Intrinsic value of Boingo Wireless, Inc. - WIFI

Previous Close

$17.71

  Intrinsic Value

$57.33

stock screener

  Rating & Target

str. buy

+224%

Previous close

$17.71

 
Intrinsic value

$57.33

 
Up/down potential

+224%

 
Rating

str. buy

We calculate the intrinsic value of WIFI 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 0.8

 

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, %
  18.20
  16.88
  15.69
  14.62
  13.66
  12.79
  12.02
  11.31
  10.68
  10.11
  9.60
  9.14
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
Revenue, $m
  297
  347
  401
  460
  523
  590
  660
  735
  814
  896
  982
  1,072
  1,165
  1,263
  1,364
  1,469
  1,578
  1,692
  1,810
  1,933
  2,061
  2,194
  2,332
  2,476
  2,625
  2,782
  2,944
  3,114
  3,291
  3,476
Variable operating expenses, $m
  178
  202
  229
  258
  289
  322
  357
  394
  432
  473
  484
  528
  574
  622
  672
  724
  778
  834
  892
  953
  1,016
  1,081
  1,149
  1,220
  1,294
  1,371
  1,451
  1,535
  1,622
  1,714
Fixed operating expenses, $m
  103
  105
  108
  110
  113
  115
  118
  120
  123
  126
  128
  131
  134
  137
  140
  143
  146
  149
  153
  156
  160
  163
  167
  170
  174
  178
  182
  186
  190
  194
Total operating expenses, $m
  281
  307
  337
  368
  402
  437
  475
  514
  555
  599
  612
  659
  708
  759
  812
  867
  924
  983
  1,045
  1,109
  1,176
  1,244
  1,316
  1,390
  1,468
  1,549
  1,633
  1,721
  1,812
  1,908
Operating income, $m
  16
  39
  64
  92
  121
  152
  186
  221
  258
  297
  370
  412
  457
  503
  552
  602
  654
  709
  765
  824
  885
  949
  1,016
  1,085
  1,157
  1,233
  1,311
  1,393
  1,479
  1,569
EBITDA, $m
  123
  159
  198
  241
  286
  335
  386
  441
  498
  558
  621
  686
  755
  826
  900
  978
  1,058
  1,141
  1,228
  1,319
  1,413
  1,510
  1,612
  1,718
  1,829
  1,944
  2,065
  2,190
  2,321
  2,458
Interest expense (income), $m
  0
  9
  14
  19
  24
  30
  37
  43
  51
  58
  66
  75
  84
  93
  102
  112
  123
  133
  145
  156
  168
  181
  194
  208
  222
  236
  252
  268
  284
  302
  320
Earnings before tax, $m
  7
  25
  46
  67
  91
  116
  142
  170
  200
  231
  295
  329
  364
  401
  439
  479
  521
  564
  609
  656
  705
  755
  808
  863
  921
  981
  1,044
  1,109
  1,178
  1,249
Tax expense, $m
  2
  7
  12
  18
  25
  31
  38
  46
  54
  62
  80
  89
  98
  108
  119
  129
  141
  152
  164
  177
  190
  204
  218
  233
  249
  265
  282
  299
  318
  337
Net income, $m
  5
  19
  33
  49
  66
  85
  104
  124
  146
  169
  215
  240
  266
  293
  321
  350
  380
  412
  445
  479
  514
  551
  590
  630
  672
  716
  762
  810
  860
  912

