Intrinsic value of Manning&Napier - MN

Previous Close

$3.35

  Intrinsic Value

$75.62

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+70%

Previous close

$3.35

 
Intrinsic value

$75.62

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+70%

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

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

We calculate the intrinsic value of MN 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 0.0

 

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, %
  -20.70
  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
  249
  254
  260
  266
  274
  282
  291
  301
  312
  324
  336
  349
  364
  379
  395
  412
  430
  449
  469
  490
  513
  537
  562
  588
  616
  645
  676
  709
  743
  779
  817
Variable operating expenses, $m
 
  113
  116
  119
  122
  126
  130
  134
  139
  144
  150
  155
  161
  168
  175
  183
  191
  199
  208
  218
  228
  238
  249
  261
  274
  287
  300
  315
  330
  346
  363
Fixed operating expenses, $m
 
  51
  53
  54
  55
  57
  58
  59
  61
  62
  64
  66
  67
  69
  71
  72
  74
  76
  78
  80
  82
  84
  86
  88
  90
  93
  95
  97
  100
  102
  105
Total operating expenses, $m
  160
  164
  169
  173
  177
  183
  188
  193
  200
  206
  214
  221
  228
  237
  246
  255
  265
  275
  286
  298
  310
  322
  335
  349
  364
  380
  395
  412
  430
  448
  468
Operating income, $m
  89
  89
  91
  94
  97
  100
  104
  108
  112
  117
  122
  129
  135
  142
  149
  157
  165
  173
  183
  193
  203
  214
  226
  239
  252
  266
  281
  297
  313
  331
  349
EBITDA, $m
  91
  91
  93
  95
  98
  101
  105
  109
  113
  118
  124
  129
  136
  142
  150
  157
  166
  174
  184
  194
  204
  216
  228
  240
  253
  268
  282
  298
  315
  332
  351
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
Earnings before tax, $m
  91
  89
  91
  94
  97
  100
  103
  107
  112
  116
  122
  128
  134
  141
  148
  155
  163
  172
  181
  191
  201
  212
  224
  236
  249
  263
  278
  293
  310
  327
  345
Tax expense, $m
  9
  24
  25
  25
  26
  27
  28
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  49
  52
  54
  57
  60
  64
  67
  71
  75
  79
  84
  88
  93
Net income, $m
  9
  65
  67
  68
  70
  73
  75
  78
  82
  85
  89
  93
  98
  103
  108
  113
  119
  126
  132
  139
  147
  155
  163
  172
  182
  192
  203
  214
  226
  239
  252

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  138
  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
  221
  85
  87
  89
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  132
  137
  143
  150
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  260
  272
Adjusted assets (=assets-cash), $m
  83
  85
  87
  89
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  132
  137
  143
  150
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  260
  272
Revenue / Adjusted assets
  3.000
  2.988
  2.989
  2.989
  3.011
  3.000
  3.000
  3.010
  3.000
  3.000
  3.000
  3.009
  3.008
  3.008
  2.992
  3.007
  3.007
  2.993
  3.006
  3.006
  3.000
  3.000
  3.005
  3.000
  3.005
  3.000
  3.004
  3.004
  2.996
  2.996
  3.004
Average production assets, $m
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
Working capital, $m
  118
  -20
  -21
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
Total debt, $m
  0
  1
  3
  4
  6
  8
  10
  12
  15
  17
  20
  23
  27
  30
  34
  38
  42
  47
  51
  56
  62
  67
  73
  79
  86
  92
  100
  107
  115
  123
  132
Total liabilities, $m
  58
  59
  61
  62
  64
  66
  68
  70
  73
  75
  78
  81
  85
  88
  92
  96
  100
  105
  109
  114
  120
  125
  131
  137
  144
  150
  158
  165
  173
  181
  190
Total equity, $m
  163
  25
  26
  27
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
Total liabilities and equity, $m
  221
  84
  87
  89
  91
  94
  97
  100
  104
  107
  112
  116
  121
  126
  132
  137
  143
  150
  156
  163
  171
  179
  187
  196
  206
  215
  226
  236
  248
  259
  272
Debt-to-equity ratio
  0.000
  0.050
  0.100
  0.150
  0.210
  0.270
  0.340
  0.400
  0.470
  0.540
  0.600
  0.670
  0.730
  0.800
  0.860
  0.920
  0.980
  1.030
  1.090
  1.140
  1.200
  1.250
  1.290
  1.340
  1.380
  1.430
  1.470
  1.510
  1.540
  1.580
  1.610
Adjusted equity ratio
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  65
  67
  68
  70
  73
  75
  78
  82
  85
  89
  93
  98
  103
  108
  113
  119
  126
  132
  139
  147
  155
  163
  172
  182
  192
  203
  214
  226
  239
  252
Depreciation, amort., depletion, $m
  2
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
Funds from operations, $m
  85
  66
  68
  70
  72
  74
  77
  79
  83
  86
  90
  94
  99
  104
  109
  114
  120
  127
  133
  140
  148
  156
  165
  174
  183
  194
  204
  216
  228
  240
  254
Change in working capital, $m
  -5
  0
  0
  -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
Cash from operations, $m
  90
  67
  68
  70
  72
  75
  77
  80
  84
  87
  91
  95
  100
  105
  110
  116
  122
  128
  135
  142
  150
  158
  167
  176
  186
  196
  207
  218
  230
  243
  257
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  -21
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
Free cash flow, $m
  69
  66
  68
  69
  71
  74
  76
  79
  83
  86
  90
  94
  99
  104
  109
  114
  120
  127
  133
  141
  148
  156
  165
  174
  184
  194
  205
  216
  228
  241
  254
Issuance/(repayment) of debt, $m
  0
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
  8
  9
Issuance/(repurchase) of shares, $m
  -16
  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
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
  8
  9
Total cash flow (excl. dividends), $m
  -7
  67
  69
  71
  73
  76
  79
  82
  85
  89
  93
  97
  102
  107
  113
  118
  125
  131
  138
  146
  154
  162
  171
  180
  190
  201
  212
  224
  236
  249
  263
Retained Cash Flow (-), $m
  6
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
Prev. year cash balance distribution, $m
 
