Intrinsic value of Apptio Cl A - APTI

Previous Close

$37.71

  Intrinsic Value

$27.20

stock screener

  Rating & Target

sell

-28%

Previous close

$37.71

 
Intrinsic value

$27.20

 
Up/down potential

-28%

 
Rating

sell

We calculate the intrinsic value of APTI 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 1.6

 

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, %
  30.60
  28.04
  25.74
  23.66
  21.80
  20.12
  18.60
  17.24
  16.02
  14.92
  13.93
  13.03
  12.23
  11.51
  10.86
  10.27
  9.74
  9.27
  8.84
  8.46
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.21
Revenue, $m
  246
  315
  396
  490
  597
  717
  851
  997
  1,157
  1,330
  1,515
  1,712
  1,921
  2,143
  2,375
  2,619
  2,874
  3,141
  3,418
  3,708
  4,008
  4,321
  4,646
  4,984
  5,335
  5,700
  6,079
  6,473
  6,884
  7,311
Variable operating expenses, $m
  225
  288
  363
  448
  546
  656
  778
  912
  1,059
  1,217
  1,386
  1,567
  1,758
  1,960
  2,173
  2,397
  2,630
  2,874
  3,128
  3,392
  3,668
  3,954
  4,251
  4,560
  4,881
  5,215
  5,562
  5,923
  6,299
  6,689
Fixed operating expenses, $m
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
Total operating expenses, $m
  269
  333
  409
  495
  594
  705
  828
  963
  1,111
  1,270
  1,441
  1,623
  1,815
  2,018
  2,233
  2,458
  2,692
  2,938
  3,193
  3,458
  3,736
  4,023
  4,322
  4,632
  4,955
  5,291
  5,639
  6,002
  6,380
  6,772
Operating income, $m
  -23
  -18
  -12
  -5
  3
  12
  22
  34
  46
  60
  74
  90
  106
  124
  142
  162
  182
  203
  226
  249
  273
  298
  324
  351
  379
  409
  439
  471
  504
  539
EBITDA, $m
  -20
  -14
  -7
  1
  10
  21
  33
  46
  60
  76
  93
  111
  130
  150
  172
  194
  218
  242
  268
  295
  323
  351
  382
  413
  446
  479
  515
  551
  590
  629
Interest expense (income), $m
  1
  0
  2
  5
  9
  13
  17
  22
  28
  34
  40
  48
  55
  63
  72
  81
  91
  101
  112
  123
  135
  147
  159
  172
  186
  200
  214
  230
  245
  262
  279
Earnings before tax, $m
  -23
  -20
  -17
  -14
  -10
  -5
  0
  6
  12
  19
  27
  34
  43
  52
  61
  71
  81
  91
  103
  114
  126
  139
  152
  165
  180
  194
  210
  226
  242
  260
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  2
  3
  5
  7
  9
  12
  14
  16
  19
  22
  25
  28
  31
  34
  37
  41
  45
  48
  52
  57
  61
  65
  70
Net income, $m
  -23
  -20
  -17
  -14
  -10
  -5
  0
  4
  9
  14
  19
  25
  31
  38
  44
  52
  59
  67
  75
  83
  92
  101
  111
  121
  131
  142
  153
  165
  177
  190

