Intrinsic value of Care.com - CRCM

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$15.13

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of CRCM 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, %
  16.55
  13.90
  13.01
  12.21
  11.49
  10.84
  10.26
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
  6.48
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  162
  158
  179
  201
  224
  248
  274
  300
  328
  357
  387
  418
  451
  485
  520
  557
  595
  634
  675
  718
  763
  809
  857
  908
  960
  1,015
  1,073
  1,132
  1,195
  1,260
  1,328
Variable operating expenses, $m
 
  50
  56
  62
  69
  76
  83
  90
  98
  106
  115
  118
  127
  137
  146
  157
  167
  179
  190
  202
  215
  228
  241
  256
  270
  286
  302
  319
  336
  355
  374
Fixed operating expenses, $m
 
  115
  118
  121
  124
  127
  130
  133
  136
  140
  143
  147
  151
  154
  158
  162
  166
  170
  175
  179
  184
  188
  193
  198
  203
  208
  213
  218
  224
  229
  235
Total operating expenses, $m
  160
  165
  174
  183
  193
  203
  213
  223
  234
  246
  258
  265
  278
  291
  304
  319
  333
  349
  365
  381
  399
  416
  434
  454
  473
  494
  515
  537
  560
  584
  609
Operating income, $m
  2
  -7
  5
  18
  31
  46
  61
  77
  93
  111
  129
  154
  173
  194
  215
  238
  261
  285
  311
  337
  364
  393
  423
  455
  487
  522
  558
  595
  635
  676
  719
EBITDA, $m
  6
  0
  12
  25
  38
  53
  68
  84
  101
  119
  137
  156
  176
  197
  218
  241
  264
  289
  314
  341
  369
  398
  428
  460
  493
  527
  564
  602
  641
  683
  727
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
Earnings before tax, $m
  1
  -7
  5
  17
  30
  44
  59
  75
  91
  108
  126
  150
  170
  190
  211
  233
  255
  279
  304
  330
  357
  385
  414
  445
  477
  511
  546
  583
  621
  662
  704
Tax expense, $m
  2
  0
  1
  5
  8
  12
  16
  20
  25
  29
  34
  41
  46
  51
  57
  63
  69
  75
  82
  89
  96
  104
  112
  120
  129
  138
  147
  157
  168
  179
  190
Net income, $m
  7
  -7
  3
  13
  22
  32
  43
  55
  66
  79
  92
  110
  124
  139
  154
  170
  186
  204
  222
  241
  260
  281
  302
  325
  348
  373
  398
  425
  454
  483
  514

