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 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.
- 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?