Intrinsic value of Bazaarvoice - BV

Previous Close

$5.05

  Intrinsic Value

$0.14

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

-108%

Previous close

$5.05

 
Intrinsic value

$0.14

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

-108%

*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 2017), $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
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.50
  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
  201
  205
  210
  215
  221
  228
  235
  243
  252
  261
  271
  282
  293
  306
  319
  332
  347
  362
  379
  396
  414
  433
  453
  475
  497
  521
  546
  572
  600
  629
  659
Variable operating expenses, $m
 
  228
  233
  239
  245
  252
  260
  268
  277
  287
  297
  295
  307
  319
  333
  347
  362
  379
  396
  414
  433
  453
  474
  496
  520
  544
  570
  598
  627
  657
  689
Fixed operating expenses, $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
Total operating expenses, $m
  214
  228
  233
  239
  245
  252
  260
  268
  277
  287
  297
  295
  307
  319
  333
  347
  362
  379
  396
  414
  433
  453
  474
  496
  520
  544
  570
  598
  627
  657
  689
Operating income, $m
  -13
  -23
  -23
  -24
  -24
  -24
  -24
  -25
  -25
  -26
  -26
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
EBITDA, $m
  1
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
Interest expense (income), $m
  2
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
Earnings before tax, $m
  -15
  -23
  -23
  -24
  -24
  -25
  -25
  -26
  -26
  -27
  -28
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
Tax expense, $m
  1
  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
Net income, $m
  -16
  -23
  -23
  -24
  -24
  -25
  -25
  -26
  -26
  -27
  -28
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  91
  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
  322
  236
  241
  247
  254
  262
  270
  280
  290
  300
  312
  324
  337
  351
  366
  382
  399
  416
  435
  455
  476
  498
  521
  546
  572
  599
  627
  658
  689
  723
  758
Adjusted assets (=assets-cash), $m
  231
  236
  241
  247
  254
  262
  270
  280
  290
  300
  312
  324
  337
  351
  366
  382
  399
  416
  435
  455
  476
  498
  521
  546
  572
  599
  627
  658
  689
  723
  758
Revenue / Adjusted assets
  0.870
  0.869
  0.871
  0.870
  0.870
  0.870
  0.870
  0.868
  0.869
  0.870
  0.869
  0.870
  0.869
  0.872
  0.872
  0.869
  0.870
  0.870
  0.871
  0.870
  0.870
  0.869
  0.869
  0.870
  0.869
  0.870
  0.871
  0.869
  0.871
  0.870
  0.869
Average production assets, $m
  39
  39
  40
  41
  42
  44
  45
  47
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
  127
Working capital, $m
  16
  -44
  -45
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -106
  -111
  -117
  -122
  -128
  -135
  -141
Total debt, $m
  32
  2
  4
  7
  10
  14
  18
  22
  26
  31
  36
  42
  48
  54
  61
  68
  75
  83
  92
  101
  110
  120
  131
  142
  153
  165
  178
  192
  206
  221
  237
Total liabilities, $m
  136
  106
  108
  111
  114
  118
  122
  126
  130
  135
  140
  146
  152
  158
  165
  172
  179
  187
  196
  205
  214
  224
  235
  246
  257
  269
  282
  296
  310
  325
  341
Total equity, $m
  186
  130
  133
  136
  140
  144
  149
  154
  159
  165
  172
  178
  186
  193
  201
  210
  219
  229
  239
  250
  262
  274
  287
  300
  314
  329
  345
  362
  379
  398
  417
Total liabilities and equity, $m
  322
  236
  241
  247
  254
  262
  271
  280
  289
  300
  312
  324
  338
  351
  366
  382
  398
  416
  435
  455
  476
  498
  522
  546
  571
  598
  627
  658
  689
  723
  758
Debt-to-equity ratio
  0.172
  0.020
  0.030
  0.050
  0.070
  0.100
  0.120
  0.140
  0.170
  0.190
  0.210
  0.230
  0.260
  0.280
  0.300
  0.320
  0.340
  0.360
  0.380
  0.400
  0.420
  0.440
  0.460
  0.470
  0.490
  0.500
  0.520
  0.530
  0.540
  0.560
  0.570
Adjusted equity ratio
  0.411
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -16
  -23
  -23
  -24
  -24
  -25
  -25
  -26
  -26
  -27
  -28
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
Depreciation, amort., depletion, $m
  14
  17
  17
  17
  17
  17
  17
  18
  18
  18
  18
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
Funds from operations, $m
  15
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
Cash from operations, $m
  15
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
New CAPEX, $m
  -9
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from investing activities, $m
  3
  -4
  -4
  -4
  -4
  -4
  -4
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -11
  -13
  -13
  -13
  -14
  -15
  -16
Free cash flow, $m
  18
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
Issuance/(repayment) of debt, $m
  -10
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
Issuance/(repurchase) of shares, $m
  2
  26
  26
  27
  28
  29
  30
  31
  32
  33
  34
  21
  23
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
Cash from financing (excl. dividends), $m  
  -8
  28
  28
  30
  31
  32
  34
  35
  36
  38
  39
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
  53
  56
  59
  62
  66
  69
  73
  77
Total cash flow (excl. dividends), $m
  9
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  13
  14
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
Retained Cash Flow (-), $m
  -1
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -34
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
Prev. year cash balance distribution, $m
 
