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Twitter Inc (TWTR) Extended Graph Analysis

May 30th, 2019 Posted by Extended Analysis No Comment yet

Twitter Inc (TWTR) is one of the most favored social networking services in the world. Founded by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams in 2006.

TWTR logo

About the Company

 

Company Profile

Twitter is an American online news and social networking service on which users post and interact with messages known as “tweets”. Tweets were originally restricted to 140 characters, but on November 7, 2017, this limit was doubled to 280 for all languages except Chinese, Japanese, and Korean. Wikipedia

Founded on March 21, 2006, at San Francisco, CA. The founders are Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams.

 

Twitter Extended Graph Analysis

 

A) TWITTER CASH FLOW

CASH FLOW

Net cash flow provided by operating activites Net cash used for investing activities Net cash provided by (used for) financing activities Capital expenditures Free cash flows
2014 81,796,000 -1,097,272,000 1,691,722,000 -201,630,000 -119,834,000
2015 383,066,000 -902,421,000 -62,998,000 -347,280,000 36,786,000
2016 763,055,000 -598,008,000 -83,975,000 -218,657,000 544,398,000
2017 831,209,000 -112,932,000 -78,373,000 -160,742,000 670,467,000
2018 1,339,711,000 -2,055,513,000 978,116,000 -483,934,000 855,777,000
TTM 1,448,731,000 -1,767,075,000 978,051,000 -473,869,000 974,862,000

Facts

  • Net cash flow provided by operating activities were $1.34 billion and $1.45 billion in 2018 and the trailing twelve months (TTM), respectively.
  • Net cash used for investing activities was -$2.06 billion and -$1.77 billion in 2018 and the trailing twelve months respectively.
  • The net cash provided by (used for) financing activities were $978 million and $978 million in 2018 and the trailing twelve months respectively.
  • While the capital expenditures were -$484 million and -$474 million in 2018 and the trailing twelve months respectively.
  • On the other hand, the free cash flows were $856 million and $975 million in 2018 and the trailing twelve months respectively.

Explanation

  • The net cash flow had increased by 61 and 8 percent from 2017 to 2018 and the trailing twelve months due to the huge increase in net income at 1216 percent.
  • Net cash used for investing activities increased by 1720 percent from 2017 to 2018 due to the increase in purchases of investment.
  • There was a debt issued of $1.15 billion in 2018 which impacted the net cash provided by (used for) financing activities and shows a positive result.
  • On the other hand, capital expenditures are an investment in properties, plant, and equipment.
  • While free cash flows are increasing year-over-year and show a growth of 112 percent in the last five years.

Interpretation

Free cash flows exclude the non-cash expenses and include expenses from equipment and assets and changes in working capital. The company’s free cash flow was impressive as year-over-year it increases. Moreover, Twitter is liquid and its free cash flows represent 73 percent of the net income.

B) TWITTER BALANCE SHEET

Twitter

2014 2015 2016 2017 2018
Total cash 3,621,878,000 3,495,348,000 3,774,579,000 4,403,102,000 6,209,401,000
Current Assets 4,255,853,000 4,381,792,000 4,652,196,000 5,321,884,000 7,111,036,000
Total assets 5,583,082,000 6,442,439,000 6,870,365,000 7,412,477,000 10,162,572,000
Current liabilities 393,794,000 506,039,000 584,021,000 583,278,000 1,516,311,000
Total liabilities 1,956,679,000 2,074,392,000 2,265,430,000 2,365,259,000 3,356,978,000
Equity 3,646,403,000 4,368,047,000 4,604,935,000 5,047,218,000 6,805,594,000
Retained earnings -1,572,446,000 -2,093,477,000 -2,550,350,000 -2,671,729,000 -1,454,073,000
Total debts 1,376,020,000 1,455,095,000 1,538,967,000 1,627,460,000 2,628,250,000
Working capital 3,862,000,000 3,876,000,000 4,068,000,000 4,739,000,000 5,595,000,000

Facts:

  • Total cash was $6.21 billion in 2018.
  • The current assets were $7.12 billion in 2018.
  • Total assets were $10.16 billion in 2018.
  • Current liabilities were $1.52 billion in 2018.
  • Total liabilities were $3.36 billion in 2018.
  • Total equity was $6.8 billion in 2018.
  • Retained earnings were -$1.45 billion in 2018.
  • Total debts were $2.6 billion in 2018.
  • Working capital was $5.6 billion in 2018.

Explanation

  • Total cash increases year-over-year from 2015 to 2018 and has a growth of 42 percent in five years.
  • Current assets increase year-over-year in the last five years and have a growth of 40 percent.
  • Total assets increase year-over-year in the last five years and have a growth of 45 percent.
  • Current liabilities increase year-over-year in the last five years at a rate of 74 percent.
  • Total liabilities increase year-over-year in the last five years at a rate of 42 percent.
  • Total equity increases year-over-year in the last five years at a rate of 46 percent due to additional paid-in capital.
  • Retained earnings were negative in the last five years due to net income losses from 2014 to 2017. In 2018 and the trailing twelve months net income shows positive results and increase 109 and 10 percent from 2017 to 2018 and the trailing twelve months.
  • Total debts increased 48 percent from 2014 to 2018.
  • Working capital has a growth of 31 percent in five years and increasing year-over-year.

Interpretation

The balance sheet represents the company’s financial status at a certain period of time. Twitter has a strong balance sheet, it has sufficient funds and able to handle its liabilities. In other words, Twitter is liquid.

C) TWITTER FINANCIAL RATIOS

Twitter

2011 2012 2013 2014 2015 2016 2017 2018 TTM
Asset turnover (average) 0.15 0.41 0.32 0.31 0.37 0.38 0.34 0.35 0.34
Return on assets % -22.77 -10.23 -30.75 -12.91 -8.67 -6.86 -1.51 13.72 14.29
Financial leverage (average) 0.00 0.00 1.14 1.54 1.47 1.49 1.47 1.49 1.57
Return on equity % 0.00 0.00 -47.77 -17.57 -13.03 -10.19 -2.24 20.34 21.72
Return on invested capital % 0.00 0.00 -42.82 -13.79 -7.59 -6.19 0.17 15.48 15.92
Interest coverage 0.00 0.00 0.00 0.00 -4.43 -3.41 0.09 4.19 4.19

Facts:

  • The asset turnover (average) was 0.34 ratio in the trailing twelve months.
  • Return on assets was 14.29 percent in the trailing twelve months.
  • Financial leverage (average) was 1.57 ratio in the trailing twelve months.
  • Return on equity was 21.72 percent in the trailing twelve months.
  • While return on invested capital was 15.92 percent in the trailing twelve months.
  • The interest coverage was 4.19 ratio in the trailing twelve months.

Explanation

  • Asset turnover ratio means that each dollar of assets generates an average of $0.34 in the trailing twelve months.
  • Return on assets indicates that for every dollar that was invested in assets produced $0.137 in 2018.
  • Financial leverage indicates that the liabilities are 157 percent of the stockholder’s equity.
  • Return on equity indicates that every dollar of common shareholders equity earned $0.2172 return on their investment in 2018.
  • Return on invested capital indicates that every dollar invested in capital produces a $0.1592 return in 2018.
  • Interest coverage measures the company’s ability to make interest payments on its debt in time. Twitter is able to make 4.19 times more earnings than his current interest payments.

Interpretation

Twitter is liquid and was able to make an acceptable return on investments made.

D) INCOME AND MARKET

Twitter

2014 2015 2016 2017 2018 YTD
Revenue 1,403,002,000 2,218,032,000 2,529,619,000 2,443,299,000 3,042,359,000 3,164,378,000
EBIT -538,866,000 -450,036,000 -367,208,000 38,740,000 453,325,000 472,058,000
Net Income -577,820,000 -521,031,000 -456,873,000 -108,063,000 1,205,596,000 1,335,403,000
Market Capitalization 23,042,000,000 16,062,000,000 11,653,000,000 17,834,000,000 21,965,000,000 30,676,000,000
Intrinsic Value 0 815,729,332 890,352,542 2,026,132,340 2,822,415,366 4,173,150,541

Facts:

  • Revenue was $3.16 billion in the trailing twelve months.
  • While the EBIT was $472 million in the trailing twelve months.
  • And the net income was $1.34 billion in the trailing twelve months.
  • The market capitalization was $30.68 billion in the trailing twelve months.
  • While the intrinsic value was $4.17 billion in the trailing twelve months.

Explanation

  • Revenue increases year-over-year and has a growth of 56 percent in five years.
  • While EBIT shows negative in the first three years and has a growth of 214 percent in five years.
  • Net income shows negative in the first 4 years however managed an increased in 2018 and YTD and has a growth of 143 percent in five years.
  • Moreover, market capitalization was erratic in movement in the last five years and has a growth of 25 percent in five years.
  • However, the intrinsic value is increasing year-over-year in the last four years and has a growth of 80 percent. The market capitalization might be overvalued compared to the intrinsic value.

Interpretation

In the last two years of its operation, the management was able to augment its earnings which shows a positive bottom line and was able to increase its cash and working capital as well. Twitter is profitable.

