Intrinsic value of Bazaarvoice - BV

Previous Close

$4.70

  Intrinsic Value

$0.51

stock screener

  Rating & Target

str. sell

-89%

  Value-price divergence*

-89%

Previous close

$4.70

 
Intrinsic value

$0.51

 
Up/down potential

-89%

 
Rating

str. sell

 
Value-price divergence*

-89%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BV stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.71
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  200
  204
  209
  214
  220
  227
  234
  242
  251
  260
  270
  281
  292
  304
  317
  331
  345
  361
  377
  394
  412
  431
  451
  472
  495
  518
  543
  569
  597
  626
  656
Variable operating expenses, $m
 
  47
  47
  48
  49
  50
  51
  53
  54
  56
  57
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
  100
  105
Fixed operating expenses, $m
 
  187
  191
  196
  201
  206
  211
  216
  222
  227
  233
  239
  245
  251
  257
  264
  270
  277
  284
  291
  298
  306
  313
  321
  329
  337
  346
  354
  363
  372
  382
Total operating expenses, $m
  223
  234
  238
  244
  250
  256
  262
  269
  276
  283
  290
  284
  292
  300
  308
  317
  325
  335
  344
  354
  364
  375
  385
  397
  408
  420
  433
  445
  459
  472
  487
Operating income, $m
  -23
  -29
  -30
  -30
  -30
  -29
  -28
  -27
  -25
  -23
  -20
  -3
  0
  4
  9
  14
  20
  26
  32
  40
  48
  56
  65
  75
  86
  98
  110
  123
  138
  153
  169
EBITDA, $m
  -9
  -12
  -13
  -13
  -13
  -12
  -11
  -10
  -8
  -5
  -2
  1
  5
  9
  14
  19
  25
  31
  38
  45
  54
  62
  72
  82
  93
  105
  118
  132
  146
  162
  178
Interest expense (income), $m
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
Earnings before tax, $m
  -25
  -31
  -32
  -32
  -32
  -32
  -31
  -30
  -28
  -26
  -24
  -7
  -4
  0
  4
  9
  14
  20
  26
  33
  40
  48
  57
  67
  77
  88
  99
  112
  125
  140
  155
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  4
  5
  7
  9
  11
  13
  15
  18
  21
  24
  27
  30
  34
  38
  42
Net income, $m
  -25
  -31
  -32
  -32
  -32
  -32
  -31
  -30
  -28
  -26
  -24
  -7
  -4
  0
  3
  7
  10
  15
  19
  24
  29
  35
  42
  49
  56
  64
  73
  82
  92
  102
  113

