Intrinsic value of Zebra Technologies Cl A - ZBRA

Previous Close

$112.76

  Intrinsic Value

$22.88

stock screener

  Rating & Target

str. sell

-80%

  Value-price divergence*

-93%

Previous close

$112.76

 
Intrinsic value

$22.88

 
Up/down potential

-80%

 
Rating

str. sell

 
Value-price divergence*

-93%

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

We calculate the intrinsic value of ZBRA 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 6.0

 

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, %
  -2.08
  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
  3,574
  3,645
  3,729
  3,825
  3,933
  4,052
  4,183
  4,325
  4,479
  4,646
  4,824
  5,015
  5,218
  5,435
  5,665
  5,910
  6,168
  6,443
  6,733
  7,039
  7,362
  7,704
  8,063
  8,443
  8,842
  9,263
  9,707
  10,173
  10,664
  11,180
  11,724
Variable operating expenses, $m
 
  3,604
  3,681
  3,770
  3,869
  3,979
  4,099
  4,230
  4,372
  4,525
  4,690
  4,620
  4,807
  5,007
  5,219
  5,444
  5,683
  5,935
  6,202
  6,484
  6,782
  7,097
  7,428
  7,778
  8,146
  8,534
  8,942
  9,372
  9,824
  10,300
  10,800
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
  3,494
  3,604
  3,681
  3,770
  3,869
  3,979
  4,099
  4,230
  4,372
  4,525
  4,690
  4,620
  4,807
  5,007
  5,219
  5,444
  5,683
  5,935
  6,202
  6,484
  6,782
  7,097
  7,428
  7,778
  8,146
  8,534
  8,942
  9,372
  9,824
  10,300
  10,800
Operating income, $m
  80
  41
  48
  56
  64
  73
  84
  95
  107
  120
  134
  395
  411
  428
  446
  466
  486
  508
  530
  554
  580
  607
  635
  665
  697
  730
  765
  801
  840
  881
  924
EBITDA, $m
  384
  371
  380
  390
  401
  413
  426
  440
  456
  473
  491
  511
  531
  553
  577
  602
  628
  656
  686
  717
  750
  785
  821
  860
  900
  943
  988
  1,036
  1,086
  1,139
  1,194
Interest expense (income), $m
  180
  169
  175
  180
  187
  194
  203
  212
  221
  232
  243
  256
  269
  283
  298
  314
  330
  348
  367
  387
  408
  430
  454
  479
  505
  532
  561
  592
  624
  658
  693
Earnings before tax, $m
  -129
  -128
  -127
  -125
  -123
  -121
  -119
  -117
  -114
  -112
  -109
  139
  142
  145
  149
  152
  156
  159
  163
  167
  172
  177
  181
  187
  192
  198
  203
  210
  216
  223
  230
Tax expense, $m
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  38
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  52
  53
  55
  57
  58
  60
  62
Net income, $m
  -137
  -128
  -127
  -125
  -123
  -121
  -119
  -117
  -114
  -112
  -109
  102
  104
  106
  108
  111
  114
  116
  119
  122
  125
  129
  132
  136
  140
  144
  149
  153
  158
  163
  168