E) KEY EXECUTIVE COMPENSATION

Twitter

2014 2015 2016 2017 2018
Key Executive Compensation 7,855,088 440,006 9,904,051 15,207,588 39,067,621
Jack Dorsey/ Chief Executive Officer 0 68,506 56,551 0 1
Ned Segal/ Chief Financial Officer 0 0 0 14,299,528 4,963,054
Michael Montano/ Engineering Lead 0 0 0 0 17,984,246
Vijava Gadde/ Chief Legal Officer and Secretary 7,855,088 371,500 9,847,500 908,060 11,799,901
Mathew Derella/ Customers Lead 0 0 0 0 4,320,419

Detailed Distribution

2014 2015 2016 2017 2018
Key Executive Compensation
Salary 283,981 370,000 498,000 665,385 1,822,885
Bonus 300,000 609,210
Annual Other Income
Restricted Stock Award 7,555,950 9,348,000 14,239,203 36,626,526
Securities Option
LTIP Payout
Non-Equity Compensation
Other Compensation 15,157 70,006 58,051 3,000 9,000
Total 7,855,088 440,006 9,904,051 15,207,588 39,067,621
Jack Dorsey/Chief Executive Officer
Salary 1
Bonus
Annual Other Income
Restricted Stock Award
Securities Option
LTIP Payout
Non-Equity Compensation 68,506 56,551
Other Compensation 68,506 56,551 1
Total
Ned Segal/Chief Financial Officer
Salary 165,385 500,000
Bonus 300,000
Annual Other Income
Restricted Stock Award 13,832,643 4,460,054
Securities Option
LTIP Payout
Non-Equity Compensation
Other Compensation 1,500 3,000
Total 14,299,528 4,963,054
Michael Montano/ Engineering Lead
Salary 325,769
Bonus 45,500
Annual Other Income
Restricted Stock Award 17,612,977
Securities Option
LTIP Payout
Non-Equity Compensation
Other Compensation
Total 17,984,246
Vijaya Gadde/ Chief Legal Officer
Salary 283,981 370,000 498,000 500,000 498,077
Bonus
Annual Other Income
Restricted Stock Award 7,555,950 9,348,000 406,560 11,298,824
Securities Option
LTIP Payout
Non-Equity Compensation
Other Compensation 15,157 1,500 1,500 1,500 3,000
Total 7,855,088 371,500 9,847,500 908,060 11,799,901
Matthew Derella/Customers Lead
Salary 499,038
Bonus 563,710
Annual Other Income
Restricted Stock Award 3,254,671
Securities Option
LTIP Payout
Non-Equity Compensation
Other Compensation 3,000
Total 4,320,419

Facts

  • Total key executive compensation was $39,067,621 in 2018.
  • And the chief executive officer, Jack Dorsey compensation was $1 in 2018.
  • While the chief financial officer, Ned Segal compensation was $4,963,054 in 2018.
  • On the other hand, Engineering Lead, Michael Montano compensation was $17,984,246 in 2018.
  • In addition, the Chief Legal Officer and Secretary, Vijava Gadde compensation was $11,799,901 in 2018.
  • Customers Lead, Matthew Derella compensation was $4,320,419 in 2018.

Explanation

  • The total key executive compensation represents 1.81 percent of the gross profit.
  • Ned Segal, CFO total salary represent 10 percent of his total compensation.
  • Michael Montano, Engg Lead total salary represents 2 percent of his total compensation.
  • Vijava Gadde, CLO and Secretary total salary represent 4 percent of his total compensation.
  • Matthew Derella, Customer Lead total salary represent 12 percent of his total compensation.

Interpretation

The total key executive compensation shows an increase of 110.53 percent from that of last year.

F) LOBBYING AND CONTRIBUTIONS

Twitter

LOBBYING/CONTRIBUTIONS TO POLITICIANS

2013 2014 2015 2016 2017 2018 2019
$90,000.00 $310,000.00 $500,000.00 $680,000.00 $550,000.00 $1,100,000.00 $420,000.00

TOTAL CONTRIBUTIONS

Cycle Total Democrats Republicans % to Dems % to Repubs Individuals PACs Soft (Indivs) Soft (Orgs)
2018 $288,284.00 $278,211.00 $9,150.00 97.00% 3.00% $269,558.00 $10,700.00 $250.00 $0.00
2016 $858,021.00 $589,276.00 $263,945.00 69.00% 31.00% $840,021.00 $15,500.00 $2,250.00 $0.00
2014 $41,300.00 $23,300.00 $3,000.00 56.00% 7.00% $26,300.00 $0.00 $15,000.00 $0.00
2012 $35,529.00 $34,279.00 $250.00 97.00% 1.00% $34,529.00 $0.00 $0.00 $0.00
2008 $3,000.00 $3,000.00 $0.00 100.00% 0.00% $3,000.00 $0.00 $0.00 $0.00
$1,226,134.00 $928,066.00 $276,345.00 76.00% 23.00% $1,173,408.00 $26,200.00 $17,500.00 $0.00

Itemized Lobbying Expenses for Twitter, 2019

Firms Hired Total Reported by Filer Reported Contract Expenses (Included in Total Reported by Filer)
Twitter $420,000.00
Mehlman, Castagnetti, et al $60,000.00
Integrated Solutions Group $30,000.00
Joseph Group $30,000.00
Total $120,000.00

A lobbyist representing Twitter, 2019

Lobbying Firm Hired Amount Subsidiary (Lobbied For) Lobbyist
Integrated Solutions Group $30,000.00 Twitter Boyd, Moses
O’Hanlon, G John
Joseph Group $30,000.00 Twitter Joseph, Kevin
Mehlman, Gastanetti, et al $60,000.00 Twitter Aronson, Lauren
Castagnetti, David
Collins, Mike
Distefano, Nichole
Eastman, Sage
Haro, Steven
Hingson, Dean Constantine
Mehlman, Bruce P
Pickering, Elise Finley
Robinson, Michael C
Rosen, Dean
Thomas, David R
Tolar, Helen
Wooters, Charles
Twitter $420,000.00 Twitter Culbertson, Lauren
Kane, Kevin
Roman, Lisa

Facts:

  • Total lobbying expenses in 2013 was $90,000.00.
  • Total lobbying expenses in 2014 was $310,000.00.
  • The lobbying expenses in 2015 was $500,000.00.
  • While lobbying expenses in 2016 was $680,000.00.
  • Lobbying expenses in 2017 was $550,000.00.
  • On the other hand, in 2018 the total lobbying expenses was $1,100,000,00.
  • And the total lobbying expenses in 2019 was $420,000.00.

Explanation

A special interest’s lobbying activity may go up or down over time, depending on how much attention the federal government is giving their issues. Particularly active clients often retain multiple lobbying firms, each with a team of lobbyists, to press their case for them.

Total Lobbying Expenditures: $420,000

Source: OpenSecrets.org

Center for Responsive Politics

Interpretation

Twitter is incurring a lobbying and contributions expenses to politicians every year since 2013 to the present time. These expenses are not reflected in the financial statements of the company although they were actually incurred.

G) FINANCIAL STRENGTH

Twitter

DATA

Working capital Total assets Sales EBIT Market value of equity Book value of total liabilities Retained earnings
5,595,000,000 10,162,572,000 3,164,378,000 472,058,000 28,585,400,000 3,356,978,000 -1,454,073,000

FORMULA

Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Calculation Ratio Z-Score Result
A – Working Capital / Total Assets 0.55 1.2 0.66
B – Retained Earnings / Total Assets -0.14 1.4 -0.196
C – EBIT / Total Assets 0.05 3.3 0.165
D – Market Value of Equity / Book Value of Total Liabilities 8.52 0.6 5.112
E – Sales / Total Assets 0.31 1.0 0.31
Z-Score 6.051

The Z-Score formula is computed as follows: Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Facts

  • A – 0.55 * 1.2 = 0.66
  • B – -0.14 * 1.4 = -0.196
  • C – 0.05 * 3.3 = 0.165
  • D – 8.52 * 0.6 = 5.112
  • E – 0.31 * 1.0 = 0.31   
  • Z-Score = 6.051

Explanation

  • The Z-Score by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. It indicates the company’s probability of bankruptcy.

Interpretation

The Z-Score of Twitter was 6.051, it is then compared to the grading scale. According to Altman, an overall score of 3 and above will not declare bankruptcy. Twitter is not close to solvency. The company is in good financial health.  

CONCLUSION

Twitter company’s balance sheet is in good health and financially stable. The company is liquid and profitable. The management was able to augment its earnings every year which produced good financial results.

The company’s stock price was erratic in movement so as the market capitalization in the last ten years. The book value is increasing every year in the past six years. The shares of stocks were increasing as well. I recommend the stock of Twitter Inc (TWTR) a Buy.

