Intrinsic value of Janus Capital Group - JNS

Previous Close

$12.45

  Intrinsic Value

$21.39

stock screener

  Rating & Target

str. buy

+72%

  Value-price divergence*

-59%

Previous close

$12.45

 
Intrinsic value

$21.39

 
Up/down potential

+72%

 
Rating

str. buy

 
Value-price divergence*

-59%

Our model is not good at valuating stocks of financial companies, such as JNS.

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

We calculate the intrinsic value of JNS 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 2.3

 

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, %
  -6.04
  3.60
  3.74
  3.87
  3.98
  4.08
  4.17
  4.26
  4.33
  4.40
  4.46
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
Revenue, $m
  1,011
  1,047
  1,087
  1,129
  1,173
  1,221
  1,272
  1,327
  1,384
  1,445
  1,509
  1,577
  1,649
  1,725
  1,805
  1,890
  1,979
  2,073
  2,171
  2,275
  2,385
  2,500
  2,621
  2,749
  2,883
  3,024
  3,172
  3,328
  3,491
  3,663
  3,844
Variable operating expenses, $m
 
  659
  681
  705
  731
  758
  787
  818
  851
  886
  923
  901
  942
  986
  1,032
  1,080
  1,131
  1,184
  1,241
  1,300
  1,363
  1,429
  1,498
  1,571
  1,647
  1,728
  1,813
  1,902
  1,995
  2,093
  2,197
Fixed operating expenses, $m
 
  117
  120
  123
  126
  129
  132
  136
  139
  142
  146
  150
  153
  157
  161
  165
  169
  173
  178
  182
  187
  191
  196
  201
  206
  211
  217
  222
  228
  233
  239
Total operating expenses, $m
  749
  776
  801
  828
  857
  887
  919
  954
  990
  1,028
  1,069
  1,051
  1,095
  1,143
  1,193
  1,245
  1,300
  1,357
  1,419
  1,482
  1,550
  1,620
  1,694
  1,772
  1,853
  1,939
  2,030
  2,124
  2,223
  2,326
  2,436
Operating income, $m
  262
  272
  286
  301
  317
  334
  353
  373
  394
  417
  441
  526
  553
  582
  613
  645
  679
  715
  753
  793
  835
  880
  927
  977
  1,029
  1,084
  1,143
  1,204
  1,269
  1,337
  1,408
EBITDA, $m
  298
  379
  395
  412
  430
  449
  470
  493
  516
  542
  569
  597
  628
  660
  694
  730
  768
  808
  850
  895
  942
  992
  1,045
  1,100
  1,159
  1,220
  1,285
  1,354
  1,426
  1,501
  1,581
Interest expense (income), $m
  16
  16
  18
  20
  22
  25
  27
  30
  33
  36
  39
  42
  46
  50
  54
  58
  62
  67
  72
  77
  82
  88
  94
  100
  107
  114
  122
  129
  137
  146
  155
Earnings before tax, $m
  242
  256
  267
  280
  294
  309
  326
  343
  361
  381
  402
  484
  508
  533
  559
  587
  617
  648
  681
  716
  753
  792
  833
  876
  922
  970
  1,021
  1,075
  1,131
  1,191
  1,253
Tax expense, $m
  91
  69
  72
  76
  79
  84
  88
  93
  98
  103
  108
  131
  137
  144
  151
  158
  166
  175
  184
  193
  203
  214
  225
  237
  249
  262
  276
  290
  305
  321
  338
Net income, $m
  146
  187
  195
  205
  215
  226
  238
  250
  264
  278
  293
  353
  371
  389
  408
  428
  450
  473
  497
  523
  550
  578
  608
  640
  673
  708
  745
  785
  826
  869
  915

