Magnite, Inc. (NASDAQ:MGNI) Shares Could Be 46% Below Their Intrinsic Value Estimate

Simply Wall St.11-30

Key Insights Magnite's estimated fair value is US$30.86 based on 2 Stage Free Cash Flow to Equity Magnite is estimated to be 46% undervalued based on current share price of US$16.62 The US$...

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(NASDAQ:MGNI) Shares Could Be 46% Below Their Intrinsic Value Estimate","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n Magnite's estimated fair value is US$30.86 based on 2 Stage Free Cash Flow to Equity \n Magnite is estimated to be 46% undervalued based on current share price of US$16.62 \n  The US$...</p>\n\n<a href=\"https://finance.yahoo.com/news/magnite-inc-nasdaq-mgni-shares-195053241.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Magnite, Inc. (NASDAQ:MGNI) Shares Could Be 46% Below Their Intrinsic Value Estimate</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMagnite, Inc. (NASDAQ:MGNI) Shares Could Be 46% Below Their Intrinsic Value Estimate\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-30 03:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/magnite-inc-nasdaq-mgni-shares-195053241.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Magnite's estimated fair value is US$30.86 based on 2 Stage Free Cash Flow to Equity \n Magnite is estimated to be 46% undervalued based on current share price of US$16.62 \n  The US$...</p>\n\n<a href=\"https://finance.yahoo.com/news/magnite-inc-nasdaq-mgni-shares-195053241.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FT_SY_NQ","symbol_name":"NQ100指数","start_time":0,"source_url":"https://finance.yahoo.com/news/magnite-inc-nasdaq-mgni-shares-195053241.html","article_id":"2487949835","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/00OqBzbQM9NM6aQKBzc4vA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/992331fc596d921e34ccfa3b8813259a"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2487949835","pubTimestamp":1732909853,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Magnite's estimated fair value is US$30.86 based on 2 Stage Free Cash Flow to Equity. Magnite is estimated to be 46% undervalued based on current share price of US$16.62. The US$17.63 analyst price target for MGNI is 43% less than our estimate of fair value. Today we will run through one way of estimating the intrinsic value of Magnite, Inc.  by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow  model. Before you think you won't be able to understand it, just read on!It's actually much less complex than you'd imagine.We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","SQQQ":"纳指三倍做空ETF","BK4100":"有线和卫星","BK4211":"区域性银行","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","BK4009":"广告","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","NDAQ":"纳斯达克OMX交易所","MGNI":"Magnite, Inc.","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC",".IXIC":"NASDAQ Composite","BK4588":"碎股","QID":"纳指两倍做空ETF","TV":"墨西哥电视","IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","QLD":"纳指两倍做多ETF","TQQQ":"纳指三倍做多ETF","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","FCF":"第一联邦金融","BK4112":"金融交易所和数据","PSQ":"纳指反向ETF"},"translate_title":"Magnite，Inc.（纳斯达克：MGNI）股价可能比其内在价值估计低46%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TV":1,"DCF":1,"FCF":1,"NDAQ":1,"MGNI":1,".IXIC":1,"TQQQ":0.6,"SQQQ":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"NQmain":0.6,"MNQmain":0.6},"content_text":"Key Insights\n\n Magnite's estimated fair value is US$30.86 based on 2 Stage Free Cash Flow to Equity \n Magnite is estimated to be 46% undervalued based on current share price of US$16.62 \n  The US$17.63 analyst price target for MGNI is 43% less than our estimate of fair value \n\n Today we will run through one way of estimating the intrinsic value of Magnite, Inc. (NASDAQ:MGNI) by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. \n We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. \n Check out our latest analysis for Magnite \n Crunching The Numbers \n We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars: \n 10-year free cash flow (FCF) forecast \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF ($, Millions) \nUS$178.2m\nUS$182.2m\nUS$186.4m\nUS$191.0m\nUS$195.7m\nUS$200.6m\nUS$205.8m\nUS$211.1m\nUS$216.5m\nUS$222.1m\n\n\nGrowth Rate Estimate Source\nAnalyst x3\nEst @ 2.22%\nEst @ 2.34%\nEst @ 2.42%\nEst @ 2.48%\nEst @ 2.52%\nEst @ 2.55%\nEst @ 2.57%\nEst @ 2.59%\nEst @ 2.60%\n\n\n Present Value ($, Millions) Discounted @ 6.7% \nUS$167\nUS$160\nUS$154\nUS$147\nUS$142\nUS$136\nUS$131\nUS$126\nUS$121\nUS$116\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$1.4b\n 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 2.6%. We discount the terminal cash flows to today's value at a cost of equity of 6.7%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$222m× (1 + 2.6%) ÷ (6.7%– 2.6%) = US$5.6b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$5.6b÷ ( 1 + 6.7%)10= US$2.9b\n 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 US$4.3b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of US$16.6, the company appears quite undervalued at a 46% 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. \n\n\n\n  NasdaqGS:MGNI Discounted Cash Flow November 29th 2024\n \n\n Important Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. 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 Magnite 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 6.7%, which is based on a levered beta of 0.985. 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. \nSWOT Analysis for Magnite\n\n\nStrength\n\nDebt is well covered by cash flow.\n\n\nBalance sheet summary for MGNI.\n\n\n\nWeakness\n\nInterest payments on debt are not well covered.\n\n\nShareholders have been diluted in the past year.\n\n\n\nOpportunity\n\nAnnual earnings are forecast to grow faster than the American market.\n\n\nTrading below our estimate of fair value by more than 20%.\n\n\n\nThreat\n\nAnnual revenue is forecast to grow slower than the American market.\n\n\nWhat else are analysts forecasting for MGNI?\n\n\n\n Next Steps: \n 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. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Can we work out why the company is trading at a discount to intrinsic value? For Magnite, we've compiled three pertinent factors you should further examine: \n\n Risks: For example, we've discovered 1 warning sign for Magnite that you should be aware of before investing here. \n Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for MGNI's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. \n Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! \n\n PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2487949835"}