Valuation of Alphabet (GOOG:NAS) June 2017

Alphabet (GOOG:NAS) Fundamental Valuation Report


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Alphabet$949.83 (USD) Close Price as of09/06/2017

Based on the analysis conducted in this report, Alphabet, (GOOG:NAS) is found to be Undervalued (refer below to each of the models for detailed calculations and assumptions).

Company
Alphabet

Symbol:Exchange
GOOG:NAS

Industry
Technology:Internet Content & Information

Close Price/Date
$949.83 (USD) 09/06/2017

Weighted Average Valuation
$1,018.66 (USD)

Summary
GOOG:NAS is found to be Undervalued by 7.2% using the 3 valuation models shown below.

Valuation Models Used
Analyst Consensus: $1,033.00 (USD)

(in order of importance)
Discounted Cash Flow: $801.23 (USD)

Comparables: $1,410.52 (USD)

Valuation Methods Analysis
This company is:
Cash Flow Basis:
Overvalued on a Cash Flow Valuation basis

Comparable Company Basis:
Undervalued on a Comparable Valuation basis

Asset Basis:
Overvalued on an Asset Valuation basis

Alphabet Valuations

Summary chart
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  • Discounted Cash Flow

    Using a discounted cash flow model we generated an intrinsic value of $801.23 (USD) for GOOG:NAS
    Details of the DCF model are shown below

  • Comparables Model

    Using similar companies and price based ratios we generated a valuation of $1,410.52 (USD) for GOOG:NAS. We also generated a valuation of $735.72 (USD) using other metrics and comparables.

    The comparable companies were Facebook (FB:NAS)

    Details of the Comparables Model are shown below

  • Multiples

    Using a multiples approach we generated a valuation of $851.19 (USD) for GOOG:NAS

    Details of the Multiples Model are shown below

  • Adjusted Book Value versus Historical Price to Book

    Using an Adjusted Book Value versus Historical Price to Book we generated a value of $808.51 (USD) for GOOG:NAS

    Details of the Adjusted Book Value Model are shown below

  • Analyst Data

    In the Stockcalc database there are 10 analysts that provide a valuation for GOOG:NAS.
    The 10 analysts have a concensus valuation for GOOG:NAS for 2017 of $1,033.00 (USD).

    Details of the Analyst Data are shown below

  • Summary

    If you would like to explore this company further you can start with a quick DCF analysis at https://www.stockcalc.com?ss=DE4F96E9F37E4F91A0487C0A10D98701

Company Overview (GOOG:NAS USD)

Bid:Ask 953.42:962.10
Price 953.40
Change %Change +10.50 – +1.11%
Day Range 944.09 – 959.98
52 Week Range 663.28 – 988.25
Open Price 951.91
Day Volume 2013395
Average Volume 1543740
P/E Ratio 32.22
Diluted EPS 29.59
Shares Outstanding 691748603
Market Cap 659,513,118,100

Summary chart

Detailed Company Description

Alphabet Inc is a provider of internet content products and portals. Its suite of brands includes Search, Android, YouTube, Apps, Maps & Ads.

Financial Data for GOOG:NAS

The following presents the last up to 5 years of the companies Income Statement, Balance Sheet and Cash Flow data.

Income Statement

Line Item USD Millions 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
Total Revenue 50,175 59,825 66,001 74,989 90,272
Cost Of Revenue 20,634 25,858 25,691 28,164 35,138
Gross Profit 29,541 33,967 40,310 46,825 55,134
Selling General And Administration 9,988 12,049 13,982 15,183 17,470
Research And Development 6,793 7,952 9,832 12,282 13,948
EBITDA 16,432 18,518 22,339 24,818 30,418
Depreciation and Amortization 2,962 3,939 4,979 5,063 6,144
Operating Expense 16,781 20,001 23,814 27,465 31,418
Operating Income 12,760 13,966 16,496 19,360 23,716
EBIT 13,470 14,579 17,360 19,755 24,274
Interest Income 713 785 746 999 1,220
Interest Expense 84 83 101 104 124
Pre-Tax Income 13,386 14,496 17,259 19,651 24,150
Tax Provision 2,598 2,282 3,331 3,303 4,672
Net Income 10,737 12,920 14,444 16,348 19,478

Diluted Average Shares 664 677 687 693 699
Diluted EPS 16.17 19.08 21.02 22.84 27.85

Balance Sheet

Line Item USD Millions 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
Total Assets 93,798 110,920 131,133 147,461 167,497
Current Assets 60,454 72,886 80,685 90,114 105,408
Cash And Cash Equivalents 14,778 18,898 18,347 16,549 12,918
Other Short Term Investments 33,310 39,819 46,048 56,517 73,415
Receivables 8,585 9,390 11,556 13,909 14,232
Inventory 505 426 0 0 268
PrepaidAssets 2,132 2,827 3,412 3,139 4,575
Deferred Income Taxes 1,144 1,526 1,322 0 0
Other Current Assets 0 0 0 0 0
Total Non Current Assets 33,344 38,034 50,448 57,347 62,089
Gross PPE 17,697 23,837 32,746 40,146 47,527
Accumulated Depreciation -5,843 -7,313 -8,863 -11,130 -13,293
Net PPE 11,854 16,524 23,883 29,016 34,234
Goodwill 10,537 11,492 15,599 15,869 16,468
Intangibles 7,473 6,066 4,607 3,847 3,307
Other Non Current Assets 3,480 3,952 6,359 8,615 8,080
Total liabilities 22,083 23,611 26,633 27,130 28,461
Current Liabilities 14,337 15,908 16,805 19,310 16,756
Payables 3,925 3,851 4,589 4,661 2,595
Current debt 2,549 3,009 2,009 3,225 0
Current capital lease obligation 0 0 0 0 0
Other current liabilities 0 0 0 0 0
Non Current Liabilities 7,746 7,703 9,828 7,820 11,705
Long Term Debt 2,988 2,236 3,228 1,995 3,935
Long Term Capital Lease 0 0 0 0 0
Other Non Current Liabilities 0 0 0 0 0
Total Equity 71,715 87,309 104,500 120,331 139,036
Stockholders Equity 71,715 87,309 104,500 120,331 139,036
Preferred Stock 0 0 0 0 0
CapitalStock 22,835 25,922 28,767 32,982 36,307
Common Stock 22,835 25,922 28,767 32,982 0
Treasury Stock 0 0 0 0 0
Retained Earnings 48,342 61,262 75,706 89,223 105,131
Other Equity 0 0 0 0 0
Total Liabilities and Total Equity 93,798 110,920 131,133 147,461 167,497

Cash Flow

Line Item USD Millions 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
Net Income 10,737 12,920 14,444 16,348 19,478
Depreciation and amortization 2,962 3,939 4,979 5,063 6,144
Amortization of debt discount/premium and issuance costs 0 0 0 0 0
Investment/asset impairment charges 0 0 0 0 0
Investments losses (gains) 0 0 -159 334 275
Deferred income taxes -266 -437 -104 -179 -38
Stock based compensation 2,692 3,343 4,279 5,203 6,703
Accounts receivable -787 -1,307 -1,641 -2,094 -2,578
Inventory 301 -234 0 0 0
Prepaid expenses -833 -696 459 -318 312
Accounts payable -499 605 436 203 110
Accrued liabilities 1,061 967 1,002 1,936 2,108
Income Tax Payable 1,492 0 0 0 0
Interest payable 0 0 0 0 0
Other working capital 1,655 634 108 -136 3,348
Other non-cash items -1,896 -1,075 -1,427 -336 174

Net cash provided by operating activities 16,619 18,659 22,376 26,024 36,036
Investments in property, plant, and equipment -3,273 -7,358 -10,959 -9,915 -10,212
Property, plant, and equipment reductions 0 0 0 0 240
Acquisitions, net -10,568 1,077 -4,502 -236 -986
Purchases of investments -34,061 -46,013 -57,537 -76,540 -85,618
Sales/Maturities of investments 35,180 38,314 51,315 62,905 67,389
Other investing activities -334 301 628 75 -1,978

Net cash used for investing activities -13,056 -13,679 -21,055 -23,711 -31,165
Debt issued 16,109 10,768 11,625 13,705 8,729
Debt repayment -14,781 -11,325 -11,643 -13,728 -10,064
Common stock issued 0 0 0 0 0
Preferred stock issued 0 0 0 0 0
Cash dividends paid 0 0 0 0 0
Other financing activities -99 -300 -1,421 -3,654 -6,997

Net cash provided by, used for activities 1,229 -857 -1,439 -3,677 -8,332
Effect of exchange rates 3 -3 -433 -434 -170
Net change in cash 4,795 4,120 -551 -1,798 -3,631
Cash at beginning of period 9,983 14,778 18,898 18,347 16,549
Cash at end of period 14,778 18,898 18,347 16,549 12,918
Operating cash flow 16,619 18,659 22,376 26,024 36,036
Capital expenditure -3,273 -7,358 -10,959 -9,915 -10,212
Free cash flow 13,346 11,301 11,417 16,109 25,824

