Intrinsic value of SS&C Technologies Holdings - SSNC

Previous Close

$37.33

  Intrinsic Value

$54.98

stock screener

  Rating & Target

buy

+47%

  Value-price divergence*

-50%

Previous close

$37.33

 
Intrinsic value

$54.98

 
Up/down potential

+47%

 
Rating

buy

 
Value-price divergence*

-50%

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

We calculate the intrinsic value of SSNC 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 7.5

 

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, %
  48.10
  25.90
  23.81
  21.93
  20.24
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
Revenue, $m
  1,481
  1,865
  2,309
  2,815
  3,384
  4,018
  4,714
  5,474
  6,295
  7,176
  8,115
  9,113
  10,166
  11,274
  12,437
  13,653
  14,924
  16,248
  17,626
  19,061
  20,552
  22,102
  23,712
  25,386
  27,125
  28,934
  30,815
  32,772
  34,808
  36,930
  39,140
Variable operating expenses, $m
 
  1,173
  1,366
  1,585
  1,832
  2,106
  2,408
  2,737
  3,093
  3,475
  3,882
  3,949
  4,405
  4,886
  5,389
  5,917
  6,467
  7,041
  7,638
  8,260
  8,906
  9,578
  10,276
  11,001
  11,755
  12,538
  13,353
  14,201
  15,084
  16,003
  16,961
Fixed operating expenses, $m
 
  196
  201
  206
  211
  216
  222
  227
  233
  239
  244
  251
  257
  263
  270
  277
  284
  291
  298
  305
  313
  321
  329
  337
  345
  354
  363
  372
  381
  391
  401
Total operating expenses, $m
  1,193
  1,369
  1,567
  1,791
  2,043
  2,322
  2,630
  2,964
  3,326
  3,714
  4,126
  4,200
  4,662
  5,149
  5,659
  6,194
  6,751
  7,332
  7,936
  8,565
  9,219
  9,899
  10,605
  11,338
  12,100
  12,892
  13,716
  14,573
  15,465
  16,394
  17,362
Operating income, $m
  289
  496
  742
  1,024
  1,342
  1,695
  2,085
  2,509
  2,969
  3,462
  3,989
  4,913
  5,504
  6,125
  6,778
  7,460
  8,173
  8,916
  9,690
  10,496
  11,333
  12,203
  13,108
  14,048
  15,025
  16,042
  17,098
  18,198
  19,343
  20,536
  21,778
EBITDA, $m
  518
  950
  1,218
  1,524
  1,869
  2,252
  2,675
  3,136
  3,635
  4,170
  4,742
  5,348
  5,989
  6,664
  7,372
  8,112
  8,886
  9,692
  10,532
  11,406
  12,314
  13,259
  14,240
  15,260
  16,321
  17,423
  18,570
  19,763
  21,005
  22,299
  23,647
Interest expense (income), $m
  127
  114
  156
  204
  258
  320
  388
  463
  545
  634
  729
  831
  938
  1,052
  1,172
  1,297
  1,428
  1,566
  1,709
  1,857
  2,012
  2,173
  2,341
  2,514
  2,695
  2,883
  3,078
  3,281
  3,492
  3,712
  3,941
Earnings before tax, $m
  164
  381
  586
  820
  1,083
  1,375
  1,696
  2,046
  2,423
  2,828
  3,260
  4,082
  4,565
  5,073
  5,606
  6,163
  6,745
  7,351
  7,982
  8,638
  9,321
  10,030
  10,767
  11,534
  12,330
  13,159
  14,020
  14,917
  15,851
  16,823
  17,837
Tax expense, $m
  33
  103
  158
  221
  292
  371
  458
  552
  654
  764
  880
  1,102
  1,233
  1,370
  1,514
  1,664
  1,821
  1,985
  2,155
  2,332
  2,517
  2,708
  2,907
  3,114
  3,329
  3,553
  3,785
  4,028
  4,280
  4,542
  4,816
Net income, $m
  131
  278
  428
  599
  791
  1,004
  1,238
  1,494
  1,769
  2,065
  2,380
  2,980
  3,333
  3,704
  4,092
  4,499
  4,924
  5,366
  5,827
  6,306
  6,804
  7,322
  7,860
  8,420
  9,001
  9,606
  10,235
  10,889
  11,571
  12,281
  13,021