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  796
  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
  2,950
  2,233
  2,317
  2,406
  2,502
  2,604
  2,713
  2,828
  2,951
  3,081
  3,218
  3,363
  3,516
  3,678
  3,849
  4,029
  4,219
  4,419
  4,630
  4,852
  5,085
  5,331
  5,589
  5,861
  6,147
  6,447
  6,763
  7,095
  7,444
  7,811
  8,196
Adjusted assets (=assets-cash), $m
  2,154
  2,233
  2,317
  2,406
  2,502
  2,604
  2,713
  2,828
  2,951
  3,081
  3,218
  3,363
  3,516
  3,678
  3,849
  4,029
  4,219
  4,419
  4,630
  4,852
  5,085
  5,331
  5,589
  5,861
  6,147
  6,447
  6,763
  7,095
  7,444
  7,811
  8,196
Revenue / Adjusted assets
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
Average production assets, $m
  1,364
  1,413
  1,466
  1,522
  1,583
  1,648
  1,716
  1,789
  1,867
  1,949
  2,036
  2,128
  2,225
  2,327
  2,435
  2,549
  2,669
  2,796
  2,929
  3,070
  3,217
  3,373
  3,536
  3,708
  3,889
  4,079
  4,279
  4,489
  4,710
  4,942
  5,185
Working capital, $m
  731
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -89
  -92
  -97
  -101
  -106
  -110
  -116
  -121
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -184
  -194
  -203
  -213
  -223
  -234
  -246
Total debt, $m
  406
  455
  506
  561
  620
  682
  749
  820
  895
  974
  1,059
  1,148
  1,242
  1,341
  1,446
  1,556
  1,672
  1,795
  1,924
  2,060
  2,203
  2,354
  2,512
  2,679
  2,854
  3,038
  3,232
  3,435
  3,649
  3,874
  4,110
Total liabilities, $m
  1,320
  1,369
  1,420
  1,475
  1,534
  1,596
  1,663
  1,734
  1,809
  1,888
  1,973
  2,062
  2,156
  2,255
  2,360
  2,470
  2,586
  2,709
  2,838
  2,974
  3,117
  3,268
  3,426
  3,593
  3,768
  3,952
  4,146
  4,349
  4,563
  4,788
  5,024
Total equity, $m
  1,630
  864
  897
  931
  968
  1,008
  1,050
  1,095
  1,142
  1,192
  1,245
  1,302
  1,361
  1,424
  1,490
  1,559
  1,633
  1,710
  1,792
  1,878
  1,968
  2,063
  2,163
  2,268
  2,379
  2,495
  2,617
  2,746
  2,881
  3,023
  3,172
Total liabilities and equity, $m
  2,950
  2,233
  2,317
  2,406
  2,502
  2,604
  2,713
  2,829
  2,951
  3,080
  3,218
  3,364
  3,517
  3,679
  3,850
  4,029
  4,219
  4,419
  4,630
  4,852
  5,085
  5,331
  5,589
  5,861
  6,147
  6,447
  6,763
  7,095
  7,444
  7,811
  8,196
Debt-to-equity ratio
  0.249
  0.530
  0.560
  0.600
  0.640
  0.680
  0.710
  0.750
  0.780
  0.820
  0.850
  0.880
  0.910
  0.940
  0.970
  1.000
  1.020
  1.050
  1.070
  1.100
  1.120
  1.140
  1.160
  1.180
  1.200
  1.220
  1.230
  1.250
  1.270
  1.280
  1.300
Adjusted equity ratio
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  146
  187
  195
  205
  215
  226
  238
  250
  264
  278
  293
  353
  371
  389
  408
  428
  450
  473
  497
  523
  550
  578
  608
  640
  673
  708
  745
  785
  826
  869
  915
Depreciation, amort., depletion, $m
  36
  107
  109
  111
  113
  115
  117
  120
  122
  125
  128
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  112
  118
  124
  130
  136
  143
  150
  157
  165
  173
Funds from operations, $m
  270
  294
  304
  316
  328
  341
  355
  370
  386
  403
  421
  424
  445
  466
  489
  513
  539
  566
  595
  625
  657
  690
  726
  763
  803
  844
  888
  934
  983
  1,034
  1,088
Change in working capital, $m
  8
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
Cash from operations, $m
  262
  296
  307
  318
  331
  344
  358
  374
  390
  407
  425
  429
  449
  471
  494
  519
  545
  572
  601
  632
  664
  698
  734
  771
  811
  853
  898
  944
  993
  1,045
  1,099
Maintenance CAPEX, $m
  0
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -98
  -102
  -107
  -112
  -118
  -124
  -130
  -136
  -143
  -150
  -157
  -165
New CAPEX, $m
  -9
  -49
  -53
  -57
  -61
  -65
  -69
  -73
  -77
  -82
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -127
  -133
  -140
  -148
  -155
  -163
  -172
  -181
  -190
  -200
  -210
  -221
  -232
  -244
Cash from investing activities, $m
  13
  -94
  -100
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -152
  -160
  -168
  -176
  -186
  -195
  -205
  -216
  -226
  -238
  -250
  -262
  -275
  -290
  -305
  -320
  -336
  -353
  -371
  -389
  -409
Free cash flow, $m
  275
  201
  207
  213
  219
  227
  235
  243
  253
  263
  274
  269
  281
  295
  309
  324
  340
  357
  375
  394
  414
  435
  458
  482
  507
  534
  562
  591
  623
  656
  691
Issuance/(repayment) of debt, $m
  -9
  49
  51
  55
  59
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  110
  116
  123
  129
  136
  143
  151
  158
  167
  175
  184
  194
  204
  214
  225
  236
Issuance/(repurchase) of shares, $m
  -64
  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  
  -76
  49
  51
  55
  59
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  110
  116
  123
  129
  136
  143
  151
  158
  167
  175
  184
  194
  204
  214
  225
  236
Total cash flow (excl. dividends), $m
  199
  250
  258
  268
  278
  289
  301
  314
  328
  342
  358
  358
  375
  394
  413
  434
  456
  479
  504
  530
  557
  586
  616
  648
  682
  718
  755
  795
  837
  881
  927
Retained Cash Flow (-), $m
  -47
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -73
  -77
  -82
  -86
  -90
  -95
  -100
  -105
  -111
  -116
  -122
  -128
  -135
  -142
  -149
Prev. year cash balance distribution, $m
 