Ratio Data for GOOG:NAS

Profitability Ratios

Year 2012 2013 2014 2015 2016
Gross Margin (%) 58.88 56.78 61.07 62.44 61.08
Operation Margin (%) 25.43 23.34 24.99 25.82 26.27
Tax Rate (%) 19.41 15.74 19.3 16.81 19.35
Net Margin (%) 21.4 21.6 21.88 21.1 21.58
Sales per Employee 931565 1M 1M 1M 1M
EBIT Margin (%) 26.85 24.37 26.3 26.34 26.89
EBITDA Margin (%) 32.75 30.95 33.85 33.1 33.7
Net Profit Margin (%) 21.51 20.66 21.31 22.47 22.17
Interest Coverage 160.36 175.65 171.88 189.95 195.76

Efficiency Ratios

Year 2012 2013 2014 2015 2016
Days In Sales 48.42 51.15 50.5 50.96 51.94
Days In Inventory 8.93 6.57 2.78
Days In Payment 23 31.51 29.61 23.63 20.63
Cash Conversion Cycle 34.36 26.21 34.1
Receivable Turnover 7.54 7.14 7.23 7.16 7.03
Inventory Turnover 40.86 55.55 131.11
Payment Turnover 15.87 11.58 12.33 15.45 17.69
Fixed Assets Turnover 4.68 4.22 3.27 2.84 2.85
Assets Turnover 0.6 0.58 0.55 0.54 0.57
ROE (%) 16.54 16.25 15.06 14.08 15.02
ROA (%) 12.91 12.62 11.93 11.36 12.37
ROIC (%) 14.66 14.52 13.77 12.82 13.85
FCF Sales Ratio (%) 26.6 18.89 17.3 21.48 28.61
FCF Net Income Ratio (%) 124.3 87.47 79.04 98.54 132.58
Capital Expenditure Sales Ratio (%) 6.52 12.3 16.6 13.22 11.31

Financial Health

Year 2012 2013 2014 2015 2016
Current Ratio 4.22 4.58 4.8 4.67 6.29
Quick Ratio 3.95 4.28 4.52 4.5 6
Long Term Debt Total Capital Ratio (%) 4 2.5 3 1.63 2.75
Long Term Debt Equity Ratio 0.04 0.03 0.03 0.02 0.03
Financial Leverage 1.31 1.27 1.25 1.23 1.2
Total Debt To Equity Ratio 0.08 0.06 0.05 0.04 0.03

Valuation Ratios

Year 2014 2015 2016
Sustainable Growth Rate (%) 14.37 14.77 15.23
Payout Ratio (%) 0 0 0
Cash Return 0.04 0.03 0.05
Sales Per Share 99.17 103.88 122.94
Book Value Per Share 145.08 169.12 193.99
CFO Per Share 31.03 37.6 46.98
FCF Per Share 16.92 21.15 33.75
Earning Yield (%) 3.58 2.85 3.54
PE Ratio 27.9 35.13 28.24
Sales Yield (%) 18.89 13.69 15.93
PS Ratio 5.29 7.3 6.28
Book Value Yield (%) 27.64 22.28 25.13
PB Ratio 3.62 4.49 3.98
CF Yield (%) 5.91 4.95 6.09
PCF Ratio 16.92 20.18 16.43
FCF Yield (%) 3.22 2.79 4.37
FCF Ratio 31.03 35.89 22.87
Dividend Yield (%)
Forward Dividend Yield (%)
Forward Earning Yield (%) 5.63 4.44 5.28
Forward PE Ratio 17.76 22.52 18.94
PEG Ratio 1.42 2.11 1.15
PEG Payback 8.92 11.07 8.28
Dividend Rate
Working Capital Per Share 91.31 101.33 121.83
EV To EBITDA 14.6 19.19 16.16
Buy Back Yield (%) 1.02
Total Yield (%) 1.02

Valuation Details and Assumptions

Cost of Capital

We have calculated the WACC for GOOG:NAS to be 8.70 based on the following assumptions:

WACC chart
Component
Value
%
K
Cost Of

Common Equity
675105049679
99
Ke
8.77

Debt (Book Value)
3937000000
1
Kd
2.08

Preferred (Book Value)
0
0
Kp
0.00

Enterprise Value
679042049679
100

Weighted Average Cost of Capital
WACC
8.70

The Company’s Beta was calculated as 0.87 using a 60 month time frame and the Nasdaq index.

Note: Higher risk premiums imply investors require greater returns

The Company’s Cost of Preferred equity was calculated using the preferred stock dividend divided by the book value of prefrerred shares for the company

The Company’s Cost of Debt was calculated as the weighted average Interest paid for the last 3 years divided by the book value of weighted average interest bearing debt outstanding

Analyst Coverage

We have 10 Analysts covering GOOG:NAS.

GOOG:NAS Alphabet

Current Price: 953.40 USD

Analyst Consensus
USD Millions 2017 2018 2019
Mean EPS 38.9691 45.6042 50.0456
# EPS Analysts 10 10 5
Mean Revenue 98,441.6 114,797.4 132,156.7
# Revenue Analysts 9 9 5
Mean Target Price 1033.0000
Mean Cash Flow 52.0322 59.6918 61.9414
Mean EBITDA 38,165.3 44,671.2 50,281.7
Mean Net Income 26,044.9 30,689.9 34,069.1
Mean Debt Outstanding -12,298.3 -22,436.7 9,860.5
Mean Tax Rate 19.8167 20.0000 20.5000
Mean Growth Rate 17.8450
Mean Capital Expenditure 11,794.9 13,184.3 15,132.0
Analyst Recommendation
Buy Hold Sell Rating(out of 5) Recommendation As Of
9 2 1 4.3333 Outperform 2017-6-8
Based on the 10 Analysts we have covering GOOG:NAS we see a consensus price target for 2017 of $1,033.00 (USD).

Forecasted Financial Statements

The resulting projections of the 10 analysts are shown here:

Income Statement Projections for
GOOG:NAS Alphabet

millions10183

Line Item USD Millions 2012 2013 2014 2015 2016 Weighted
Average
2017 2018 2019
Total Revenue 50,175 59,825 66,001 74,989 90,272 100.00 98,442 114,797 132,157
Cost Of Revenue 20,634 25,858 25,691 28,164 35,138 39.12 31,679 36,856 43,031
Gross Profit 29,541 33,967 40,310 46,825 55,134 60.88 66,762 77,941 89,126
Selling General And Administration 9,988 12,049 13,982 15,183 17,470 20.03 16,218 18,868 22,029
Research And Development 6,793 7,952 9,832 12,282 13,948 15.28 12,379 14,402 16,815
EBITDA 16,432 18,518 22,339 24,818 30,418 33.23 38,165 44,671 50,282
Depreciation and Amortization 2,962 3,939 4,979 5,063 6,144 6.86 7,044 8,125 9,422
Operating Expense 16,781 20,001 23,814 27,465 31,418 35.31 34,760 40,536 46,665
Operating Income 12,760 13,966 16,496 19,360 23,716 25.57 32,002 37,406 42,461
EBIT 13,470 14,579 17,360 19,755 24,274 26.37 31,122 36,546 40,860
Interest Income 713 785 746 999 1,220 1.31 1,286 1,499 1,726
Interest Expense 84 83 101 104 124 0.14 146 168 195
Pre-Tax Income 13,386 14,496 17,259 19,651 24,150 26.23 30,976 36,378 40,665
Tax Provision 2,598 2,282 3,331 3,303 4,672 4.80 4,931 5,688 6,596
Net Income 10,737 12,920 14,444 16,348 19,478 21.69 26,045 30,690 34,069
Diluted Average Shares 664 677 687 693 699 668 673 681

Diluted EPS 16.17 19.08 21.02 22.84 27.85 38.97 45.60 50.05
# Of Analysts 10 10 5

As a measure of Cash flow for the company we start with the EBITDA above and adjust as you see in the Discounted Cash Flow Analysis

Discounted Cash Flow

Using a Discounted Cash flow model we generate a Value per share for GOOG:NAS of $801.23 (USD)
Year 2017 2018 2019 Terminal Growth Rate(%)3
EBITDA (Cash Flow) 38165300000 44671200000 50281700000 51790151000
Normalizations & Adjustments 0 0 0 0
Normalized EBITDA 38165300000 44671200000 50281700000 51790151000
Tax Rate(%)19.3458 7383382607.40 8642001009.60 9727397118.60 10019219032.16
+/- Tax Loss Carry Forward 0 0 0 0
Net Operating After Tax Cash Flow 30,781,917,393 36,029,198,990 40,554,302,881 41,770,931,968
Capital Investment Required (Estimate) -8295400000 -8295400000 -8295400000 -8295400000
Tax Shields on Capital Investment 1118400732 1118400732 1118400732 1118400732
Incremental Working Capital Requirements 824400000 824400000 824400000 824400000
Discretionary Cash Flow 24,429,318,124 29,676,599,722 34,201,703,613 35,418,332,699
Terminal Multiple ( 100 / (WACC – Growth Rate )) 17.55
Capitalized Terminal Value 621,556,694,773
Year: (For Discounted Calculations) 1 2 3 3+
WACC: 8.70 8.70 8.70 8.70
Discounted Annual Cash Flows 22,474,419,623 25,117,037,828 26,630,490,164 483,963,010,551
Present Value of Discretionary Cash Flow 74,221,947,616
Discounted Terminal Value 483,963,010,551
Total Discounted Cash Flow 558,184,958,167
Present Value of Tax Shields 0
Redundant Assets 0
Enterprise Value 558,184,958,167
Less Interest Bearing Debt 3938000000
En Block Fair MarketValue(FMV) Equity 554,246,958,167
Book Value of Preferred Equity 0
Value of Common Equity 554,246,958,167
Number of Fully Diluted Shares Outstanding 691748603
Calculated Value Per Share ($/share) $801.23 (USD)