 

CITATION

https://www.morningstar.com/stocks/XNYS/TWTR/quote.html

https://www.opensecrets.org/orgs/lobby.php?id=D000067113

Researched and written by Criselda

Twitter: criseldarome

 

 

 

Tesla Inc (TSLA) Extended Graph Analysis

April 29th, 2019 Posted by Extended Analysis No Comment yet

Tesla Motors Inc (TSLA) has officially changed its name to Tesla Inc. The company has acquired Solar City in August 2016, a solar power company.

tesla-motors-inc

About the Company

Company Profile

Tesla, Inc. is an American automotive and energy company based in Palo Alto, California. The company specializes in electric car manufacturing and, through its SolarCity subsidiary, solar panel manufacturing. Founded July 1, 2003, in San Carlos, CA by Elon Musk.Source: Wikipedia

 

TESLA EXTENDED GRAPH ANALYSIS

 

A) TESLA CASH FLOW

TeslaCASH FLOWS

Net Cash flows provided by operating activities Net Cash used for investing activities Net Cash provided (used for) financing Capital Expenditure Free Cash Flow
2014 -57,337,000 -990,444,000 2,143,130,000 -969,885,000 -1,027,222,000
2015 -524,499,000 -1,673,551,000 1,523,523,000 -1,634,850,000 -2,159,349,000
2016 -123,829,000 -1,416,430,000 3,743,976,000 -1,440,471,000 -1,564,300,000
2017 -60,654,000 -4,418,967,000 4,414,864,000 -4,081,354,000 -4,142,008,000
2018 2,097,802,000 -2,337,428,000 573,755,000 -2,319,516,000 -221,714,000
TTM 2,097,802,000 -2,337,428,000 573,755,000 -2,319,516,000 -221,714,000

Facts

  • Net cash flows provided by operating activities was $2.098 billion in 2018 and the trailing twelve months.
  • Also, net cash used for investing activities was $-2.34 billion in 2018 and the trailing twelve months.
  • And, cash provided (used for) financing was $574 million in 2018 and the trailing twelve months.
  • On the other hand, capital expenditures were $-2.32 billion in 2018 and the trailing twelve months.
  • Free cash flow was $222 million in 2018 and the trailing twelve month

Explanation

  • The net cash flows provided by operating activities soared up to 103 percent from 2017 to 2018 due to depreciation.
  • Also, the net cash used for investing activities is the purchases of property and equipment, excluding capital leases, net of sales.
  • Net cash provided (used for) financing activities are proceeds from the issuance of convertible and other debt; and repayments of convertible and other debt. Plus collateralized lease borrowings and other repayments.
  • On the other hand, capital expenditures are an investment in property and equipment.
  • Free cash flow increases by 1768 percent although negative, compared to 2017.

Interpretation

Tesla suffered a negative free cash flow for the past five years due to its huge investment in property and equipment. However, in 2018, free cash flow improved by 1768 percent. There is no cash left over from cash from operations after operating expenses and capital expenditures or CAPEX.

B) TESLA BALANCE SHEET

tesla motors

BALANCE SHEET 2014 2015 2016 2017 2018
Total cash 1,905,713,000 1,196,908,000 3,393,216,000 3,367,914,000 3,685,618,000
Current Assets 3,198,657,000 2,791,568,000 6,259,796,000 6,570,520,000 8,306,308,000
Total assets 5,849,251,000 8,092,460,000 22,664,076,000 28,655,372,000 29,739,614,000
Current liabilities 2,107,166,000 2,816,274,000 5,827,006,000 7,674,670,000 9,992,136,000
Total liabilities 4,937,541,000 7,003,516,000 17,911,165,000 24,418,130,000 24,816,371,000
Equity 911,710,000 1,088,944,000 4,752,911,000 4,237,242,000 4,923,243,000
Retained earnings -1,433,682,000 -2,322,323,000 -2,997,237,000 -4,974,299,000 -5,317,832,000
Total debts 2,466,280,000 2,715,586,000 7,128,431,000 10,314,938,000 11,971,371,000
Working capital 1,091,000,000 -25,000,000 433,000,000 -1,104,000,000 -1,686,000,000

Facts

  • Total cash were $3.37 billion and $3.69 billion in 2017 and 2018 respectively.
  • And, current assets were $6.57 billion and $8.31 billion in 2017 and 2018 respectively.
  • Total assets were $28.66 billion and $29.34 billion in 2017 and 2018 respectively.
  • Current liabilities were $7.67 billion and $9.99 billion respectively.
  • Total liabilities were $24.42 billion and $24.82 in 2017 and 2018 respectively.
  • Equity were $4.97 billion and $5.32 billion in 2017 and 2018 respectively.
  • Retained earnings were -$4.97 billion and -$5.32 billion in 2017 and 2018 respectively.
  • Total debts were $10.31 billion and $11.97 billion in 2017 and 2018 respectively.
  • Working capital was -$1.1 billion and -$1.7 billion in 2017 and 2018 respectively.

Explanation

  • Total cash growth was 48 percent in five years period.
  • And, current assets growth was 61 percent in five years period. Increased in inventory has impacted the total.
  • While total assets growth was 80 percent in five years period.
  • Current liabilities increased 79 percent in five years due to an increase in accounts payable.
  • On the other hand, total liabilities increased 80 percent in five years due to an increase in long-term debt which increases year-over-year.
  • Equity has a growth of 81 percent in five years due to year-over-year increases in paid-in capital.
  • Retained earnings were negative in the last five years and falling year-over-year.
  • Moreover, total debts increase year-over-year and have grown 79 percent in five years. Long-term debt impacted the total and in 2018 the short term-debt increased by 186 percent from 2017 to 2018.
  • On the other hand, working capital was negative due to current liabilities are higher than the current liabilities in 2017 and in 2018. Due to increased accounts payable and short-term debt.

Interpretation

Tesla’s total current assets are not enough to pay its total current liabilities in the past two years because liabilities are higher than the current assets.

 

C) TESLA FINANCIAL RATIOS

tesla-motors

FINANCIAL RATIOS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 TTM
Asset turnover (average) 1.23 0.45 0.37 0.45 1.14 0.77 0.58 0.46 0.46 0.73 0.73
Return on assets % -61.21 -59.76 -46.28 -43.36 -4.19 -7.11 -12.75 -4.39 -7.64 -3.34 -3.34
Financial leverage (average) 0.00 1.86 3.18 8.94 3.62 6.42 7.43 4.77 6.76 6.04 6.04
Return on equity % 0.00 0.00 -118.03 -227.22 -18.69 -37.25 -88.84 -23.11 -43.63 -21.31 -21.31
Return on invested capital % 0.00 0.00 -64.97 -72.34 -4.55 -8.45 -21.46 -6.27 -11.47 -1.90 -2.38
Interest coverage -21.01 -154.40 0.00 0.00 -1.17 -1.82 -6.37 -2.75 -3.69 -0.52 -0.52

Facts

  • Asset turnover was averaging 0.46 and 0.73 in 2017, 2018 respectively.
  • Return on assets was -.0764 percent and -.0334 percent in 2017 and 2018 respectively.
  • Financial leverage was averaging 6.76 and 6.04 in 2017 and 2018 respectively.
  • Return on equity was -43.63 percent and -21.31 percent in 2017 and 2018 respectively.
  • Return on invested capital was -11.47 percent and -1.90 percent in 2017 and 2018 respectively.
  • Interest coverage were -3.69 and -0.52 in 2017 and 2018 respectively.

Explanation

  • Asset turnover ratio means that each dollar of assets generates an average of 46 cents and 73 cents of sales in 2017 and 2018 respectively.
  • While the returns on assets (ROA) indicates that for every dollar that was invested in assets produced -$76.4 and -$33.4 of net income in 2017 and 2018 respectively. In other words, there were no returns on the dollar invested in assets because it is negative.
  • Moreover, financial leverage indicates that liabilities are 676 percent and 604 percent of shareholders’ equity in 2017 and 2018 respectively.
  • Also, return on equity indicates that every dollar of common shareholders’ equity earned -$43.63 percent and -$21.31 in 2017 and 2018 respectively. In other words, the shareholders did not earn a return on their investment.
  • Return on invested capital indicates that for every dollar invested in capital produces a -$0.1147 and -$0.0190 cents negative returns in 2017 and 2018 respectively.
  • On the other hand, interest coverage means that Tesla has negative 3.69 and negative -0.52 times earnings than its current interest payments in 2017 and 2018 respectively. In other words, its earnings are less than the current interest payment.

Interpretation

The profitability of Tesla was not impressive. The return on the investments in assets, equity and invested capital was negative meaning there was no return on the investment. Moreover, financial leverage was high at 604 percent. In addition, Its current interest payment is greater than its earnings.

 

D) TESLA INCOME AND MARKET

tesla-motors

  2014 2015 2016 2017 2018 TTM
Revenue 3,198,356,000 4,046,025,000 7,000,132,000 11,758,751,000 21,461,268,000 21,461,268,000
EBIT -186,689,000 -716,629,000 -667,340,000 -1,632,086,000 -252,840,000 -252,840,000
Net Income -294,040,000 -888,663,000 -674,914,000 -1,961,400,000 -976,091,000 -976,091,000
Market capitalization 27,954,000,000 31,543,000,000 34,423,000,000 52,328,000,000 57,442,000,000 48,338,000,000
Intrinsic value 6,912,210,299 12,344,598,323 1,227,212,668 9,992,830,135 27,736,000,163 35,273,927,556

Facts

  • Revenue were $11.76 billion and $21.46 billion in 2017 and 2018 respectively.
  • While EBIT was -$1.63 billion and -$253 million in 2017 and 2018 respectively.
  • Net income were -$1.96 billion and -$976 million in 2017 and 2018 respectively.
  • In addition, market capitalization were $57,442,000,000 and $48,338,000,000 in 2018 and the trailing twelve months respectively. The market value falls down by 20 percent in the trailing twelve months from 2018.
  • On the other hand, the intrinsic values were $27,736,000,163 and $35,273,927,556 in 2018 and the trailing twelve months respectively. In other words, the intrinsic value was $27.74 billion and $35.27 billion in 2018 and the trailing twelve months.