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  76
  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
  155
  92
  104
  117
  130
  145
  159
  175
  191
  208
  226
  244
  263
  283
  303
  324
  347
  370
  394
  419
  444
  472
  500
  529
  560
  592
  625
  660
  696
  734
  774
Adjusted assets (=assets-cash), $m
  79
  92
  104
  117
  130
  145
  159
  175
  191
  208
  226
  244
  263
  283
  303
  324
  347
  370
  394
  419
  444
  472
  500
  529
  560
  592
  625
  660
  696
  734
  774
Revenue / Adjusted assets
  2.051
  1.717
  1.721
  1.718
  1.723
  1.710
  1.723
  1.714
  1.717
  1.716
  1.712
  1.713
  1.715
  1.714
  1.716
  1.719
  1.715
  1.714
  1.713
  1.714
  1.718
  1.714
  1.714
  1.716
  1.714
  1.715
  1.717
  1.715
  1.717
  1.717
  1.716
Average production assets, $m
  8
  13
  14
  16
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  76
  80
  85
  89
  94
  100
  105
Working capital, $m
  57
  -42
  -48
  -53
  -60
  -66
  -73
  -80
  -87
  -95
  -103
  -111
  -120
  -129
  -138
  -148
  -158
  -169
  -180
  -191
  -203
  -215
  -228
  -241
  -255
  -270
  -285
  -301
  -318
  -335
  -353
Total debt, $m
  0
  8
  16
  24
  33
  42
  52
  63
  73
  85
  96
  109
  121
  134
  148
  162
  177
  193
  209
  225
  242
  261
  279
  299
  319
  341
  363
  386
  410
  436
  462
Total liabilities, $m
  41
  62
  70
  78
  87
  96
  106
  117
  127
  139
  150
  163
  175
  188
  202
  216
  231
  247
  263
  279
  296
  315
  333
  353
  373
  395
  417
  440
  464
  490
  516
Total equity, $m
  115
  31
  35
  39
  43
  48
  53
  58
  64
  69
  75
  81
  88
  94
  101
  108
  115
  123
  131
  139
  148
  157
  166
  176
  186
  197
  208
  220
  232
  245
  258
Total liabilities and equity, $m
  156
  93
  105
  117
  130
  144
  159
  175
  191
  208
  225
  244
  263
  282
  303
  324
  346
  370
  394
  418
  444
  472
  499
  529
  559
  592
  625
  660
  696
  735
  774
Debt-to-equity ratio
  0.000
  0.250
  0.450
  0.620
  0.760
  0.880
  0.990
  1.080
  1.150
  1.220
  1.280
  1.340
  1.390
  1.430
  1.470
  1.500
  1.540
  1.560
  1.590
  1.620
  1.640
  1.660
  1.680
  1.700
  1.710
  1.730
  1.740
  1.760
  1.770
  1.780
  1.790
Adjusted equity ratio
  0.494
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  -7
  3
  13
  22
  32
  43
  55
  66
  79
  92
  110
  124
  139
  154
  170
  186
  204
  222
  241
  260
  281
  302
  325
  348
  373
  398
  425
  454
  483
  514
Depreciation, amort., depletion, $m
  4
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
Funds from operations, $m
  16
  0
  10
  20
  29
  40
  51
  62
  74
  87
  100
  112
  126
  141
  157
  173
  190
  207
  226
  245
  265
  285
  307
  330
  354
  378
  404
  432
  460
  490
  521
Change in working capital, $m
  1
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
Cash from operations, $m
  15
  3
  16
  25
  36
  46
  57
  69
  82
  94
  108
  120
  135
  150
  166
  183
  200
  218
  236
  256
  276
  298
  320
  343
  368
  393
  420
  448
  477
  507
  540
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
New CAPEX, $m
  0
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
Cash from investing activities, $m
  -16
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -9
  -11
  -11
  -11
  -12
  -12
Free cash flow, $m
  -1
  1
  13
  23
  33
  43
  54
  66
  78
  90
  104
  116
  130
  145
  161
  177
  194
  211
  230
  249
  269
  290
  312
  334
  358
  383
  409
  437
  466
  496
  527
Issuance/(repayment) of debt, $m
  0
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  27
Issuance/(repurchase) of shares, $m
  15
  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  
  1
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  27
Total cash flow (excl. dividends), $m
  0
  8
  21
  31
  42
  52
  64
  76
  89
  102
  115
  128
  143
  158
  174
  191
  209
  227
  246
  266
  286
  308
  330
  354
  379
  405
  432
  460
  490
  521
  554
Retained Cash Flow (-), $m
  -27
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
Prev. year cash balance distribution, $m
 
  61
  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
 
  65
  17
  27
  37
  48
  59
  71
  83
  96
  109
  122
  136
  152
  167
  184
  201
  219
  238
  257
  278
  299
  321
  344
  369
  394
  421
  448
  478
  508
  540
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
 
  63
  16
  23
  31
  37
  43
  48
  52
  55
  57
  58
  58
  58
  56
  54
  51
  48
  44
  40
  35
  31
  27
  23
  19
  15
  12
  10
  7
  6
  4
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
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Care.com, Inc. operates an online marketplace for finding and managing family care in the United States and internationally. The company helps families to address their lifecycle of care needs, including child care, senior care, and special needs care, as well as other non-medical family care needs, such as pet care, tutoring, and housekeeping; and enables caregivers to find full-time and part-time employment opportunities. Its consumer matching solutions provide families access to job posting features, search features, caregiver profiles, and content; and consumer payments solutions allows families to pay a caregiver through Care.com HomePay product. The company offers its services to families, caregivers, and employers, as well as care-related businesses, such as day care centers, nanny agencies, and home care agencies. Care.com, Inc. was founded in 2006 and is headquartered in Waltham, Massachusetts.