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
  331
  424
  533
  659
  802
  964
  1,143
  1,340
  1,555
  1,787
  2,036
  2,301
  2,583
  2,880
  3,192
  3,520
  3,863
  4,221
  4,595
  4,983
  5,388
  5,808
  6,245
  6,699
  7,170
  7,661
  8,170
  8,701
  9,252
  9,826
Adjusted assets (=assets-cash), $m
  331
  424
  533
  659
  802
  964
  1,143
  1,340
  1,555
  1,787
  2,036
  2,301
  2,583
  2,880
  3,192
  3,520
  3,863
  4,221
  4,595
  4,983
  5,388
  5,808
  6,245
  6,699
  7,170
  7,661
  8,170
  8,701
  9,252
  9,826
Revenue / Adjusted assets
  0.743
  0.743
  0.743
  0.744
  0.744
  0.744
  0.745
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
Average production assets, $m
  15
  20
  25
  30
  37
  44
  53
  62
  72
  82
  94
  106
  119
  133
  147
  162
  178
  195
  212
  230
  249
  268
  288
  309
  331
  353
  377
  401
  427
  453
Working capital, $m
  -70
  -90
  -113
  -140
  -171
  -205
  -243
  -285
  -331
  -380
  -433
  -490
  -550
  -613
  -679
  -749
  -822
  -898
  -978
  -1,060
  -1,146
  -1,236
  -1,329
  -1,425
  -1,526
  -1,630
  -1,739
  -1,851
  -1,969
  -2,091
Total debt, $m
  44
  97
  160
  232
  315
  407
  510
  623
  747
  880
  1,023
  1,175
  1,336
  1,507
  1,687
  1,875
  2,072
  2,277
  2,491
  2,715
  2,947
  3,188
  3,439
  3,699
  3,970
  4,251
  4,544
  4,848
  5,165
  5,494
Total liabilities, $m
  190
  243
  306
  378
  461
  553
  656
  769
  893
  1,026
  1,169
  1,321
  1,482
  1,653
  1,832
  2,021
  2,218
  2,423
  2,637
  2,860
  3,093
  3,334
  3,584
  3,845
  4,116
  4,397
  4,690
  4,994
  5,311
  5,640
Total equity, $m
  141
  181
  227
  281
  342
  411
  487
  571
  662
  761
  867
  980
  1,100
  1,227
  1,360
  1,500
  1,646
  1,798
  1,957
  2,123
  2,295
  2,474
  2,660
  2,854
  3,055
  3,263
  3,481
  3,706
  3,941
  4,186
Total liabilities and equity, $m
  331
  424
  533
  659
  803
  964
  1,143
  1,340
  1,555
  1,787
  2,036
  2,301
  2,582
  2,880
  3,192
  3,521
  3,864
  4,221
  4,594
  4,983
  5,388
  5,808
  6,244
  6,699
  7,171
  7,660
  8,171
  8,700
  9,252
  9,826
Debt-to-equity ratio
  0.310
  0.540
  0.700
  0.830
  0.920
  0.990
  1.050
  1.090
  1.130
  1.160
  1.180
  1.200
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.270
  1.280
  1.280
  1.290
  1.290
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
Adjusted equity ratio
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -23
  -20
  -17
  -14
  -10
  -5
  0
  4
  9
  14
  19
  25
  31
  38
  44
  52
  59
  67
  75
  83
  92
  101
  111
  121
  131
  142
  153
  165
  177
  190
Depreciation, amort., depletion, $m
  3
  4
  5
  6
  7
  9
  11
  12
  14
  16
  19
  21
  24
  27
  29
  32
  36
  39
  42
  46
  50
  54
  58
  62
  66
  71
  75
  80
  85
  91
Funds from operations, $m
  -20
  -17
  -13
  -8
  -2
  4
  11
  17
  23
  31
  38
  46
  55
  64
  74
  84
  95
  106
  117
  129
  142
  155
  168
  183