Explanation

  • The revenue growth was 85 percent in five years and it increases year-over-year.
  • While EBIT was erratic in movement and negative in the last five years.
  • In addition, net income was erratic in movement and was negative in the last five years.
  • Moreover, market capitalization has a growth of 42 percent in the last five years.
  • The intrinsic value was erratic in movement from 2014 to 2017. However, the value increased by 64 percent and 21 percent in 2018 and the trailing twelve months respectively.

Interpretation

Although the revenue increases year-over-year, the bottom line was not impressive. The cost of revenue represents 80 percent of the sales. In addition, the intrinsic value is lesser than the market capitalization of Tesla. It may be said that the market value is overstated.

E) KEY EXECUTIVE COMPENSATION

tesla-motors

Key Executive Compensation 2013 2014 2015 2016 2017
Key Executive Compensation 875,592 20,950,746 24,641,448 17,360,435 27,558,904
Elon Musk / CEO and Chairman of the Board 69,989 35,360 37,584 45,936 49,920
Deepak Ahuja / Chief Financial Officer 338,000 3,784,343 339,300 0 15,498,009
Jason Wheeler / Former Chief Financial Officer 0 0 20,898,296 501,931 174,041
Douglas John Field / Senior Vice President, Engineering 0 0 3,115,708 2,420,475 9,151,618
John Mcneil / Former President, Global Sales and Service 0 0 0 6,464,510 2,435,706
Jeffrey Straubel / Chief Technology Officer 467,603 17,131,043 250,560 7,927,583 249,600

DETAILED DISTRIBUTION

2013 2014 2015 2016 2017

Key Executive Compensation

Salary 620,880 622,960 980,521 1,601,503 1,702,407
Bonus 10,500 0
Annual Other Income 0
Restricted Stock Award 56,424 32,655 2,808,785 4,238,644 20,756,754
Securities Option 187,788 20,295,131 20,852,142 10,747,808 4,567,304
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 772,480 395,803
Other Compensation 0 0 0 0 136,636
Total 875,592 20,950,746 24,641,448 17,360,435 27,558,904

Elon Musk / CEO and Chairman of the Board

Salary 33,280 35,360 37,584 45,936 49,920
Bonus
Annual Other Income
Restricted Stock Award 10,620
Securities Option 26,089
LTIP Payout
Non-Equity Compensation
Other Compensation
Total 69,989 35,360 37,584 45,936 49,920
Deepak Ahuja / Chief Financial Officer
Salary 338,000 338,000 339,300 0 428,846
Bonus 0
Annual Other Income 0
Restricted Stock Award 10,501,859
Securities Option 3,446,343 4,567,304
LTIP Payout 0 0
Non-Equity Compensation 0 0
Other Compensation 0 0
Total 338,000 3,784,343 339,300 0 15,498,009

Jason Wheeler / Former Chief Financial Officer

Salary 0 0 46,154 501,931 174,041
Bonus
Annual Other Income
Restricted Stock Award
Securities Option 20,852,142
LTIP Payout
Non-Equity Compensation
Other Compensation
Total 0 0 20,898,296 501,931 174,041

Douglas John Field / Senior Vice President, Engineering

Salary 0 0 306,923 301,153 300,000
Bonus 0
Annual Other Income 0
Restricted Stock Award 2,808,785 2,119,322 8,851,618
Securities Option
LTIP Payout
Non-Equity Compensation
Other Compensation
Total 0 0 3,115,708 2,420,475 9,151,618

John Mcneil / Former President, Global Sales and Service

Salary 0 0 0 501,923 500,000
Bonus 0 0
Annual Other Income 0 0
Restricted Stock Award 2,119,322 1,403,277
Securities Option 3,070,785 0
LTIP Payout 0 0
Non-Equity Compensation 772,480 395,803
Other Compensation 0 136,626
Total 0 0 0 6,464,510 2,435,706

Jeffrey Straubel / Chief Technology Officer

Salary 249,600 249,600 250,560 250,560 249,600
Bonus 10,500 0
Annual Other Income 0 0
Restricted Stock Award 45,804 32,655
Securities Option 161,699 16,848,788 7,677,023
LTIP Payout 0 0
Non-Equity Compensation 0 0
Other Compensation 0 0
Total 467,603 17,131,043 250,560 7,927,583 249,600

Facts

  • The total key executive compensation was $27,558,904 in 2017.
  • Elon Musk total compensation was $49,920 in 2017.
  • While Deepak Ahuja total compensation was $15,498,009 in 2017.
  • In addition, Jason Wheeler total compensation was $174,041 in 2017.
  • Douglas John Field total compensation was $9,151,618 in 2017.
  • Moreover, John McNeil total compensation was $2,435,706 in 2017.
  • Jeffrey Straubel total compensation was $249,600 in 2017.

Explanation

  • The total key executive compensation had increased by 58.75 percent from the previous year.
  • Elon Musk total compensation represents 0.18 percent of the total key executive compensation.
  • While Deepak Ahuja total compensation represents 56.24 percent of the total key executive compensation.
  • And, Jason Wheeler total compensation represents 0.63 percent of the total key executive compensation.
  • Douglas John Field total compensation represents 33.21 percent of the total key executive compensation.
  • In addition, John McNeil total compensation represents 8.84 percent of the total key executive compensation.
  • Jeffrey Straubel total compensation represents 0.91 percent of the total key executive compensation.

Interpretation

The total key executive compensation represents 1.24 percent of the gross profit, however, its EBIT and net income were negative.

 

F) TESLA LOBBYING/CONTRIBUTIONS TO POLITICIANS

tesla-motors

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
40,000 30,000 170,000 120,000 120,000 0 0 0 560,000 820,000 760,000 890,000

 

Firms Hired

Total Reported by Filer

Reported Contract Expenses (Included in Total Reported by Filer)

Tesla Motors

$890,000.00

West Front Strategies $200,000.00
Holland & Knight $130,000.00
Tia Ginsberg & Assoc $120,000.00
Burton Strategy Group $15,000.00
Total $465,000.00

Lobbyists representing Tesla Motors Inc, 2018

Lobbying Firm Hired Amount Subsidiary

(Lobbied For)

Lobbyist
Burton Strategy Group $15,000.00 Tesla Motors Burton Jeff
Holland & Knight $130,000.00 Tesla Motors Dunham, Ben
Karakitsos, Dimitri
Mason, Scott D
Reynolds, Tom
Tesla Motors $890,000.00 Tesla Motors Hennessy, Scott
Kintz, Brooke Frankenfield
Nazar, Hasan
Veitch, Alexandra Norris
Tia Ginsberg & Assoc $120,000.00 Tesla Motors Ginsberg, Matt
Pike, Madelene
Tai, Jason
West Front Strategies $200,000.00 Tesla Motors Brown, Cindy S
Davis, Ashley E
Mcdaniel, Malloy
Remington, Kristi
Stein, Shimon

Source: OpenSecret.org   The Center for Responsive Politics

 

Facts

  • Lobbying was $40,000 in 2007.
  • And, lobbying in 2008 was $30,000.
  • In 2009 the lobbying was $170,000.
  • In 2010 the lobbying was $120,000.
  • While in 2011 the lobbying was $120,000.
  • On the other hand, in 2012, 2013 and 2014, the lobbying was $0.
  • Lobbying in 2015 was $560,000.
  • The lobbying in 2016 was $820,000.
  • Moreover, lobbying in 2017 was $760,000.
  • And in 2018 lobbying was $890,000.

Explanation

The total lobbying in 2018 of $890,000 represents 0.02 percent of the total operating expenses.

Interpretation

Total lobbying expenses are not shown in the financials of Tesla, however, yearly the company contributed to the politicians.

 

G) TESLA FINANCIAL STRENGTH

tesla-motors

DATA

Working Capital Total Assets Sales EBIT Market Value of Equity Book Value of Total Liabilities Retained Earnings
-1,686,000,000 29,739,614,000 21,461,268,000 -252,840,000 48,338,000,000 24,816,371,000 -5,317,832,000

Formula:

Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

 

Calculation Ratio Z-Score Result
A – Working Capital / Total Assets -0.06 1.2 -0.07
B – Retained Earnings / Total Assets -0.18 1.4 -0.25
C – EBIT / Total Assets -0.01 3.3 -0.03
D – Market Value of Equity / Book Value of Total Liabilities 1.95 0.6 1.17
E – Sales / Total Assets 0.72 1.0 0.72
Z-Score 1.53

 

The Z-Score formula is computed as follows: Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Facts

  • A – -0.06 * 1.2  = -0.07
  • B – -0.18 * 1.4 = – 0.25
  • C – -0.01 * 3.3 = – 0.03
  • D – 1.95  * 0.6 = 1.17
  • E – 0.72 * 1.0  = 0.72
  • Z – Score = 1.53

Explanation

Z-Score is a mathematical measurement that is used to compare data points from different sets of data to arrive at the relationship to the mean. This impression is often known as the Altman Z-Score. This measurement was used to forecast the likelihood of the company would go bankrupt.

Interpretation

The Z – Score of Tesla was 1.53. According to Altman, a score of 0 – 1.8 would likely to declare bankruptcy in the future. Let us go deeper into the analysis with care. Tesla is an auto industry and is highly capital intensive, in addition, its cost of revenue from year-to-year is expensive which needs a huge amount of cash to meet its production demands. Although Elon Musk has no problem in obtaining funds, he has somehow developed that trust among investors which is very significant.