Discounted Cash Flow Sensitivity Analysis for GOOG:NAS

GOOG:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $801.23 1% 5% 1% 5%
WACC (or Ke) 8.70 $977.20 $677.90
Terminal Growth Rate 3.00 $689.96 $959.85
Tax Rate 0.19 $853.70 $748.75
Cash Flow 51790151000 $753.44 $849.01
Capital Expenditures -8295400000 $794.14 $808.31
Long Term Debt 3938000000 $801.51 $800.94

Comparable Companies

(Using Price Based Ratios)

We ran GOOG:NAS against comparable companies in its space and generated a valution of $1,410.52 (USD). The comparable companies included Facebook (FB:NAS)
Company GOOG:NAS End Date Value
Earnings/Share $29.56 (USD)
Book Value/Share $209.54 (USD)
Sales/Share $135.62 (USD)
Cash Flow/Share $54.28 (USD)
EBITDA/Share $43.53 (USD)
Price Based on Comps Adjustment Factor (%)
$1,139.22 (USD) 0.0
$1,479.06 (USD) 0.0
$1,990.38 (USD) 0.0
$1,363.93 (USD) 0.0
$1,080.03 (USD) 0.0
GOOG:NAS Ratios Used Average Values FB:NAS
32.64 PE Ratio 38.54 38.54
4.60 PB Ratio 7.06 7.06
7.11 PS Ratio 14.68 14.68
17.78 PCF Ratio 25.13 25.13
18.20 EV to EBITDA 24.94 24.94

Other Ratios

Companies that do not have revenue yet or experience negative incomes can be valued against their peer group using other ratios such as Cash/share, Returns, Market Cap and Net PPE.

Using this approach we generate a valuation for GOOG:NAS of $735.72 (USD)
Company GOOG:NAS End Date Value
Cash/Share $18.49 (USD)
Book Value/Share $179.98 (USD)
MarketCap 509617523298
1 Year Return 0.311
NetPPE 34234000000
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0
$0.00 (USD) 0
$0.00 (USD) 0
$735.72 (USD) 0
$0.00 (USD) 0
Ratios Used Average Values
Cash / Share 0.00
Book Value / Share 0.00
Market Cap 0.00
1 Year Return 0.00
Net PPE 0.00

Multiples Approach

(We use the term multiples to describe valuing the company against its previous ratio values)
Using a multiples model we see GOOG:NAS is and generate a valuation of $851.19 (USD)
Ratios Ratio Average
PE Ratio 29.95
PB Ratio 4.01
PS Ratio 6.39
PCF Ratio 17.53
EV to EBITDA 16.34
Price Based on Comparables Adjustment Factor
$885.22 (USD) 0
$840.63 (USD) 0
$867.31 (USD) 0
$951.56 (USD) 0
$711.24 (USD) 0
Company GOOG:NAS End Date Value
Earnings/Share $29.56 (USD)
Book Value/Share $209.54 (USD)
Sales/Share $135.62 (USD)
Cash Flow/Share $54.28 (USD)
EBITDA/Share $43.53 (USD)

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for GOOG:NAS for the last 3 years was 4.02

We ran the Adjusted Book Value for GOOG:NAS as follows and see a value of $201.12 (USD)

By multiplying these we get an adjusted valuation of $808.51 (USD)

Line Item Most Recent Book Value Estimated FMV Realizable %
Total Assets 167497000000 167497000000 0
Current Assets 105408000000 105408000000 0
Cash and Cash Equilivents 12918000000 12918000000 100.00
Other Short Term Investments 73415000000 73415000000 100.00
Receivables 14232000000 14232000000 100.00
Inventory 268000000 268000000 100.00
Prepaid Assets 4575000000 4575000000 100.00
Deferred Income Taxes 0 0 0.00
Other Current Assets 0 0 0.00
Non-Current Assets 62089000000 62089000000 0
Gross PPE 47527000000 47527000000 0
Accumulated Depreciation -13293000000 -13293000000 0
Net PPE 34234000000 34234000000 100.00
Goodwill 16468000000 16468000000 100.00
Other Intangible Assets 3307000000 3307000000 100.00
Other Non-Current Assets 8080000000 8080000000 100.00
Total Liabilities 28461000000 28461000000 0
Current Liabilities 16756000000 16756000000 0
Payables 2595000000 2595000000 100.00
Current Debt 0 0 0.00
Current Capital Lease Obligation 0 0 0.00
Other Current Liabilities 14161000000 14161000000 100.00
Non-Current Liabilities 11705000000 11705000000 0
Long Term Debt 3935000000 3935000000 100.00
Long Term Capital Lease Obligation 0 0 0.00
Other Non-Current Liabilities 7770000000 7770000000 100.00
Total Equity 139036000000 139036000000 0
Stockholder’s Equity 139036000000 139036000000 0
Preferred Stock 0 0 0.00
Common Stock 139036000000 139036000000 0
Treasury Stock 0 0 0.00
Retained Earnings 105131000000 105131000000 100.00
Other Equity -105131000000 -105131000000 100.00
Total Liabilities and Equity 167497000000 167497000000 0
ANBV Equity Common Shareholders 139036000000
Number Shares Outstanding 691293000
Adjusted NetBook Value per Share USD $ $201.12

Sector and Industry Analysis

GOOG:NAS 2016 2015 2014
P:E 28.24 35.13 27.90
P:B 3.98 4.49 3.62
P:S 6.28 7.31 5.29
P:CF 16.43 20.18 16.92
EV:EBITDA 16.16 19.19 14.61
Technology:Internet Content & Information 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
P:E 33.96 49.08 45.97 91.86 45.38 74.01 33.13 119.40 40.60 57.09
P:B 4.33 4.20 4.32 6.45 3.21 3.79 4.74 4.01 6.20 6.63
P:S 4.48 4.29 5.29 7.01 4.79 3.50 3.85 4.33 4.17 7.60
P:CF 18.32 29.22 26.04 29.24 15.99 17.45 16.59 18.84 12.29 24.91
EV:EBITDA 16.79 23.99 21.59 13.44 14.66 20.67 12.01 18.26 11.13 26.63

Summary

If you would like to explore this company further you can start with a quick DCF analysis at https://www.stockcalc.com?ss=DE4F96E9F37E4F91A0487C0A10D98701

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Fundamental Valuation of Alphabet (GOOG:NAS) April 28 2017

Alphabet (GOOG:NAS) Fundamental Valuation Report


This Analyst style Report was generated using the tools available on the Stockcalc.com website.
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Alphabet$872.30 (USD) Close Price as of25/04/2017

Based on the analysis conducted in this report, Alphabet, (GOOG:NAS) is found to be Undervalued (refer below to each of the models for detailed calculations and assumptions).

Company
Alphabet

Symbol:Exchange
GOOG:NAS

Industry
Technology:Internet Content & Information

Close Price/Date
$872.30 (USD) 25/04/2017

Weighted Average Valuation
$961.61 (USD)

Summary
GOOG:NAS is found to be Undervalued by 10.2% using the 3 valuation models shown below.

Valuation Models Used
Analyst Consensus: $982.91 (USD)

(in order of importance)
Discounted Cash Flow: $718.68 (USD)

Comparables: $1,383.60 (USD)

Valuation Methods Analysis
This company is:
Cash Flow Basis:
Overvalued on a Cash Flow Valuation basis

Comparable Company Basis:
Undervalued on a Comparable Valuation basis

Asset Basis:
Overvalued on an Asset Valuation basis

Alphabet Valuations

Summary chart
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  • Discounted Cash Flow

    Using a discounted cash flow model we generated an intrinsic value of $718.68 (USD) for GOOG:NAS
    Details of the DCF model are shown below

  • Comparables Model

    Using similar companies and price based ratios we generated a valuation of $1,383.60 (USD) for GOOG:NAS. We also generated a valuation of $891.34 (USD) using other metrics and comparables.

    The comparable companies were Facebook (FB:NAS)

    Details of the Comparables Model are shown below

  • Multiples

    Using a multiples approach we generated a valuation of $813.91 (USD) for GOOG:NAS

    Details of the Multiples Model are shown below

  • Adjusted Book Value versus Historical Price to Book

    Using an Adjusted Book Value versus Historical Price to Book we generated a value of $804.61 (USD) for GOOG:NAS

    Details of the Adjusted Book Value Model are shown below

  • Analyst Data

    In the Stockcalc database there are 11 analysts that provide a valuation for GOOG:NAS.
    The 11 analysts have a concensus valuation for GOOG:NAS for 2017 of $982.91 (USD).

    Details of the Analyst Data are shown below

  • Summary

    If you would like to explore this company further you can start with a quick DCF analysis at https://www.stockcalc.com?ss=00CB9BFAC9964E639F156E6F03EA4EAD

Company Overview (GOOG:NAS USD)

Bid:Ask 907.78:908.83
Price 913.49
Change %Change +39.24 – +4.49%
Day Range 907.00 – 914.12
52 Week Range 663.28 – 914.12
Open Price 910.95
Day Volume 1355399
Average Volume 1399650
P/E Ratio 32.77
Diluted EPS 27.88
Shares Outstanding 691420327
Market Cap 631,605,554,511

Summary chart

Detailed Company Description

Alphabet Inc through its subsidiary Google Inc is engaged in improving the ways people connect with information & products including Search, Android, YouTube, Apps, Maps & Ads. It also produces internet-connected home devices & provides internet services.