  197
  213
  228
  245
  262
  280
Change in working capital, $m
  -16
  -20
  -23
  -27
  -31
  -34
  -38
  -42
  -46
  -49
  -53
  -56
  -60
  -63
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -89
  -93
  -97
  -100
  -104
  -108
  -113
  -117
  -122
Cash from operations, $m
  -3
  3
  11
  19
  28
  38
  49
  59
  69
  80
  91
  103
  115
  127
  140
  154
  168
  182
  197
  212
  228
  244
  261
  279
  298
  317
  337
  358
  380
  403
Maintenance CAPEX, $m
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -11
  -12
  -14
  -16
  -19
  -21
  -24
  -27
  -29
  -32
  -36
  -39
  -42
  -46
  -50
  -54
  -58
  -62
  -66
  -71
  -75
  -80
  -85
New CAPEX, $m
  -4
  -4
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -25
  -26
Cash from investing activities, $m
  -6
  -7
  -9
  -11
  -13
  -14
  -17
  -20
  -22
  -25
  -27
  -31
  -34
  -38
  -41
  -44
  -48
  -53
  -56
  -60
  -65
  -69
  -74
  -79
  -84
  -89
  -95
  -99
  -105
  -111
Free cash flow, $m
  -9
  -4
  2
  8
  16
  23
  32
  39
  47
  55
  63
  72
  81
  90
  99
  109
  119
  130
  141
  152
  163
  175
  188
  201
  214
  228
  243
  258
  274
  291
Issuance/(repayment) of debt, $m
  44
  53
  63
  72
  82
  93
  103
  113
  123
  133
  143
  152
  162
  171
  179
  188
  197
  206
  214
  223
  232
  241
  251
  261
  271
  281
  293
  304
  317
  330
Issuance/(repurchase) of shares, $m
  56
  60
  64
  68
  71
  74
  76
  80
  82
  85
  87
  88
  89
  89
  89
  88
  87
  86
  84
  82
  80
  78
  75
  73
  70
  67
  64
  61
  58
  55
Cash from financing (excl. dividends), $m  
  100
  113
  127
  140
  153
  167
  179
  193
  205
  218
  230
  240
  251
  260
  268
  276
  284
  292
  298
  305
  312
  319
  326
  334
  341
  348
  357
  365
  375
  385
Total cash flow (excl. dividends), $m
  90
  109
  128
  148
  169
  190
  211
  232
  252
  273
  293
  312
  331
  349
  368
  386
  403
  421
  439
  457
  475
  494
  514
  534
  555
  577
  599
  623
  649
  675
Retained Cash Flow (-), $m
  -56
  -60
  -64
  -68
  -71
  -74
  -76
  -84
  -91
  -99
  -106
  -113
  -120
  -127
  -133
  -140
  -146
  -153
  -159
  -166
  -172
  -179
  -186
  -193
  -201
  -209
  -217
  -226
  -235
  -245
Prev. year cash balance distribution, $m
  9
  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
  44
  49
  64
  81
  98
  116
  134
  148
  161
  174
  187
  199
  211
  223
  234
  246
  257
  269
  280
  291
  303
  315
  328
  340
  354
  368
  382
  398
  414
  431
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
  42
  45
  56
  66
  76
  84
  91
  92
  92
  91
  89
  85
  80
  75
  69
  62
  56
  49
  43
  37
  31
  26
  21
  17
  14
  11
  8
  6
  5
  3
Current shareholders' claim on cash, %
  95.1
  91.2
  88.1
  85.5
  83.4
  81.7
  80.2
  78.9
  77.8
  76.8
  75.9
  75.2
  74.5
  73.9
  73.4
  72.9
  72.5
  72.1
  71.8
  71.5
  71.2
  70.9
  70.7
  70.5
  70.4
  70.2
  70.1
  70.0
  69.8
  69.7

