Intrinsic value of XO Group - XOXO

Previous Close

$34.25

  Intrinsic Value

$11.42

stock screener

  Rating & Target

str. sell

-67%

Previous close

$34.25

 
Intrinsic value

$11.42

 
Up/down potential

-67%

 
Rating

str. sell

We calculate the intrinsic value of XOXO 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 0.9

 

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, %
  2.50
  2.75
  2.97
  3.18
  3.36
  3.52
  3.67
  3.80
  3.92
  4.03
  4.13
  4.22
  4.29
  4.36
  4.43
  4.49
  4.54
  4.58
  4.62
  4.66
  4.70
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
Revenue, $m
  165
  169
  174
  180
  186
  192
  199
  207
  215
  224
  233
  243
  253
  264
  276
  288
  301
  315
  330
  345
  361
  378
  396
  415
  435
  456
  478
  502
  526
  552
Variable operating expenses, $m
  145
  149
  153
  158
  163
  168
  174
  181
  188
  195
  197
  206
  215
  224
  234
  244
  255
  267
  279
  292
  306
  321
  336
  352
  369
  387
  405
  425
  446
  467
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
  145
  149
  153
  158
  163
  168
  174
  181
  188
  195
  197
  206
  215
  224
  234
  244
  255
  267
  279
  292
  306
  321
  336
  352
  369
  387
  405
  425
  446
  467
Operating income, $m
  20
  20
  21
  22
  23
  24
  25
  26
  27
  29
  36
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  70
  73
  77
  80
  84
EBITDA, $m
  29
  30
  31
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
Earnings before tax, $m
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
Tax expense, $m
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
Net income, $m
  14
  15
  15
  16
  16
  17
  18
  19
  20
  20
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  47
  49
  51
  53
  56
  59

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
  127
  131
  135
  139
  144
  149
  154
  160
  167
  173
  180
  188
  196
  205
  214
  223
  233
  244
  255
  267
  280
  293
  307
  322
  337
  353
  370
  388
  407
  427
Adjusted assets (=assets-cash), $m
  127
  131
  135
  139
  144
  149
  154
  160
  167
  173
  180
  188
  196
  205
  214
  223
  233
  244
  255
  267
  280
  293
  307
  322
  337
  353
  370
  388
  407
  427
Revenue / Adjusted assets
  1.299
  1.290
  1.289
  1.295
  1.292
  1.289
  1.292
  1.294
  1.287
  1.295
  1.294
  1.293
  1.291
  1.288
  1.290
  1.291
  1.292
  1.291
  1.294
  1.292
  1.289
  1.290
  1.290
  1.289
  1.291
  1.292
  1.292
  1.294
  1.292
  1.293
Average production assets, $m
  40
  41
  42
  44
  45
  47
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
  128
  134
Working capital, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
Total debt, $m
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  16
  18
  20
  22
  24
  27
  30
  32
  35
  38
  42
  45
  49
  53
  57
  61
  65
  70
  75
Total liabilities, $m
  32
  32
  33
  35
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  61
  63
  66
  69
  73
  76
  80
  84
  88
  92
  96
  101
  106
Total equity, $m
  96
  98
  101
  105
  108
  112
  116
  121
  125
  130
  136
  141
  147
  154
  161
  168
  176
  184
  192
  201
  210
  220
  231
  242
  254
  266
  279
  292
  306
  321
Total liabilities and equity, $m
  128
  130
  134
  140
  144
  149
  154
  161
  166
  173
  181
  188
  196
  205
  214
  223
  234
  245
  255
  267
  279
  293
  307
  322
  338
  354
  371
  388
  407
  427
Debt-to-equity ratio
  0.010
  0.020
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.230
  0.230
Adjusted equity ratio
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  15
  15
  16
  16
  17
  18
  19
  20
  20
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  47
  49
  51
  53
  56
  59
Depreciation, amort., depletion, $m
  10
  10
  10
  10
  10
  10
  10
  11
  11
  11
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
Funds from operations, $m
  24
  24
  25
  26
  27
  27
  28
  29
  30
  32
  31
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
Change in working capital, $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 operations, $m
  24
  25
  25
  26
  27
  28
  29
  30
  31
  32
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
Maintenance CAPEX, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
New CAPEX, $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 investing activities, $m
  -5
  -5
  -5
  -5
  -5
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -10
  -12
  -12
  -13
  -13
  -13
  -15
  -15
  -16
  -16
  -18
  -18
  -19
Free cash flow, $m
  19
  19
  20
  20
  21
  21
  22
  23
  23
  24
  24
  25
  25
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
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  
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
Total cash flow (excl. dividends), $m
  20
  20
  21
  21
  22
  23
  23
  24
  25
  26
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  58
Retained Cash Flow (-), $m
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
Prev. year cash balance distribution, $m
  80
  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
  98
  18
  18
  18
  18
  19
  19
  20
  20
  21
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  44
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
  94
  16
  16
  15
  14
  14
  13
  12
  12
  11
  10
  9
  8
  7
  7
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
  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

XO Group Inc. is engaged in providing content and marketing solutions, targeted advertising programs, transactions and merchandise. The Company's multi-platform brands guide couples through transformative life stages from getting married with The Knot, to moving in together with The Nest, to having a baby with The Bump, and helping bring celebrations to life with entertainment vendors from GigMasters.com Incorporated (GigMasters). The Knot is the wedding resource and marketplace that engages, matches and connects couples. The Bump is a pregnancy and parenting brand, providing personalized information, content and tools. The Nest is a brand focused on nesters setting up homes and navigating their lives together. GigMasters is an event marketplace for finding and booking the entertainment and vendors for birthday parties, weddings, anniversaries and corporate events, among others. The Company's product offerings include Online Media Advertising, Transactions, and Publishing and Other.

