Intrinsic value of Qualys - QLYS

Previous Close

$64.35

  Intrinsic Value

$33.59

stock screener

  Rating & Target

sell

-48%

Previous close

$64.35

 
Intrinsic value

$33.59

 
Up/down potential

-48%

 
Rating

sell

We calculate the intrinsic value of QLYS 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, %
  20.73
  15.70
  14.63
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.61
  6.45
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
Revenue, $m
  198
  229
  263
  298
  337
  377
  420
  465
  512
  561
  612
  666
  721
  779
  839
  902
  967
  1,034
  1,104
  1,177
  1,253
  1,332
  1,414
  1,500
  1,589
  1,682
  1,779
  1,881
  1,986
  2,097
  2,212
Variable operating expenses, $m
 
  194
  223
  253
  286
  320
  356
  394
  434
  476
  519
  564
  612
  661
  712
  765
  820
  877
  937
  998
  1,063
  1,130
  1,199
  1,272
  1,348
  1,427
  1,509
  1,595
  1,684
  1,778
  1,876
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
  168
  194
  223
  253
  286
  320
  356
  394
  434
  476
  519
  564
  612
  661
  712
  765
  820
  877
  937
  998
  1,063
  1,130
  1,199
  1,272
  1,348
  1,427
  1,509
  1,595
  1,684
  1,778
  1,876
Operating income, $m
  30
  35
  40
  45
  51
  57
  64
  71
  78
  85
  93
  101
  110
  118
  128
  137
  147
  157
  168
  179
  191
  203
  215
  228
  242
  256
  270
  286
  302
  319
  336
EBITDA, $m
  47
  43
  49
  56
  63
  71
  79
  88
  96
  106
  115
  125
  136
  147
  158
  170
  182
  195
  208
  222
  236
  251
  266
  283
  299
  317
  335
  354
  374
  395
  417
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  34
  36
  38
  41
  44
  46
  49
Earnings before tax, $m
  30
  35
  39
  44
  49
  54
  59
  65
  71
  77
  84
  91
  98
  105
  113
  121
  129
  137
  146
  156
  165
  175
  186
  197
  208
  220
  232
  245
  258
  272
  287
Tax expense, $m
  11
  9
  11
  12
  13
  15
  16
  18
  19
  21
  23
  24
  26
  28
  30
  33
  35
  37
  39
  42
  45
  47
  50
  53
  56
  59
  63
  66
  70
  74
  78
Net income, $m
  19
  25
  29
  32
  36
  39
  43
  47
  52
  56
  61
  66
  71
  77
  82
  88
  94
  100
  107
  114
  121
  128
  136
  143
  152
  160
  169
  179
  189
  199
  210