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  95
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  328
  238
  243
  249
  256
  264
  273
  282
  292
  303
  315
  327
  340
  354
  369
  385
  402
  420
  439
  459
  480
  502
  526
  551
  577
  604
  633
  664
  696
  729
  765
Adjusted assets (=assets-cash), $m
  233
  238
  243
  249
  256
  264
  273
  282
  292
  303
  315
  327
  340
  354
  369
  385
  402
  420
  439
  459
  480
  502
  526
  551
  577
  604
  633
  664
  696
  729
  765
Revenue / Adjusted assets
  0.858
  0.857
  0.860
  0.859
  0.859
  0.860
  0.857
  0.858
  0.860
  0.858
  0.857
  0.859
  0.859
  0.859
  0.859
  0.860
  0.858
  0.860
  0.859
  0.858
  0.858
  0.859
  0.857
  0.857
  0.858
  0.858
  0.858
  0.857
  0.858
  0.859
  0.858
Average production assets, $m
  36
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113
  118
Working capital, $m
  51
  -20
  -21
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
Total debt, $m
  42
  45
  48
  52
  56
  61
  67
  72
  78
  85
  92
  100
  108
  117
  126
  136
  146
  157
  169
  181
  194
  207
  222
  237
  253
  270
  288
  306
  326
  347
  368
Total liabilities, $m
  144
  146
  149
  153
  157
  162
  168
  173
  179
  186
  193
  201
  209
  218
  227
  237
  247
  258
  270
  282
  295
  308
  323
  338
  354
  371
  389
  407
  427
  448
  469
Total equity, $m
  185
  92
  94
  96
  99
  102
  105
  109
  113
  117
  121
  126
  131
  137
  143
  149
  155
  162
  169
  177
  185
  194
  203
  213
  223
  233
  244
  256
  268
  281
  295
Total liabilities and equity, $m
  329
  238
  243
  249
  256
  264
  273
  282
  292
  303
  314
  327
  340
  355
  370
  386
  402
  420
  439
  459
  480
  502
  526
  551
  577
  604
  633
  663
  695
  729
  764
Debt-to-equity ratio
  0.227
  0.490
  0.510
  0.540
  0.570
  0.600
  0.630
  0.660
  0.700
  0.730
  0.760
  0.790
  0.820
  0.850
  0.880
  0.910
  0.940
  0.970
  0.990
  1.020
  1.050
  1.070
  1.090
  1.120
  1.140
  1.160
  1.180
  1.200
  1.210
  1.230
  1.250
Adjusted equity ratio
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -25
  -31
  -32
  -32
  -32
  -32
  -31
  -30
  -28
  -26
  -24
  -7
  -4
  0
  3
  7
  10
  15
  19
  24
  29
  35
  42
  49
  56
  64
  73
  82
  92
  102
  113
Depreciation, amort., depletion, $m
  14
  17
  17
  17
  17
  17
  17
  17
  18
  18
  18
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
Funds from operations, $m
  35
  -14
  -15
  -15
  -15
  -15
  -14
  -12
  -11
  -8
  -6
  -3
  1
  4
  8
  11
  15
  20
  25
  30
  35
  42
  48
  55
  63
  71
  80
  90
  100
  111
  123
Change in working capital, $m
  16
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
Cash from operations, $m
  19
  -14
  -14
  -15
  -14
  -14
  -13
  -12
  -10
  -8
  -5
  -2
  2
  6
  9
  13
  17
  21
  26
  31
  37
  43
  50
  58
  65
  74
  83
  93
  103
  114
  126
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
New CAPEX, $m
  -24
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from investing activities, $m
  -17
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -14
  -14
Free cash flow, $m
  2
  -17
  -18
  -19
  -19
  -18
  -17
  -16
  -15
  -13
  -10
  -8
  -4
  -1
  2
  6
  9
  14
  18
  23
  28
  34
  40
  47
  55
  62
  71
  80
  90
  100
  111
Issuance/(repayment) of debt, $m
  -15
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Issuance/(repurchase) of shares, $m
  3
  33
  34
  35
  35
  35
  34
  33
  32
  30
  28
  12
  9
  5
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -12
  36
  37
  39
  39
  40
  39
  39
  38
  37
  35
  20
  17
  14
  12
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Total cash flow (excl. dividends), $m
  -10
  18
  19
  20
  21
  21
  22
  23
  23
  24
  25
  12
  13
  13
  14
  15
  20
  24
  30
  35
  41
  48
  55
  62
  71
  79
  89
  99
  109
  121
  133
Retained Cash Flow (-), $m
  6
  -33
  -34
  -35
  -35
  -35
  -34
  -33
  -32
  -30
  -28
  -12
  -9
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
Prev. year cash balance distribution, $m
 
  95
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  81
  -15
  -15
  -14
  -13
  -12
  -11
  -9
  -6
  -3
  0
  4
  8
  8
  9
  13
  18
  22
  28
  33
  39
  46
  53
  60
  69
  77
  87
  97
  108
  119
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  77
  -14
  -13
  -12
  -10
  -9
  -7
  -5
  -4
  -2
  0
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  84.8
  71.8
  60.8
  51.6
  44.0
  37.7
  32.7
  28.5
  25.2
  22.5
  21.5
  20.8
  20.4
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2
  20.2