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
  713
  834
  964
  1,105
  1,256
  1,417
  1,587
  1,767
  1,956
  2,154
  2,360
  2,576
  2,801
  3,035
  3,278
  3,531
  3,794
  4,068
  4,352
  4,647
  4,954
  5,273
  5,605
  5,951
  6,311
  6,686
  7,078
  7,486
  7,912
  8,357
Adjusted assets (=assets-cash), $m
  713
  834
  964
  1,105
  1,256
  1,417
  1,587
  1,767
  1,956
  2,154
  2,360
  2,576
  2,801
  3,035
  3,278
  3,531
  3,794
  4,068
  4,352
  4,647
  4,954
  5,273
  5,605
  5,951
  6,311
  6,686
  7,078
  7,486
  7,912
  8,357
Revenue / Adjusted assets
  0.417
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
Average production assets, $m
  379
  444
  513
  588
  668
  754
  845
  940
  1,041
  1,146
  1,256
  1,371
  1,490
  1,615
  1,744
  1,879
  2,019
  2,164
  2,315
  2,472
  2,636
  2,806
  2,982
  3,166
  3,358
  3,558
  3,766
  3,983
  4,210
  4,446
Working capital, $m
  -135
  -157
  -182
  -209
  -237
  -268
  -300
  -334
  -369
  -407
  -446
  -487
  -529
  -573
  -619
  -667
  -717
  -768
  -822
  -878
  -936
  -996
  -1,059
  -1,124
  -1,192
  -1,263
  -1,337
  -1,414
  -1,494
  -1,578
Total debt, $m
  250
  345
  448
  559
  678
  805
  939
  1,081
  1,229
  1,385
  1,548
  1,718
  1,895
  2,080
  2,272
  2,471
  2,678
  2,893
  3,117
  3,350
  3,592
  3,843
  4,105
  4,378
  4,661
  4,957
  5,266
  5,587
  5,923
  6,273
Total liabilities, $m
  562
  657
  760
  871
  990
  1,117
  1,251
  1,392
  1,541
  1,697
  1,860
  2,030
  2,207
  2,392
  2,583
  2,783
  2,990
  3,205
  3,429
  3,662
  3,903
  4,155
  4,417
  4,689
  4,973
  5,269
  5,577
  5,899
  6,235
  6,585
Total equity, $m
  151
  177
  204
  234
  266
  300
  337
  375
  415
  457
  500
  546
  594
  643
  695
  749
  804
  862
  923
  985
  1,050
  1,118
  1,188
  1,262
  1,338
  1,418
  1,501
  1,587
  1,677
  1,772
Total liabilities and equity, $m
  713
  834
  964
  1,105
  1,256
  1,417
  1,588
  1,767
  1,956
  2,154
  2,360
  2,576
  2,801
  3,035
  3,278
  3,532
  3,794
  4,067
  4,352
  4,647
  4,953
  5,273
  5,605
  5,951
  6,311
  6,687
  7,078
  7,486
  7,912
  8,357
Debt-to-equity ratio
  1.650
  1.950
  2.190
  2.390
  2.550
  2.680
  2.790
  2.880
  2.960
  3.030
  3.090
  3.150
  3.190
  3.230
  3.270
  3.300
  3.330
  3.360
  3.380
  3.400
  3.420
  3.440
  3.450
  3.470
  3.480
  3.500
  3.510
  3.520
  3.530
  3.540
Adjusted equity ratio
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  19
  33
  49
  66
  85
  104
  124
  146
  169
  215
  240
  266
  293
  321
  350
  380
  412
  445
  479
  514
  551
  590
  630
  672
  716
  762
  810
  860
  912
Depreciation, amort., depletion, $m
  107
  120
  134
  149
  165
  182
  200
  219
  240
  261
  251
  274
  298
  323
  349
  376
  404
  433
  463
  494
  527
  561
  596
  633
  672
  712
  753
  797
  842
  889
Funds from operations, $m
  112
  139
  167
  198
  231
  267
  304
  344
  385
  429
  466
  514
  564
  616
  670
  726
  784
  845
  908
  973
  1,041
  1,113
  1,186
  1,264
  1,344
  1,428
  1,515
  1,606
  1,702
  1,801
Change in working capital, $m
  -21
  -23
  -25
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
Cash from operations, $m
  133
  161
  192
  225
  260
  297
  336
  378
  421
  467
  505
  555
  606
  660
  716
  773
  834
  896
  961
  1,029
  1,099
  1,173
  1,249
  1,329
  1,412
  1,499
  1,589
  1,683
  1,782
  1,885
Maintenance CAPEX, $m
  -64
  -76
  -89
  -103
  -118
  -134
  -151
  -169
  -188
  -208
  -229
  -251
  -274
  -298
  -323
  -349
  -376
  -404
  -433
  -463
  -494
  -527
  -561
  -596
  -633
  -672
  -712
  -753
  -797
  -842
New CAPEX, $m
  -58
  -64
  -70
  -75
  -80
  -86
  -91
  -96
  -100
  -105
  -110
  -115
  -120
  -125
  -130
  -135
  -140
  -145
  -151
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -208
  -217
  -227
  -237
Cash from investing activities, $m
  -122
  -140
  -159
  -178
  -198
  -220
  -242
  -265
  -288
  -313
  -339
  -366
  -394
  -423
  -453
  -484
  -516
  -549
  -584
  -620
  -657
  -697
  -738
  -780
  -825
  -872
  -920
  -970
  -1,024
  -1,079
Free cash flow, $m
  11
  21
  34
  47
  62
  78
  95
  113
  133
  153
  166
  189
  213
  237
  263
  290
  318
  347
  377
  409
  442
  476
  511
  548
  587
  627
  669
  713
  759
  806
Issuance/(repayment) of debt, $m
  87
  95
  103
  111
  119
  127
  134
  142
  149
  156
  163
  170
  177
  184
  192
  199
  207
  215
  224
  233
  242
  252
  262
  273
  284
  296
  308
  322
  336
  350
Issuance/(repurchase) of shares, $m
  18
  7
  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  
  105
  102
  103
  111
  119
  127
  134
  142
  149
  156
  163
  170
  177
  184
  192
  199
  207
  215
  224
  233
  242
  252
  262
  273
  284
  296
  308
  322
  336
  350
Total cash flow (excl. dividends), $m
  116
  123
  137
  158
  181
  205
  229
  255
  281
  309
  329
  359
  390
  422
  455
  489
  525
  562
  601
  641
  684
  727
  773
  821
  871
  923
  978
  1,035
  1,094
  1,157
Retained Cash Flow (-), $m
  -23
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -80
  -83
  -87
  -90
  -94
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
  92
  98
  109
  128
  149
  170
  193
  217
  241
  267
  285
  313
  342
  372
  403
  436
  469
  504
  541
  579
  618
  660
  703
  748
  794
  843
  895
  948
  1,004
  1,063
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
  89
  89
  95
  106
  115
  124
  130
  135
  139
  140
  136
  134
  130
  125
  118
  111
  102
  93
  83
  74
  64
  55
  46
  38
  31
  25
  19
  15
  11
  8
Current shareholders' claim on cash, %
  97.7
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0

