Intrinsic value of Care.com - CRCM

Previous Close

$19.96

  Intrinsic Value

$30.63

stock screener

  Rating & Target

str. buy

+53%

Previous close

$19.96

 
Intrinsic value

$30.63

 
Up/down potential

+53%

 
Rating

str. buy

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

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
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
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
Revenue, $m
  162
  178
  194
  212
  230
  248
  268
  288
  309
  331
  354
  377
  402
  427
  454
  482
  511
  541
  572
  605
  639
  675
  712
  751
  791
  834
  879
  925
  974
  1,025
  1,079
Variable operating expenses, $m
 
  46
  49
  53
  57
  61
  66
  70
  75
  80
  85
  84
  90
  95
  101
  108
  114
  121
  128
  135
  143
  151
  159
  168
  177
  186
  196
  207
  217
  229
  241
Fixed operating expenses, $m
 
  124
  127
  130
  134
  137
  140
  144
  147
  151
  155
  159
  163
  167
  171
  175
  180
  184
  189
  193
  198
  203
  208
  214
  219
  224
  230
  236
  242
  248
  254
Total operating expenses, $m
  160
  170
  176
  183
  191
  198
  206
  214
  222
  231
  240
  243
  253
  262
  272
  283
  294
  305
  317
  328
  341
  354
  367
  382
  396
  410
  426
  443
  459
  477
  495
Operating income, $m
  2
  8
  18
  28
  39
  50
  62
  74
  87
  100
  114
  134
  149
  165
  182
  199
  217
  236
  256
  276
  298
  321
  345
  370
  396
  424
  453
  483
  515
  549
  584
EBITDA, $m
  6
  15
  25
  35
  46
  57
  69
  81
  94
  107
  121
  135
  151
  166
  183
  200
  218
  237
  257
  278
  300
  323
  347
  372
  398
  426
  455
  486
  518
  552
  587
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
Earnings before tax, $m
  1
  8
  18
  28
  39
  50
  61
  73
  86
  99
  113
  133
  148
  163
  179
  196
  214
  233
  252
  273
  294
  317
  340
  365
  391
  418
  447
  477
  509
  542
  577
Tax expense, $m
  2
  2
  5
  8
  10
  13
  17
  20
  23
  27
  30
  36
  40
  44
  48
  53
  58
  63
  68
  74
  79
  85
  92
  99
  106
  113
  121
  129
  137
  146
  156
Net income, $m
  7
  6
  13
  21
  28
  36
  45
  54
  63
  72
  82
  97
  108
  119
  131
  143
  156
  170
  184
  199
  215
  231
  248
  266
  285
  305
  326
  348
  371
  396
  421