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  244
  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
  407
  189
  216
  246
  277
  310
  346
  382
  421
  462
  504
  548
  594
  641
  691
  742
  796
  851
  909
  969
  1,032
  1,097
  1,164
  1,235
  1,308
  1,385
  1,465
  1,548
  1,635
  1,726
  1,821
Adjusted assets (=assets-cash), $m
  163
  189
  216
  246
  277
  310
  346
  382
  421
  462
  504
  548
  594
  641
  691
  742
  796
  851
  909
  969
  1,032
  1,097
  1,164
  1,235
  1,308
  1,385
  1,465
  1,548
  1,635
  1,726
  1,821
Revenue / Adjusted assets
  1.215
  1.212
  1.218
  1.211
  1.217
  1.216
  1.214
  1.217
  1.216
  1.214
  1.214
  1.215
  1.214
  1.215
  1.214
  1.216
  1.215
  1.215
  1.215
  1.215
  1.214
  1.214
  1.215
  1.215
  1.215
  1.214
  1.214
  1.215
  1.215
  1.215
  1.215
Average production assets, $m
  36
  42
  48
  54
  61
  69
  76
  85
  93
  102
  111
  121
  131
  142
  153
  164
  176
  188
  201
  214
  228
  242
  257
  273
  289
  306
  324
  342
  362
  382
  403
Working capital, $m
  171
  -85
  -97
  -110
  -124
  -139
  -155
  -171
  -189
  -207
  -226
  -246
  -266
  -288
  -310
  -333
  -357
  -382
  -408
  -434
  -462
  -492
  -522
  -554
  -586
  -621
  -657
  -694
  -733
  -774
  -816
Total debt, $m
  0
  21
  46
  72
  100
  130
  162
  195
  230
  266
  304
  344
  385
  428
  473
  519
  567
  617
  669
  723
  779
  838
  899
  962
  1,028
  1,097
  1,169
  1,244
  1,322
  1,404
  1,490
Total liabilities, $m
  149
  170
  195
  221
  249
  279
  311
  344
  379
  415
  453
  493
  534
  577
  622
  668
  716
  766
  818
  872
  928
  987
  1,048
  1,111
  1,177
  1,246
  1,318
  1,393
  1,471
  1,553
  1,639
Total equity, $m
  258
  19
  22
  25
  28
  31
  35
  38
  42
  46
  50
  55
  59
  64
  69
  74
  80
  85
  91
  97
  103
  110
  116
  123
  131
  138
  146
  155
  163
  173
  182
Total liabilities and equity, $m
  407
  189
  217
  246
  277
  310
  346
  382
  421
  461
  503
  548
  593
  641
  691
  742
  796
  851
  909
  969
  1,031
  1,097
  1,164
  1,234
  1,308
  1,384
  1,464
  1,548
  1,634
  1,726
  1,821
Debt-to-equity ratio
  0.000
  1.100
  2.110
  2.930
  3.620
  4.200
  4.690
  5.100
  5.460
  5.770
  6.040
  6.280
  6.490
  6.680
  6.840
  6.990
  7.130
  7.250
  7.360
  7.460
  7.560
  7.640
  7.720
  7.790
  7.860
  7.920
  7.980
  8.040
  8.090
  8.140
  8.180
Adjusted equity ratio
  0.086
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  25
  29
  32
  36
  39
  43
  47
  52
  56
  61
  66
  71
  77
  82
  88
  94
  100
  107
  114
  121
  128
  136
  143
  152
  160
  169
  179
  189
  199
  210
Depreciation, amort., depletion, $m
  17
  8
  10
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  31
  33
  35
  38
  40
  43
  46
  48
  51
  55
  58
  61
  65
  68
  72
  76
  81
Funds from operations, $m
  88
  34
  38
  43
  48
  53
  59
  64
  70
  77
  83
  90
  97
  105
  113
  121
  129
  138
  147
  156
  166
  176
  187
  198
  210
  222
  234
  247
  261
  275
  290
Change in working capital, $m
  20
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -43
Cash from operations, $m
  68
  45
  51
  56
  62
  68
  74
  81
  88
  95
  102
  110
  118
  126
  135
  144
  153
  163
  173
  183
  194
  206
  217
  230
  243
  256
  270
  285
  300
  316
  333
Maintenance CAPEX, $m
  0
  -7
  -8
  -10
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38
  -40
  -43
  -46
  -48
  -51
  -55
  -58
  -61
  -65
  -68
  -72
  -76
New CAPEX, $m
  -23
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
Cash from investing activities, $m
  -96
  -13
  -14
  -17
  -18
  -19
  -22
  -23
  -26
  -28
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -47
  -51
  -53
  -57
  -60
  -63
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
Free cash flow, $m
  -28
  32
  36
  40
  44
  48
  53
  57
  62
  67
  73
  78
  84
  90
  96
  102
  109
  115
  122
  130
  138
  146
  154
  163
  172
  181
  191
  201
  212
  224
  235
Issuance/(repayment) of debt, $m
  0
  21
  25
  27
  28
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  85
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  
  23
  21
  25
  27
  28
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  85
Total cash flow (excl. dividends), $m
  -5
  53
  61
  67
  72
  78
  84
  91
  97
  104
  111
  118
  125
  132
  140
  148
  157
  165
  174
  184
  194
  204
  215
  226
  238
  250
  263
  276
  291
  305
  321
Retained Cash Flow (-), $m
  -62
  -5
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
Prev. year cash balance distribution, $m
 
  244
  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
 
  292
  58
  64
  69
  75
  81
  87
  93
  100
  106
  113
  120
  128
  135
  143
  151
  160
  169
  178
  188
  198
  208
  219
  230
  242
  255
  268
  282
  296
  311
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
 
  280
  53
  55
  57
  58
  59
  59
  58
  57
  56
  54
  51
  49
  45
  42
  38
  35
  31
  27
  24
  20
  17
  14
  12
  9
  7
  6
  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
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Qualys, Inc. is a provider of cloud-based security and compliance solutions. The Company's solutions enable organizations to identify security risks to their information technology (IT) infrastructures, help protect their IT systems and applications from cyber-attacks. Its suite of security and compliance solutions delivered on its Qualys Cloud Platform enables its customers to identify their IT assets, collect and analyze IT security data, discover and prioritize vulnerabilities, recommend remediation actions and verify the implementation of such actions. Its Qualys Cloud Platform consists of a suite of IT security and compliance solutions. The Qualys Cloud Suite includes solutions, such as Vulnerability Management, Continuous Monitoring, Cloud Agent, AssetView, ThreatPROTECT, Policy Compliance, Payment Card Industry Compliance, Security Assessment Questionnaire, Web Application Scanning and Web Application Firewall. It provides its solutions through a software-as-a-service model.