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  156
  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
  4,632
  4,568
  4,673
  4,793
  4,928
  5,078
  5,242
  5,420
  5,613
  5,822
  6,045
  6,284
  6,539
  6,811
  7,099
  7,405
  7,730
  8,073
  8,437
  8,821
  9,226
  9,654
  10,105
  10,580
  11,081
  11,608
  12,164
  12,748
  13,363
  14,011
  14,691
Adjusted assets (=assets-cash), $m
  4,476
  4,568
  4,673
  4,793
  4,928
  5,078
  5,242
  5,420
  5,613
  5,822
  6,045
  6,284
  6,539
  6,811
  7,099
  7,405
  7,730
  8,073
  8,437
  8,821
  9,226
  9,654
  10,105
  10,580
  11,081
  11,608
  12,164
  12,748
  13,363
  14,011
  14,691
Revenue / Adjusted assets
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
Average production assets, $m
  914
  933
  955
  979
  1,007
  1,037
  1,071
  1,107
  1,147
  1,189
  1,235
  1,284
  1,336
  1,391
  1,450
  1,513
  1,579
  1,649
  1,724
  1,802
  1,885
  1,972
  2,064
  2,161
  2,264
  2,371
  2,485
  2,604
  2,730
  2,862
  3,001
Working capital, $m
  273
  120
  123
  126
  130
  134
  138
  143
  148
  153
  159
  165
  172
  179
  187
  195
  204
  213
  222
  232
  243
  254
  266
  279
  292
  306
  320
  336
  352
  369
  387
Total debt, $m
  2,648
  2,728
  2,818
  2,921
  3,036
  3,165
  3,305
  3,458
  3,624
  3,803
  3,995
  4,200
  4,418
  4,651
  4,899
  5,162
  5,440
  5,735
  6,047
  6,376
  6,724
  7,091
  7,478
  7,886
  8,315
  8,768
  9,244
  9,746
  10,274
  10,829
  11,413
Total liabilities, $m
  3,840
  3,920
  4,010
  4,113
  4,228
  4,357
  4,497
  4,650
  4,816
  4,995
  5,187
  5,392
  5,610
  5,843
  6,091
  6,354
  6,632
  6,927
  7,239
  7,568
  7,916
  8,283
  8,670
  9,078
  9,507
  9,960
  10,436
  10,938
  11,466
  12,021
  12,605
Total equity, $m
  792
  649
  664
  681
  700
  721
  744
  770
  797
  827
  858
  892
  929
  967
  1,008
  1,052
  1,098
  1,146
  1,198
  1,253
  1,310
  1,371
  1,435
  1,502
  1,573
  1,648
  1,727
  1,810
  1,898
  1,990
  2,086
Total liabilities and equity, $m
  4,632
  4,569
  4,674
  4,794
  4,928
  5,078
  5,241
  5,420
  5,613
  5,822
  6,045
  6,284
  6,539
  6,810
  7,099
  7,406
  7,730
  8,073
  8,437
  8,821
  9,226
  9,654
  10,105
  10,580
  11,080
  11,608
  12,163
  12,748
  13,364
  14,011
  14,691
Debt-to-equity ratio
  3.343
  4.200
  4.250
  4.290
  4.340
  4.390
  4.440
  4.490
  4.550
  4.600
  4.650
  4.710
  4.760
  4.810
  4.860
  4.910
  4.960
  5.000
  5.050
  5.090
  5.130
  5.170
  5.210
  5.250
  5.280
  5.320
  5.350
  5.380
  5.410
  5.440
  5.470
Adjusted equity ratio
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -137
  -128
  -127
  -125
  -123
  -121
  -119
  -117
  -114
  -112
  -109
  102
  104
  106
  108
  111
  114
  116
  119
  122
  125
  129
  132
  136
  140
  144
  149
  153
  158
  163
  168
Depreciation, amort., depletion, $m
  304
  330
  332
  334
  337
  339
  342
  346
  349
  353
  357
  116
  120
  125
  131
  136
  142
  149
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
  270
Funds from operations, $m
  502
  202
  205
  209
  214
  218
  223
  229
  235
  241
  248
  217
  224
  231
  239
  247
  256
  265
  274
  285
  295
  307
  318
  331
  344
  358
  372
  388
  404
  421
  439
Change in working capital, $m
  130
  2
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
Cash from operations, $m
  372
  199
  202
  206
  210
  214
  219
  224
  230
  236
  242
  211
  217
  224
  232
  239
  247
  256
  265
  274
  285
  295
  307
  318
  331
  344
  358
  372
  388
  404
  421
Maintenance CAPEX, $m
  0
  -82
  -84
  -86
  -88
  -91
  -93
  -96
  -100
  -103
  -107
  -111
  -116
  -120
  -125
  -131
  -136
  -142
  -149
  -155
  -162
  -170
  -178
  -186
  -195
  -204
  -214
  -224
  -235
  -246
  -258
New CAPEX, $m
  -77
  -20
  -21
  -25
  -28
  -31
  -33
  -36
  -39
  -43
  -46
  -49
  -52
  -55
  -59
  -63
  -66
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -108
  -113
  -119
  -126
  -132
  -139
Cash from investing activities, $m
  -39
  -102
  -105
  -111
  -116
  -122
  -126
  -132
  -139
  -146
  -153
  -160
  -168
  -175
  -184
  -194
  -202
  -212
  -223
  -233
  -245
  -257
  -270
  -283
  -297
  -312
  -327
  -343
  -361
  -378
  -397
Free cash flow, $m
  333
  97
  97
  96
  94
  93
  92
  91
  91
  90
  89
  51
  50
  48
  47
  46
  45
  43
  42
  41
  39
  38
  37
  35
  34
  32
  31
  29
  27
  26
  24
Issuance/(repayment) of debt, $m
  -382
  80
  90
  103
  116
  128
  141
  153
  166
  179
  192
  205
  219
  233
  248
  263
  278
  295
  312
  329
  348
  367
  387
  408
  430
  453
  477
  502
  528
  555
  584
Issuance/(repurchase) of shares, $m
  11
  141
  142
  142
  142
  142
  142
  142
  142
  141
  141
  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  
  -376
  221
  232
  245
  258
  270
  283
  295
  308
  320
  333
  205
  219
  233
  248
  263
  278
  295
  312
  329
  348
  367
  387
  408
  430
  453
  477
  502
  528
  555
  584
Total cash flow (excl. dividends), $m
  -36
  318
  329
  340
  352
  364
  375
  386
  398
  410
  422
  256
  269
  281
  295
  309
  323
  338
  354
  370
  387
  405
  424
  443
  464
  485
  507
  531
  555
  581
  608
Retained Cash Flow (-), $m
  101
  -141
  -142
  -142
  -142
  -142
  -142
  -142
  -142
  -141
  -141
  -34
  -36
  -39
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -92
  -97
Prev. year cash balance distribution, $m
 
