Intrinsic value of Civitas Solutions - CIVI

Previous Close

$12.70

  Intrinsic Value

$12.95

stock screener

  Rating & Target

hold

+2%

Previous close

$12.70

 
Intrinsic value

$12.95

 
Up/down potential

+2%

 
Rating

hold

We calculate the intrinsic value of CIVI 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  4.76
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  1,475
  1,549
  1,626
  1,707
  1,793
  1,883
  1,977
  2,075
  2,179
  2,288
  2,403
  2,523
  2,649
  2,781
  2,920
  3,066
  3,220
  3,381
  3,550
  3,727
  3,914
  4,109
  4,315
  4,530
  4,757
  4,995
  5,245
  5,507
  5,782
  6,071
  6,375
Variable operating expenses, $m
 
  1,484
  1,557
  1,633
  1,713
  1,798
  1,886
  1,979
  2,077
  2,179
  2,287
  2,373
  2,491
  2,616
  2,747
  2,884
  3,028
  3,180
  3,339
  3,505
  3,681
  3,865
  4,058
  4,261
  4,474
  4,698
  4,933
  5,179
  5,438
  5,710
  5,996
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
  1,434
  1,484
  1,557
  1,633
  1,713
  1,798
  1,886
  1,979
  2,077
  2,179
  2,287
  2,373
  2,491
  2,616
  2,747
  2,884
  3,028
  3,180
  3,339
  3,505
  3,681
  3,865
  4,058
  4,261
  4,474
  4,698
  4,933
  5,179
  5,438
  5,710
  5,996
Operating income, $m
  41
  65
  69
  74
  79
  85
  90
  96
  102
  109
  116
  150
  158
  166
  174
  182
  192
  201
  211
  222
  233
  245
  257
  270
  283
  297
  312
  328
  344
  361
  379
EBITDA, $m
  117
  143
  150
  158
  166
  174
  183
  192
  202
  212
  222
  233
  245
  257
  270
  284
  298
  313
  328
  345
  362
  380
  399
  419
  440
  462
  485
  509
  535
  562
  590
Interest expense (income), $m
  0
  22
  23
  25
  27
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  86
  90
  95
  100
  106
  112
  118
Earnings before tax, $m
  8
  43
  46
  49
  53
  56
  60
  64
  68
  72
  77
  109
  114
  119
  125
  130
  137
  143
  150
  157
  164
  172
  180
  189
  197
  207
  217
  227
  238
  250
  262
Tax expense, $m
  2
  12
  12
  13
  14
  15
  16
  17
  18
  20
  21
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  59
  61
  64
  67
  71
Net income, $m
  6
  31
  34
  36
  38
  41
  44
  47
  50
  53
  56
  80
  83
  87
  91
  95
  100
  104
  109
  114
  120
  125
  131
  138
  144
  151
  158
  166
  174
  182
  191

