Henry Blodget at Silicon Alley Insider working with 24/7 Wall Street has put up a seven-point plan to save the New York Times ($NYT). The follow-up is here. This is our contribution. A valuation of the intrinsic value of the company with some pretty pessimistic assumptions. The model is interactive and the assumptions can be adjusted to change the valuation.

Valuecruncher valuation model of $NYT with interactive assumptions

Valuecruncher produces a valuation of US$7.66 for $NYT. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 19.8% below the current share price of US$9.55.

Assumptions

• Revenue: Reuters aggregates six analysts covering $NYT and these produce mean estimates of 2008 and 2009 revenues of US$2.99 billion and US$2.92 billion respectively. For our analysis we have used US$2.975 billion in 2008, US$2.835 billion in 2009 and US$2.725 billion in 2010.
• Profitability: We have used an EBITDA margin of 14.0% flat to 2010.
• Capital Expenditure: We have assumed capital expenditures of US$150.0 million in 2008 then US$75.0 million in 2009 and 2010. We have then assumed US$150 million per annum moving forward.
• Discount Rate: 8.0%.
• Terminal Growth Rate: 0%. We have assumed zero growth moving forward. If we factor in any growth at all this positively impacts the valuation.

Our analysis incorporates the cash and debt the $NYT balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None