Intrinsic value of AMN Healthcare Services Inc - AMN

Previous Close

$48.16

  Intrinsic Value

$67.09

stock screener

  Rating & Target

buy

+39%

Previous close

$48.16

 
Intrinsic value

$67.09

 
Up/down potential

+39%

 
Rating

buy

We calculate the intrinsic value of AMN 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 2.3

 

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, %
  3.80
  3.92
  4.03
  4.13
  4.21
  4.29
  4.36
  4.43
  4.48
  4.54
  4.58
  4.62
  4.66
  4.69
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
Revenue, $m
  2,217
  2,304
  2,397
  2,496
  2,601
  2,713
  2,831
  2,956
  3,089
  3,229
  3,377
  3,533
  3,697
  3,871
  4,054
  4,247
  4,450
  4,663
  4,888
  5,124
  5,373
  5,635
  5,910
  6,199
  6,503
  6,823
  7,158
  7,511
  7,882
  8,272
Variable operating expenses, $m
  1,977
  2,052
  2,131
  2,216
  2,306
  2,402
  2,503
  2,610
  2,724
  2,844
  2,894
  3,028
  3,169
  3,318
  3,475
  3,640
  3,814
  3,997
  4,190
  4,393
  4,606
  4,830
  5,066
  5,314
  5,574
  5,848
  6,136
  6,439
  6,756
  7,090
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
  1,977
  2,052
  2,131
  2,216
  2,306
  2,402
  2,503
  2,610
  2,724
  2,844
  2,894
  3,028
  3,169
  3,318
  3,475
  3,640
  3,814
  3,997
  4,190
  4,393
  4,606
  4,830
  5,066
  5,314
  5,574
  5,848
  6,136
  6,439
  6,756
  7,090
Operating income, $m
  240
  253
  266
  280
  295
  311
  328
  346
  365
  385
  482
  505
  528
  553
  579
  606
  635
  666
  698
  732
  767
  805
  844
  885
  929
  974
  1,022
  1,073
  1,126
  1,181
EBITDA, $m
  340
  354
  368
  383
  399
  416
  435
  454
  474
  496
  518
  542
  568
  594
  622
  652
  683
  716
  750
  787
  825
  865
  907
  952
  998
  1,047
  1,099
  1,153
  1,210
  1,270
Interest expense (income), $m
  8
  24
  26
  27
  29
  32
  34
  36
  39
  41
  44
  47
  51
  54
  58
  61
  65
  69
  74
  78
  83
  88
  94
  99
  105
  111
  118
  125
  132
  140
  148
Earnings before tax, $m
  216
  227
  238
  251
  263
  277
  292
  307
  323
  340
  435
  454
  474
  495
  518
  541
  566
  592
  620
  649
  679
  711
  745
  780
  817
  856
  897
  941
  986
  1,034
Tax expense, $m
  58
  61
  64
  68
  71
  75
  79
  83
  87
  92
  117
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  231
  242
  254
  266
  279
Net income, $m
  158
  166
  174
  183
  192
  202
  213
  224
  236
  248
  317
  331
  346
  362
  378
  395
  413
  432
  452
  474
  496
  519
  544
  569
  597
  625
  655
  687
  720
  754