Financial Data for GOOG:NAS

The following presents the last up to 5 years of the companies Income Statement, Balance Sheet and Cash Flow data.

Income Statement

Line Item USD Millions 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
Total Revenue 50,175 59,825 66,001 74,989 90,272
Cost Of Revenue 20,634 25,858 25,691 28,164 35,138
Gross Profit 29,541 33,967 40,310 46,825 55,134
Selling General And Administration 9,988 12,049 13,982 15,183 17,470
Research And Development 6,793 7,952 9,832 12,282 13,948
EBITDA 16,432 18,518 22,339 24,818 30,418
Depreciation and Amortization 2,962 3,939 4,979 5,063 6,144
Operating Expense 16,781 20,001 23,814 27,465 31,418
Operating Income 12,760 13,966 16,496 19,360 23,716
EBIT 13,470 14,579 17,360 19,755 24,274
Interest Income 713 785 746 999 1,220
Interest Expense 84 83 101 104 124
Pre-Tax Income 13,386 14,496 17,259 19,651 24,150
Tax Provision 2,598 2,282 3,331 3,303 4,672
Net Income 10,737 12,920 14,444 16,348 19,478

Diluted Average Shares 664 677 687 693 699
Diluted EPS 16.17 19.08 21.02 22.84 27.85

Balance Sheet

Line Item USD Millions 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
Total Assets 93,798 110,920 131,133 147,461 167,497
Current Assets 60,454 72,886 80,685 90,114 105,408
Cash And Cash Equivalents 14,778 18,898 18,347 16,549 12,918
Other Short Term Investments 33,310 39,819 46,048 56,517 73,415
Receivables 8,585 9,390 11,556 13,909 14,232
Inventory 505 426 0 0 268
PrepaidAssets 2,132 2,827 3,412 3,139 4,575
Deferred Income Taxes 1,144 1,526 1,322 0 0
Other Current Assets 0 0 0 0 0
Total Non Current Assets 33,344 38,034 50,448 57,347 62,089
Gross PPE 17,697 23,837 32,746 40,146 47,527
Accumulated Depreciation -5,843 -7,313 -8,863 -11,130 -13,293
Net PPE 11,854 16,524 23,883 29,016 34,234
Goodwill 10,537 11,492 15,599 15,869 16,468
Intangibles 7,473 6,066 4,607 3,847 3,307
Other Non Current Assets 3,480 3,952 6,359 8,615 8,080
Total liabilities 22,083 23,611 26,633 27,130 28,461
Current Liabilities 14,337 15,908 16,805 19,310 16,756
Payables 3,925 3,851 4,589 4,661 2,595
Current debt 2,549 3,009 2,009 3,225 0
Current capital lease obligation 0 0 0 0 0
Other current liabilities 0 0 0 0 0
Non Current Liabilities 7,746 7,703 9,828 7,820 11,705
Long Term Debt 2,988 2,236 3,228 1,995 3,935
Long Term Capital Lease 0 0 0 0 0
Other Non Current Liabilities 0 0 0 0 0
Total Equity 71,715 87,309 104,500 120,331 139,036
Stockholders Equity 71,715 87,309 104,500 120,331 139,036
Preferred Stock 0 0 0 0 0
CapitalStock 22,835 25,922 28,767 32,982 36,307
Common Stock 22,835 25,922 28,767 32,982 0
Treasury Stock 0 0 0 0 0
Retained Earnings 48,342 61,262 75,706 89,223 105,131
Other Equity 0 0 0 0 0
Total Liabilities and Total Equity 93,798 110,920 131,133 147,461 167,497

Cash Flow

Line Item USD Millions 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
Net Income 10,737 12,920 14,444 16,348 19,478
Depreciation and amortization 2,962 3,939 4,979 5,063 6,144
Amortization of debt discount/premium and issuance costs 0 0 0 0 0
Investment/asset impairment charges 0 0 0 0 0
Investments losses (gains) 0 0 -159 334 275
Deferred income taxes -266 -437 -104 -179 -38
Stock based compensation 2,692 3,343 4,279 5,203 6,703
Accounts receivable -787 -1,307 -1,641 -2,094 -2,578
Inventory 301 -234 0 0 0
Prepaid expenses -833 -696 459 -318 312
Accounts payable -499 605 436 203 110
Accrued liabilities 1,061 967 1,002 1,936 2,108
Income Tax Payable 1,492 0 0 0 0
Interest payable 0 0 0 0 0
Other working capital 1,655 634 108 -136 3,348
Other non-cash items -1,896 -1,075 -1,427 -336 174

Net cash provided by operating activities 16,619 18,659 22,376 26,024 36,036
Investments in property, plant, and equipment -3,273 -7,358 -10,959 -9,915 -10,212
Property, plant, and equipment reductions 0 0 0 0 240
Acquisitions, net -10,568 1,077 -4,502 -236 -986
Purchases of investments -34,061 -46,013 -57,537 -76,540 -85,618
Sales/Maturities of investments 35,180 38,314 51,315 62,905 67,389
Other investing activities -334 301 628 75 -1,978

Net cash used for investing activities -13,056 -13,679 -21,055 -23,711 -31,165
Debt issued 16,109 10,768 11,625 13,705 8,729
Debt repayment -14,781 -11,325 -11,643 -13,728 -10,064
Common stock issued 0 0 0 0 0
Preferred stock issued 0 0 0 0 0
Cash dividends paid 0 0 0 0 0
Other financing activities -99 -300 -1,421 -3,654 -6,997

Net cash provided by, used for activities 1,229 -857 -1,439 -3,677 -8,332
Effect of exchange rates 3 -3 -433 -434 -170
Net change in cash 4,795 4,120 -551 -1,798 -3,631
Cash at beginning of period 9,983 14,778 18,898 18,347 16,549
Cash at end of period 14,778 18,898 18,347 16,549 12,918
Operating cash flow 16,619 18,659 22,376 26,024 36,036
Capital expenditure -3,273 -7,358 -10,959 -9,915 -10,212
Free cash flow 13,346 11,301 11,417 16,109 25,824

Ratio Data for GOOG:NAS

Profitability Ratios

Year 2012 2013 2014 2015 2016
Gross Margin (%) 58.88 56.78 61.07 62.44 61.08
Operation Margin (%) 25.43 23.34 24.99 25.82 26.27
Tax Rate (%) 19.41 15.74 19.3 16.81 19.35
Net Margin (%) 21.4 21.6 21.88 21.1 21.58
Sales per Employee 931565 1M 1M 1M 1M
EBIT Margin (%) 26.85 24.37 26.3 26.34 26.89
EBITDA Margin (%) 32.75 30.95 33.85 33.1 33.7
Net Profit Margin (%) 21.51 20.66 21.31 22.47 22.17
Interest Coverage 160.36 175.65 171.88 189.95 195.76

Efficiency Ratios

Year 2012 2013 2014 2015 2016
Days In Sales 48.42 51.15 50.5 50.96 51.94
Days In Inventory 8.93 6.57 2.78
Days In Payment 23 31.51 29.61 23.63 20.63
Cash Conversion Cycle 34.36 26.21 34.1
Receivable Turnover 7.54 7.14 7.23 7.16 7.03
Inventory Turnover 40.86 55.55 131.11
Payment Turnover 15.87 11.58 12.33 15.45 17.69
Fixed Assets Turnover 4.68 4.22 3.27 2.84 2.85
Assets Turnover 0.6 0.58 0.55 0.54 0.57
ROE (%) 16.54 16.25 15.06 14.08 15.02
ROA (%) 12.91 12.62 11.93 11.36 12.37
ROIC (%) 14.66 14.52 13.77 12.82 13.85
FCF Sales Ratio (%) 26.6 18.89 17.3 21.48 28.61
FCF Net Income Ratio (%) 124.3 87.47 79.04 98.54 132.58
Capital Expenditure Sales Ratio (%) 6.52 12.3 16.6 13.22 11.31

Financial Health

Year 2012 2013 2014 2015 2016
Current Ratio 4.22 4.58 4.8 4.67 6.29
Quick Ratio 3.95 4.28 4.52 4.5 6
Long Term Debt Total Capital Ratio (%) 4 2.5 3 1.63 2.75
Long Term Debt Equity Ratio 0.04 0.03 0.03 0.02 0.03
Financial Leverage 1.31 1.27 1.25 1.23 1.2
Total Debt To Equity Ratio 0.08 0.06 0.05 0.04 0.03