Bazaarvoice, Inc. provides solutions and services that connect brands and retailers to the voices of people where they shop. It provides its solutions through Bazaarvoice conversations platform, a software as a service platform, which enables clients to capture, manage, and display online consumer-generated content, including ratings and reviews, photos, questions and answers, videos, long-format narratives, seller ratings, and workbench analytics. The company’s platform also allows clients to pull in content from various social platforms, including Instagram, Facebook, and Twitter, as well as organize and display photos, videos, texts, and links that leverage social content throughout their site. In addition, its platform allows brands and retailers to build their own branded community for engaging their advocates to gain content and momentum for new products and seasonal launches, as well as provides clients with the opportunity to search results at the product category level. The company’s content is used by clients for various applications, including online and mobile-optimized Websites, mobile applications, social networks, in-store kiosks, physical in-store displays, printed flyers, email, and other forms of online and offline media. As of April 30, 2016, it served 1,399 active clients in the retail, consumer products, travel and leisure, technology, telecommunications, financial services, healthcare, and automotive industries. It operates in the United States, the United Kingdom, France, Germany, the Netherlands, Sweden, Singapore, and Australia. Bazaarvoice, Inc. was founded in 2005 and is headquartered in Austin, Texas.

FINANCIAL RATIOS  of  Bazaarvoice (BV)

Valuation Ratios
P/E Ratio -15.4
Price to Sales 1.9
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow -77.1
Growth Rates
Sales Growth Rate 4.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 118.2%
Cap. Spend. - 3 Yr. Gr. Rate 16.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 22.7%
Total Debt to Equity 22.7%
Interest Coverage -12
Management Effectiveness
Return On Assets -6.9%
Ret/ On Assets - 3 Yr. Avg. -11.8%
Return On Total Capital -10.5%
Ret/ On T. Cap. - 3 Yr. Avg. -17.9%
Return On Equity -13.3%
Return On Equity - 3 Yr. Avg. -19.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 61.5%
Gross Margin - 3 Yr. Avg. 64.4%
EBITDA Margin -4.5%
EBITDA Margin - 3 Yr. Avg. -12.5%
Operating Margin -11.5%
Oper. Margin - 3 Yr. Avg. -19.8%
Pre-Tax Margin -12.5%
Pre-Tax Margin - 3 Yr. Avg. -20.4%
Net Profit Margin -12.5%
Net Profit Margin - 3 Yr. Avg. -22.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BV stock intrinsic value calculation we used $200 million for the last fiscal year's total revenue generated by Bazaarvoice. The default revenue input number comes from 2016 income statement of Bazaarvoice. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BV stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BV is calculated based on our internal credit rating of Bazaarvoice, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Bazaarvoice.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BV stock the variable cost ratio is equal to 23%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $182 million in the base year in the intrinsic value calculation for BV stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4% for Bazaarvoice.

Corporate tax rate of 27% is the nominal tax rate for Bazaarvoice. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BV stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BV are equal to 18%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Bazaarvoice operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BV is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $185 million for Bazaarvoice - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 79.876 million for Bazaarvoice is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Bazaarvoice at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ ETFs with exposure to Bazaarvoice, Inc. : July 4, 2017   [Jul-04-17 02:40PM  Capital Cube]
▶ ETFs with exposure to Bazaarvoice, Inc. : June 22, 2017   [Jun-22-17 03:28PM  Capital Cube]
▶ Bazaarvoice reports 4Q loss   [Jun-06-17 04:23PM  Associated Press]
▶ Bazaarvoice Appoints Ali Wing to Board of Directors   [Jun-01-17 10:00AM  GlobeNewswire]
▶ Bazaarvoice Appoints Krista Berry to Board of Directors   [May-15-17 10:00AM  GlobeNewswire]
▶ Bazaarvoice reports 3Q loss   [05:02AM  Associated Press]
▶ Why Bazaarvoice Inc. Stock Plunged Today   [Dec-01-16 05:25PM  at Motley Fool]
▶ Hedge Funds Are Crazy About Bazaarvoice Inc (BV)   [Nov-27-16 06:30PM  at Insider Monkey]
▶ Five Under-the-Radar Tech Stocks that Okumus Fund Loves   [Oct-07-16 08:00AM  at Insider Monkey]
▶ Five Cheap Tech Stocks Poised to Gain   [Sep-17-16 03:23PM  at Insider Monkey]
Stock chart of BV Financial statements of BV
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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