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
  1,549
  1,610
  1,675
  1,744
  1,818
  1,896
  1,978
  2,066
  2,158
  2,256
  2,360
  2,469
  2,584
  2,705
  2,833
  2,968
  3,109
  3,259
  3,416
  3,581
  3,755
  3,938
  4,130
  4,332
  4,544
  4,768
  5,002
  5,249
  5,508
  5,780
Adjusted assets (=assets-cash), $m
  1,549
  1,610
  1,675
  1,744
  1,818
  1,896
  1,978
  2,066
  2,158
  2,256
  2,360
  2,469
  2,584
  2,705
  2,833
  2,968
  3,109
  3,259
  3,416
  3,581
  3,755
  3,938
  4,130
  4,332
  4,544
  4,768
  5,002
  5,249
  5,508
  5,780
Revenue / Adjusted assets
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
Average production assets, $m
  430
  447
  465
  484
  505
  526
  549
  573
  599
  626
  655
  685
  717
  751
  786
  824
  863
  905
  948
  994
  1,042
  1,093
  1,146
  1,203
  1,262
  1,324
  1,389
  1,457
  1,529
  1,605
Working capital, $m
  106
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  170
  177
  186
  195
  204
  214
  224
  235
  246
  258
  270
  284
  298
  312
  327
  344
  361
  378
  397
Total debt, $m
  473
  508
  545
  584
  627
  671
  718
  769
  821
  877
  937
  999
  1,065
  1,134
  1,207
  1,284
  1,365
  1,451
  1,541
  1,635
  1,735
  1,839
  1,949
  2,065
  2,186
  2,314
  2,448
  2,589
  2,738
  2,893
Total liabilities, $m
  886
  921
  958
  998
  1,040
  1,084
  1,132
  1,182
  1,235
  1,291
  1,350
  1,412
  1,478
  1,547
  1,620
  1,697
  1,779
  1,864
  1,954
  2,048
  2,148
  2,252
  2,362
  2,478
  2,599
  2,727
  2,861
  3,002
  3,151
  3,306
Total equity, $m
  663
  689
  717
  746
  778
  811
  847
  884
  924
  966
  1,010
  1,057
  1,106
  1,158
  1,213
  1,270
  1,331
  1,395
  1,462
  1,533
  1,607
  1,685
  1,768
  1,854
  1,945
  2,041
  2,141
  2,247
  2,357
  2,474
Total liabilities and equity, $m
  1,549
  1,610
  1,675
  1,744
  1,818
  1,895
  1,979
  2,066
  2,159
  2,257
  2,360
  2,469
  2,584
  2,705
  2,833
  2,967
  3,110
  3,259
  3,416
  3,581
  3,755
  3,937
  4,130
  4,332
  4,544
  4,768
  5,002
  5,249
  5,508
  5,780
Debt-to-equity ratio
  0.710
  0.740
  0.760
  0.780
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.930
  0.950
  0.960
  0.980
  1.000
  1.010
  1.030
  1.040
  1.050
  1.070
  1.080
  1.090
  1.100
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.170
Adjusted equity ratio
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  158
  166
  174
  183
  192
  202
  213
  224
  236
  248
  317
  331
  346
  362
  378
  395
  413
  432
  452
  474
  496
  519
  544
  569
  597
  625
  655
  687
  720
  754
Depreciation, amort., depletion, $m
  100
  101
  102
  103
  104
  106
  107
  108
  110
  111
  36
  38
  40
  41
  43
  46
  48
  50
  52
  55
  58
  60
  63
  66
  70
  73
  77
  81
  84
  89
Funds from operations, $m
  258
  267
  276
  286
  297
  308
  320
  332
  345
  359
  354
  369
  386
  403
  421
  441
  461
  482
  505
  528
  553
  579
  607
  636
  666
  698
  732
  767
  804
  843
Change in working capital, $m
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
Cash from operations, $m
  254
  263
  272
  281
  292
  302
  314
  326
  339
  353
  347
  362
  378
  395
  413
  431
  451
  472
  494
  517
  541
  567
  594
  622
  652
  683
  716
  750
  786
  824
Maintenance CAPEX, $m
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -46
  -48
  -50
  -52
  -55
  -58
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -84
New CAPEX, $m
  -15
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
Cash from investing activities, $m
  -38
  -41
  -43
  -45
  -47
  -50
  -52
  -54
  -58
  -60
  -64
  -66
  -70
  -74
  -76
  -80
  -85
  -89
  -94
  -98
  -103
  -109
  -113
  -119
  -125
  -132
  -138
  -145
  -153
  -160
Free cash flow, $m
  216
  222
  229
  236
  244
  253
  262
  272
  282
  292
  283
  295
  308
  321
  336
  351
  366
  383
  400
  419
  438
  459
  480
  503
  526
  551
  577
  605
  634
  664
Issuance/(repayment) of debt, $m
  33
  35
  37
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  99
  105
  110
  116
  122
  128
  134
  141
  148
  156
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  33
  35
  37
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  99
  105
  110
  116
  122
  128
  134
  141
  148
  156
Total cash flow (excl. dividends), $m
  249
  257
  266
  276
  286
  298
  309
  322
  335
  348
  342
  358
  374
  391
  409
  428
  447
  468
  490
  513
  538
  563
  590
  618
  648
  679
  712
  746
  782
  820
Retained Cash Flow (-), $m
  -24
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -91
  -96
  -100
  -106
  -111
  -117
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
  225
  231
  238
  246
  255
  264
  274
  284
  295
  307
  298
  311
  325
  339
  354
  370
  387
  404
  423
  443
  463
  485
  508
  532
  557
  583
  611
  640
  671
  704
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
  215
  211
  207
  203
  198
  192
  185
  178
  169
  161
  142
  133
  123
  114
  104
  94
  84
  74
  65
  56
  48
  40
  33
  27
  22
  17
  13
  10
  7
  5
Current shareholders' claim on cash, %
  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
  100.0