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  118
  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
  5,707
  7,036
  8,711
  10,622
  12,771
  15,161
  17,790
  20,656
  23,753
  27,078
  30,624
  34,387
  38,362
  42,544
  46,932
  51,522
  56,316
  61,312
  66,515
  71,927
  77,554
  83,403
  89,480
  95,796
  102,360
  109,185
  116,282
  123,666
  131,353
  139,357
  147,697
Adjusted assets (=assets-cash), $m
  5,589
  7,036
  8,711
  10,622
  12,771
  15,161
  17,790
  20,656
  23,753
  27,078
  30,624
  34,387
  38,362
  42,544
  46,932
  51,522
  56,316
  61,312
  66,515
  71,927
  77,554
  83,403
  89,480
  95,796
  102,360
  109,185
  116,282
  123,666
  131,353
  139,357
  147,697
Revenue / Adjusted assets
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
Average production assets, $m
  1,606
  2,021
  2,502
  3,051
  3,669
  4,355
  5,110
  5,934
  6,823
  7,778
  8,797
  9,878
  11,020
  12,221
  13,482
  14,800
  16,177
  17,613
  19,107
  20,662
  22,278
  23,958
  25,704
  27,518
  29,404
  31,364
  33,403
  35,524
  37,732
  40,032
  42,427
Working capital, $m
  -146
  -173
  -215
  -262
  -315
  -374
  -438
  -509
  -585
  -667
  -755
  -847
  -945
  -1,049
  -1,157
  -1,270
  -1,388
  -1,511
  -1,639
  -1,773
  -1,911
  -2,055
  -2,205
  -2,361
  -2,523
  -2,691
  -2,866
  -3,048
  -3,237
  -3,434
  -3,640
Total debt, $m
  2,501
  3,247
  4,245
  5,384
  6,665
  8,089
  9,656
  11,364
  13,210
  15,191
  17,305
  19,548
  21,917
  24,410
  27,024
  29,760
  32,617
  35,595
  38,696
  41,922
  45,275
  48,761
  52,383
  56,147
  60,060
  64,127
  68,357
  72,758
  77,339
  82,110
  87,080
Total liabilities, $m
  3,448
  4,194
  5,192
  6,331
  7,612
  9,036
  10,603
  12,311
  14,157
  16,138
  18,252
  20,495
  22,864
  25,357
  27,971
  30,707
  33,564
  36,542
  39,643
  42,869
  46,222
  49,708
  53,330
  57,094
  61,007
  65,074
  69,304
  73,705
  78,286
  83,057
  88,027
Total equity, $m
  2,259
  2,843
  3,519
  4,291
  5,160
  6,125
  7,187
  8,345
  9,596
  10,939
  12,372
  13,892
  15,498
  17,188
  18,960
  20,815
  22,752
  24,770
  26,872
  29,059
  31,332
  33,695
  36,150
  38,702
  41,354
  44,111
  46,978
  49,961
  53,067
  56,300
  59,670
Total liabilities and equity, $m
  5,707
  7,037
  8,711
  10,622
  12,772
  15,161
  17,790
  20,656
  23,753
  27,077
  30,624
  34,387
  38,362
  42,545
  46,931
  51,522
  56,316
  61,312
  66,515
  71,928
  77,554
  83,403
  89,480
  95,796
  102,361
  109,185
  116,282
  123,666
  131,353
  139,357
  147,697
Debt-to-equity ratio
  1.107
  1.140
  1.210
  1.250
  1.290
  1.320
  1.340
  1.360
  1.380
  1.390
  1.400
  1.410
  1.410
  1.420
  1.430
  1.430
  1.430
  1.440
  1.440
  1.440
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.460
  1.460
  1.460
  1.460
  1.460
Adjusted equity ratio
  0.383
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  131
  278
  428
  599
  791
  1,004
  1,238
  1,494
  1,769
  2,065
  2,380
  2,980
  3,333
  3,704
  4,092
  4,499
  4,924
  5,366
  5,827
  6,306
  6,804
  7,322
  7,860
  8,420
  9,001
  9,606
  10,235
  10,889
  11,571
  12,281
  13,021
Depreciation, amort., depletion, $m
  229
  454
  476
  500
  527
  557
  590
  627
  666
  708
  753
  435
  485
  538
  594
  652
  713
  776
  842
  910
  981
  1,055