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7
  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
  1,049
  1,094
  1,148
  1,206
  1,266
  1,329
  1,396
  1,466
  1,539
  1,616
  1,697
  1,782
  1,871
  1,964
  2,062
  2,166
  2,274
  2,388
  2,507
  2,632
  2,764
  2,902
  3,047
  3,200
  3,359
  3,527
  3,704
  3,889
  4,083
  4,288
  4,502
Adjusted assets (=assets-cash), $m
  1,042
  1,094
  1,148
  1,206
  1,266
  1,329
  1,396
  1,466
  1,539
  1,616
  1,697
  1,782
  1,871
  1,964
  2,062
  2,166
  2,274
  2,388
  2,507
  2,632
  2,764
  2,902
  3,047
  3,200
  3,359
  3,527
  3,704
  3,889
  4,083
  4,288
  4,502
Revenue / Adjusted assets
  1.416
  1.416
  1.416
  1.415
  1.416
  1.417
  1.416
  1.415
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
  1.416
Average production assets, $m
  487
  511
  537
  563
  592
  621
  652
  685
  719
  755
  793
  833
  874
  918
  964
  1,012
  1,063
  1,116
  1,171
  1,230
  1,291
  1,356
  1,424
  1,495
  1,570
  1,648
  1,731
  1,817
  1,908
  2,004
  2,104
Working capital, $m
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  50
  53
  56
  58
  61
  64
  68
  71
  75
  78
  82
  86
  91
  95
  100
  105
  110
  116
  121
  127
Total debt, $m
  631
  668
  714
  763
  814
  867
  923
  982
  1,044
  1,109
  1,177
  1,249
  1,324
  1,403
  1,486
  1,573
  1,664
  1,760
  1,861
  1,967
  2,078
  2,194
  2,317
  2,445
  2,580
  2,722
  2,871
  3,027
  3,191
  3,364
  3,545
Total liabilities, $m
  886
  923
  969
  1,018
  1,069
  1,122
  1,178
  1,237
  1,299
  1,364
  1,432
  1,504
  1,579
  1,658
  1,741
  1,828
  1,919
  2,015
  2,116
  2,222
  2,333
  2,449
  2,572
  2,700
  2,835
  2,977
  3,126
  3,282
  3,446
  3,619
  3,800
Total equity, $m
  163
  171
  179
  188
  198
  207
  218
  229
  240
  252
  265
  278
  292
  306
  322
  338
  355
  372
  391
  411
  431
  453
  475
  499
  524
  550
  578
  607
  637
  669
  702
Total liabilities and equity, $m
  1,049
  1,094
  1,148
  1,206
  1,267
  1,329
  1,396
  1,466
  1,539
  1,616
  1,697
  1,782
  1,871
  1,964
  2,063
  2,166
  2,274
  2,387
  2,507
  2,633
  2,764
  2,902
  3,047
  3,199
  3,359
  3,527
  3,704
  3,889
  4,083
  4,288
  4,502
Debt-to-equity ratio
  3.871
  3.920
  3.990
  4.050
  4.120
  4.180
  4.240
  4.300
  4.350
  4.400
  4.450
  4.490
  4.540
  4.580
  4.620
  4.660
  4.690
  4.730
  4.760
  4.790
  4.820
  4.850
  4.870
  4.900
  4.920
  4.950
  4.970
  4.990
  5.010
  5.030
  5.050
Adjusted equity ratio
  0.150
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  31
  34
  36
  38
  41
  44
  47
  50
  53
  56
  80
  83
  87
  91
  95
  100
  104
  109
  114
  120
  125
  131
  138
  144
  151
  158
  166
  174
  182
  191
Depreciation, amort., depletion, $m
  76
  78
  81
  84
  86
  89
  93
  96
  99
  103
  107
  83
  87
  92
  96
  101
  106
  112
  117
  123
  129
  136
  142
  150
  157
  165
  173
  182
  191
  200
  210
Funds from operations, $m
  72
  110
  115
  120
  125
  130
  136
  142
  149
  156
  163
  163
  171
  179
  187
  196
  206
  216
  226
  237
  249
  261
  274
  287
  301
  316
  331
  348
  365
  383
  401
Change in working capital, $m
  -25
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Cash from operations, $m
  97
  108
  113
  118
  123
  129
  134
  140
  147
  153
  160
  160
  168
  176
  185
  194
  203
  213
  223
  234
  245
  257
  270
  283
  297
  311
  326
  342
  359
  377
  395
Maintenance CAPEX, $m
  0
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -112
  -117
  -123
  -129
  -136
  -142
  -150
  -157
  -165
  -173
  -182
  -191
  -200
New CAPEX, $m
  -47
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -61
  -65
  -68
  -71
  -75
  -78
  -82
  -87
  -91
  -95
  -100
Cash from investing activities, $m
  -126
  -74
  -77
  -81
  -84
  -89
  -93
  -98
  -102
  -108
  -114
  -119
  -125
  -131
  -138
  -144
  -152
  -159
  -168
  -176
  -184
  -194
  -204
  -213
  -225
  -235
  -247
  -260
  -273
  -286
  -300
Free cash flow, $m
  -29
  35
  36
  38
  39
  40
  41
  43
  44
  46
  47
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
Issuance/(repayment) of debt, $m
  -7
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  122
  129
  135
  142
  149
  156
  164
  172
  181
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -15
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  122
  129
  135
  142
  149
  156
  164
  172
  181
Total cash flow (excl. dividends), $m
  -43
  79
  83
  86
  90
  93
  97
  102
  106
  111
  115
  113
  118
  124
  130
  136
  142
  149
  156
  164
  172
  180
  189
  198
  207
  217
  228
  239
  251
  263
  276
Retained Cash Flow (-), $m
  -17
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
Prev. year cash balance distribution, $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 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
 