AMN Healthcare Services, Inc. provides healthcare workforce solutions and staffing services at acute and sub-acute care hospitals and other healthcare facilities throughout the United States. The Company's segments include nurse and allied solutions, locum tenens solutions and other workforce solutions. Through its suite of solutions, the Company provides technology, analytics and services to build and manage all or a portion of its clients' healthcare workforce needs, from nurses, doctors and allied health professionals to healthcare leaders and executives. It offers managed services programs, vendor management systems, predictive analytics, workforce optimization consulting, recruitment process outsourcing, interim and executive leadership, and remote medical coding. It offers various services, including travel nurse staffing; local, or per diem, staffing; locum tenens staffing; allied staffing; physician permanent placement services, and health information management.

FINANCIAL RATIOS  of  AMN Healthcare Services Inc (AMN)

Valuation Ratios
P/E Ratio 21.6
Price to Sales 1.2
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 17.4
Price to Free Cash Flow 20.8
Growth Rates
Sales Growth Rate 30%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.5%
Cap. Spend. - 3 Yr. Gr. Rate 19.6%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 80%
Total Debt to Equity 80.8%
Interest Coverage 23
Management Effectiveness
Return On Assets 10.7%
Ret/ On Assets - 3 Yr. Avg. 9.1%
Return On Total Capital 16.4%
Ret/ On T. Cap. - 3 Yr. Avg. 14.5%
Return On Equity 26.6%
Return On Equity - 3 Yr. Avg. 22.5%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 32.6%
Gross Margin - 3 Yr. Avg. 31.7%
EBITDA Margin 11.3%
EBITDA Margin - 3 Yr. Avg. 9.7%
Operating Margin 10%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 4.8%
Effective Tax Rate 39.8%
Eff/ Tax Rate - 3 Yr. Avg. 38.7%
Payout Ratio 0%

AMN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMN stock intrinsic value calculation we used $2136 million for the last fiscal year's total revenue generated by AMN Healthcare Services Inc. The default revenue input number comes from 0001 income statement of AMN Healthcare Services Inc. 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 AMN stock valuation model: a) initial revenue growth rate of 3.8% 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 AMN is calculated based on our internal credit rating of AMN Healthcare Services Inc, 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 AMN Healthcare Services Inc.
    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 AMN stock the variable cost ratio is equal to 89.3%.

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 AMN 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 AMN Healthcare Services Inc.

Corporate tax rate of 27% is the nominal tax rate for AMN Healthcare Services Inc. 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 AMN 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 AMN are equal to 19.4%.

Life of production assets of 18.1 years is the average useful life of capital assets used in AMN Healthcare Services Inc 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 AMN is equal to 4.8%. 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 - $638.99 million for AMN Healthcare Services Inc - 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 46.841 million for AMN Healthcare Services Inc 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 AMN Healthcare Services Inc at the current share price and the inputted number of shares is $2.3 billion.

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