Valuation Ratios

Year 2014 2015 2016
Sustainable Growth Rate (%) 14.37 14.77 15.23
Payout Ratio (%) 0 0 0
Cash Return 0.04 0.03 0.05
Sales Per Share 99.17 103.88 122.94
Book Value Per Share 145.08 169.12 194.57
CFO Per Share 31.03 37.6 46.98
FCF Per Share 16.92 21.15 33.75
Earning Yield (%) 3.58 2.85 3.54
PE Ratio 27.9 35.13 28.24
Sales Yield (%) 18.89 13.69 15.93
PS Ratio 5.29 7.3 6.28
Book Value Yield (%) 27.64 22.28 25.21
PB Ratio 3.62 4.49 3.97
CF Yield (%) 5.91 4.95 6.09
PCF Ratio 16.92 20.18 16.43
FCF Yield (%) 3.22 2.79 4.37
FCF Ratio 31.03 35.89 22.87
Dividend Yield (%)
Forward Dividend Yield (%)
Forward Earning Yield (%) 5.63 4.44 5.28
Forward PE Ratio 17.76 22.52 18.94
PEG Ratio 1.42 2.11 1.15
PEG Payback 8.92 11.07 8.28
Dividend Rate
Working Capital Per Share 91.31 101.33 122.2
EV To EBITDA 14.51 18.91 15.91
Buy Back Yield (%) 1.03
Total Yield (%) 1.03

Valuation Details and Assumptions

Cost of Capital

We have calculated the WACC for GOOG:NAS to be 8.60 based on the following assumptions:

WACC chart
Component
Value
%
K
Cost Of

Common Equity
573574646466
99
Ke
8.67

Debt (Book Value)
3938000000
1
Kd
2.08

Preferred (Book Value)
0
0
Kp
0.00

Enterprise Value
577512646466
100

Weighted Average Cost of Capital
WACC
8.60

The Company’s Beta was calculated as 0.85 using a 60 month time frame and the Nasdaq index.

Note: Higher risk premiums imply investors require greater returns

The Company’s Cost of Preferred equity was calculated using the preferred stock dividend divided by the book value of prefrerred shares for the company

The Company’s Cost of Debt was calculated as the weighted average Interest paid for the last 3 years divided by the book value of weighted average interest bearing debt outstanding

Analyst Coverage

We have 11 Analysts covering GOOG:NAS.

GOOG:NAS Alphabet

Current Price: 915.24 USD

Analyst Consensus
USD Millions 2017 2018 2019
Mean EPS 39.5440 45.9348 47.8503
# EPS Analysts 10 10 4
Mean Revenue 97,748.7 113,832.8 130,031.1
# Revenue Analysts 9 9 4
Mean Target Price 982.9091
Mean Cash Flow 52.4656 59.7878 56.7340
Mean EBITDA 38,384.6 44,572.3 44,781.8
Mean Net Income 26,417.1 30,796.6 34,000.8
Mean Debt Outstanding -13,834.2 -24,131.7 174,581.0
Mean Tax Rate 19.7833 20.0000 20.5000
Mean Growth Rate 16.4300
Mean Capital Expenditure 12,079.8 13,455.2 15,972.9
Analyst Recommendation
Buy Hold Sell Rating(out of 5) Recommendation As Of
10 2 1 4.3846 Outperform 2017-4-24
Based on the 11 Analysts we have covering GOOG:NAS we see a consensus price target for 2017 of $982.91 (USD).

Forecasted Financial Statements

The resulting projections of the 11 analysts are shown here:

Income Statement Projections for
GOOG:NAS Alphabet

millions10183

Line Item USD Millions 2012 2013 2014 2015 2016 Weighted
Average
2017 2018 2019
Total Revenue 50,175 59,825 66,001 74,989 90,272 100.00 97,749 113,833 130,031
Cost Of Revenue 20,634 25,858 25,691 28,164 35,138 39.12 31,200 36,401 44,804
Gross Profit 29,541 33,967 40,310 46,825 55,134 60.88 66,549 77,432 85,227
Selling General And Administration 9,988 12,049 13,982 15,183 17,470 20.03 15,973 18,635 22,937
Research And Development 6,793 7,952 9,832 12,282 13,948 15.28 12,192 14,224 17,508
EBITDA 16,432 18,518 22,339 24,818 30,418 33.23 38,385 44,572 44,782
Depreciation and Amortization 2,962 3,939 4,979 5,063 6,144 6.86 6,955 8,006 6,265
Operating Expense 16,781 20,001 23,814 27,465 31,418 35.31 34,516 40,195 45,915
Operating Income 12,760 13,966 16,496 19,360 23,716 25.57 32,033 37,237 39,312
EBIT 13,470 14,579 17,360 19,755 24,274 26.37 31,430 36,567 38,516
Interest Income 713 785 746 999 1,220 1.31 1,277 1,487 1,698
Interest Expense 84 83 101 104 124 0.14 144 166 130
Pre-Tax Income 13,386 14,496 17,259 19,651 24,150 26.23 31,286 36,401 38,387
Tax Provision 2,598 2,282 3,331 3,303 4,672 4.80 4,869 5,604 4,386
Net Income 10,737 12,920 14,444 16,348 19,478 21.69 26,417 30,797 34,001
Diluted Average Shares 664 677 687 693 699 668 670 711

Diluted EPS 16.17 19.08 21.02 22.84 27.85 39.54 45.93 47.85
# Of Analysts 10 10 4

As a measure of Cash flow for the company we start with the EBITDA above and adjust as you see in the Discounted Cash Flow Analysis

Discounted Cash Flow

Using a Discounted Cash flow model we generate a Value per share for GOOG:NAS of $718.68 (USD)
Year 2017 2018 2019 Terminal Growth Rate(%)3
EBITDA (Cash Flow) 38384600000 44572300000 44781800000 46125254000
Normalizations & Adjustments 0 0 0 0
Normalized EBITDA 38384600000 44572300000 44781800000 46125254000
Tax Rate(%)19.3458 7425807946.80 8622868013.40 8663397464.40 8923299388.33
+/- Tax Loss Carry Forward 0 0 0 0
Net Operating After Tax Cash Flow 30,958,792,053 35,949,431,987 36,118,402,536 37,201,954,612
Capital Investment Required (Estimate) -8295400000 -8295400000 -8295400000 -8295400000
Tax Shields on Capital Investment 1122111670 1122111670 1122111670 1122111670
Incremental Working Capital Requirements 824400000 824400000 824400000 824400000
Discretionary Cash Flow 24,609,903,723 29,600,543,657 29,769,514,206 30,853,066,282
Terminal Multiple ( 100 / (WACC – Growth Rate )) 17.85
Capitalized Terminal Value 550,611,478,887
Year: (For Discounted Calculations) 1 2 3 3+
WACC: 8.60 8.60 8.60 8.60
Discounted Annual Cash Flows 22,660,339,821 25,096,473,227 23,240,274,788 429,847,863,227
Present Value of Discretionary Cash Flow 70,997,087,836
Discounted Terminal Value 429,847,863,227
Total Discounted Cash Flow 500,844,951,063
Present Value of Tax Shields 0
Redundant Assets 0
Enterprise Value 500,844,951,063
Less Interest Bearing Debt 3938000000
En Block Fair MarketValue(FMV) Equity 496,906,951,063
Book Value of Preferred Equity 0
Value of Common Equity 496,906,951,063
Number of Fully Diluted Shares Outstanding 691420327
Calculated Value Per Share ($/share) $718.68 (USD)

Discounted Cash Flow Sensitivity Analysis for GOOG:NAS

GOOG:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $718.68 1% 5% 1% 5%
WACC (or Ke) 8.60 $878.13 $607.58
Terminal Growth Rate 3.00 $618.35 $862.58
Tax Rate 0.19 $766.05 $671.30
Cash Flow 46125254000 $674.89 $762.46
Capital Expenditures -8295400000 $711.45 $725.90
Long Term Debt 3938000000 $718.96 $718.39

Comparable Companies

(Using Price Based Ratios)

We ran GOOG:NAS against comparable companies in its space and generated a valution of $1,383.60 (USD). The comparable companies included Facebook (FB:NAS)
Company GOOG:NAS End Date Value
Earnings/Share $27.85 (USD)
Book Value/Share $201.09 (USD)
Sales/Share $129.20 (USD)
Cash Flow/Share $51.58 (USD)
EBITDA/Share $43.49 (USD)
Price Based on Comps Adjustment Factor (%)
$1,133.55 (USD) 0.0
$1,399.01 (USD) 0.0
$1,942.31 (USD) 0.0
$1,330.35 (USD) 0.0
$1,112.76 (USD) 0.0
GOOG:NAS Ratios Used Average Values FB:NAS
29.79 PE Ratio 40.70 40.70
4.13 PB Ratio 6.96 6.96
6.42 PS Ratio 15.03 15.03
16.08 PCF Ratio 25.79 25.79
16.15 EV to EBITDA 25.71 25.71

Comparables chartComparables chartComparables chartComparables chartComparables chart

Other Ratios

Companies that do not have revenue yet or experience negative incomes can be valued against their peer group using other ratios such as Cash/share, Returns, Market Cap and Net PPE.