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
  87
  95
  103
  112
  121
  131
  140
  151
  161
  172
  184
  196
  208
  221
  235
  249
  264
  279
  295
  311
  329
  347
  366
  386
  407
  428
  451
  475
  500
  526
Adjusted assets (=assets-cash), $m
  79
  87
  95
  103
  112
  121
  131
  140
  151
  161
  172
  184
  196
  208
  221
  235
  249
  264
  279
  295
  311
  329
  347
  366
  386
  407
  428
  451
  475
  500
  526
Revenue / Adjusted assets
  2.051
  2.046
  2.042
  2.058
  2.054
  2.050
  2.046
  2.057
  2.046
  2.056
  2.058
  2.049
  2.051
  2.053
  2.054
  2.051
  2.052
  2.049
  2.050
  2.051
  2.055
  2.052
  2.052
  2.052
  2.049
  2.049
  2.054
  2.051
  2.051
  2.050
  2.051
Average production assets, $m
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
Working capital, $m
  57
  -21
  -23
  -25
  -27
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
Total debt, $m
  0
  4
  8
  12
  17
  21
  26
  31
  36
  42
  47
  53
  59
  65
  72
  79
  86
  93
  101
  109
  118
  126
  136
  145
  155
  166
  177
  188
  200
  213
  226
Total liabilities, $m
  41
  44
  48
  52
  57
  61
  66
  71
  76
  82
  87
  93
  99
  105
  112
  119
  126
  133
  141
  149
  158
  166
  176
  185
  195
  206
  217
  228
  240
  253
  266
Total equity, $m
  115
  43
  47
  51
  55
  60
  65
  69
  74
  80
  85
  91
  97
  103
  109
  116
  123
  130
  138
  146
  154
  162
  171
  181
  191
  201
  212
  223
  235
  247
  260
Total liabilities and equity, $m
  156
  87
  95
  103
  112
  121
  131
  140
  150
  162
  172
  184
  196
  208
  221
  235
  249
  263
  279
  295
  312
  328
  347
  366
  386
  407
  429
  451
  475
  500
  526
Debt-to-equity ratio
  0.000
  0.090
  0.170
  0.240
  0.300
  0.360
  0.400
  0.450
  0.490
  0.520
  0.550
  0.580
  0.610
  0.640
  0.660
  0.680
  0.700
  0.720
  0.730
  0.750
  0.760
  0.780
  0.790
  0.800
  0.810
  0.830
  0.840
  0.840
  0.850
  0.860
  0.870
Adjusted equity ratio
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  6
  13
  21
  28
  36
  45
  54
  63
  72
  82
  97
  108
  119
  131
  143
  156
  170
  184
  199
  215
  231
  248
  266
  285
  305
  326
  348
  371
  396
  421
Depreciation, amort., depletion, $m
  4
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
Funds from operations, $m
  16
  12
  20
  27
  35
  43
  51
  60
  69
  79
  89
  98
  109
  120
  132
  145
  158
  172
  186
  201
  217
  233
  250
  269
  288
  308
  329
  351
  374
  399
  424
Change in working capital, $m
  1
  -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
  -6
  -6
  -6
Cash from operations, $m
  15
  14
  21
  29
  37
  45
  54
  63
  72
  82
  92
  101
  112
  123
  135
  148
  161
  175
  190
  205
  221
  237
  255
  273
  292
  313
  334
  356
  380
  405
  431
Maintenance CAPEX, $m
  0
  0
  -1
  -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
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
Cash from investing activities, $m
  -16
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
Free cash flow, $m
  -1
  13
  20
  28
  35
  43
  52
  61
  70
  80
  90
  99
  109
  121
  133
  145
  158
  172
  186
  201
  217
  234
  251
  269
  288
  308
  329
  351
  375
  399
  425
Issuance/(repayment) of debt, $m
  0
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
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
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
Total cash flow (excl. dividends), $m
  0
  17
  24
  32
  40
  48
  57
  66
  75
  85
  95
  104
  116
  127
  139
  152
  166
  180
  194
  209
  226
  242
  260
  279
  298
  319
  340
  363
  387
  412
  438
Retained Cash Flow (-), $m
  -27
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
Prev. year cash balance distribution, $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
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
 
  89
  20
  28
  35
  44
  52
  61
  70
  80
  90
  99
  110
  121
  133
  146
  159
  172
  187
  202
  217
  234
  251
  269
  288
  309
  330
  352
  375
  399
  425
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
 
  85
  18
  24
  29
  34
  38
  41
  44
  46
  47
  47
  47
  46
  45
  43
  40
  37
  34
  31
  28
  24
  21
  18
  15
  12
  10
  8
  6
  4
  3
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

Care.com, Inc. is an online marketplace for finding and managing family care. As of December 31, 2016, the Company had 22.8 million members, including 12.9 million families and 9.9 million caregivers, spanning 19 countries. Its consumer matching solutions allow families to search for, qualify, vet, connect with and select caregivers. It also provides caregivers with solutions to create personal profiles, describe their skills and experience, and otherwise differentiate and market themselves in a fragmented marketplace. In addition to consumer matching solutions, the Company offers its members products and services to facilitate their interaction with caregivers. It serves employers by providing access to certain of its products and services to employer-sponsored families. In addition, it serves care-related businesses, such as day care centers, nanny agencies and home care agencies, willing to market their services to its care-seeking families and recruit its caregiver members.

FINANCIAL RATIOS  of  Care.com (CRCM)

Valuation Ratios
P/E Ratio 82.6
Price to Sales 3.6
Price to Book 5
Price to Tangible Book
Price to Cash Flow 38.6
Price to Free Cash Flow 38.6
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 $162 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 9.8% 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 25.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $121 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 4.9%.

Life of production assets of 16.6 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 -11.7%. 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 - $115 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 30.4 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 $0.6 billion.

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COMPANY NEWS

▶ Should You Care About Care.Com?   [Dec-11-17 05:53PM  GuruFocus.com]
▶ ETFs with exposure to Care.com, Inc. : November 8, 2017   [Nov-08-17 05:48PM  Capital Cube]
▶ Care.com tops Street 3Q forecasts   [06:16AM  Associated Press]
▶ Care.com, Inc. to Host Earnings Call   [06:00AM  ACCESSWIRE]
▶ ETFs with exposure to Care.com, Inc. : August 29, 2017   [Aug-29-17 06:45PM  Capital Cube]
▶ Care.com beats Street 2Q forecasts   [Aug-10-17 09:18PM  Associated Press]
▶ Care.com, Inc. Value Analysis (NYSE:CRCM) : July 5, 2017   [Jul-05-17 01:25PM  Capital Cube]
▶ 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]
Financial statements 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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