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VELA Summary Non-Bank Model
Documentation (PDF)
Inputs
Assumptions
Ticker
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5-Year Revenue CAGR (%)
\(c\): Five-year compound annual growth rate of revenue.
\(Rev_t = Rev_0\,(1 + c/100)^{t}\)
Industry
Required Return (%)
\(r_r\): Required rate of return (discount rate) — the investor's minimum acceptable return.
Current Price
\(P_0\): Current stock price.
Dividend/Share
\(D\): Trailing twelve-month dividends.
\(DPS_t = NPS_t \cdot DPR/100\)
Calculated Terminal Multiple P/E (x)
\(adjPE_5\): Adjusted P/E at year 5.
\(adjPE_0 = \dfrac{P_0 - TBVPS_0}{NPS_5}\)
\(adjPE_5 = \dfrac{adjPE_0 + 10}{2}\)
Dividend Payout Ratio (%)
\(DPR\): Dividend payout ratio — percentage of earnings paid as dividends. Typically \(\text{Dividends} / \text{Net Income}\).
Manual Terminal Multiple P/E (x)
User override for the terminal P/E multiple. If set, replaces the calculated \(adjPE_5\) in the terminal value calculation.
Base Year
Terminal Year
Revenues ($B)
\(Rev_0\): Base-year revenue — the company's total sales for the most recent year.
Revenues ($B)
\(Rev_5\): Terminal-year revenue.
\(Rev_5 = Rev_0\,(1 + c/100)^{5}\)
Operating Margin (%)
\(OM_0\): Base-year operating margin.
\(OM_t = OM_0 + \frac{t}{5}(OM_5 - OM_0)\)
Operating Margin (%)
\(OM_5\): Terminal-year operating margin target.
\(OM_t = OM_0 + \frac{t}{5}(OM_5 - OM_0)\)
Tangible Book Value/Share
\(TBVPS_0\): Tangible book value per share — net worth per share after excluding intangible assets.
Tangible Book Value/Share
\(TBVPS_5\): Terminal tangible book value per share.
\(TBVPS_5 = TBVPS_0 + \displaystyle\sum_{t=0}^{5} NPS_t \cdot (1 - DPR/100)\)
Tax Rate (%)
\(TR_0\): Base-year tax rate.
\(TR_t = TR_0 + \frac{t}{5}(TR_5 - TR_0)\)
Tax Rate (%)
\(TR_5\): Terminal-year tax rate target.
\(TR_t = TR_0 + \frac{t}{5}(TR_5 - TR_0)\)
Share Count (#M)
\(SC_0\): Share count at the start of the period (in millions).
Share Count (#M)
\(SC_5\): Projected share count at year 5 (in millions).
NOPAT/Share
\(NPS_0\): Net operating profit after tax per share.
\(NPS_t = \dfrac{Rev_t \cdot (OM_t/100) \cdot (1 - TR_t/100)}{SC_0 / 10^3}\)
NOPAT/Share
\(NPS_5\): Terminal NOPAT per share.
\(NPS_t = \dfrac{Rev_t \cdot (OM_t/100) \cdot (1 - TR_t/100)}{SC_0 / 10^3}\)
Valuation
Estimate of Intrinsic Value
\(IV\): Intrinsic value — present value of projected dividends plus discounted terminal value.
\(IV = \displaystyle\sum_{t=1}^{5}\frac{DPS_t}{(1+r)^t} + \frac{TV_5}{(1+r)^5}\)
Intrinsic Value in Year 5
\(TV_5\): Terminal value — estimated value at end of year 5.
\(TV_5 = TBVPS_5 + NPS_5 \times adjPE_5\)
Premium/Discount to Intrinsic Value
Price / IV = \(\dfrac{P_0}{IV}\). Above 1 means the stock trades above estimated value; below 1 suggests undervaluation.
Expected Return
\(r^*\): Expected return — the IRR that sets NPV to zero.
\(0 = -P_0 + \displaystyle\sum_{t=1}^{4}\frac{DPS_t}{(1+r^*)^t} + \frac{DPS_5 + TV_5}{(1+r^*)^5}\)
Years
Year
Trailing Year 3
Trailing Year 2
Trailing Year 1
Base Year
Year 1
Year 5
Revenue ($B)
\(Rev_t\): Revenue projected at constant CAGR.
\(Rev_t = Rev_0\,(1 + c/100)^{t}\)
0
0
0
0
0
0
Operating Margin
\(OM_t\): Operating margin, linearly interpolated.
\(OM_t = OM_0 + \frac{t}{5}(OM_5 - OM_0)\)
0
0
0
0
0
0
Tax Rate
\(TR_t\): Tax rate, linearly interpolated.
\(TR_t = TR_0 + \frac{t}{5}(TR_5 - TR_0)\)
0
0
0
0
0
0
Share Count (#M)
\(SC_0\): Share count (in millions).
0
0
0
0
0
0
Tangible Book Value/Share
\(TBVPS\): Tangible book value per share.
\(TBVPS_5 = TBVPS_0 + \displaystyle\sum_{t=0}^{5} NPS_t \cdot (1 - DPR/100)\)
0
0
0
0
0
0
Dividend/Share
\(DPS_t\): Dividends per share.
\(DPS_t = NPS_t \cdot DPR/100\)
0
0
0
0
0
0
NOPAT/Share
\(NPS_t\): Net operating profit after tax per share.
\(NPS_t = \dfrac{Rev_t \cdot (OM_t/100) \cdot (1 - TR_t/100)}{SC_0 / 10^3}\)
0
0
0
0
0
0