  59
  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
 
  52
  -7
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -19
  -20
  -21
  -22
  -23
  -25
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
 
  50
  -6
  -6
  -6
  -5
  -5
  -5
  -5
  -5
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  91.8
  84.2
  77.2
  70.8
  64.9
  59.4
  54.4
  49.9
  45.7
  41.9
  39.7
  37.6
  35.5
  33.6
  31.7
  29.9
  28.2
  26.6
  25.0
  23.6
  22.2
  20.8
  19.6
  18.4
  17.2
  16.2
  15.2
  14.2
  13.3
  12.5

Bazaarvoice, Inc. offers solutions and services that allow its retailer and brand clients to understand that consumer voice and the role it plays in influencing purchasing decisions, both online and offline. The Company's solutions collect, curate and display consumer-generated content, including ratings and reviews, questions and answers, customer stories, and social posts, photos and videos. This content is syndicated and distributed across its clients' marketing channels. Its solutions, which the Company provides primarily through a software-as-a-service (SaaS) platform, enable the clients to capture and display consumer-generated content; syndicate that consumer-generated content into its network of brand and retail clients; understand consumer behavior, and monetize the value of that content through targeted advertising based on online and offline shopping behavior. The Company's geographical segments include Americas, EMEA and Other.

FINANCIAL RATIOS  of  Bazaarvoice (BV)

Valuation Ratios
P/E Ratio -26.6
Price to Sales 2.1
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 28.4
Price to Free Cash Flow 70.9
Growth Rates
Sales Growth Rate 0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.5%
Cap. Spend. - 3 Yr. Gr. Rate -2.1%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 17.2%
Interest Coverage -7
Management Effectiveness
Return On Assets -4.3%
Ret/ On Assets - 3 Yr. Avg. -7%
Return On Total Capital -7.2%
Ret/ On T. Cap. - 3 Yr. Avg. -10.9%
Return On Equity -8.6%
Return On Equity - 3 Yr. Avg. -13%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 62.2%
Gross Margin - 3 Yr. Avg. 62.3%
EBITDA Margin 0.5%
EBITDA Margin - 3 Yr. Avg. -4.8%
Operating Margin -6.5%
Oper. Margin - 3 Yr. Avg. -11.4%
Pre-Tax Margin -7.5%
Pre-Tax Margin - 3 Yr. Avg. -12.4%
Net Profit Margin -8%
Net Profit Margin - 3 Yr. Avg. -12.8%
Effective Tax Rate -6.7%
Eff/ Tax Rate - 3 Yr. Avg. -2.2%
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 $201 million for the last fiscal year's total revenue generated by Bazaarvoice. The default revenue input number comes from 2017 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 111.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% 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 19.2%.

Life of production assets of 12.7 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 -21.4%. 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 - $186 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 83.383 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

▶ Bazaarvoice reports 1Q loss   [Sep-07-17 09:15PM  Associated Press]
▶ 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]
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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