This statistical measurement sums several weighted financial ratios and compares it to the scale shown above as A, B, C, D & E. The profitability, liquidity, leverage, and efficiency are the main factors of this measurement. Hence, total assets are the denominator in four equations, and total assets represent a huge percentage on all the ratios, the result is most likely negative and low.

Conclusion

Since Tesla was founded in 2003, investors believed that the company can succeed. In the past, Tesla has faced a number of challenges and was able to meet its target production but with a quarter of short-target production. There was an issue of Model 3 production mistakes which is excessive automation.

According to Bloomberg in an article written by Tom Randall and Dean Halford updated April 30, 2019, they estimated that the company had manufactured 241,253 cars of Model 3s or 22,640 units in the current quarter or 5,902 units per week. When I first valued Tesla in April 2014, the number of units I estimated at the end of 2014 was 42,250 units which are almost the actual number of units produced by the company when the report came out. I also projected the five years annual from 2015 up to 2019. The total number of units I projected at the end of 2019 was 259,521 units which are not far from the Bloomberg estimate.

Tesla Inc is not liquid because of the demand in cash is too high. Its financial leverage ratio was 6.04 or 604 percent, meaning debt is 604 percent of total equity. In other words, Tesla is using more debt than equity. The market price in 2019 drop by 28.66 percent from the end of 2018.

Elon Musk had established the confidence of many investors and I believed that the company will succeed although Tesla is experiencing a tough time running its operation due to the high volume of demands and production that must be manufactured and delivered.

I believed in the ability of Elon Musk in running the company as other investors have put there trust in him. I can say that I can recommend a Buy on the stock of Tesla Inc (TSLA).

CITATION

https://www.morningstar.com/stocks/XNAS/TSLA/quote.html

https://www.sec.gov/cgi-bin/browse-edgar?CIK=TSLA&owner=exclude&action=getcompany&Find=Search

 

Researched and written by Criselda

Twitter: criseldarome

Air Lease Corporation Class A (AL) Extended Graph Analysis

February 13th, 2019 Posted by Extended Analysis 4 comments

Air Lease Corporation Class A (AL)

air-lease-corporation-al

About the Company

Company Profile

Air Lease Corporation Class A (AL) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. The Company engages in purchasing new commercial jet transport aircraft directly from aircraft manufacturers. Such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”), and leasing those aircraft to airlines throughout the world. The company is based in the United States. Further, AL is headquartered in Los Angeles, California, USA. Moreover, the initial public offering (IPO) of Class A stock on the New York Stock Exchange on April 19, 2011, and in fact raised an estimated total of US $965.6 million.

AIR LEASE EXTENDED GRAPH ANALYSIS

A) AIR LEASE CASH FLOW

CASH FLOWS

Net Cash Flow provided by Operating Activities Net Cash used for Investing activities Net Cash (used for) financing activities Capital expenditure Free Cash Flow
2013 654,213,000 -2,185,894,000 1,571,765,000 -2,283,642,000 -1,629,429,000
2014 769,018,000 -1,805,657,000 1,049,285,000 -2,409,506,000 -1,640,488,000
2015 839,795,000 -2,152,801,000 1,186,862,000 -2,905,548,000 -2,065,753,000
2016 1,020,078,000 -2,005,516,000 1,103,565,000 -2,993,556,000 -1,973,478,000
2017 1,059,713,000 -2,143,951,000 1,101,640,000 -2,923,440,000 -1,863,727,000
TTM 1,178,181,000 -3,123,079,000 1,948,309,000 -3,545,839,000 -2,367,658,000

Facts:

  • Operating cash flow was $1.06 billion and $1.2 billion in 2017 and the trailing twelve months respectively.
  • Net cash used for investing activities was -$2.1 and $3.1 billion in 2017 and the trailing twelve months respectively.
  • On the other hand, net cash used for financing activities was $1.1 and $1.9 billion in 2017 and the trailing twelve months respectively.
  • Next, capital expenditure was -$2.9 and -$3.5 billion in 2017 and the trailing twelve months respectively.
  • Also, Free cash flow was -$1.9 and -$2.4 billion in 2017 and the trailing twelve months respectively.

Explanation

  • Operating cash flow shows that AL is successful in its operation by producing sufficient money for its growth.
  • On the other hand, net cash used for investing activities is consist of flight equipment under operating lease and payments for deposits on flight equipment purchases.
  • Moreover, the net cash used for financing activities is cash dividends paid and the acquisition of furnishings, equipment, and other assets.
  • Likewise, capital expenditures are:
    • $1.97 million – acquisition of flight equipment under operating lease.
    • $774k – payments on deposits on flight equipment purchases.
    • $177k – acquisition of aircraft furnishings, equipment, and other assets.
  • Moreover,  Free cash flow was negative in the last five years indicating that capital expenditures are higher than the operating cash flows. It might simply mean that AL is investing heavily in new equipment and other capital assets that cause excess cash to utilized.

Interpretation

As a result, Air Lease Corporation is liquid and has sa table cash flow in the past five years of its business operations.

 

B) AIR LEASE BALANCE SHEET

air-lease-corporation-al

Total Cash Current Asset Total Asset Current Liabilities Total Liabilities Equity Retained Earnings Total Debts Working Capital
2013 270,173,000 1,345,196,000 9,332,604,000 131,223,000 6,809,170,000 2,523,434,000 312,859,000 5,853,317,000 1,213,973,000
2014 282,819,000 1,427,422,000 10,774,784,000 190,952,000 8,002,722,000 2,772,062,000 555,573,000 6,714,362,000 1,236,470,000
2015 156,675,000 1,227,710,000 12,355,098,000 215,983,000 9,335,186,000 3,019,912,000 791,526,000 7,712,421,000 1,011,727,000
2016 274,802,000 1,565,478,000 13,975,616,000 256,775,000 10,593,429,000 3,382,187,000 1,143,311,000 8,713,874,000 1,308,703,000
2017 292,204,000 1,854,980,000 15,614,164,000 309,182,000 11,486,722,000 4,127,442,000 1,866,342,000 9,698,785,000 1,545,798,000

Facts:

  • Total cash were $275 and $292 million in 2016 and 2017 respectively.
  • And the current assets were $1.57 and $1.85 billion in 2016 and 2017 respectively.
  • Total assets were $13.98 and $18.6 billion in 2016 and 2017 respectively.
  • On the other hand, current liabilities were $256.8 and $309 million in 2016 and 2017 respectively.
  • Moreover, total liabilities were $1.59 and $11.49 billion in 2016 and 2017 respectively.
  • Consequently, the equities were $3.38 and $4.13 billion in 2016 and 2017 respectively.
  • In the same way, retained earnings were $1.14 and $1.87 billion in 2016 and 2017 respectively.
  • In addition, total debts were $8.71 and $8.7 billion in 2016 and 2017 respectively.
  • Similarly, working capitals were $1.31 and $1.55 billion in 2016 and 2017 respectively.

Explanation

  • Total cash has a growth of 8 percent in five years. Cash is 2 percent of total assets.
  • And also, current assets have a growth of 38 percent in five years. It is 12 percent of total assets.
  • Total assets have a growth of 67 percent in five years.
  • On the other hand, current liabilities increased 136 percent from 2013 to 2017. It is 3 percent of total liabilities.
  • Moreover, total liabilities increased by 69 percent from 2013 to 2017.
  • Likewise, equity had a growth of 64 percent in five years.
  • And also the retained earnings had a growth of 497 percent in five years and have a year-over-year growth averaging 60 percent.
  • Consequently, the total debt increased by 66 percent from 2013 to 2017.
  • Last, working capital was stable in the last five years at an average of $1.3 million indicating that AL was able to finance its short-term obligations. Further, it has a growth of 27 percent in five years.

Interpretation

AL is high leverage at nearly 400 percent. Its long-term debt represents 84 percent against total debt. Further, the debt was greater 43 percent against equity. However, its total assets were impressive and increase year-over-year in five years. Finally, the company’s balance sheet was stable and sound.

 

C) AIR LEASE FINANCIAL RATIOS

air-lease-corporation-class-a-al

2011 2012 2013 2014 2015 2016 2017 TTM
Asset Turnover (Average) 0.06 0.10 0.10 0.10 0.11 0.11 0.10 0.10
Return on Assets % 1.03 2.11 2.28 2.55 2.19 2.85 5.11 5.20
Financial Leverage (Average) 2.37 3.15 3.70 3.89 4.09 4.13 3.78 3.92
Return on Equity % 2.45 5.85 7.84 9.67 8.75 11.71 20.14 20.74
Return on Invested Capital % 1.84 3.65 3.97 4.27 4.01 4.73 7.35 7.28
Interest Coverage 2.44 2.56 2.73 3.05 2.67 3.27 3.36 3.19

Facts

  • The asset turnover ratio is averaging 0.10 in 2017 and the trailing twelve months.
  • Return on assets was 5.11 and 5.20 percent in 2017 and the trailing twelve months.
  • Moreover, Financial leverage is averaging 3.78 and 3.92 in 2017 and the trailing twelve months.
  • In addition, Return on equity was 20.14 and 20.74 in 2017 and the trailing twelve months.
  • Likewise, Return on invested capital was 7.35 and 7.28 percent in 2017 and the trailing twelve months.
  • And the interest coverage was 3.36 and 3.19 in 2017 and the trailing twelve months.

