Intrinsic value of Acxiom - ACXM

Previous Close

$48.48

  Intrinsic Value

$6.41

stock screener

  Rating & Target

str. sell

-87%

Previous close

$48.48

 
Intrinsic value

$6.41

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of ACXM 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 0001), $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 3.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  980
  1,045
  1,112
  1,182
  1,255
  1,332
  1,411
  1,494
  1,580
  1,670
  1,764
  1,862
  1,964
  2,072
  2,184
  2,301
  2,424
  2,552
  2,687
  2,828
  2,975
  3,130
  3,292
  3,462
  3,640
  3,826
  4,022
  4,228
  4,443
  4,669
Variable operating expenses, $m
  959
  1,018
  1,080
  1,144
  1,211
  1,280
  1,352
  1,428
  1,507
  1,589
  1,611
  1,701
  1,794
  1,892
  1,995
  2,102
  2,214
  2,331
  2,454
  2,583
  2,717
  2,859
  3,007
  3,162
  3,324
  3,495
  3,674
  3,861
  4,058
  4,264
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
  959
  1,018
  1,080
  1,144
  1,211
  1,280
  1,352
  1,428
  1,507
  1,589
  1,611
  1,701
  1,794
  1,892
  1,995
  2,102
  2,214
  2,331
  2,454
  2,583
  2,717
  2,859
  3,007
  3,162
  3,324
  3,495
  3,674
  3,861
  4,058
  4,264
Operating income, $m
  21
  27
  32
  39
  45
  51
  58
  65
  73
  81
  153
  161
  170
  179
  189
  199
  210
  221
  233
  245
  258
  271
  285
  300
  315
  331
  348
  366
  385
  404
EBITDA, $m
  140
  149
  159
  169
  179
  190
  201
  213
  225
  238
  252
  266
  280
  295
  311
  328
  346
  364
  383
  403
  424
  446
  470
  494
  519
  546
  574
  603
  634
  666
Interest expense (income), $m
  8
  12
  14
  16
  18
  20
  22
  24
  26
  28
  30
  33
  35
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  77
  81
  86
  91
  97
  102
  108
Earnings before tax, $m
  9
  12
  17
  21
  25
  30
  35
  40
  45
  50
  120
  126
  132
  139
  145
  152
  160
  168
  176
  184
  193
  203
  213
  223
  234
  245
  257
  269
  283
  296
Tax expense, $m
  2
  3
  4
  6
  7
  8
  9
  11
  12
  14
  32
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  69
  73
  76
  80
Net income, $m
  6
  9
  12
  15
  18
  22
  25
  29
  33
  37
  88
  92
  96
  101
  106
  111
  117
  122
  128
  135
  141
  148
  155
  163
  171
  179
  188
  197
  206
  216