Using this approach we generate a valuation for GOOG:NAS of $891.34 (USD)
Company GOOG:NAS End Date Value
Cash/Share $18.49 (USD)
Book Value/Share $201.09 (USD)
MarketCap 573574646466
1 Year Return 0.114
NetPPE 34234000000
Price Based on Comps Adjustment Factor (%)
$858.33 (USD) 0
$1,599.37 (USD) 0
$509.22 (USD) 0
$923.74 (USD) 0
$566.05 (USD) 0
Ratios Used Average Values FB:NAS
Cash / Share 3.06 3.06
Book Value / Share 17.86 17.86
Market Cap 355793680522.00 355793680522
1 Year Return 0.24 0.24
Net PPE 8591000000.00 8591000000.00

Multiples Approach

(We use the term multiples to describe valuing the company against its previous ratio values)
Using a multiples model we see GOOG:NAS is and generate a valuation of $813.91 (USD)
Ratios Ratio Average
PE Ratio 29.81
PB Ratio 3.99
PS Ratio 6.37
PCF Ratio 17.60
EV to EBITDA 16.22
Price Based on Comparables Adjustment Factor
$830.14 (USD) 0
$802.89 (USD) 0
$822.77 (USD) 0
$907.49 (USD) 0
$706.26 (USD) 0
Company GOOG:NAS End Date Value
Earnings/Share $27.85 (USD)
Book Value/Share $201.09 (USD)
Sales/Share $129.20 (USD)
Cash Flow/Share $51.58 (USD)
EBITDA/Share $43.53 (USD)

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for GOOG:NAS for the last 3 years was 4.00

We ran the Adjusted Book Value for GOOG:NAS as follows and see a value of $201.12 (USD)

By multiplying these we get an adjusted valuation of $804.61 (USD)

Line Item Most Recent Book Value Estimated FMV Realizable %
Total Assets 167497000000 167497000000 0
Current Assets 105408000000 105408000000 0
Cash and Cash Equilivents 12918000000 12918000000 100.00
Other Short Term Investments 73415000000 73415000000 100.00
Receivables 14232000000 14232000000 100.00
Inventory 268000000 268000000 100.00
Prepaid Assets 4575000000 4575000000 100.00
Deferred Income Taxes 0 0 0.00
Other Current Assets 0 0 0.00
Non-Current Assets 62089000000 62089000000 0
Gross PPE 47527000000 47527000000 0
Accumulated Depreciation -13293000000 -13293000000 0
Net PPE 34234000000 34234000000 100.00
Goodwill 16468000000 16468000000 100.00
Other Intangible Assets 3307000000 3307000000 100.00
Other Non-Current Assets 8080000000 8080000000 100.00
Total Liabilities 28461000000 28461000000 0
Current Liabilities 16756000000 16756000000 0
Payables 2595000000 2595000000 100.00
Current Debt 0 0 0.00
Current Capital Lease Obligation 0 0 0.00
Other Current Liabilities 14161000000 14161000000 100.00
Non-Current Liabilities 11705000000 11705000000 0
Long Term Debt 3935000000 3935000000 100.00
Long Term Capital Lease Obligation 0 0 0.00
Other Non-Current Liabilities 7770000000 7770000000 100.00
Total Equity 139036000000 139036000000 0
Stockholder’s Equity 139036000000 139036000000 0
Preferred Stock 0 0 0.00
Common Stock 139036000000 139036000000 0
Treasury Stock 0 0 0.00
Retained Earnings 105131000000 105131000000 100.00
Other Equity -105131000000 -105131000000 100.00
Total Liabilities and Equity 167497000000 167497000000 0
ANBV Equity Common Shareholders 139036000000
Number Shares Outstanding 691293000
Adjusted NetBook Value per Share USD $ $201.12

Sector and Industry Analysis

GOOG:NAS 2016 2015 2014
P:E 28.24 35.13 27.90
P:B 3.97 4.49 3.62
P:S 6.28 7.31 5.29
P:CF 16.43 20.18 16.92
EV:EBITDA 15.91 18.91 14.51
Technology:Internet Content & Information 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
P:E 50.46 46.32 95.35 47.32 72.48 33.13 119.40 42.35 56.10 47.89
P:B 4.36 4.54 6.80 3.39 3.83 4.74 4.01 5.90 6.45 5.54
P:S 4.30 5.88 7.40 3.30 3.63 3.85 4.37 4.01 7.58 8.83
P:CF 28.20 28.27 30.49 16.38 16.83 16.60 20.21 12.19 25.45 83.87
EV:EBITDA 24.54 21.82 14.86 15.24 9.42 11.89 18.12 10.57 26.62 29.50

Summary

If you would like to explore this company further you can start with a quick DCF analysis at https://www.stockcalc.com?ss=00CB9BFAC9964E639F156E6F03EA4EAD

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GGD:TSE GoGold Resources Valuation Report

GoGold Resources (GGD:TSE) Fundamental Valuation Report


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GoGold Resources$0.84 (CAD) Close Price as of01/03/2017

Based on the analysis conducted in this report, GoGold Resources, (GGD:TSE) is found to be (refer below to each of the models for detailed calculations and assumptions). Use a conversion rate of 1.3505 from USD to CAD.

Summary chart
  1. Discounted Cash Flow

    Using a discounted cash flow model we generated an intrinsic value of $1.78 (USD) for GGD:TSE
    Details of the DCF model are shown below

  2. Comparables Model

    Using similar companies and price based ratios we generated a valuation of $1.98 (CAD) for GGD:TSE. We also generated a valuation of $1.02 (CAD) using other metrics and comparables.

    The comparable companies were Erdene Resource Dev (ERD:TSE), Excellon Resources (EXN:TSE), Nautilus Minerals (NUS:TSE), Select Sands (SNS:TSX) and Western Copper & Gold (WRN:TSE)

    Details of the Comparables Model are shown below

  3. Multiples

    Using a multiples approach we generated a valuation of $1.11 (CAD) for GGD:TSE

    Details of the Multiples Model are shown below

  4. Adjusted Book Value versus Historical Price to Book

    Using an Adjusted Book Value versus Historical Price to Book we generated a value of $0.83 (USD) for GGD:TSE

    Details of the Adjusted Book Value Model are shown below

  5. Analyst Data

    In the Stockcalc database there are 1 analysts that provide a valuation for GGD:TSE.
    The 1 analysts have a concensus valuation for GGD:TSE for 2017 of $1.10 (USD).

    Details of the Analyst Data are shown below

  6. Summary

    If you would like to explore this company further you can start with a quick DCF analysis at https://www.stockcalc.com?ss=B63CF04C210D469A8898D1CA689352F0

Company Overview (GGD:TSE CAD)

Bid:Ask 0.67:0.69
Price 0.67
Change %Change +0.00 – +0.00%
Day Range 0.65 – 0.68
52 Week Range 0.41 – 1.65
Open Price 0.66
Day Volume 204986
Average Volume 519538
P/E Ratio
Diluted EPS -0.11
Shares Outstanding 171376481
Market Cap 114,822,242

Summary chart

Detailed Company Description

GoGold Resources Inc is engaged in the discovery, exploration and development of gold, silver and copper deposits in Mexico. The Company’s projects include San Diego, Santa Gertrudis and Parral.

Financial Data for GGD:TSE

The following presents the last up to 5 years of the companies Income Statement, Balance Sheet and Cash Flow data.

Income Statement

Line Item USD Thousands 2014-9-30 2014-9-30 2014-9-30 2015-9-30 2016-9-30
Total Revenue 0 0 0 12,521 16,701
Cost Of Revenue 0 0 0 7,039 11,047
Gross Profit 0 0 0 5,482 5,654
Selling General And Administration 3,142 3,142 3,142 3,592 4,711
Research And Development 0 0 0 0 0
EBITDA -3,088 -3,088 -3,088 -1,441 -15,611
Depreciation and Amortization 48 54 54 0 0
Operating Expense 3,142 3,142 3,142 3,592 4,711
Operating Income -3,142 -3,142 -3,142 1,890 943
EBIT -3,142 -3,142 -3,142 -3,805 -19,369
Interest Income 0 0 0 0 0
Interest Expense 0 0 0 1,879 1,886
Pre-Tax Income -4,907 -4,907 -4,907 -5,684 -21,255
Tax Provision 2,300 2,300 2,300 398 -718
Net Income -7,207 -7,207 -7,207 -6,082 -20,537

Diluted Average Shares 138,890 138,890 138,890 159,591 165,086
Diluted EPS -0.04 -0.04 -0.04 -0.04 -0.13

Balance Sheet

Line Item USD Thousands 2013-9-30 2014-9-30 2014-9-30 2015-9-30 2016-9-30
Total Assets 112,449 135,225 150,935 140,596 140,651
Current Assets 31,552 12,709 14,186 16,796 29,662
Cash And Cash Equivalents 31,114 3,423 3,821 2,721 2,091
Other Short Term Investments 0 0 0 0 0
Receivables 341 6,314 7,048 1,736 3,154
Inventory 0 1,514 1,690 11,090 24,191
PrepaidAssets 96 1,458 1,628 1,249 226
Deferred Income Taxes 0 0 0 0 0
Other Current Assets 0 0 0 0 0
Total Non Current Assets 80,897 122,515 136,749 123,800 110,989
Gross PPE 80,974 122,636 136,884 122,677 114,434
Accumulated Depreciation -78 -121 -135 -5,112 -13,139
Net PPE 80,897 122,515 136,749 117,565 101,295
Goodwill 0 0 0 0 0
Intangibles 0 0 0 0 0
Other Non Current Assets 0 0 0 0 0
Total liabilities 15,705 37,401 41,746 36,740 52,553
Current Liabilities 2,879 16,686 18,624 5,803 48,703
Payables 1,629 2,995 3,343 5,629 13,563
Current debt 1,250 13,091 14,612 0 35,077
Current capital lease obligation 0 0 0 0 0
Other current liabilities 0 0 0 0 0
Non Current Liabilities 12,826 20,715 23,122 30,937 3,850
Long Term Debt 12,422 17,253 19,258 27,357 0
Long Term Capital Lease 0 0 0 0 0
Other Non Current Liabilities 0 0 0 0 0
Total Equity 96,744 97,824 109,189 103,856 88,098
Stockholders Equity 96,744 97,824 109,189 103,856 88,098
Preferred Stock 0 0 0 0 0
CapitalStock 0 0 0 0 0
Common Stock 0 0 0 0 0
Treasury Stock 0 0 0 0 0
Retained Earnings -7,733 -13,747 -15,344 -20,726 -41,263
Other Equity 0 0 0 0 0
Total Liabilities and Total Equity 112,449 135,225 150,935 140,596 140,651