Explanation

  • Asset turnover ratio means that each dollar of assets generates an average of 10 cents of sales.
  • The return on assets (ROA) indicates that for every dollar that was invested in assets produced $51.10 and $52 of net income in 2017 and the trailing twelve months respectively.
  • On the other hand, financial leverage indicates that AL’s liabilities are 378 and 392 percent of shareholders’ equity in 2017 and the trailing twelve months respectively, which are high.
  • Return on equity indicates that every dollar of common shareholders’ equity earned $20.14 and $20.74 in 2017 and the trailing twelve months respectively. In other terms, shareholders earned 2014 percent return on their investment.
  • Return on invested capital indicates that for every dollar invested in capital produces a $0.0735 and $0.0728 cents returns in 2017 and the trailing twelve months respectively.
  • Lastly, interest coverage means that AL 3.36 and 3.19 times more earnings than its current interest payments in 2017 and the trailing twelve months respectively.

Interpretation

Overall, efficiency and profitability ratios show positive results although financial leverage has a high ratio. Further, it indicates that debt is used effectively to convert capital to earned profits. Furthermore, the company is capable to pay its interest on debt with its principal.

 

D) AIR LEASE INCOME AND MARKET

air-lease-corporation-al

Sales EBIT Net Income Market Cap Intrinsic Value
2013 858,675,000 485,812,000 190,411,000 3,222,000,000 712,340,1357
2014 1,050,493,000 615,366,000 255,998,000 3,576,000,000 2,097,085,219
2015 1,222,840,000 731,097,000 253,391,000 3,434,000,000 2,900,818,643
2016 1,419,055,000 866,439,000 374,925,000 3,531,000,000 3,601,547,148
2017 1,516,380,000 896,901,000 756,152,000 4,983,000,000 14,180,694,017
TTM 1,628,192,000 953,981,000 843,538,000 3,351,000,000 12,118,551,202

Facts:

  • Sales were $1.5 billion and $1.6 billion in 2017 and 2018 TTM respectively.
  • And the EBIT was $896.9 million and $954 million in 2017 and 2018 TTM respectively.
  • Net Income was $756 million and $843.5 million in 2017 and 2018 TTM respectively.
  • Further, the market capitalization was $4.98 billion and $3.351 billion in 2017 and 2018 TTM respectively.
  • Likewise, intrinsic value was $14.181 and $12,119 billion in 2017 and 2018 TTM respectively.

Explanation:

  • The sales growth was 90 percent in five years and increases year-over-year at an average of 14 percent.
  • And the EBIT growth was 96 percent in five years and increases year-over-year at an average of 15 percent.
  • Moreover, the net income has a growth of 343 percent in five years and increases year-over-year at an average of 39 percent, except in 2015 to 2016 where the growth was -1.02 percent.
  • On the other hand, market capitalization has a growth of 4 percent in five years and the year-over-year growth was averaging 3.64 percent. It suffered negative growth in 2016 at 4 percent and the trailing twelve months at 32.75 percent.
  • Further, the intrinsic value was 185 and 185 percent above the market cap in 2017 and 2018 TTM respectively.

Interpretation

AL management has managed to utilize its assets to produce sufficient revenue for the operation of the business in the last five years. As a result, the company is profitable. Moreover, its intrinsic value was higher than the market cap indicating that the stock price of AL was trading at an undervalued price.

 

E) AIR LEASE KEY EXECUTIVE COMPENSATION

air-lease-corporation-al

SUMMARY

Executive 2013 2014 2015 2016 2017 (2017) %
Key Executive Compensation 24,969,215 26,494,168 24,748,889 27,000,783 24,568,646 100.00%
Steven F. Udvar-Hazy – Exec Chairman of the Board 9,122,086 9,674,429 9,079,933 9,686,620 7,924,666 32.26%
John L. Plueger – CEO and President 7,122,845 7,482,030 7,012,942 7,785,065 8,076,572 32.87%
Gregory B. Willis – CFO and EVP 1,277,367 1,554,217 1,923,635 2,272,815 2,202,488 8.96%
Jie Chen – EVP and Managing Director of Asia 4,163,116 4,369,772 3,671,083 3,881,834 3,323,377 13.53%
Grant A. Levy – EVP 3,283,801 3,413,720 3,061,296 3,374,449 3,041,543 12.38%

DETAILED DISTRIBUTION

Key Executive Compensation

2013 2014 2015 2016 2017 % 2017
Salary 5,351,865 5,443,304 5,508,251 5,335,625 5,153,417 20.98%
Bonus 1,492,816 1,017,497 1,337,132 1,730,618 0
Restricted Stock Award 7,866,680 9,097,027 10,348,203 9,565,268 11,819,083 48.11%
Non-Equity Compensation 9,936,909 10,569,427 7,220,411 9,882,069 7,029,850 28.61%
Other Compensation 320,945 366,913 334,892 487,203 566,296 2.30%
Total 24,969,215 26,494,168 24,748,889 27,000,783 24,568,646 100.00%

Steven F. Udvar-Hazy – Exec Chairman of the Board

Salary 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 22.71%
Bonus 526,291 347,328 456,840 649,801 0
Restricted Stock Award 3,376,861 3,897,384 4,316,339 3,817,607 3,267,474 41.23%
Non-Equity Compensation 3,276,000 3,420,000 2,340,000 3,132,000 2,548,000 32.15%
Other Compensation 142,934 209,717 166,754 287,212 308,392 3.89%
Total 9,122,086 9,674,429 9,079,933 9,686,620 7,924,666 100.00%

John L. Plueger – CEO and President

Salary 1,500,000 1,500,000 1,500,000 1,250,000 1,000,000 12.38%
Bonus 410,561 258,552 380,700 541,500 0
Restricted Stock Award 2,412,042 2,793,105 3,093,352 3,279,398 5,145,622 63.71%
Non-Equity Compensation 2,730,000 2,850,000 1,950,000 2,610,000 1,770,000 21.92%
Other Compensation 70,242 80,373 88,890 104,167 160,950 1.99%
Total 7,122,845 7,482,030 7,012,942 7,785,065 8,076,572 100.00%

Gregory B. Willis – CFO and EVP

Salary 401,969 443,333 491,667 555,917 606,417 27.53%
Bonus 25,886 43,969 67,085 83,875 0
Restricted Stock Award 306,571 409,224 763,157 485,301 818,496 37.16%
Non-Equity Compensation 492,492 641,250 585,000 1,126,389 755,790 100.00%
Other Compensation 50,449 16,441 16,726 21,333 21,785 0.99%
Total 1,277,367 1,554,217 1,923,635 2,272,815 2,202,488 100.00%

Jie Chen – EVP and Managing Director of Asia

Salary 876,563 905,596 914,167 920,833 928,667 27.94%
Bonus 303,148 228,500 246,881 259,003 0 0.00%
Restricted Stock Award 930,018 1,063,983 1,229,799 1,060,523 1,369,522 41.21%
Non-Equity Compensation 2,027,917 2,141,502 1,248,975 1,604,280 987,660 29.72%
Other Compensation 25,470 30,191 31,261 37,195 37,528 1.13%
Total 4,163,116 4,369,772 3,671,083 3,881,834 3,323,377 100.00%

Grant A. Levy – EVP

Salary 773,333 794,375 802,417 808,875 818,333 26.91%
Bonus 226,930 139,148 185,626 196,439 0
Restricted Stock Award 841,188 933,331 945,556 922,439 1,217,969 40.04%
Non-Equity Compensation 1,410,500 1,516,675 1,096,436 1,409,400 967,600 31.81%
Other Compensation 31,850 30,191 31,261 37,296 37,641 1.24%
Total 3,283,801 3,413,720 3,061,296 3,374,449 3,041,543 100.00%

Facts:

In 2017:

  • Total key executive compensation was $24.57 million.
  • And Steven F. Udvar-Hazy total compensation was $7.92 million.
  • John L Plueger total compensation was $8.08 million.
  • Gregory B. Willis total compensation was $2.20 million.
  • Jie Chen total compensation was $3.23 million.
  • Grant A. Levy total compensation was $3.04 million.

Explanation

  • The total key executive compensation represents 3.25 percent of the total net income in 2017.
  • And Steven F. Udvar-Hazy total compensation represents 32.26 percent of the total key executive compensation, in which 22.71 percent is salary or equivalent to $1.8 million.
  • Further, John L. Plueger total compensation represents 32.86 percent of the total key executive compensation in which 12.38 percent is salary equivalent to $1.0 million.
  • Likewise, Gregory B. Willis total compensation represents 8.96 percent of the total key executive compensation in which 27.53 percent is salary or equivalent to $606k.
  • Next is Jie Chen total compensation represents 13.53 percent of the total key executive compensation in which 27.94 percent is salary or equivalent to $929k.
  • Similarly, Grant A. Levy total compensation represents 12.38 percent of the total key executive compensation in which 26.91 percent is salary or equivalent to $818k.

Interpretation

The total key executive compensation is averaging $25.6 million in five years comparing to the average 5-year net income of $366 million. Therefore, it indicates that the total executive compensation is 7 percent of the average net income.

 

F) LOBBYING/CONTRIBUTIONS TO POLITICIANS

There is no record of lobbying found for Air Lease Corporation (AL).