  138
  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
 
  205
  68
  70
  72
  75
  78
  81
  84
  88
  92
  96
  101
  106
  111
  117
  123
  129
  136
  143
  151
  160
  168
  178
  187
  198
  209
  220
  233
  245
  259
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
 
  196
  63
  61
  60
  58
  56
  55
  53
  50
  48
  46
  43
  40
  37
  34
  31
  28
  25
  22
  19
  17
  14
  12
  10
  8
  6
  5
  4
  3
  2
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
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Manning & Napier, Inc. is publicly owned investment manager. It provides its services to net worth individuals and institutions, including 401(k) plans, pension plans, taft-hartley plans, endowments and foundations. The firm manages separate client-focused equity and fixed income portfolios. It invests in the public equity and fixed income markets of the United States. The firm employs fundamental analysis along with a combination of bottom-up and top-down stock picking approach to create its portfolios. Manning & Napier, Inc. was founded in 1970 and is based in Fairport, New York with additional offices in Dublin, Ohio; St. Petersburg, Florida; and Chicago, Illinois.

FINANCIAL RATIOS  of  Manning&Napier (MN)

Valuation Ratios
P/E Ratio 5.6
Price to Sales 0.2
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 0.6
Price to Free Cash Flow 0.6
Growth Rates
Sales Growth Rate -20.7%
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%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 5.4%
Return On Equity - 3 Yr. Avg. 6.2%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 37.3%
EBITDA Margin - 3 Yr. Avg. 37.2%
Operating Margin 35.7%
Oper. Margin - 3 Yr. Avg. 36.4%
Pre-Tax Margin 36.5%
Pre-Tax Margin - 3 Yr. Avg. 36.6%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 9.9%
Eff/ Tax Rate - 3 Yr. Avg. 7.6%
Payout Ratio 111.1%

MN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MN stock intrinsic value calculation we used $249 million for the last fiscal year's total revenue generated by Manning&Napier. The default revenue input number comes from 2016 income statement of Manning&Napier. 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 MN 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 MN is calculated based on our internal credit rating of Manning&Napier, 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 Manning&Napier.
    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 MN stock the variable cost ratio is equal to 44.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $50 million in the base year in the intrinsic value calculation for MN 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 Manning&Napier.

Corporate tax rate of 27% is the nominal tax rate for Manning&Napier. 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 MN 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 MN are equal to 2.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Manning&Napier 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 MN is equal to -8%. 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 Manning&Napier - 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 14.652 million for Manning&Napier 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 Manning&Napier at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Manning & Napier posts 2Q profit   [Aug-01-17 09:57PM  Associated Press]
▶ Manning & Napier, Inc. Announces Quarterly Dividend   [Jul-27-17 04:05PM  PR Newswire]
▶ 4 Deep Value Net-Net Stocks   [Jul-05-17 03:31PM  GuruFocus.com]
▶ Manning & Napier posts 1Q profit   [May-03-17 06:08PM  Associated Press]
▶ Manning & Napier, Inc. Announces Quarterly Dividend   [Apr-27-17 04:05PM  PR Newswire]
▶ Manning & Napier March 2017 Perspective   [Mar-07-17 03:29PM  GuruFocus.com]
▶ Do Hedge Funds Love Manning and Napier Inc (MN)?   [Dec-11-16 08:08AM  at Insider Monkey]
▶ [$$] Asset managers pay penalty for tight focus   [Aug-07-16 03:23PM  at Financial Times]
▶ Manning & Napier, Inc. Announces Quarterly Dividend   [Jul-28-16 04:05PM  PR Newswire]
Stock chart of MN Financial statements of MN
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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