Intrinsic value of AMN Healthcare Services - AMN

Previous Close

$50.90

  Intrinsic Value

$41.57

stock screener

  Rating & Target

hold

-18%

Previous close

$50.90

 
Intrinsic value

$41.57

 
Up/down potential

-18%

 
Rating

hold

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

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

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, %
  30.01
  4.40
  4.46
  4.51
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
Revenue, $m
  1,902
  1,986
  2,074
  2,168
  2,267
  2,371
  2,481
  2,598
  2,720
  2,849
  2,985
  3,128
  3,278
  3,437
  3,603
  3,778
  3,963
  4,156
  4,360
  4,574
  4,799
  5,036
  5,284
  5,545
  5,819
  6,108
  6,410
  6,728
  7,062
  7,413
  7,782
Variable operating expenses, $m
 
  1,704
  1,779
  1,857
  1,941
  2,028
  2,121
  2,219
  2,322
  2,430
  2,544
  2,630
  2,757
  2,890
  3,030
  3,178
  3,333
  3,496
  3,667
  3,847
  4,036
  4,235
  4,444
  4,664
  4,894
  5,137
  5,391
  5,659
  5,940
  6,235
  6,545
Fixed operating expenses, $m
 
  82
  84
  86
  88
  91
  93
  95
  97
  100
  102
  105
  108
  110
  113
  116
  119
  122
  125
  128
  131
  134
  138
  141
  145
  148
  152
  156
  160
  164
  168
Total operating expenses, $m
  1,711
  1,786
  1,863
  1,943
  2,029
  2,119
  2,214
  2,314
  2,419
  2,530
  2,646
  2,735
  2,865
  3,000
  3,143
  3,294
  3,452
  3,618
  3,792
  3,975
  4,167
  4,369
  4,582
  4,805
  5,039
  5,285
  5,543
  5,815
  6,100
  6,399
  6,713
Operating income, $m
  192
  199
  212
  224
  238
  252
  268
  284
  301
  319
  338
  392
  414
  436
  460
  485
  511
  539
  568
  599
  632
  666
  702
  740
  780
  823
  867
  914
  963
  1,015
  1,069
EBITDA, $m
  222
  249
  262
  275
  290
  305
  321
  338
  356
  375
  395
  417
  439
  463
  488
  514
  542
  571
  602
  635
  669
  705
  743
  784
  826
  870
  917
  966
  1,018
  1,073
  1,130
Interest expense (income), $m
  8
  13
  14
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  36
  38
  40
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  78
  82
  87
Earnings before tax, $m
  176
  187
  198
  209
  222
  235
  249
  263
  279
  295
  313
  365
  384
  405
  427
  449
  473
  499
  525
  554
  583
  614
  647
  682
  719
  757
  798
  840
  885
  933
  982
Tax expense, $m
  70
  50
  53
  57
  60
  63
  67
  71
  75
  80
  84
  99
  104
  109
  115
  121
  128
  135
  142
  149
  157
  166
  175
  184
  194
  204
  215
  227
  239
  252
  265
Net income, $m
  106
  136
  144
  153
  162
  171
  181
  192
  204
  215
  228
  267
  281
  296
  311
  328
  346
  364
  384
  404
  426
  449
  473
  498
  525
  553
  582
  613
  646
  681
  717