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,293
  1,378
  1,467
  1,560
  1,656
  1,757
  1,861
  1,970
  2,084
  2,203
  2,327
  2,456
  2,592
  2,733
  2,881
  3,036
  3,198
  3,367
  3,545
  3,730
  3,925
  4,129
  4,343
  4,567
  4,802
  5,048
  5,306
  5,577
  5,861
  6,159
Adjusted assets (=assets-cash), $m
  1,293
  1,378
  1,467
  1,560
  1,656
  1,757
  1,861
  1,970
  2,084
  2,203
  2,327
  2,456
  2,592
  2,733
  2,881
  3,036
  3,198
  3,367
  3,545
  3,730
  3,925
  4,129
  4,343
  4,567
  4,802
  5,048
  5,306
  5,577
  5,861
  6,159
Revenue / Adjusted assets
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
Average production assets, $m
  510
  544
  579
  616
  654
  694
  735
  778
  823
  870
  919
  970
  1,023
  1,079
  1,138
  1,199
  1,263
  1,330
  1,400
  1,473
  1,550
  1,631
  1,715
  1,804
  1,896
  1,994
  2,096
  2,203
  2,315
  2,432
Working capital, $m
  44
  47
  50
  53
  56
  60
  63
  67
  71
  75
  79
  84
  88
  93
  98
  104
  109
  115
  121
  127
  134
  141
  148
  156
  164
  172
  181
  190
  200
  210
Total debt, $m
  262
  294
  328
  364
  400
  439
  478
  520
  563
  609
  656
  705
  757
  811
  867
  926
  988
  1,052
  1,120
  1,191
  1,265
  1,342
  1,424
  1,509
  1,599
  1,693
  1,791
  1,894
  2,002
  2,116
Total liabilities, $m
  492
  525
  559
  594
  631
  669
  709
  751
  794
  839
  887
  936
  987
  1,041
  1,098
  1,157
  1,218
  1,283
  1,350
  1,421
  1,495
  1,573
  1,655
  1,740
  1,829
  1,923
  2,022
  2,125
  2,233
  2,347
Total equity, $m
  800
  853
  908
  966
  1,025
  1,087
  1,152
  1,220
  1,290
  1,364
  1,440
  1,520
  1,604
  1,692
  1,783
  1,879
  1,979
  2,084
  2,194
  2,309
  2,430
  2,556
  2,688
  2,827
  2,972
  3,125
  3,285
  3,452
  3,628
  3,813
Total liabilities and equity, $m
  1,292
  1,378
  1,467
  1,560
  1,656
  1,756
  1,861
  1,971
  2,084
  2,203
  2,327
  2,456
  2,591
  2,733
  2,881
  3,036
  3,197
  3,367
  3,544
  3,730
  3,925
  4,129
  4,343
  4,567
  4,801
  5,048
  5,307
  5,577
  5,861
  6,160
Debt-to-equity ratio
  0.330
  0.350
  0.360
  0.380
  0.390
  0.400
  0.420
  0.430
  0.440
  0.450
  0.460
  0.460
  0.470
  0.480
  0.490
  0.490
  0.500
  0.500
  0.510
  0.520
  0.520
  0.530
  0.530
  0.530
  0.540
  0.540
  0.550
  0.550
  0.550
  0.550
Adjusted equity ratio
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  9
  12
  15
  18
  22
  25
  29
  33
  37
  88
  92
  96
  101
  106
  111
  117
  122
  128
  135
  141
  148
  155
  163
  171
  179
  188
  197
  206
  216
Depreciation, amort., depletion, $m
  119
  122
  126
  130
  134
  138
  143
  148
  152
  157
  99
  104
  110
  116
  122
  129
  136
  143
  151
  158
  167
  175
  184
  194
  204
  214
  225
  237
  249
  262
Funds from operations, $m
  125
  132
  138
  145
  153
  160
  168
  176
  185
  194
  186
  196
  206
  217
  228
  240
  253
  265
  279
  293
  308
  323
  340
  357
  375
  393
  413
  434
  455
  478
Change in working capital, $m
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
Cash from operations, $m
  122
  129
  135
  142
  149
  157
  165
  173
  181
  190
  182
  192
  202
  212
  223
  235
  247
  260
  273
  287
  301
  316
  332
  349
  367
  385
  404
  424
  445
  468
Maintenance CAPEX, $m
  -51
  -55
  -59
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -94
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -151
  -158
  -167
  -175
  -184
  -194
  -204
  -214
  -225
  -237
  -249
New CAPEX, $m
  -32
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -84
  -88
  -93
  -97
  -102
  -107
  -112
  -118
Cash from investing activities, $m
  -83
  -89
  -94
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -150
  -157
  -166
  -174
  -183
  -193
  -203
  -213
  -224
  -235
  -248
  -259
  -272
  -287
  -301
  -316
  -332
  -349
  -367
Free cash flow, $m
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  96
  101
Issuance/(repayment) of debt, $m
  32
  33
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  94
  98
  103
  108
  114
Issuance/(repurchase) of shares, $m
  45
  44
  43
  42
  41
  40
  39
  39
  38
  37
  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  
  77
  77
  77
  77
  78
  78
  79
  81
  81
  82
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  94
  98
  103
  108
  114
Total cash flow (excl. dividends), $m
  115
  116
  118
  121
  123
  125
  128
  131
  134
  137
  87
  91
  96
  100
  105
  110
  116
  122
  127
  134
  140
  147
  154
  162
  169
  178
  186
  195
  205
  215
Retained Cash Flow (-), $m
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -121
  -126
  -132
  -139
  -145
  -152
  -160
  -168
  -176
  -184
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
  64
  63
  63
  63
  63
  63
  63
  63
  63
  63
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
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
  62
  58
  55
  52
  49
  46
  43
  40
  36
  33
  5
  5
  5
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  98.8
  97.8
  96.8
  95.9
  95.1
  94.3
  93.7
  93.0
  92.5
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9
  91.9

Acxiom Corporation (Acxiom) is a technology and enablement services company. The Company operates through three business segments: Marketing Services, Audience Solutions, and Connectivity. The Company's Marketing Services segment helps clients to unify data at individual level. The Audience Solutions segment helps clients to validate the accuracy of their people-based data, enhance it with additional insight and keep it up to date, enabling clients to reach desired audiences with relevant messages. The Connectivity segment activates data and makes it portable across the open marketing ecosystem. The Company serves a global client base from locations in the United States, Europe and the Asia-Pacific region. The Company's client base includes organizations in these regions across industry verticals, including financial, insurance and investment services, automotive, retail, telecommunications, healthcare, travel, entertainment, non-profit and government.

FINANCIAL RATIOS  of  Acxiom (ACXM)

Valuation Ratios
P/E Ratio 948.9
Price to Sales 4.3
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 32.7
Price to Free Cash Flow 70.3
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 4.4%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 25.6%
Total Debt to Equity 31%
Interest Coverage 2
Management Effectiveness
Return On Assets 0.6%
Ret/ On Assets - 3 Yr. Avg. 0.4%
Return On Total Capital 0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0.6%
Return On Equity - 3 Yr. Avg. -0%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 45.8%
Gross Margin - 3 Yr. Avg. 42.3%
EBITDA Margin 11.4%
EBITDA Margin - 3 Yr. Avg. 8.6%
Operating Margin 1.7%
Oper. Margin - 3 Yr. Avg. -1.3%
Pre-Tax Margin 1%
Pre-Tax Margin - 3 Yr. Avg. -2.1%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. -0%
Effective Tax Rate 55.6%
Eff/ Tax Rate - 3 Yr. Avg. 48.2%
Payout Ratio 0%

ACXM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACXM stock intrinsic value calculation we used $917.406 million for the last fiscal year's total revenue generated by Acxiom. The default revenue input number comes from 0001 income statement of Acxiom. 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 ACXM stock valuation model: a) initial revenue growth rate of 6.8% 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 ACXM is calculated based on our internal credit rating of Acxiom, 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 Acxiom.
    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 ACXM stock the variable cost ratio is equal to 98.3%.

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 ACXM 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 5.4% for Acxiom.

Corporate tax rate of 27% is the nominal tax rate for Acxiom. 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 ACXM 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 ACXM are equal to 52.1%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Acxiom 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 ACXM is equal to 4.5%. 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 - $749.095 million for Acxiom - 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 77.354 million for Acxiom 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 Acxiom at the current share price and the inputted number of shares is $3.8 billion.

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