FINANCIAL RATIOS  of  Care.com (CRCM)

Valuation Ratios
P/E Ratio 62.6
Price to Sales 2.7
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 29.2
Price to Free Cash Flow 29.2
Growth Rates
Sales Growth Rate 16.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. -24.4%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. -35.4%
Return On Equity 6.9%
Return On Equity - 3 Yr. Avg. -35.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 80.2%
Gross Margin - 3 Yr. Avg. 80%
EBITDA Margin 3.1%
EBITDA Margin - 3 Yr. Avg. -11.8%
Operating Margin 1.2%
Oper. Margin - 3 Yr. Avg. -13.4%
Pre-Tax Margin 0.6%
Pre-Tax Margin - 3 Yr. Avg. -15.3%
Net Profit Margin 4.3%
Net Profit Margin - 3 Yr. Avg. -31%
Effective Tax Rate 200%
Eff/ Tax Rate - 3 Yr. Avg. 64.7%
Payout Ratio 0%

CRCM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRCM stock intrinsic value calculation we used $139 million for the last fiscal year's total revenue generated by Care.com. The default revenue input number comes from 2016 income statement of Care.com. 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 CRCM stock valuation model: a) initial revenue growth rate of 13.9% 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 CRCM is calculated based on our internal credit rating of Care.com, 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 Care.com.
    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 CRCM stock the variable cost ratio is equal to 32.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $112 million in the base year in the intrinsic value calculation for CRCM 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 Care.com.

Corporate tax rate of 27% is the nominal tax rate for Care.com. 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 CRCM 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 CRCM are equal to 7.9%.

Life of production assets of 14.2 years is the average useful life of capital assets used in Care.com 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 CRCM is equal to -26.6%. 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 - $88 million for Care.com - 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 28.707 million for Care.com 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 Care.com at the current share price and the inputted number of shares is $0.4 billion.


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COMPANY NEWS

▶ Care.com Joins New Job Search Feature on Google   [Jun-21-17 10:23AM  Business Wire]
▶ ETFs with exposure to Care.com, Inc. : May 22, 2017   [May-22-17 01:29PM  Capital Cube]
▶ ETFs with exposure to Care.com, Inc. : May 8, 2017   [May-08-17 04:21PM  Capital Cube]
▶ Why Care.com Stock Is Rallying Today   [May-03-17 02:33PM  Motley Fool]
▶ Care.com beats Street 1Q forecasts   [06:12AM  Associated Press]
▶ Care.com to Participate at Upcoming Investor Conferences   [May-01-17 04:01PM  Business Wire]
▶ ETFs with exposure to Care.com, Inc. : April 26, 2017   [Apr-26-17 03:12PM  Capital Cube]
▶ Care.com Releases 2017 Babysitter Survey Results   [Apr-17-17 08:02AM  Business Wire]
▶ Top Ranked Momentum Stocks to Buy for April 5th   [Apr-05-17 09:17AM  Zacks]
▶ Will Care.com (CRCM) Continue to Surge Higher?   [Mar-16-17 08:22AM  Zacks]
▶ [$$] Home Care Assistance Raises More Than $100 Million   [Jan-30-17 03:01AM  at The Wall Street Journal]
▶ Royce & Associates Still Likes Care.com Inc (NYSE:CRCM)   [Jan-08-17 10:39AM  at Insider Monkey]
▶ Is Care.com Inc (CRCM) A Good Stock for Your Portfolio?   [Dec-09-16 01:19PM  at Insider Monkey]
▶ Care.com to Participate At Upcoming Investor Conferences   [Nov-28-16 04:01PM  Business Wire]
▶ Care.com to Participate At Upcoming Investor Conferences   [Nov-08-16 04:01PM  Business Wire]
▶ Care.com reports 3Q loss   [06:16AM  AP]
▶ Software As A Stock Strategy   [Aug-24-16 06:30AM  at Forbes]
▶ Care.com reports 2Q loss   [06:09AM  AP]
▶ Google Loves Care.com   [Jun-30-16 06:41PM  at Motley Fool]
▶ Care.com nabs major investment from Google Capital   [02:36PM  at bizjournals.com]
▶ Term Sheet Thursday, June 30   [09:50AM  at Fortune]
Stock chart of CRCM Financial statements of CRCM Annual reports of CRCM
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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