Boingo Wireless, Inc. is a provider of commercial mobile wireless fidelity (Wi-Fi) Internet solutions and indoor direct-attached storage (DAS) services. The Company operates as a service provider of wireless connectivity solutions across its managed and operated network and aggregated network for mobile devices such as laptops, smartphones, tablets and other wireless-enabled consumer devices. It acquires long-term wireless rights at venues, such as airports, transportation hubs, stadiums, arenas, universities, convention centers, and office campuses; builds wireless networks, such as DAS, Wi-Fi and small cells at those venues, and monetizes the wireless networks through a range of products and services. As of December 31, 2016, the Company operated 36 DAS networks containing approximately 19,200 DAS nodes. Its Wi-Fi network includes locations that the Company manages and operates, as well as networks managed and operated by third-parties with whom it contracts for access.

FINANCIAL RATIOS  of  Boingo Wireless, Inc. (WIFI)

Valuation Ratios
P/E Ratio -25.3
Price to Sales 4.3
Price to Book 7
Price to Tangible Book
Price to Cash Flow 5.9
Price to Free Cash Flow 85.4
Growth Rates
Sales Growth Rate 13.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 3.9%
Cap. Spend. - 3 Yr. Gr. Rate 29%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 21.4%
Total Debt to Equity 26.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -7.5%
Ret/ On Assets - 3 Yr. Avg. -8.2%
Return On Total Capital -21.1%
Ret/ On T. Cap. - 3 Yr. Avg. -17.5%
Return On Equity -25.8%
Return On Equity - 3 Yr. Avg. -19.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 30.2%
Gross Margin - 3 Yr. Avg. 29.8%
EBITDA Margin 15.7%
EBITDA Margin - 3 Yr. Avg. 13.6%
Operating Margin -16.4%
Oper. Margin - 3 Yr. Avg. -15.5%
Pre-Tax Margin -17%
Pre-Tax Margin - 3 Yr. Avg. -15.9%
Net Profit Margin -17%
Net Profit Margin - 3 Yr. Avg. -16.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -1.9%
Payout Ratio 0%

WIFI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WIFI stock intrinsic value calculation we used $251 million for the last fiscal year's total revenue generated by Boingo Wireless, Inc.. The default revenue input number comes from 0001 income statement of Boingo Wireless, 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 WIFI stock valuation model: a) initial revenue growth rate of 18.2% 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 WIFI is calculated based on our internal credit rating of Boingo Wireless, 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 Boingo Wireless, 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 WIFI stock the variable cost ratio is equal to 61.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $101 million in the base year in the intrinsic value calculation for WIFI 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 Boingo Wireless, Inc..

Corporate tax rate of 27% is the nominal tax rate for Boingo Wireless, 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 WIFI 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 WIFI are equal to 127.9%.

Life of production assets of 4.3 years is the average useful life of capital assets used in Boingo Wireless, 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 WIFI is equal to -45.4%. 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 - $127.911 million for Boingo Wireless, 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 43.921 million for Boingo Wireless, 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 Boingo Wireless, Inc. at the current share price and the inputted number of shares is $0.8 billion.

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