -980
  -1,166
  -1,371
  -1,594
  -1,837
  -2,097
  -2,375
  -2,670
  -2,982
  -3,311
  -3,655
  -4,016
  -4,393
  -4,787
  -5,196
  -5,622
  -6,065
New CAPEX, $m
  -53
  -78
  -110
  -150
  -198
  -255
  -320
  -393
  -472
  -558
  -647
  -740
  -835
  -930
  -1,025
  -1,119
  -1,211
  -1,301
  -1,390
  -1,476
  -1,560
  -1,643
  -1,724
  -1,805
  -1,885
  -1,966
  -2,047
  -2,130
  -2,215
  -2,302
Cash from investing activities, $m
  -71
  -107
  -154
  -216
  -294
  -391
  -507
  -644
  -801
  -982
  -1,182
  -1,405
  -1,648
  -1,910
  -2,191
  -2,490
  -2,805
  -3,138
  -3,487
  -3,851
  -4,230
  -4,625
  -5,035
  -5,460
  -5,901
  -6,359
  -6,834
  -7,326
  -7,837
  -8,367
Free cash flow, $m
  -22
  -25
  -26
  -26
  -25
  -22
  -16
  -6
  8
  28
  54
  87
  127
  174
  230
  294
  366
  446
  534
  629
  732
  843
  960
  1,085
  1,216
  1,354
  1,498
  1,649
  1,806
  1,970
Issuance/(repayment) of debt, $m
  227
  330
  464
  632
  835
  1,075
  1,350
  1,657
  1,993
  2,353
  2,731
  3,122
  3,521
  3,923
  4,324
  4,720
  5,110
  5,491
  5,864
  6,228
  6,583
  6,932
  7,275
  7,615
  7,954
  8,294
  8,638
  8,987
  9,344
  9,712
Issuance/(repurchase) of shares, $m
  113
  156
  210
  277
  357
  449
  552
  664
  782
  905
  1,030
  1,152
  1,270
  1,382
  1,486
  1,579
  1,662
  1,733
  1,793
  1,842
  1,880
  1,908
  1,926
  1,937
  1,940
  1,937
  1,929
  1,917
  1,902
  1,884
Cash from financing (excl. dividends), $m  
  340
  486
  674
  909
  1,192
  1,524
  1,902
  2,321
  2,775
  3,258
  3,761
  4,274
  4,791
  5,305
  5,810
  6,299
  6,772
  7,224
  7,657
  8,070
  8,463
  8,840
  9,201
  9,552
  9,894
  10,231
  10,567
  10,904
  11,246
  11,596
Total cash flow (excl. dividends), $m
  318
  462
  648
  883
  1,167
  1,501
  1,885
  2,314
  2,784
  3,286
  3,815
  4,361
  4,918
  5,480
  6,040
  6,593
  7,138
  7,670
  8,191
  8,699
  9,195
  9,682
  10,162
  10,637
  11,110
  11,585
  12,065
  12,553
  13,052
  13,566
Retained Cash Flow (-), $m
  -125
  -182
  -256
  -348
  -460
  -592
  -743
  -912
  -1,097
  -1,295
  -1,503
  -1,718
  -1,938
  -2,159
  -2,380
  -2,598
  -2,812
  -3,022
  -3,227
  -3,428
  -3,623
  -3,815
  -4,004
  -4,191
  -4,378
  -4,565
  -4,754
  -4,946
  -5,143
  -5,346
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
  193
  280
  393
  535
  707
  910
  1,142
  1,402
  1,687
  1,991
  2,311
  2,643
  2,980
  3,321
  3,660
  3,995
  4,325
  4,648
  4,963
  5,271
  5,572
  5,867
  6,158
  6,446
  6,732
  7,020
  7,311
  7,607
  7,909
  8,221
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
  185
  256
  342
  440
  548
  660
  772
  877
  969
  1,044
  1,098
  1,128
  1,133
  1,115
  1,074
  1,015
  941
  856
  764
  670
  576
  487
  404
  328
  262
  205
  157
  118
  86
  62
Current shareholders' claim on cash, %
  92.8
  87.0
  82.2
  78.2
  74.8
  71.9
  69.4
  67.2
  65.3
  63.6
  62.2
  60.9
  59.7
  58.7
  57.8
  57.0
  56.3
  55.6
  55.1
  54.5
  54.1
  53.7
  53.3
  52.9
  52.6
  52.3
  52.1
  51.8
  51.6
  51.4

FINANCIAL RATIOS  of  Sonos, Inc. (SONO)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SONO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SONO stock intrinsic value calculation we used $1137 million for the last fiscal year's total revenue generated by Sonos, Inc.. The default revenue input number comes from 0001 income statement of Sonos, 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 SONO 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 SONO is calculated based on our internal credit rating of Sonos, 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 Sonos, 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 SONO stock the variable cost ratio is equal to 95.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $63 million in the base year in the intrinsic value calculation for SONO 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 11.4% for Sonos, Inc..

Corporate tax rate of 27% is the nominal tax rate for Sonos, 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 SONO 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 SONO are equal to 7.9%.

Life of production assets of 2.3 years is the average useful life of capital assets used in Sonos, 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 SONO is equal to -1.2%. 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 - $208.358 million for Sonos, 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 100.798 million for Sonos, 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 Sonos, Inc. at the current share price and the inputted number of shares is $1.5 billion.

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