Intrinsic value of Blucora, Inc. - BCOR

Previous Close

$34.90

  Intrinsic Value

$10.18

stock screener

  Rating & Target

str. sell

-71%

Previous close

$34.90

 
Intrinsic value

$10.18

 
Up/down potential

-71%

 
Rating

str. sell

We calculate the intrinsic value of BCOR 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 1.7

 

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, %
  3.50
  3.65
  3.78
  3.91
  4.02
  4.11
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
Revenue, $m
  580
  601
  623
  648
  674
  702
  731
  762
  796
  831
  868
  907
  949
  993
  1,039
  1,088
  1,139
  1,193
  1,250
  1,310
  1,373
  1,439
  1,509
  1,583
  1,660
  1,741
  1,827
  1,916
  2,011
  2,110
Variable operating expenses, $m
  359
  372
  386
  401
  418
  435
  453
  472
  493
  514
  536
  561
  586
  613
  642
  672
  704
  737
  772
  809
  848
  889
  933
  978
  1,026
  1,076
  1,129
  1,184
  1,242
  1,303
Fixed operating expenses, $m
  152
  156
  159
  163
  166
  170
  174
  177
  181
  185
  189
  193
  198
  202
  207
  211
  216
  220
  225
  230
  235
  240
  246
  251
  257
  262
  268
  274
  280
  286
Total operating expenses, $m
  511
  528
  545
  564
  584
  605
  627
  649
  674
  699
  725
  754
  784
  815
  849
  883
  920
  957
  997
  1,039
  1,083
  1,129
  1,179
  1,229
  1,283
  1,338
  1,397
  1,458
  1,522
  1,589
Operating income, $m
  68
  73
  78
  84
  90
  97
  105
  113
  122
  131
  142
  153
  165
  177
  190
  205
  220
  235
  252
  270
  289
  310
  331
  354
  378
  403
  430
  458
  488
  520
EBITDA, $m
  89
  95
  101
  108
  115
  123
  131
  141
  151
  161
  173
  185
  198
  212
  227
  242
  259
  277
  296
  316
  337
  360
  384
  409
  436
  464
  494
  525
  558
  594
Interest expense (income), $m
  32
  14
  15
  16
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  53
  55
  58
  62
  65
  69
Earnings before tax, $m
  54
  58
  62
  67
  73
  79
  85
  92
  100
  108
  118
  128
  138
  149
  160
  172
  186
  200
  215
  230
  247
  265
  284
  304
  325
  348
  371
  397
  423
  451
Tax expense, $m
  15
  16
  17
  18
  20
  21
  23
  25
  27
  29
  32
  34
  37
  40
  43
  47
  50
  54
  58
  62
  67
  72
  77
  82
  88
  94
  100
  107
  114
  122
Net income, $m
  39
  42
  46
  49
  53
  58
  62
  67
  73
  79
  86
  93
  101
  108
  117
  126
  136
  146
  157
  168
  180
  193
  207
  222
  237
  254
  271
  289
  309
  330