FINANCIAL RATIOS  of  XO Group (XOXO)

Valuation Ratios
P/E Ratio 75.1
Price to Sales 5.9
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 33.4
Price to Free Cash Flow 39.2
Growth Rates
Sales Growth Rate 7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
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 5.9%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 7.2%
Return On Equity - 3 Yr. Avg. 3.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 93.4%
Gross Margin - 3 Yr. Avg. 90.1%
EBITDA Margin 15.8%
EBITDA Margin - 3 Yr. Avg. 13.2%
Operating Margin 11.8%
Oper. Margin - 3 Yr. Avg. 10.3%
Pre-Tax Margin 11.8%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 7.9%
Net Profit Margin - 3 Yr. Avg. 3.8%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 65.9%
Payout Ratio 0%

XOXO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XOXO stock intrinsic value calculation we used $160.556 million for the last fiscal year's total revenue generated by XO Group. The default revenue input number comes from 0001 income statement of XO Group. 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 XOXO stock valuation model: a) initial revenue growth rate of 2.5% 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 4.3%, whose default value for XOXO is calculated based on our internal credit rating of XO Group, 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 XO Group.
    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 XOXO stock the variable cost ratio is equal to 88.2%.

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 XOXO 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 XO Group.

Corporate tax rate of 27% is the nominal tax rate for XO Group. 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 XOXO 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 XOXO are equal to 24.3%.

Life of production assets of 9.8 years is the average useful life of capital assets used in XO Group 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 XOXO is equal to -1.9%. 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 - $174.134 million for XO Group - 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 25.906 million for XO Group 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 XO Group at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ XO Group: 3Q Earnings Snapshot   [Nov-01-18 06:40PM  Associated Press]
▶ WeissLaw LLP Investigates XO Group Inc. Acquisition   [Oct-26-18 05:15PM  ACCESSWIRE]
▶ WeissLaw LLP Investigates XO Group Inc. Acquisition   [Sep-28-18 06:08PM  PR Newswire]
▶ 5 things to know before WeddingWire ties the knot with... The Knot   [Sep-26-18 05:57PM  American City Business Journals]
▶ [$$] The Knot Parent Agrees to Tie-Up With WeddingWire   [Sep-25-18 07:58PM  The Wall Street Journal]
▶ Why XO Group Inc. Stock Popped Today   [04:22PM  Motley Fool]
▶ XO Group and WeddingWire both say 'I do' to a merger   [02:48PM  American City Business Journals]
▶ [$$] The Knot Parent Agrees to Tie-Up With WeddingWire   [10:10AM  The Wall Street Journal]
▶ What Does XO Group Incs (NYSE:XOXO) PE Ratio Tell You?   [Sep-10-18 03:01PM  Simply Wall St.]
▶ XOXO Stock Gets Unfairly Hammered After Q2 Results   [Jul-31-18 10:23AM  InvestorPlace]
▶ XO Group: 2Q Earnings Snapshot   [08:01AM  Associated Press]
▶ XO Group Inc. to Host Earnings Call   [06:00AM  ACCESSWIRE]
▶ XO Group Inc. Announces Board of Directors Changes   [Jun-01-18 08:30AM  PR Newswire]
▶ The average wedding costs $33,000 in the US, says expert   [May-25-18 08:21AM  CNBC Videos]
▶ XO Group: 1Q Earnings Snapshot   [May-02-18 08:09AM  Associated Press]
▶ XO Group Inc. to Host Earnings Call   [06:00AM  ACCESSWIRE]
▶ Top Ranked Momentum Stocks to Buy for April 2nd   [Apr-03-18 08:33AM  Zacks]
▶ XO Group posts 4Q profit   [Mar-01-18 07:55AM  Associated Press]
▶ XO Group Inc. to Host Earnings Call   [06:15AM  ACCESSWIRE]
▶ XO Group CEO talks new book 'Career Manifesto'   [Jan-29-18 03:30PM  ABC News Videos]
▶ Top 2018 Wedding Trends Unveiled by The Knot   [Jan-16-18 08:00AM  PR Newswire]
▶ Jeffrey Yin Joins XO Group Inc. as General Counsel   [Jan-02-18 08:00AM  PR Newswire]
▶ ETFs with exposure to XO Group, Inc. : November 6, 2017   [Nov-06-17 12:45PM  Capital Cube]
▶ XO Group beats 3Q profit forecasts   [Oct-31-17 07:45AM  Associated Press]
▶ ETFs with exposure to XO Group, Inc. : October 27, 2017   [Oct-27-17 11:24AM  Capital Cube]

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