  1,132
  1,212
  1,295
  1,382
  1,472
  1,565
  1,662
  1,764
  1,869
Funds from operations, $m
  506
  733
  904
  1,099
  1,318
  1,561
  1,829
  2,120
  2,435
  2,773
  3,132
  3,415
  3,818
  4,242
  4,686
  5,151
  5,636
  6,142
  6,668
  7,216
  7,786
  8,377
  8,993
  9,632
  10,296
  10,988
  11,706
  12,454
  13,233
  14,045
  14,890
Change in working capital, $m
  88
  -36
  -41
  -47
  -53
  -59
  -65
  -71
  -76
  -82
  -87
  -93
  -98
  -103
  -108
  -113
  -118
  -123
  -128
  -133
  -139
  -144
  -150
  -156
  -162
  -168
  -175
  -182
  -189
  -197
  -206
Cash from operations, $m
  418
  768
  945
  1,146
  1,371
  1,620
  1,894
  2,191
  2,511
  2,855
  3,220
  3,508
  3,916
  4,345
  4,794
  5,264
  5,754
  6,265
  6,797
  7,349
  7,924
  8,522
  9,142
  9,788
  10,458
  11,156
  11,881
  12,636
  13,423
  14,242
  15,096
Maintenance CAPEX, $m
  0
  -71
  -89
  -110
  -134
  -162
  -192
  -225
  -261
  -301
  -343
  -388
  -435
  -485
  -538
  -594
  -652
  -713
  -776
  -842
  -910
  -981
  -1,055
  -1,132
  -1,212
  -1,295
  -1,382
  -1,472
  -1,565
  -1,662
  -1,764
New CAPEX, $m
  -38
  -415
  -481
  -549
  -617
  -686
  -755
  -823
  -890
  -955
  -1,019
  -1,081
  -1,142
  -1,201
  -1,260
  -1,319
  -1,377
  -1,435
  -1,495
  -1,555
  -1,616
  -1,680
  -1,746
  -1,814
  -1,886
  -1,960
  -2,039
  -2,121
  -2,208
  -2,299
  -2,396
Cash from investing activities, $m
  -495
  -486
  -570
  -659
  -751
  -848
  -947
  -1,048
  -1,151
  -1,256
  -1,362
  -1,469
  -1,577
  -1,686
  -1,798
  -1,913
  -2,029
  -2,148
  -2,271
  -2,397
  -2,526
  -2,661
  -2,801
  -2,946
  -3,098
  -3,255
  -3,421
  -3,593
  -3,773
  -3,961
  -4,160
Free cash flow, $m
  -77
  282
  375
  487
  619
  772
  946
  1,143
  1,360
  1,599
  1,858
  2,040
  2,339
  2,658
  2,996
  3,352
  3,725
  4,117
  4,526
  4,953
  5,398
  5,860
  6,341
  6,841
  7,360
  7,900
  8,461
  9,044
  9,650
  10,280
  10,936
Issuance/(repayment) of debt, $m
  -263
  864
  998
  1,139
  1,281
  1,424
  1,567
  1,708
  1,846
  1,982
  2,114
  2,243
  2,369
  2,493
  2,615
  2,736
  2,857
  2,978
  3,101
  3,226
  3,354
  3,486
  3,622
  3,764
  3,912
  4,067
  4,230
  4,401
  4,581
  4,771
  4,970
Issuance/(repurchase) of shares, $m
  39
  305
  249
  173
  78
  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  
  -186
  1,169
  1,247
  1,312
  1,359
  1,424
  1,567
  1,708
  1,846
  1,982
  2,114
  2,243
  2,369
  2,493
  2,615
  2,736
  2,857
  2,978
  3,101
  3,226
  3,354
  3,486
  3,622
  3,764
  3,912
  4,067
  4,230
  4,401
  4,581
  4,771
  4,970
Total cash flow (excl. dividends), $m
  -267
  1,451
  1,622
  1,798
  1,977
  2,196
  2,513
  2,850
  3,206
  3,580
  3,972
  4,282
  4,708
  5,151
  5,611
  6,088
  6,582
  7,095
  7,627
  8,179
  8,751
  9,346
  9,963
  10,605
  11,273
  11,967
  12,691
  13,445
  14,231
  15,051
  15,907
Retained Cash Flow (-), $m
  -154
  -584
  -677
  -772
  -868
  -965
  -1,062
  -1,158
  -1,251
  -1,343
  -1,433
  -1,520
  -1,606
  -1,690
  -1,773
  -1,855
  -1,936
  -2,019
  -2,102
  -2,187
  -2,273
  -2,363
  -2,455
  -2,552
  -2,652
  -2,757
  -2,867
  -2,983
  -3,105
  -3,234
  -3,369
Prev. year cash balance distribution, $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 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
 