FINANCIAL RATIOS  of  Qualys (QLYS)

Valuation Ratios
P/E Ratio 121.4
Price to Sales 11.6
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow 33.9
Price to Free Cash Flow 51.3
Growth Rates
Sales Growth Rate 20.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15%
Cap. Spend. - 3 Yr. Gr. Rate 10.4%
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 5.2%
Ret/ On Assets - 3 Yr. Avg. 8%
Return On Total Capital 8.4%
Ret/ On T. Cap. - 3 Yr. Avg. 13.7%
Return On Equity 8.4%
Return On Equity - 3 Yr. Avg. 13.7%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 78.3%
Gross Margin - 3 Yr. Avg. 78.6%
EBITDA Margin 23.7%
EBITDA Margin - 3 Yr. Avg. 21.1%
Operating Margin 15.2%
Oper. Margin - 3 Yr. Avg. 12.6%
Pre-Tax Margin 15.2%
Pre-Tax Margin - 3 Yr. Avg. 12.4%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 13.9%
Effective Tax Rate 36.7%
Eff/ Tax Rate - 3 Yr. Avg. -53.6%
Payout Ratio 0%

QLYS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QLYS stock intrinsic value calculation we used $198 million for the last fiscal year's total revenue generated by Qualys. The default revenue input number comes from 2016 income statement of Qualys. 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 QLYS stock valuation model: a) initial revenue growth rate of 15.7% 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 QLYS is calculated based on our internal credit rating of Qualys, 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 Qualys.
    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 QLYS stock the variable cost ratio is equal to 84.8%.

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 QLYS 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 Qualys.

Corporate tax rate of 27% is the nominal tax rate for Qualys. 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 QLYS 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 QLYS are equal to 18.2%.

Life of production assets of 2.1 years is the average useful life of capital assets used in Qualys 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 QLYS is equal to -36.9%. 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 - $258 million for Qualys - 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 38.416 million for Qualys 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 Qualys at the current share price and the inputted number of shares is $2.5 billion.

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COMPANY NEWS

▶ ETFs with exposure to Qualys, Inc. : November 30, 2017   [Nov-30-17 02:16PM  Capital Cube]
▶ ETFs with exposure to Qualys, Inc. : November 20, 2017   [Nov-20-17 01:08PM  Capital Cube]
▶ ETFs with exposure to Qualys, Inc. : November 9, 2017   [Nov-09-17 01:05PM  Capital Cube]
▶ Qualys beats Street 3Q forecasts   [Oct-31-17 04:55PM  Associated Press]
▶ Electronic Arts, Mastercard, Aetna Lead Tuesday Investing Action Plan   [Oct-30-17 04:11PM  Investor's Business Daily]
▶ Palo Alto Pops But Symantec, Qualys Fall On Analyst's Note   [Oct-10-17 04:55PM  Investor's Business Daily]
▶ Qualys Completes Asset Purchase of Nevis Networks   [Aug-30-17 09:00AM  PR Newswire]
▶ Qualys tops Street 2Q forecasts   [Aug-02-17 11:06PM  Associated Press]
▶ ETFs with exposure to Qualys, Inc. : July 21, 2017   [Jul-21-17 01:58PM  Capital Cube]
▶ ETFs with exposure to Qualys, Inc. : July 10, 2017   [Jul-10-17 03:05PM  Capital Cube]
▶ ETFs with exposure to Qualys, Inc. : June 27, 2017   [Jun-27-17 03:35PM  Capital Cube]
▶ Patching WannaCrypt: Dispatches from the frontline   [May-17-17 03:28PM  TechRepublic]
▶ Qualys tops Street 1Q forecasts   [May-02-17 07:33PM  Associated Press]
▶ Dow Futures Lower: Keep These 5 Cybersecurity Plays Under Surveillance   [Mar-31-17 12:52AM  Investor's Business Daily]
▶ Columbia Wanger Buys LCI Industries, Nasdaq   [Mar-09-17 02:28PM  GuruFocus.com]
Financial statements of QLYS
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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