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William Hill as valued by the NNWC Valuation Technique


Current Price
186p
Mkt Cap: £ 1,634m
Implied Valuation*


NNWC valuation popularised by Benjamin Graham aims to give a margin of safety versus the likely liquidation proceeds.


* Assumptions

The company's Cash and Short Term Investments are £433.4m.
Cash and Short Term Investments

The NNWC formula considers that not all balance sheet amounts may reflect current reality, hence discounts are applied. However, cash and short term investments are taken at their full value.

The company's Inventory is £0.000m.

Inventory is taken at 50 cents on the dollar (because of potential discounting when it is sold at close-out prices).

The company's Receivables are £69.4m.

Receivables are discounted at 75 cents on the dollar (because some of them might not be collectable).

The company's Total Liabilities are £1,678m.

This calculation assumes that all creditors are paid off.

The Shares Outstanding are 874,146,045 .

Description

NNWC (Net Net Working Capital) is a highly conservative measure of value which Graham chose as being likely to represent a significant discount to the value that shareholder would receive in an actual event of liquidation. NNWC is Cash and Short Term Marketable Investments, plus Accounts Receivable * 75% + Inventory * 50% – Total Liabilities.

Liquidation Valuations - such as NNWC, NCAV and Tangible Book Value - estimate the amount of money that a company could quickly be sold for, if it were to go out of business. They are typically lower than fair market value. Companies which are seriously underperforming or in collapsing industries sometimes have a liquidation value exceeding market capitalization - in such a scenario, there may be an arbitrage opportunity to sell off the company's assets. However, it depends if the business is stable enough so that operating losses don't eat away the existing assets.



* Disclaimer: These valuation tools are provided solely for informational & educational purposes so that users can easily run their own valuations. The pre-defined values are simply a starting point based on global assumptions that we have applied across the entire market – users should amend them as they see fit and not regard them as a substitute for their own judgment. Any resulting valuation outputs are necessarily generic and are not endorsed for a given stock by Stockopedia.

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