Apptio, Inc. is a provider of technology business management (TBM) solutions. The Company's cloud-based platform and software as a service (SaaS) applications enable information technology (IT) leaders to analyze, optimize and plan technology investments, and benchmark the financial and operational performance against peers. It operates in the United States, the United Kingdom, Germany, Denmark, the Netherlands, Australia, Canada, France and Singapore. Its TBM solutions consist of a cloud-based platform and SaaS applications, which include Cost Transparency, IT Benchmarking, Business Insights, Bill of IT and IT Planning. It serves a range of industries, including financial services, professional services, technology, energy, consumer goods, manufacturing, healthcare, media, retail and transportation, as well as federal and state government agencies. Its cloud-based data and analytics platform aggregates, cleanses and correlates customer data from a range of disparate sources.

FINANCIAL RATIOS  of  Apptio Cl A (APTI)

Valuation Ratios
P/E Ratio -45.2
Price to Sales 9
Price to Book 20.1
Price to Tangible Book
Price to Cash Flow -361.5
Price to Free Cash Flow -160.6
Growth Rates
Sales Growth Rate 24.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -37.5%
Cap. Spend. - 3 Yr. Gr. Rate 4.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage -30
Management Effectiveness
Return On Assets -21.1%
Ret/ On Assets - 3 Yr. Avg. -30.3%
Return On Total Capital -98.5%
Ret/ On T. Cap. - 3 Yr. Avg. -246.5%
Return On Equity -100%
Return On Equity - 3 Yr. Avg. -260%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 65.8%
Gross Margin - 3 Yr. Avg. 63.2%
EBITDA Margin -14.9%
EBITDA Margin - 3 Yr. Avg. -22.7%
Operating Margin -17.4%
Oper. Margin - 3 Yr. Avg. -26.1%
Pre-Tax Margin -19.3%
Pre-Tax Margin - 3 Yr. Avg. -27.3%
Net Profit Margin -19.9%
Net Profit Margin - 3 Yr. Avg. -27.5%
Effective Tax Rate -3.2%
Eff/ Tax Rate - 3 Yr. Avg. -1.1%
Payout Ratio 0%

APTI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APTI stock intrinsic value calculation we used $188.519 million for the last fiscal year's total revenue generated by Apptio Cl A. The default revenue input number comes from 0001 income statement of Apptio 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 APTI stock valuation model: a) initial revenue growth rate of 30.6% 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 APTI is calculated based on our internal credit rating of Apptio 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 Apptio 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 APTI stock the variable cost ratio is equal to 91.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $43 million in the base year in the intrinsic value calculation for APTI 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 Apptio Cl A.

Corporate tax rate of 27% is the nominal tax rate for Apptio 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 APTI 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 APTI are equal to 6.2%.

Life of production assets of 1.9 years is the average useful life of capital assets used in Apptio 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 APTI is equal to -28.6%. 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 - $117.33 million for Apptio 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 43.675 million for Apptio 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 Apptio Cl A at the current share price and the inputted number of shares is $1.6 billion.

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COMPANY NEWS

▶ Why Apptio Stock Soared on Monday   [03:58PM  Motley Fool]
▶ Apptio strikes $2 billion deal to be sold to private equity firm   [02:41PM  American City Business Journals]
▶ Apptio Shares Surge on Deal to Go Private   [01:02PM  TheStreet.com]
▶ WeissLaw LLP Investigates Apptio Inc.   [09:45AM  ACCESSWIRE]
▶ [$$] Vista Reaches Deal to Buy Software Firm Apptio for $1.94 Billion   [Nov-11-18 11:54PM  The Wall Street Journal]
▶ Apptio: 3Q Earnings Snapshot   [05:49PM  Associated Press]
▶ Apptio's Q3 Earnings Outlook   [07:41AM  Benzinga]
▶ 3 Overlooked Small Caps for a Fast-Growth Portfolio   [Sep-21-18 06:00AM  Investopedia]
▶ Apptio: 2Q Earnings Snapshot   [06:43PM  Associated Press]
▶ Apptio: 1Q Earnings Snapshot   [Apr-30-18 05:37PM  Associated Press]
▶ Apptio reports 4Q loss   [Feb-05-18 05:49PM  Associated Press]
▶ Apptio's Earnings Preview   [10:23AM  Benzinga]
▶ ETFs with exposure to Apptio, Inc. : December 14, 2017   [Dec-14-17 12:49PM  Capital Cube]
▶ ETFs with exposure to Apptio, Inc. : December 1, 2017   [Dec-01-17 10:24AM  Capital Cube]
▶ ETFs with exposure to Apptio, Inc. : November 20, 2017   [Nov-20-17 11:37AM  Capital Cube]
▶ ETFs with exposure to Apptio, Inc. : November 9, 2017   [Nov-09-17 11:51AM  Capital Cube]

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