Cash Flow

Line Item USD Thousands 2013-9-30 2014-9-30 2014-9-30 2015-9-30 2016-9-30
Net Income -3,643 -6,457 -7,207 -6,082 -20,537
Depreciation and amortization 31 48 54 0 0
Amortization of debt discount/premium and issuance costs 0 0 0 0 0
Investment/asset impairment charges 715 0 0 0 20,030
Investments losses (gains) 0 0 0 0 0
Deferred income taxes 15 1,926 2,150 491 -755
Stock based compensation 641 277 309 205 362
Accounts receivable 0 0 0 0 728
Inventory 0 0 0 0 -11,715
Prepaid expenses 0 0 0 0 -43
Accounts payable 0 0 0 0 0
Accrued liabilities 0 0 0 0 0
Income Tax Payable 0 0 0 0 37
Interest payable 0 0 0 0 0
Other working capital 0 0 0 0 0
Other non-cash items 959 -6,473 -7,225 1,361 8,895

Net cash provided by operating activities -1,282 -10,678 -11,919 -4,025 -2,998
Investments in property, plant, and equipment -10,930 -32,956 -36,785 -9,606 -13,365
Property, plant, and equipment reductions 0 0 0 0 0
Acquisitions, net 0 -4,776 -5,331 0 0
Purchases of investments 0 0 0 0 0
Sales/Maturities of investments 0 0 0 0 0
Other investing activities 0 0 0 0 0

Net cash used for investing activities -10,930 -37,732 -42,116 -9,606 -13,365
Debt issued 0 14,803 16,523 27,315 13,500
Debt repayment 0 0 0 -31,323 -6,000
Common stock issued 4,537 0 0 16,194 7,454
Preferred stock issued 0 0 0 0 0
Cash dividends paid 0 0 0 0 0
Other financing activities 14,060 8,311 9,276 1,173 844

Net cash provided by, used for activities 18,598 23,114 25,799 13,359 15,798
Effect of exchange rates 0 844 942 -419 -65
Net change in cash 6,386 -25,297 -28,236 -272 -630
Cash at beginning of period 24,728 27,876 31,114 3,412 2,721
Cash at end of period 31,114 3,423 3,821 2,721 2,091
Operating cash flow -1,282 -10,678 -11,919 -4,025 -2,998
Capital expenditure -10,930 -32,956 -36,785 -9,606 -13,365
Free cash flow -12,212 -43,634 -48,704 -13,631 -16,363

Ratio Data for GGD:TSE

Profitability Ratios

Year 2012 2013 2014 2015 2016
Gross Margin (%) 43.78 33.85
Operation Margin (%) 15.09 5.65
Tax Rate (%)
Net Margin (%) -48.57 -122.97
Sales per Employee 131800 146500
EBIT Margin (%) -30.39 -115.98
EBITDA Margin (%) -11.51 -93.47
Net Profit Margin (%) -48.57 -122.97
Interest Coverage -2.03 -10.27

Efficiency Ratios

Year 2012 2013 2014 2015 2016
Days In Sales 35.53 17.06
Days In Inventory 326.78 582.85
Days In Payment 219.05 315.11
Cash Conversion Cycle 143.26 284.8
Receivable Turnover 10.27 21.4
Inventory Turnover 1.12 0.63
Payment Turnover 1.67 1.16
Fixed Assets Turnover 0.1 0.15
Assets Turnover 0.09 0.12
ROE (%) -4.29 -3.7 -6.74 -6.03 -21.4
ROA (%) -4.1 -3.41 -5.29 -4.41 -14.6
ROIC (%) -4.29 -3.46 -5.49 -3.52 -12.93
FCF Sales Ratio (%)
FCF Net Income Ratio (%)
Capital Expenditure Sales Ratio (%) 76.72 80.03

Financial Health

Year 2012 2013 2014 2015 2016
Current Ratio 29.6 10.96 0.76 2.89 0.61
Quick Ratio 29.56 10.93 0.58 0.77 0.11
Long Term Debt Total Capital Ratio (%) 11.38 14.99 20.85
Long Term Debt Equity Ratio 0.13 0.18 0.26
Financial Leverage 1.01 1.16 1.38 1.35 1.6
Total Debt To Equity Ratio 0.14 0.31 0.26 0.4

Valuation Ratios

Year 2012 2013 2014 2015 2016
Sustainable Growth Rate (%) -7.67 -6.58 -4.99 -5.57 -22.56
Payout Ratio (%) 0 0 0 0 0
Cash Return -0.03 -0.11 -0.16 -0.11 -0.09
Sales Per Share 0 0 0 0.06 0.15
Book Value Per Share 0.16 0.69 0.79 0.89 0.68
CFO Per Share -0.03 -0.02 -0.02 -0.12 -0.01
FCF Per Share -0.1 -0.11 -0.33 -0.16 -0.12
Earning Yield (%) -1.84 -1.98 -1.82 -2.77 -19.58
PE Ratio
Sales Yield (%) 0 0 0 5.16 16.38
PS Ratio 19.37 6.1
Book Value Yield (%) 10.35 65.91 44.68 71.51 72.64
PB Ratio 9.66 1.52 2.24 1.4 1.38
CF Yield (%) -1.99 -1.83 -1.2 -9.52 -1.26
PCF Ratio
FCF Yield (%) -6.89 -10.77 -18.62 -12.99 -13.07
FCF Ratio
Dividend Yield (%)
Forward Dividend Yield (%)
Forward Earning Yield (%) 9.55 6.97
Forward PE Ratio 10.47 14.35
PEG Ratio
PEG Payback
Dividend Rate
Working Capital Per Share 0.01 0.11 0.01 -0.06 0.15
EV To EBITDA -119.15 -32.13 -119.77
Buy Back Yield (%) 0
Total Yield (%) 0

Valuation Details and Assumptions

Cost of Capital

We have calculated the WACC for GGD:TSE to be 8.789 based on the following assumptions:

WACC chart
Component
Value
%
K
Cost Of

Common Equity
121677301
78
Ke
9.688

Debt (Book Value)
35077000
22
Kd
5.6

Preferred (Book Value)
0
0
Kp
0

Enterprise Value
156754301
100

Weighted Average Cost of Capital
WACC
8.789

The Company’s Beta was calculated as 0.649 using a 60 month time frame and the S&P/TSX index.

Note: Higher risk premiums imply investors require greater returns

The Company’s Cost of Preferred equity was calculated using the preferred stock dividend divided by the book value of prefrerred shares for the company

The Company’s Cost of Debt was calculated as the weighted average Interest paid for the last 3 years divided by the book value of weighted average interest bearing debt outstanding

Analyst Coverage

We have 1 Analysts covering GGD:TSE.

GGD:TSE GoGold Resources

Current Price: 0.67 CAD

Analyst Consensus
USD Millions 2017 2018 2019
Mean EPS 0.0393 0.1049 0.1704
# EPS Analysts 1 1 1
Mean Revenue 57.7 103.6 162.6
# Revenue Analysts 1 1 1
Mean Target Price 1.1000
Mean Cash Flow 0.0918 0.2753 0.3540
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure
Analyst Recommendation
Buy Hold Sell Rating(out of 5) Recommendation As Of
2 0 0 5.0000 Buy 2017-2-28
Based on the 1 Analysts we have covering GGD:TSE we see a consensus price target for 2017 of $1.10 (USD).

