Discounted Cash Flow Calculation for ISE:HSW using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
ISE:HSW DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Hostelworld Group's share price is below the future cash flow value, but not at a moderate discount (< 20%).
Hostelworld Group's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Hostelworld Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Hostelworld Group's earnings are expected to grow significantly at over 20% yearly.
Hostelworld Group's revenue is expected to grow by 4.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Hostelworld Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Hostelworld Group's finances.
The net worth of a company is the difference between its assets and liabilities.
Hostelworld Group is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Hostelworld Group's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Hostelworld Group's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Low level of unsold assets.
Hostelworld Group has no debt, it does not need to be covered by short term assets.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Gary Morrison serves as CEO & Director at Hostelworld Group Plc since June 11, 2018. He serves as Vice President and General Manager, EMEA and Senior Vice President and Head of Retail Expedia Worldwide of Expedia, Inc. Mr. Morrison joined Expedia in 2011. From October 2008 to November 2009, Mr. Morrison served as the Head of Global Sales Operations for Google, Inc.‘s Online Sales Channel. Prior to that, Mr. Morrison held several senior management positions at Motorola Solutions Inc. (NYSE: MSI) in its Mobile Devices division and consulting and engineering roles at General Electric Corporation (NYSE: GE), Booz Allen & Hamilton Inc. (NYSE: BAH) and Schlumberger SA. Mr. Morrison served as a Director of Despegar.com, Corp. since April 2015 until March 1, 2018. He also serves on the board of directors for Voyages-sncf.com, a distribution channel of SNCF and AirAsiaExpedia, a division of Expedia, Inc. Mr. Morrison received a Master of Business Administration from INSEAD and a Masters in Engineering (M. Eng. Distinction) from Leeds University U.K.
Insufficient data for Gary to compare compensation growth.
Insufficient data for Gary to establish whether their remuneration is reasonable compared to companies of similar size in Ireland.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Hostelworld Group management team is less than 2 years, this suggests a new team.
CEO & Director
CFO & Director
Chief Technology Officer
Chief Human Resources Officer
Chief Revenue Officer
Chief Product Officer
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Hostelworld Group board of directors is less than 3 years, this suggests a new board.
Hostelworld Group Plc operates an online hostel-booking platform worldwide. The company provides software and data processing services that facilitate hostel, B&B, hotel, and other accommodation bookings. It operates through its Hostelworld flagship brand, as well as under the Hostelbookers and Hostels.com brands. Hostelworld Group Plc was founded in 1999 and is headquartered in Dublin, Ireland.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.