  868
  945
  1,026
  1,109
  1,231
  1,451
  1,693
  1,955
  2,237
  2,539
  2,762
  3,102
  3,461
  3,838
  4,233
  4,646
  5,076
  5,525
  5,992
  6,478
  6,983
  7,508
  8,054
  8,621
  9,210
  9,823
  10,461
  11,126
  11,817
  12,538
Discount rate, %
 
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
 
  800
  797
  784
  762
  753
  782
  796
  792
  771
  736
  663
  609
  546
  479
  411
  344
  281
  224
  175
  132
  98
  70
  49
  33
  22
  14
  8
  5
  3
  2
Current shareholders' claim on cash, %
  100
  96.1
  93.6
  92.2
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7
  91.7

SS&C Technologies Holdings, Inc. provides software products and software-enabled services to financial services providers in North America, Europe, Asia, Australia, and Africa. The company’s products and services allow its clients to automate and integrate front-office functions, such as trading and modeling; middle-office functions comprising portfolio management and reporting; and back-office functions, including accounting, performance measurement, reconciliation, reporting, processing, and clearing. It offers products and services in the areas of portfolio management/accounting, real-time trading systems, treasury operations, client reporting, financial modeling, loan management/accounting, property management, and money market processing. The company’s software-enabled services consist of financial data acquisition, transformation, and delivery; investor transaction processing platform; trade capture automation; risk analytics monitoring; and business process outsourcing investment accounting and investment operations, application software hosting, automated workflow integration, automated quality control mechanisms, and interface and connectivity services. It also offers consulting and implementation services, including installation of systems, conversion of historical data, and training and support services. The company’s clients include multinational banks, retail banks and credit unions, hedge funds, funds of funds and family offices, institutional asset managers, insurance companies and pension funds, municipal finance groups, brokers/dealers, financial exchanges, commercial lenders, real estate lenders, and property managers. SS&C Technologies Holdings, Inc. was founded in 1986 and is headquartered in Windsor, Connecticut.