Forecasted Financial Statements

The resulting projections of the 1 analysts are shown here:

Income Statement Projections for
GGD:TSE GoGold Resources

dollars10183

Line Item USD 2014 2014 2014 2015 2016 Weighted
Average
2017 2018 2019
Total Revenue 0 0 0 12,521,000 16,701,000 100.00 57,700,000 103,600,000 162,600,000
Cost Of Revenue 0 0 0 7,039,000 11,047,000 62.42 23,659,233 42,480,010 66,672,293
Gross Profit 0 0 0 5,482,000 5,654,000 37.58 34,040,767 61,119,990 95,927,707
Selling General And Administration 3,141,612 3,141,612 3,141,612 3,592,000 4,711,000 42.50 16,107,228 28,920,431 45,390,561
Research And Development 0 0 0 0 0 0.00 0 0 0
EBITDA -3,087,986 -3,087,986 -3,087,986 -1,441,000 -15,611,000 -76.61 17,933,538 32,199,559 50,537,146
Depreciation and Amortization 48,044 53,626 53,626 0 0 0.24 124,507 161,888 243,740
Operating Expense 3,141,612 3,141,612 3,141,612 3,592,000 4,711,000 42.50 9,947,880 44,027,943 69,101,771
Operating Income -3,141,612 -3,141,612 -3,141,612 1,890,000 943,000 -4.92 24,092,886 17,092,048 26,825,936
EBIT -3,141,612 -3,141,612 -3,141,612 -3,805,000 -19,369,000 -98.00 17,809,031 32,037,671 50,293,406
Interest Income 0 0 0 0 0 0.00 0 0 0
Interest Expense 0 0 0 1,879,000 1,886,000 12.69 6,673,212 8,676,732 13,063,741
Pre-Tax Income -4,906,733 -4,906,733 -4,906,733 -5,684,000 -21,255,000 -118.61 11,135,819 23,360,939 37,229,665
Tax Provision 2,300,164 2,300,164 2,300,164 398,000 -718,000 8.84 4,647,930 6,043,392 9,098,969
Net Income -7,206,897 -7,206,897 -7,206,897 -6,082,000 -20,537,000 -127.45 6,487,889 17,317,547 28,130,696
Diluted Average Shares 138,890,460 138,890,460 138,890,460 159,591,424 165,086,243 165,086,243 165,086,243 165,086,243

Diluted EPS -0.04 -0.04 -0.04 -0.04 -0.13 0.04 0.10 0.17
# Of Analysts 1 1 1

As a measure of Cash flow for the company we start with the EBITDA above and adjust as you see in the Discounted Cash Flow Analysis

Discounted Cash Flow

Using a Discounted Cash flow model we generate a Value per share for GGD:TSE of $1.78 (USD)
Year 2017 2018 2019 Terminal Growth Rate(%)3
EBITDA (Cash Flow) 17933538 32199559 50537146 52053260
Normalizations & Adjustments 0 0 0 0
Normalized EBITDA 17933538 32199559 50537146 52053260
Tax Rate(%)3.3780 605794.92 1087701.11 1707144.79 1758359.13
+/- Tax Loss Carry Forward 0 0 0 0
Net Operating After Tax Cash Flow 17,327,743 31,111,858 48,830,001 50,294,901
Capital Investment Required (Estimate) -20728363 -20728363 -20728363 -20728363
Tax Shields on Capital Investment 486439 486439 486439 486439
Incremental Working Capital Requirements -6023842 -6023842 -6023842 -6023842
Discretionary Cash Flow -8,938,023 4,846,091 22,564,235 24,029,135
Terminal Multiple ( 100 / (WACC – Growth Rate )) 17.27
Capitalized Terminal Value 415,082,650
Year: (For Discounted Calculations) 1 2 3 3+
WACC: 8.79 8.79 8.79 8.79
Discounted Annual Cash Flows -8,215,926 4,094,696 17,525,308 322,388,563
Present Value of Discretionary Cash Flow 13,404,078
Discounted Terminal Value 322,388,563
Total Discounted Cash Flow 335,792,641
Present Value of Tax Shields 0
Redundant Assets 0
Enterprise Value 335,792,641
Less Interest Bearing Debt 31507000
En Block Fair MarketValue(FMV) Equity 304,285,641
Book Value of Preferred Equity 0
Value of Common Equity 304,285,641
Number of Fully Diluted Shares Outstanding 171376481
Calculated Value Per Share ($/share) $2.40 (CAD)

Comparable Companies

(Using Price Based Ratios)

We ran GGD:TSE against comparable companies in its space and generated a valution of $1.98 (CAD). The comparable companies included Erdene Resource Dev (ERD:TSE), Excellon Resources (EXN:TSE), Nautilus Minerals (NUS:TSE), Select Sands (SNS:TSX) and Western Copper & Gold (WRN:TSE)
Company GGD:TSE End Date Value
Earnings/Share ($0.16) (CAD)
Book Value/Share $0.68 (CAD)
Sales/Share $0.16 (CAD)
Cash Flow/Share ($0.03) (CAD)
EBITDA/Share ($0.12) (CAD)
Price Based on Comps Adjustment Factor (%)
$0.00 (CAD) 0
$3.12 (CAD) 0
$0.83 (CAD) 0
$0.00 (CAD) 0
($0.28) (CAD) 0
GGD:TSE Ratios Used Average Values ERD:TSE EXN:TSE NUS:TSE SNS:TSX WRN:TSE
0.00 PE Ratio 0.00 0.00 0.00 0.00 0.00 0.00
1.26 PB Ratio 9.81 30.72 3.80 0.38 10.08 4.06
5.38 PS Ratio 5.21 0.00 5.21 0.00 0.00 0.00
0.00 PCF Ratio 0.00 0.00 0.00 0.00 0.00 0.00
0.00 EV to EBITDA 0.00 0.00 0.00 0.00 0.00 0.00

Comparables chartComparables chartComparables chartComparables chartComparables chart

Other Ratios

Companies that do not have revenue yet or experience negative incomes can be valued against their peer group using other ratios such as Cash/share, Returns, Market Cap and Net PPE.

Using this approach we generate a valuation for GGD:TSE of $1.02 (CAD)
Company GGD:TSE End Date Value
Cash/Share $0.02 (CAD)
Book Value/Share $0.68 (CAD)
MarketCap 147383773
1 Year Return -0.157
NetPPE 136798897.5
Price Based on Comps Adjustment Factor (%)
$0.00 (CAD) 0
$0.00 (CAD) 0
$0.00 (CAD) 0
$1.02 (CAD) 0
$0.00 (CAD) 0
Ratios Used Average Values
Cash / Share 0.00
Book Value / Share 0.00
Market Cap 0.00
1 Year Return 0.00
Net PPE 0.00

Multiples Approach

(We use the term multiples to describe valuing the company against its previous ratio values)
Using a multiples model we see GGD:TSE is and generate a valuation of $1.11 (CAD)
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 1.62
PS Ratio 0.00
PCF Ratio 0.00
EV to EBITDA 0.00
Price Based on Comparables Adjustment Factor
$0.00 (CAD) 0
$1.11 (CAD) 0
$0.00 (CAD) 0
$0.00 (CAD) 0
$0.00 (CAD) 0
Company GGD:TSE End Date Value
Earnings/Share ($0.16) (CAD)
Book Value/Share $0.68 (CAD)
Sales/Share $0.16 (CAD)
Cash Flow/Share ($0.03) (CAD)
EBITDA/Share ($0.12) (CAD)

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for GGD:TSE for the last 6 years was 1.61

We ran the Adjusted Book Value for GGD:TSE as follows and see a value of $0.51 (USD)

By multiplying these we get an adjusted valuation of $0.83 (USD)

Line Item Most Recent Book Value Estimated FMV Realizable %
Total Assets 140651000 140651000 0
Current Assets 29662000 29662000 0
Cash and Cash Equilivents 2091000 2091000 100.00
Other Short Term Investments 0 0 0.00
Receivables 3154000 3154000 100.00
Inventory 24191000 24191000 100.00
Prepaid Assets 226000 226000 100.00
Deferred Income Taxes 0 0 0.00
Other Current Assets 0 0 0.00
Non-Current Assets 110989000 110989000 0
Gross PPE 114434000 114434000 0
Accumulated Depreciation -13139000 -13139000 0
Net PPE 101295000 101295000 100.00
Goodwill 0 0 0.00
Other Intangible Assets 0 0 0.00
Other Non-Current Assets 9694000 9694000 100.00
Total Liabilities 52553000 52553000 0
Current Liabilities 48703000 48703000 0
Payables 13563000 13563000 100.00
Current Debt 35077000 35077000 100.00
Current Capital Lease Obligation 0 0 0.00
Other Current Liabilities 63000 63000 100.00
Non-Current Liabilities 3850000 3850000 0
Long Term Debt 0 0 0.00
Long Term Capital Lease Obligation 0 0 0.00
Other Non-Current Liabilities 3850000 3850000 100.00
Total Equity 88098000 88098000 0
Stockholder’s Equity 88098000 88098000 0
Preferred Stock 0 0 0.00
Common Stock 88098000 88098000 0
Treasury Stock 0 0 0.00
Retained Earnings -41263000 -41263000 100.00
Other Equity 41263000 41263000 100.00
Total Liabilities and Equity 140651000 140651000 0
ANBV Equity Common Shareholders 88098000
Number Shares Outstanding 171376481
Adjusted NetBook Value per Share USD $ $0.51
Adjusted NetBook Value per Share CAD $ $0.69

Sector and Industry Analysis

GGD:TSE 2016 2015 2014 2013 2012 2011 2010
P:E
P:B 1.31 2.07 1.40 1.84 4.81 2.10
P:S 10.65
P:CF
EV:EBITDA -82.77 -37.84 -54.30 -88.67 -14.81
Basic Materials:Industrial Metals & Minerals 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
P:E 26.10 22.94 16.37 29.64 35.48 36.64 21.76 10.50 65.14
P:B 1.55 1.55 1.93 3.16 3.48 3.05 2.35 4.05 3.50
P:S 8.20 2.33 10.00 16.02 46.76 11.80 14.84 32.08 40.23
P:CF 18.94 8.39 57.79 14.40 32.92 27.49 18.15 10.77 25.33
EV:EBITDA 9.31 25.95 0.38 11.80 17.35 9.09 11.56 -2.09 8.91

Summary

If you would like to explore this company further you can start with a quick DCF analysis at https://www.stockcalc.com?ss=B63CF04C210D469A8898D1CA689352F0

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