Latest news with #Warpaint
Yahoo
17 hours ago
- Business
- Yahoo
Calculating The Fair Value Of Warpaint London PLC (LON:W7L)
Using the 2 Stage Free Cash Flow to Equity, Warpaint London fair value estimate is UK£4.92 Current share price of UK£4.55 suggests Warpaint London is potentially trading close to its fair value Analyst price target for W7L is UK£6.67, which is 36% above our fair value estimate In this article we are going to estimate the intrinsic value of Warpaint London PLC (LON:W7L) by taking the forecast future cash flows of the company and discounting them back to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Believe it or not, it's not too difficult to follow, as you'll see from our example! Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) UK£11.2m UK£16.7m UK£18.5m UK£19.8m UK£21.0m UK£22.0m UK£22.9m UK£23.8m UK£24.6m UK£25.3m Growth Rate Estimate Source Analyst x3 Analyst x4 Analyst x2 Est @ 7.26% Est @ 5.84% Est @ 4.85% Est @ 4.16% Est @ 3.67% Est @ 3.33% Est @ 3.09% Present Value (£, Millions) Discounted @ 7.4% UK£10.4 UK£14.5 UK£14.9 UK£14.9 UK£14.7 UK£14.3 UK£13.9 UK£13.4 UK£12.9 UK£12.4 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£136m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.5%. We discount the terminal cash flows to today's value at a cost of equity of 7.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£25m× (1 + 2.5%) ÷ (7.4%– 2.5%) = UK£533m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£533m÷ ( 1 + 7.4%)10= UK£261m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is UK£397m. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of UK£4.6, the company appears about fair value at a 7.5% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Warpaint London as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.4%, which is based on a levered beta of 0.949. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Warpaint London Strength Earnings growth over the past year exceeded the industry. Currently debt free. Weakness Earnings growth over the past year is below its 5-year average. Dividend is low compared to the top 25% of dividend payers in the Personal Products market. Opportunity Annual revenue is forecast to grow faster than the British market. Good value based on P/E ratio and estimated fair value. Threat Dividends are not covered by cash flow. Annual earnings are forecast to grow slower than the British market. Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Warpaint London, we've put together three pertinent factors you should consider: Risks: Every company has them, and we've spotted 3 warning signs for Warpaint London (of which 1 is a bit concerning!) you should know about. Future Earnings: How does W7L's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the AIM every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Irish Times
3 days ago
- Entertainment
- Irish Times
The Music Quiz: Where are the brackets placed in this U2 song title?
Gerard Crosbie is better known by which stage name? Gerard Way James Arthur Gerry Cinnamon Gerry Rafferty Written in the key of A♭ major, which Queen song features 'dramatic intervalic contrasts, ranging from F2 in the harmonies to A♭2 to a C5 in full voice up to an A♭5 in falsetto in the lead vocals'? Somebody to Love Bohemian Rhapsody Killer Queen Brighton Rock On Christy Moore's 2009 album, Listen, which Pink Floyd song does he cover? See Emily Play Comfortably Numb Money Shine On You Crazy Diamond Which UK hip-hop act has composed the soundtrack to the forthcoming horror film, 28 Years Later? Plan B Loyle Carner Little Simz Young Fathers Brad Mehldau's forthcoming album, Ride Into the Sun, is a tribute to which US singer-songwriter? Warren Zevon Elliott Smith Janis Joplin Frank Zappa Where are the brackets placed in this U2 song? Pride (In the Name of Love) (Pride) In the Name of Love Pride In the Name (of Love) Pride (In the Name) of Love Made in Sheffield, Tony Christie's 2008 album of songs by Sheffield-based songwriters, features the MOR crooner covering which Human League track? Human Louise Open Your Heart One Man In My Heart Which is a Warpaint song named after a famous blues/jazz singer? Sarah Vaughan Ella Fitzgerald Billie Holiday Peggy Lee Anar, the title of the 2011 debut solo album by Czech-Icelandic songwriter/musician Markéta Irglová, is the Persian word for which fruit? Pomegranate Pineapple Peach Pear How many tears did ? and the Mysterians sing about in 1966? 93 94 95 96 From which song on Lou Reed's 1973 album, Berlin, did Mike Scott choose the name of his band The Waterboys? Men of Good Fortune How Do You Think It Feels The Kids Caroline Says II