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  11
  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
  1,187
  1,228
  1,283
  1,341
  1,402
  1,466
  1,535
  1,606
  1,682
  1,762
  1,846
  1,934
  2,027
  2,125
  2,228
  2,337
  2,451
  2,570
  2,696
  2,829
  2,968
  3,114
  3,268
  3,429
  3,599
  3,777
  3,964
  4,161
  4,368
  4,585
  4,813
Adjusted assets (=assets-cash), $m
  1,176
  1,228
  1,283
  1,341
  1,402
  1,466
  1,535
  1,606
  1,682
  1,762
  1,846
  1,934
  2,027
  2,125
  2,228
  2,337
  2,451
  2,570
  2,696
  2,829
  2,968
  3,114
  3,268
  3,429
  3,599
  3,777
  3,964
  4,161
  4,368
  4,585
  4,813
Revenue / Adjusted assets
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.616
  1.618
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
  1.617
Average production assets, $m
  266
  278
  290
  304
  317
  332
  347
  364
  381
  399
  418
  438
  459
  481
  504
  529
  555
  582
  610
  640
  672
  705
  740
  776
  815
  855
  897
  942
  989
  1,038
  1,089
Working capital, $m
  176
  177
  185
  193
  202
  211
  221
  231
  242
  254
  266
  278
  292
  306
  321
  336
  353
  370
  388
  407
  427
  448
  470
  494
  518
  544
  571
  599
  629
  660
  693
Total debt, $m
  363
  391
  425
  462
  500
  540
  583
  627
  675
  724
  777
  832
  890
  951
  1,015
  1,083
  1,154
  1,229
  1,308
  1,390
  1,477
  1,568
  1,664
  1,765
  1,871
  1,982
  2,099
  2,221
  2,350
  2,486
  2,628
Total liabilities, $m
  738
  766
  800
  837
  875
  915
  958
  1,002
  1,050
  1,099
  1,152
  1,207
  1,265
  1,326
  1,390
  1,458
  1,529
  1,604
  1,683
  1,765
  1,852
  1,943
  2,039
  2,140
  2,246
  2,357
  2,474
  2,596
  2,725
  2,861
  3,003
Total equity, $m
  449
  462
  482
  504
  527
  551
  577
  604
  632
  662
  694
  727
  762
  799
  838
  879
  921
  966
  1,014
  1,064
  1,116
  1,171
  1,229
  1,289
  1,353
  1,420
  1,491
  1,565
  1,642
  1,724
  1,810
Total liabilities and equity, $m
  1,187
  1,228
  1,282
  1,341
  1,402
  1,466
  1,535
  1,606
  1,682
  1,761
  1,846
  1,934
  2,027
  2,125
  2,228
  2,337
  2,450
  2,570
  2,697
  2,829
  2,968
  3,114
  3,268
  3,429
  3,599
  3,777
  3,965
  4,161
  4,367
  4,585
  4,813
Debt-to-equity ratio
  0.808
  0.850
  0.880
  0.920
  0.950
  0.980
  1.010
  1.040
  1.070
  1.090
  1.120
  1.140
  1.170
  1.190
  1.210
  1.230
  1.250
  1.270
  1.290
  1.310
  1.320
  1.340
  1.350
  1.370
  1.380
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
Adjusted equity ratio
  0.372
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  106
  136
  144
  153
  162
  171
  181
  192
  204
  215
  228
  267
  281
  296
  311
  328
  346
  364
  384
  404
  426
  449
  473
  498
  525
  553
  582
  613
  646
  681
  717
Depreciation, amort., depletion, $m
  30
  50
  50
  51
  52
  53
  53
  54
  55
  56
  57
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  52
  55
  58
  61
Funds from operations, $m
  115
  186
  195
  204
  214
  224
  235
  247
  259
  272
  286
  291
  306
  322
  339
  357
  376
  396
  417
  440
  463
  488
  514
  541
  570
  600
  632
  666
  701
  738
  778
Change in working capital, $m
  -17
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
Cash from operations, $m
  132
  179
  187
  196
  205
  215
  225
  236
  248
  260
  273
  278
  293
  308
  325
  342
  360
  379
  399
  421
  443
  467
  492
  518
  546
  575
  605
  638
  671
  707
  745
Maintenance CAPEX, $m
  0
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -52
  -55
  -58
New CAPEX, $m
  -22
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -45
  -47
  -49
  -52
Cash from investing activities, $m
  -257
  -27
  -27
  -29
  -31
  -33
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -81
  -85
  -90
  -95
  -99
  -104
  -110
Free cash flow, $m
  -125
  151
  159
  166
  174
  182
  191
  201
  211
  221
  232
  235
  247
  261
  274
  289
  305
  321
  338
  357
  376
  396
  418
  440
  464
  489
  515
  543
  572
  603
  636
Issuance/(repayment) of debt, $m
  150
  32
  34
  36
  38
  40
  43
  45
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  123
  129
  135
  142
Issuance/(repurchase) of shares, $m
  -13
  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  
  126
  32
  34
  36
  38
  40
  43
  45
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  123
  129
  135
  142
Total cash flow (excl. dividends), $m
  1
  184
  193
  202
  212
  223
  234
  246
  258
  271
  285
  290
  305
  322
  339
  357
  376
  396
  417
  439
  463
  488
  514
  541
  570
  600
  632
  666
  701
  739
  778
Retained Cash Flow (-), $m
  -101
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -82
  -86
Prev. year cash balance distribution, $m
 
  7
  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
 
  171
  173
  181
  189
  198
  208
  219
  229
  241
  253
  257
  270
  285
  300
  316
  333
  351
  370
  390
  410
  433
  456
  480
  506
  533
  562
  592
  624
  657
  692
Discount rate, %
 
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
 
  161
  153
  150
  145
  140
  135
  128
  121
  114
  105
  94
  85
  77
  69
  60
  52
  45
  38
  31
  25
  20
  16
  12
  9
  7
  5
  3
  2
  2
  1
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
  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 (AMN)

Valuation Ratios
P/E Ratio 22.9
Price to Sales 1.3
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 18.4
Price to Free Cash Flow 22
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 $1902 million for the last fiscal year's total revenue generated by AMN Healthcare Services. The default revenue input number comes from 2016 income statement of AMN Healthcare Services. 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 4.4% 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 5.9%, whose default value for AMN is calculated based on our internal credit rating of AMN Healthcare Services, 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.
    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 85.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $80 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 3.5% for AMN Healthcare Services.

Corporate tax rate of 27% is the nominal tax rate for AMN Healthcare Services. 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 14%.

Life of production assets of 18 years is the average useful life of capital assets used in AMN Healthcare Services 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 8.9%. 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 - $449 million for AMN Healthcare Services - 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 48.325 million for AMN Healthcare Services 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 at the current share price and the inputted number of shares is $2.5 billion.

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COMPANY NEWS

▶ Stocks To Watch: AMN Healthcare Services Sees RS Rating Rise To 82   [Jan-05-18 03:00AM  Investor's Business Daily]
▶ 4 Reasons To Like AMN Healthcare   [Nov-17-17 10:01AM  Benzinga]
▶ AMN Healthcare beats Street 3Q forecasts   [05:37AM  Associated Press]
▶ AMN Healthcare Announces Third Quarter 2017 Results   [Nov-02-17 04:18PM  PR Newswire]
▶ AMN Healthcare Services Reaches 80-Plus Relative Strength Rating Benchmark   [Oct-06-17 03:00AM  Investor's Business Daily]
▶ Breakout Watch: Health Care Stock Just Shy Of New Buy Zone   [Sep-28-17 11:18AM  Investor's Business Daily]
▶ AMN Healthcare beats Street 2Q forecasts   [Aug-05-17 01:10AM  Associated Press]
▶ AMN Healthcare Announces Second Quarter 2017 Results   [Aug-03-17 04:19PM  PR Newswire]
▶ AMN Healthcare tops Street 1Q forecasts   [05:02AM  Associated Press]
▶ AMN Healthcare Announces First Quarter 2017 Results   [May-04-17 04:21PM  PR Newswire]
Financial statements of AMN
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