  796
  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
 
  1,016
  226
  233
  241
  250
  259
  269
  280
  292
  305
  302
  316
  331
  347
  364
  383
  402
  422
  444
  467
  491
  516
  543
  571
  601
  633
  666
  702
  739
  778
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
 
  974
  207
  203
  198
  194
  188
  182
  175
  168
  160
  143
  135
  126
  117
  107
  97
  87
  78
  68
  59
  51
  43
  36
  29
  23
  18
  14
  11
  8
  6
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

Janus Capital Group, Inc. is a publicly owned asset management holding company with approximately $167.7 billion in assets under management. It also provides retirement planning, investment planning, tax planning, investment for college, and tax planning services to its clients. The firm primarily provides its services to investment companies, retail investors, institutions, and individuals. Through its subsidiaries, it manages equity, fixed income, money markets, and balanced mutual funds for its clients and invests in the public equity and fixed income markets across the globe. The firm was formerly known as Stilwell Financial Incorporated. Janus Capital Group was founded in 1969 and is based in Denver Colorado with additional offices in the United States, Hong Kong; London; Milan; and Tokyo, Japan.

FINANCIAL RATIOS  of  Janus Capital Group (JNS)

Valuation Ratios
P/E Ratio 15.6
Price to Sales 2.2
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 8.7
Price to Free Cash Flow 9
Growth Rates
Sales Growth Rate -6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.7%
Cap. Spend. - 3 Yr. Gr. Rate 2.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 24.9%
Total Debt to Equity 24.9%
Interest Coverage 16
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.6%
Return On Equity 9.1%
Return On Equity - 3 Yr. Avg. 9.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 29.1%
EBITDA Margin - 3 Yr. Avg. 30%
Operating Margin 25.9%
Oper. Margin - 3 Yr. Avg. 27.6%
Pre-Tax Margin 23.9%
Pre-Tax Margin - 3 Yr. Avg. 24.8%
Net Profit Margin 14.4%
Net Profit Margin - 3 Yr. Avg. 15%
Effective Tax Rate 37.6%
Eff/ Tax Rate - 3 Yr. Avg. 38.2%
Payout Ratio 52.7%

JNS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JNS stock intrinsic value calculation we used $1011 million for the last fiscal year's total revenue generated by Janus Capital Group. The default revenue input number comes from 2016 income statement of Janus Capital Group. 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 JNS stock valuation model: a) initial revenue growth rate of 3.6% 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 JNS is calculated based on our internal credit rating of Janus Capital Group, 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 Janus Capital Group.
    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 JNS stock the variable cost ratio is equal to 63.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $114 million in the base year in the intrinsic value calculation for JNS 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 Janus Capital Group.

Corporate tax rate of 27% is the nominal tax rate for Janus Capital Group. 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 JNS 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 JNS are equal to 134.9%.

Life of production assets of 54.6 years is the average useful life of capital assets used in Janus Capital Group 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 JNS is equal to -6.4%. 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 - $1630 million for Janus Capital Group - 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 183.188 million for Janus Capital Group 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 Janus Capital Group at the current share price and the inputted number of shares is $2.3 billion.

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Stock chart of JNS Financial statements of JNS
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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