FINANCIAL RATIOS  of  SS&C Technologies Holdings (SSNC)

Valuation Ratios
P/E Ratio 57.9
Price to Sales 5.1
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 18.1
Price to Free Cash Flow 19.9
Growth Rates
Sales Growth Rate 48.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 111.1%
Cap. Spend. - 3 Yr. Gr. Rate 22.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 105.1%
Total Debt to Equity 110.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital 2.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 6.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 46%
Gross Margin - 3 Yr. Avg. 46.4%
EBITDA Margin 35.1%
EBITDA Margin - 3 Yr. Avg. 33.1%
Operating Margin 19.4%
Oper. Margin - 3 Yr. Avg. 19.7%
Pre-Tax Margin 11.1%
Pre-Tax Margin - 3 Yr. Avg. 13.5%
Net Profit Margin 8.8%
Net Profit Margin - 3 Yr. Avg. 10.1%
Effective Tax Rate 20.1%
Eff/ Tax Rate - 3 Yr. Avg. 25.3%
Payout Ratio 38.2%

SSNC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SSNC stock intrinsic value calculation we used $1481 million for the last fiscal year's total revenue generated by SS&C Technologies Holdings. The default revenue input number comes from 2016 income statement of SS&C Technologies Holdings. 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 SSNC stock valuation model: a) initial revenue growth rate of 25.9% 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 8.5%, whose default value for SSNC is calculated based on our internal credit rating of SS&C Technologies Holdings, 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 SS&C Technologies Holdings.
    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 SSNC stock the variable cost ratio is equal to 68%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $191 million in the base year in the intrinsic value calculation for SSNC 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 4.8% for SS&C Technologies Holdings.

Corporate tax rate of 27% is the nominal tax rate for SS&C Technologies Holdings. 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 SSNC 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 SSNC are equal to 108.4%.

Life of production assets of 22.7 years is the average useful life of capital assets used in SS&C Technologies Holdings 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 SSNC is equal to -9.3%. 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 - $2259 million for SS&C Technologies Holdings - 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 200.169 million for SS&C Technologies Holdings 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 SS&C Technologies Holdings at the current share price and the inputted number of shares is $7.5 billion.

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COMPANY NEWS

▶ SS&C Technologies meets 2Q profit forecasts   [Jul-27-17 06:39PM  Associated Press]
▶ This Mutual Fund Gets Hot Gains, Low Volatility With Alphabet, PayPal   [Jun-29-17 03:25PM  Investor's Business Daily]
▶ 3 Promising Technology Stocks for Aggressive Investors   [Jun-17-17 08:21AM  Motley Fool]
▶ 3 Mid-Cap Stocks for June   [Jun-15-17 09:04AM  Motley Fool]
▶ SS&C Tackles AIFMD and UCITS Compliance with Anova 6.3   [Jun-14-17 09:00AM  PR Newswire]
▶ SS&C Releases Enhanced Precision LM Borrowers Viewpoint   [May-30-17 09:00AM  PR Newswire]
▶ Online Mortgage Services Provider Ellie Mae Earns Rating Upgrade   [May-25-17 12:21PM  Investor's Business Daily]
▶ Pegasystems Sees Its Composite Rating Rise To 96   [12:20PM  Investor's Business Daily]
▶ SS&C to Speak at JP Morgan TMT Conference   [May-19-17 10:11AM  CNW Group]
▶ SS&C Announces Quarterly Dividend   [May-17-17 04:15PM  CNW Group]
▶ SS&C Releases First Round of 2017 Product Upgrades   [May-08-17 09:00AM  PR Newswire]
▶ SS&C Technologies Pulls Back After a Solid Quarter   [Apr-29-17 08:00AM  Motley Fool]
▶ SS&C Technologies meets 1Q profit forecasts   [Apr-27-17 06:40PM  Associated Press]
▶ ATR Asset Management Leverages SS&C's PORTIA   [Apr-19-17 09:00PM  CNW Group]
▶ Forbes: Eight of the worlds billionaires call Tampa Bay home   [Mar-20-17 02:15PM  at bizjournals.com]
▶ SS&C Announces Quarterly Dividend   [09:00AM  PR Newswire]
▶ SS&C Technologies Finishes Another Great Year   [Feb-16-17 06:49PM  at Motley Fool]
Stock chart of SSNC Financial statements of SSNC
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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