  156
  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
 
  333
  187
  199
  210
  221
  233
  244
  256
  268
  281
  222
  232
  243
  254
  265
  277
  289
  302
  316
  330
  344
  360
  376
  392
  410
  428
  448
  468
  489
  511
Discount rate, %
 
  11.20
  11.76
  12.35
  12.97
  13.61
  14.29
  15.01
  15.76
  16.55
  17.37
  18.24
  19.16
  20.11
  21.12
  22.18
  23.28
  24.45
  25.67
  26.95
  28.30
  29.72
  31.20
  32.76
  34.40
  36.12
  37.93
  39.82
  41.81
  43.91
  46.10
PV of cash for distribution, $m
 
  299
  150
  140
  129
  117
  104
  92
  79
  68
  57
  35
  28
  22
  17
  13
  10
  7
  5
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  97.2
  94.4
  91.9
  89.4
  87.1
  84.8
  82.8
  80.8
  79.0
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2
  77.2

Zebra Technologies Corporation designs, manufactures and sells a range of automatic identification and data capture (AIDC) products. The Company's AIDC products include mobile computers, barcode scanners, radio frequency identification (RFID) readers, wireless local area network (WLAN) products, specialty printers for barcode labeling and personal identification, real-time location systems (RTLS), related accessories and supplies, such as self-adhesive labels and other consumables, and utilities and application software. The Company operates through two segments: Enterprise, which comprises its mobile computing, data capture, RFID and WLAN products, and services, and Legacy Zebra, which comprises barcode and card printing, location solutions, supplies and services. The Company's products are used in automatic identification (auto ID), data collection and personal identification applications.

FINANCIAL RATIOS  of  Zebra Technologies Cl A (ZBRA)

Valuation Ratios
P/E Ratio -43.5
Price to Sales 1.7
Price to Book 7.5
Price to Tangible Book
Price to Cash Flow 16
Price to Free Cash Flow 20.2
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.9%
Cap. Spend. - 3 Yr. Gr. Rate 28.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 334.3%
Total Debt to Equity 334.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 0.7%
Return On Total Capital -3.7%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity -16.3%
Return On Equity - 3 Yr. Avg. -9.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 45.9%
Gross Margin - 3 Yr. Avg. 45.8%
EBITDA Margin 9.9%
EBITDA Margin - 3 Yr. Avg. 8.2%
Operating Margin 2.2%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin -3.6%
Pre-Tax Margin - 3 Yr. Avg. -2.5%
Net Profit Margin -3.8%
Net Profit Margin - 3 Yr. Avg. -2.1%
Effective Tax Rate -6.2%
Eff/ Tax Rate - 3 Yr. Avg. -27.4%
Payout Ratio 0%

ZBRA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ZBRA stock intrinsic value calculation we used $3574 million for the last fiscal year's total revenue generated by Zebra Technologies Cl A. The default revenue input number comes from 2016 income statement of Zebra Technologies Cl A. 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 ZBRA 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 11.2%, whose default value for ZBRA is calculated based on our internal credit rating of Zebra Technologies Cl A, 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 Zebra Technologies Cl A.
    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 ZBRA stock the variable cost ratio is equal to 99%.

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 ZBRA 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 6.4% for Zebra Technologies Cl A.

Corporate tax rate of 27% is the nominal tax rate for Zebra Technologies Cl A. 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 ZBRA 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 ZBRA are equal to 25.6%.

Life of production assets of 11.1 years is the average useful life of capital assets used in Zebra Technologies Cl A 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 ZBRA is equal to 3.3%. 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 - $792 million for Zebra Technologies Cl A - 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 53.226 million for Zebra Technologies Cl A 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 Zebra Technologies Cl A at the current share price and the inputted number of shares is $6.0 billion.

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Financial statements of ZBRA
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