Search Results

No lobbying income or spending found.

This may be because no lobbying was reported, because the lobbying contract was terminated, or because reported lobbying was less than the $10,000 threshold that allows us to build a profile. The Center for Responsive Politics conservatively assumes any lobbying under the $10,000 threshold to be $0 earned or spent. Please click on “View Report Images” on the tab navigation bar to see if this firm or client has filed any reports.

NOTE: All lobbying expenditures on this page come from the Senate Office of Public Records. Data for the most recent year was downloaded on October 24, 2018.

 

G) AIR LEASE FINANCIAL STRENGTH

air-lease-corporation-al

Data:

Working Capital Total Assets Sales EBIT Market Value of Equity Book Value of Total Liabilities Retained Earnings
1,545,798,000 15,614,164,000 1,629,374,000 953,981,000 4,127,442,000 11,486,722,000 1,866,342,000

Formula:

Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Calculation Ratio Z-Score Result
A – Working Capital/Total Assets 0.10 1.2 0.12
B – Retained Earnings/Total Assets 0.12 1.4 0.17
C – EBIT/Total Assets 0.06 3.3 0.20
D – Market Value of Equity/Book Value of Total Liabilities 0.36 0.6 0.22
E-Sales/Total Assets 0.10 1.0 0.10
Z-Score 0.81

The above Z-Score is computed as follows:  Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Facts:

  • A –  0.10 * 1.2 = 0.12
  • B – 0.12 * 1.4 = 0.17
  • C – 0.06 * 3.3 = 0.20
  • D – 0.36 * 0.6 = 0.22
  • E – 0.10 * 1.0 = 0.10
  • Z-Score = 0.81  

Explanation

Z-Score is a mathematical measurement that is used to compare data points from different sets of data to arrive at the relationship to the mean. Moreover, this impression is often known as the Altman Z-Score. This measurement was used to forecast the likelihood of the company would go bankrupt.

Interpretation

The Z-Score of AL is below 1.0 which is 0.81. Typically a score of 0 – 1.8 is more likely the company will declare bankruptcy. Alarming isn’t it. But wait let us go deeper and interpret it with care.

Let us note that, this statistical measurement sums several weighted financial ratios and compare it to the scale shown above  A, B, C, D & E. The profitability, liquidity, leverage, and efficiency is the main factors of this measurement. Hence, total assets are the denominator in four equations, therefore, total assets represent a huge percentage on all the ratios, the result is obviously low.  

In addition, analyzing this kind of industry, AL is an intensive industry which requires a huge amount of capital investment to run its business effectively. Further, AL invested heavily in property, plant, and equipment and in the last five years the company has never suffered a loss in its operation and is considered to be profitable.

In conclusion

Air Lease Corporation (AL)  has sound financial health and is profitable in the past five years. Debt is greater than equity and the leverage ratio is high at nearly 400 percent. And also, the company is investing heavily in equipment. Significantly, the management or the leaders of AL has a satisfactory strategic method in running the operation of the business for its growth and development. AL doesn’t have any expenses in lobbying. Moreover, AL has not failed in the past five years based on all the test and valuation made for AL above. As a result, I believe that Air Lease Corporation (AL) can be a good candidate for investment, therefore, I recommend a BUY on the stock of AL.

 

CITATION

https://www.sec.gov/cgi-bin/browse-edgar?CIK=AL&owner=exclude&action=getcompany

https://www.morningstar.com/

https://finance.yahoo.com/

https://airleasecorp.com/

https://en.wikipedia.org/wiki/Air_Lease_Corporation

https://www.opensecrets.org/lobby/lookup.php

https://www.opensecrets.org/industries/alphalist.php

Researched and written by Criselda

Twitter: criseldarome

Lazard Ltd Shs A (LAZ) Extended Graph Analysis

June 10th, 2017 Posted by Extended Analysis No Comment yet

Lazard Company Profile

Lazard Ltd Shs A (LAZ) is a financial advisory and asset management firm. The company has a diverse set of clients around the globe including corporations, governments, institutions, partnership, and individuals. The company is currently operating from 42 cities in key business and financial centers across 27 countries throughout North America, Europe, Asia, Australia, the Middle East, and Central and South America. Moreover, LAZ has 2,610 employees as of 2015.

LAZ logo

Lazard Ltd Shs A (LAZ) Extended Graph Analysis

A. LAZ CASH FLOW

LAZ CF

  Net cash provided by operating activities Net cash used for investing activities Net cash provided (used for) financing activities Capital expenditure Free Cash Flow
2011 397,277,000 -45,277,000 -552,359,000 -45,277,000 442,554,000
2012 481,908,000 -84,933,000 -563,220,000 -84,933,000 566,841,000
2013 526,697,000 -54,553,000 -487,072,000 -54,553,000 581,250,000
2014 736,017,000 20,099,000 -435,369,000 -20,099,000 715,918,000
2015 887,296,000 -25,952,000 -746,804,000 -25,952,000 913,248,000
2016 601,287,000 -37,653,000 -486,952,000 -37,653,000 638,940,000
2017 795,561,000 -36,015,000 -519,117,000 -36,015,000 831,576,000

Facts:

  • Cash from operating activities is $795.6 million.
  • And the cash from investing activities is -$36  million.
  • In addition, the net cash provided by (used for) financing activities is -$519 million.
  • While, capital expenditure is -$36 million.
  • Likewise, free cash flow is $831.6 million.

Explanation:

  • The five years of growth of cash from operating activities was 100 percent.
  • Net cash used for investing activities are purchases of property, plant, and equipment.
  • In addition, the net cash used for financing activities is long-term debt repayment, repurchase of treasury stock, and cash dividend payments.
  • While, capital expenditures are purchases of property, plant, and equipment.
  • Likewise, free cash flow has 88 percent growth in five years.

Interpretation

Lazard is capable of generating sufficient cash for its business operation.

Summary

Overall, Lazard is generating sufficient cash revenue for the business operation. In addition, the company was able to purchase properties, plant, and equipment for the operations. Moreover, the company was able to pay their long-term debt, repurchase treasury stock and cash dividend payments. Finally, free cash flow is growing.

B. LAZ BALANCE SHEET

LAZ BS

  Cash and Cash Equivalent Current Assets Total Assets Current Liabilities Total liabilities Equity Retained Earnings Total Debt Working Capital
2011 1,289,828,000 2,377,564,000 3,081,936,000 294,502,000 2,355,793,000 726,143,000 258,646,000 1,076,850,000 2,083,062,000
2012 1,142,684,000 2,100,632,000 2,986,893,000 273,411,000 2,417,237,000 569,656,000 182,647,000 1,076,850,000 1,827,221,000
2013 1,086,361,000 2,139,187,000 3,011,137,000 280,465,000 2,450,928,000 560,209,000 203,236,000 1,048,350,000 1,858,722,000
2014 1,274,340,000 2,487,802,000 3,332,236,000 336,178,000 2,625,492,000 706,744,000 464,655,000 1,048,350,000 2,151,624,000
2015 1,521,944,000 2,596,016,000 4,486,766,000 506,665,000 3,173,311,000 1,313,455,000 1,123,728,000 998,350,000 2,089,351,000
2016 853,887,000 1,889,508,000 4,302,303,000 587,059,000 3,001,161,000 1,301,161,000 1,058,189,000 990,488,000 1,302,449,000

Facts:

  • Cash and cash equivalent was $853.9 million in 2016.
  • And the current assets were $1.9 billion IN 2016.
  • In addition, total assets were $4.3 billion IN 2016.
  • While the current liabilities were $587 million IN 2016.
  • On the other hand, total liabilities were $3.0 billion IN 2016.
  • Moreover, retained earnings were $1.1 billion IN 2016.
  • And total equity was $1.3 billion IN 2016.
  • Rather, working capital was $1.3 billion IN 2016.
  • Total debt was $1.2 billion IN 2016.

Explanation:

  • Cash and cash equivalent have negative growth of 34 percent from 2011 at $436 million.
  • And the current assets have negative growth of 21 percent from 2011 at $488 billion.
  • Likewise, total assets have grown 40 percent in 2011 at $1.2 billion.
  • On the other hand, current liabilities increased by 99 percent from 2011 at $293 million.
  • And the total liabilities increased by 27 percent from 2011 at $645 million.
  • In addition, retained earnings had increased by 309 percent from 2011 at $800 million.
  • Similarly, total equity had increased by 79 percent from 2011 at $575 million.
  • And the working capital was erratic in movement and has decreased 37 percent from 2011 at $781 million.
  • Finally, the total debt had decreased by 8 percent from 2011 at $86 million.

Interpretation

As a result, the company is financially healthy and stable in the last six years of its business operations.

Summary

Overall, LAZ is liquid and capable of paying its short-term financial obligations using its cash and cash equivalents. Although its liability/equity ratio is 72/28 percent, respectively, meaning the company is using more of borrowed funds in its capital structures, in other words, creditors have more stake in the assets of the company than the investors. Moreover, total assets, retained earnings and equity were increasing year-over-year from 2012.