  72
  74
  77
  80
  84
  87
  91
  94
  99
  103
  100
  104
  109
  115
  120
  126
  132
  138
  144
  151
  158
  166
  174
  182
  191
  200
  210
  220
  231
  242
Discount rate, %
 
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
 
  65
  60
  55
  50
  45
  40
  35
  30
  26
  22
  17
  14
  11
  9
  7
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Civitas Solutions, Inc. is a provider of home- and community-based health and human services to individuals with intellectual, developmental, physical or behavioral disabilities and other special needs. The Company operates through two segments: Human Services and Post-Acute Specialty Rehabilitation Services (SRS). The Human Services segment provides home- and community-based human services to individuals with intellectual and/or developmental disabilities (I/DD), youth with emotional, behavioral and/or medically complex challenges or at-risk youth (ARY), and elders. The SRS segment delivers healthcare and community-based health and human services to individuals having suffered acquired brain injury, spinal injuries, and other catastrophic injuries and illnesses. Within its SRS segment, its NeuroRestorative business unit is focused on rehabilitation and transitional living services, and its CareMeridian business unit is focused on the medically-intensive post-acute care services.

FINANCIAL RATIOS  of  Civitas Solutions (CIVI)

Valuation Ratios
P/E Ratio 79.2
Price to Sales 0.3
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 4.9
Price to Free Cash Flow 9.5
Growth Rates
Sales Growth Rate 4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.3%
Cap. Spend. - 3 Yr. Gr. Rate 6.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 382.8%
Total Debt to Equity 387.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.6%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital 0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity 3.9%
Return On Equity - 3 Yr. Avg. 4.4%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 21.3%
Gross Margin - 3 Yr. Avg. 22.1%
EBITDA Margin 5.7%
EBITDA Margin - 3 Yr. Avg. 6.1%
Operating Margin 2.8%
Oper. Margin - 3 Yr. Avg. 3.4%
Pre-Tax Margin 0.5%
Pre-Tax Margin - 3 Yr. Avg. 0.9%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 0.4%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 42.9%
Payout Ratio 0%

CIVI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CIVI stock intrinsic value calculation we used $1475 million for the last fiscal year's total revenue generated by Civitas Solutions. The default revenue input number comes from 2017 income statement of Civitas Solutions. 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 CIVI stock valuation model: a) initial revenue growth rate of 5% 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 10.8%, whose default value for CIVI is calculated based on our internal credit rating of Civitas Solutions, 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 Civitas Solutions.
    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 CIVI stock the variable cost ratio is equal to 95.9%.

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 CIVI 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 3.5% for Civitas Solutions.

Corporate tax rate of 27% is the nominal tax rate for Civitas Solutions. 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 CIVI 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 CIVI are equal to 33%.

Life of production assets of 10 years is the average useful life of capital assets used in Civitas Solutions 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 CIVI is equal to 2%. 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 - $163 million for Civitas Solutions - 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 38.646 million for Civitas Solutions 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 Civitas Solutions at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Civitas Solutions beats 1Q profit forecasts   [Feb-08-18 06:53PM  Associated Press]
▶ Company News For Dec 14, 2017   [10:28AM  Zacks]
▶ Civitas Solutions reports 4Q loss   [Dec-12-17 04:35PM  Associated Press]
▶ Civitas Solutions beats 3Q profit forecasts   [Aug-09-17 09:33PM  Associated Press]
▶ Civitas Solutions misses 2Q profit forecasts   [04:34PM  Associated Press]
▶ Civitas Solutions meets 1Q profit forecasts   [Feb-09-17 05:11PM  Associated Press]
▶ Do Hedge Funds Love Civitas Solutions Inc (CIVI)?   [Dec-20-16 02:58PM  at Insider Monkey]
▶ Xencor Inc (XNCR): What Smart Money Thinks about This Stock?   [Dec-04-16 03:53PM  at Insider Monkey]
Financial statements of CIVI
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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