C. LAZ RATIOS

LAZ RATIOS

  Operating Margin Net Margin Return on Assets Return on Equity Asset Turnover Financial Leverage Debt to Equity
2011 12.90 9.56 5.38 25.38 0.56 4.24 1.51
2012 6.50 4.41 2.78 13.01 0.63 5.24 1.92
2013 10.90 8.07 5.34 28.36 0.66 5.38 1.90
2014 22.60 18.57 13.47 67.45 0.73 4.71 1.50
2015 -0.70 41.91 25.23 97.65 0.60 3.41 0.77
2016 22.20 16.62 8.57 30.41 0.52 3.69 0.97
2017 23.20 17.43 10.20 36.96 0.59 3.80 1.04

Facts:

  • The current operating margin is 23 percent; averaging 14 percent from 2011.
  • And the net margin was 17.43 percent; averaging 17 percent from 2011.
  • In addition, return on assets was 10.20 percent; averaging 10.14 percent from 2011.
  • Likewise, return on equity was 36.96 percent; averaging 43 percent from 2011.
  • Further, asset turnover was 0.59, averaging 0.61 from 2011.
  • And the debt to equity was 1.37; decreased by 0.47 from 2011 and averaging 1.37.
  • Financial leverage was 3.80; decreased by 0.44 from 2011 and averaging 4.35.

Explanation

  • Operating margin shows that management is efficient and shows a decent leftover on revenue after deducting operating costs.
  • And the net margin shows a decent return on revenue after deducting all expenses.
  • On the other hand, return on assets shows a return of 10 cents for every dollar invested in assets.
  • Moreover, return on equity shows a return of 37 percent on investments made in the stocks of LAZ.
  • Likewise, asset turnover shows that LAZ is generating 59 cents of net sales for every dollar invested in the assets.
  • While debt to equity shows that more assets are financed by debt than those financed by investors.
  • Hence, financial leverage is total assets over stockholders equity. LAZ uses more debt in its capital structure.

Interpretation

It indicates that LAZ is profitable, however, the company is utilizing more on borrowed funds to finance assets.

Summary

Overall, the results of ratios show that the company is profitable in its business operations and can generate a decent return on the investments made by investors. However, creditors have more stake in the assets of the company.

D. LAZ INCOME AND MARKET

LAZ INC AND MARKET

  Total Revenue Revenues, net of int expense Inc before inc taxes Net Income Intrinsic Value Market Cap
2011 1,919,638,000 1,829,512,000 235,499,000 174,917,000 1,377,240,000 3,680,180,000
2012 1,994,013,000 1,912,448,000 123,885,000 84,309,000 1,415,130,000 3,444,000,000
2013 2,064,733,000 1,985,352,000 216,807,000 160,212,000 2,237,800,000 5,472,000,000
2014 2,363,017,000 2,300,447,000 519,465,000 427,277,000 2,935,940,000 6,492,000,000
2015 2,404,767,000 2,353,608,000 -16,620,000 986,373,000 5,713,680,000 5,841,000,000
2016 2,383,663,000 2,235,055,000 517,461,000 387,698,000 6,220,410,000 5,064,000,000
2017 2,510,967,000 2,458,617,000 569,281,000 428,428,000 6,096,720,000 5,333,000,000

Facts

  • The current revenue is $2.5 billion; grown 31 percent from 2011.
  • The revenue net of interest expense was $2.46 billion; grown 24 percent from 2011.
  • Income before income taxes was $569 million; grown 142 percent from 2011.
  • Net income was $428 million; grown 145 percent in six years.
  • The current intrinsic value was $6.1 billion; grown 343 percent in six years.
  • Market capitalization was $5.3 billion; grown 45 percent in six years.

Explanation

  • Revenue is interest and dividend income.
  • Interest expense is approximately 2 percent of total revenue.
  • And the income before income taxes is 23 percent of total revenue.
  • Likewise, net income is 17 percent of the total revenue.
  • On the other hand, the Intrinsic value is increasing year-over-year at an average of 32 percent.
  • Moreover, the growth in market capitalization year-over-year was 9 percent.

Interpretation

The income statement of LAZ shows that the company is capable of generating sufficient income for its daily operation. Moreover, in 2016 and 2017 shows that the stock of LAZ is undervalued.

Summary

LAZ is efficient in generating sufficient revenue and earnings for its operations. It indicates that the company is profitable and financially stable.

E. LAZ KEY EXECUTIVE COMPENSATION

LAZ KEY EXEC COMPENSATION

  Key Executive Compensation Chairman and CEO – Kenneth M. Jacobs CEO of Lazard Asset Management – Ashish Bhutani COO and CEO, Fianancial Advisory – Alexander F. Stern General Counsel – Scott D. Hoffman
2011 40,684,344 12,461,056 11,985,709 5,238,088 3,878,514
2012 30,647,351 8,842,195 9,681,715 4,718,605 3,495,131
2013 29,836,142 8,615,321 9,628,768 4,689,013 3,255,326
2014 33,987,277 9,992,527 10,486,058 5,878,981 3,682,299
2015 37,363,585 11,679,538 10,443,083 6,806,199 4,064,935
2016 36,239,177 11,641,070 9,543,515 6,945,432 4,017,627

Facts:

  • The key executive compensation was $36 million.
  • The Chairman and CEO compensation are $ 11.6 million.
  • And the CEO of Lazard Asset Management compensation was $9.5 million.
  • In addition, the COO and CFO Financial Advisory compensation were $6.9 million.
  • Moreover, the General Counsel compensation was $4 million.

Explanation

  • The key executive compensation represents 1.5 percent of the total revenue.
  • The Chairman and CEO compensation represent 32 percent of the total key executive compensation.
  • And the CEO of Lazard Asset Management compensation represents 26 percent of the total key executive compensation.
  • While the COO and CFO Financial Advisory compensation represent 19 percent of the total key executive compensation.
  • And the General Counsel compensation represents  11 percent of the total key executive compensation.

Interpretation

The key executive compensation is composed of basic salary, bonus, restricted stock award, and other compensation.

Summary

Laz is paying its key executives a decent salary plus incentives and benefits.

 

F. LAZ LOBBYING AND CONTRIBUTIONS

LAZ LOBBY

  2012 2013 2014 2015 2016
Lobbying 0 630,000 610,000 560,000 360,000
Contributions 673,094 0 577,526 0 568,632

Facts

  • The company spent lobbying year-over-year, and in 2016 lobbying was $360,000.
  • Likewise, LAZ spent contributions and in 2016 contributions was $568.632.

Explanation

  • LAZ lobbying is spending made to candidates like Hillary Clinton and many others.
  • In addition, the contributions of $568,632 are composed of the following:
    • Contributions to candidates                           $351,148
    • Contribution to Leadership PACs                        7,900
    • Contributions to parties                                     183,584
    • Contributions to outside spending groups      26,000

Interpretations

Lazard is spending approximately 2 percent of revenue in lobbying and 2 percent of revenue in contributions.

Summary

Annually the company is spending lobbying to candidates and other figures. The company’s highest spending on lobbying was in 2009 in approximately $1 million.

G. LAZ FINANCIAL STRENGTH

LAZ FINANCIAL STRENGTH

  2011 2012 2013 2014 2015 2016 2017 2018
Score 2.99 2.81 3.68 4.12 3.09 2.91 2.98 3.05

Facts

  • The calculated score in 2011 was 2.99.
  • In 2012 score was 2.81.
  • And in 2013 score was 3.68.
  • Likewise in 2014 score was 4.12.
  • While in 2015 score was 3.09
  • Moreover, in 2016 score was 2.91
  • Future score for 2017 was 2.98
  • Finally, the future score in 2018 was 3.05

Explanation

Lazard has an erratic score from 2011. A score of above 1.8 to 3 indicates that the company might be headed to bankruptcy and a score of above 3 is considered financially stable.

Interpretation

The future score in 2018 is based on the current trend movement in 2017. It shows from 2016 to 2017 there was an upward trend in the score, therefore, the future score is up at the same ratio.

Summary

Multiple financial ratios were combined to form the score, it is a gauge of the company’s financial strength and the likelihood of bankruptcy. It indicates that LAZ is considered financially stable, although, the score in 2017 fall less than 3. The score went up from 2016, therefore, the future score is based on the current trend.

Overview

Lazard is generating sufficient cash revenue for the business operation. The company was able to purchase properties, plant, and equipment for the operations. Moreover, the company was able to pay their long-term debt, repurchase treasury stock and cash dividend payments. Above all, free cash flow is growing.

Further, Lazard is liquid and capable of paying its short-term financial obligations using its cash and cash equivalents. Although its liability/equity ratio is 72/28 percent, respectively. Meaning, LAZ is using more of borrowed funds in its capital structures. In other words, creditors have more stake in the assets of the company than the investors. In addition, total assets, retained earnings and equity were increasing year-over-year from 2012.

Furthermore,

The company shows profitability in its business operations and can generate a decent return on the investments made by investors. Moreover, the company is efficient in generating sufficient revenue and earnings for its operations. It indicates that the company is profitable and financially stable.

In addition, LAZ is paying its key executives a decent salary plus incentives and benefits. Further, the financial strength indicates that LAZ is considered financially stable, although, the score in 2017 fall less than 3, and the score went up from 2016, as a result, the future score is based on the current trend.

CITATION

https://www.sec.gov/Archives/edgar/

http://financials.morningstar.com/income-statement/is.html?t=LAZ

https://www.opensecrets.org/orgs/summary.php?id=D000035294&cycle=2016

Researched and Written by Criselda

Twitter: criseldarome

Note:

Research Reports can be found under the company tab.