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
  994
  1,030
  1,069
  1,111
  1,156
  1,203
  1,254
  1,308
  1,365
  1,425
  1,489
  1,556
  1,627
  1,703
  1,782
  1,865
  1,954
  2,046
  2,144
  2,247
  2,355
  2,469
  2,589
  2,715
  2,847
  2,987
  3,133
  3,287
  3,449
  3,619
Adjusted assets (=assets-cash), $m
  994
  1,030
  1,069
  1,111
  1,156
  1,203
  1,254
  1,308
  1,365
  1,425
  1,489
  1,556
  1,627
  1,703
  1,782
  1,865
  1,954
  2,046
  2,144
  2,247
  2,355
  2,469
  2,589
  2,715
  2,847
  2,987
  3,133
  3,287
  3,449
  3,619
Revenue / Adjusted assets
  0.584
  0.583
  0.583
  0.583
  0.583
  0.584
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
Average production assets, $m
  457
  473
  491
  511
  531
  553
  576
  601
  627
  655
  684
  715
  748
  782
  819
  857
  897
  940
  985
  1,032
  1,082
  1,134
  1,189
  1,247
  1,308
  1,372
  1,439
  1,510
  1,584
  1,662
Working capital, $m
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Total debt, $m
  274
  289
  304
  321
  340
  359
  379
  401
  424
  449
  475
  502
  531
  561
  594
  628
  663
  701
  741
  782
  826
  873
  921
  972
  1,026
  1,083
  1,142
  1,205
  1,270
  1,339
Total liabilities, $m
  404
  418
  434
  451
  469
  489
  509
  531
  554
  579
  604
  632
  661
  691
  723
  757
  793
  831
  870
  912
  956
  1,002
  1,051
  1,102
  1,156
  1,213
  1,272
  1,334
  1,400
  1,469
Total equity, $m
  591
  612
  635
  660
  687
  715
  745
  777
  811
  846
  884
  924
  967
  1,011
  1,058
  1,108
  1,160
  1,215
  1,274
  1,335
  1,399
  1,467
  1,538
  1,613
  1,691
  1,774
  1,861
  1,952
  2,049
  2,150
Total liabilities and equity, $m
  995
  1,030
  1,069
  1,111
  1,156
  1,204
  1,254
  1,308
  1,365
  1,425
  1,488
  1,556
  1,628
  1,702
  1,781
  1,865
  1,953
  2,046
  2,144
  2,247
  2,355
  2,469
  2,589
  2,715
  2,847
  2,987
  3,133
  3,286
  3,449
  3,619
Debt-to-equity ratio
  0.460
  0.470
  0.480
  0.490
  0.490
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.600
  0.600
  0.600
  0.610
  0.610
  0.610
  0.620
  0.620
  0.620
Adjusted equity ratio
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  39
  42
  46
  49
  53
  58
  62
  67
  73
  79
  86
  93
  101
  108
  117
  126
  136
  146
  157
  168
  180
  193
  207
  222
  237
  254
  271
  289
  309
  330
Depreciation, amort., depletion, $m
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  70
  74
Funds from operations, $m
  61
  64
  69
  73
  78
  83
  89
  95
  102
  109
  117
  125
  134
  143
  153
  164
  175
  187
  200
  214
  228
  244
  260
  277
  295
  314
  335
  356
  379
  403
Change in working capital, $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 operations, $m
  61
  65
  69
  73
  78
  83
  89
  95
  102
  109
  117
  125
  134
  143
  153
  164
  175
  188
  200
  214
  229
  244
  260
  277
  296
  315
  335
  357
  380
  404
Maintenance CAPEX, $m
  -20
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
New CAPEX, $m
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -74
  -78
Cash from investing activities, $m
  -35
  -37
  -39
  -41
  -44
  -45
  -47
  -50
  -53
  -56
  -58
  -61
  -65
  -68
  -71
  -74
  -78
  -83
  -87
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -135
  -141
  -148
Free cash flow, $m
  26
  28
  30
  32
  35
  38
  41
  45
  49
  54
  58
  64
  69
  76
  82
  89
  97
  105
  114
  123
  133
  144
  155
  167
  180
  193
  207
  222
  238
  255
Issuance/(repayment) of debt, $m
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  57
  59
  62
  66
  69
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  
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  57
  59
  62
  66
  69
Total cash flow (excl. dividends), $m
  39
  42
  46
  49
  53
  57
  62
  67
  72
  78
  84
  91
  98
  106
  115
  123
  133
  143
  154
  165
  177
  190
  204
  218
  233
  250
  267
  285
  304
  324
Retained Cash Flow (-), $m
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -101
Prev. year cash balance distribution, $m
  37
  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
  56
  21
  22
  24
  27
  29
  32
  35
  39
  42
  46
  51
  56
  62
  67
  74
  81
  88
  96
  104
  113
  122
  132
  143
  155
  167
  180
  193
  208
  223
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
  54
  19
  20
  20
  21
  21
  22
  22
  22
  22
  22
  22
  21
  21
  20
  19
  18
  16
  15
  13
  12
  10
  9
  7
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  100.0
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  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
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  100.0
  100.0

Blucora, Inc. is a provider of technology-enabled financial solutions to consumers, small business owners and tax professionals. The Company operates through the Wealth Management and Tax Preparation segments. The Company's Wealth Management segment consists of HD Vest, which provides financial advisors with an integrated platform of brokerage, investment advisory and insurance services to assist in making each financial advisor a financial service center for his/her clients The Company's Tax Preparation segment provides digital do-it-yourself (DDIY) tax preparation solutions for consumers, small business owners and tax professionals. TaxAct, a provider of digital tax preparation solutions. HD Vest's specialized model provides an open-architecture investment platform and technology tools to help financial advisors identify investment opportunities for their clients. TaxAct offers pricing and packaging options for tax professionals.

FINANCIAL RATIOS  of  Blucora, Inc. (BCOR)

Valuation Ratios
P/E Ratio -22.5
Price to Sales 3.2
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 17.2
Price to Free Cash Flow 18
Growth Rates
Sales Growth Rate 286.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate -4.4%
Financial Strength
Quick Ratio 20
Current Ratio 0
LT Debt to Equity 98.8%
Total Debt to Equity 99.5%
Interest Coverage 1
Management Effectiveness
Return On Assets -4.7%
Ret/ On Assets - 3 Yr. Avg. -3.7%
Return On Total Capital -7%
Ret/ On T. Cap. - 3 Yr. Avg. -5.4%
Return On Equity -14.8%
Return On Equity - 3 Yr. Avg. -10.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 51.1%
Gross Margin - 3 Yr. Avg. 75.3%
EBITDA Margin 14.9%
EBITDA Margin - 3 Yr. Avg. 16.3%
Operating Margin 7.9%
Oper. Margin - 3 Yr. Avg. 3.1%
Pre-Tax Margin -0.7%
Pre-Tax Margin - 3 Yr. Avg. -7.9%
Net Profit Margin -14.3%
Net Profit Margin - 3 Yr. Avg. -27.6%
Effective Tax Rate 66.7%
Eff/ Tax Rate - 3 Yr. Avg. 41.2%
Payout Ratio 0%

BCOR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BCOR stock intrinsic value calculation we used $560 million for the last fiscal year's total revenue generated by Blucora, Inc.. The default revenue input number comes from 0001 income statement of Blucora, 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 BCOR stock valuation model: a) initial revenue growth rate of 3.5% 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 BCOR is calculated based on our internal credit rating of Blucora, 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 Blucora, 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 BCOR stock the variable cost ratio is equal to 62%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $149 million in the base year in the intrinsic value calculation for BCOR 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 Blucora, Inc..

Corporate tax rate of 27% is the nominal tax rate for Blucora, 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 BCOR 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 BCOR are equal to 78.8%.

Life of production assets of 22.6 years is the average useful life of capital assets used in Blucora, 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 BCOR is equal to -0.5%. 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 - $607.595 million for Blucora, 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 48.273 million for Blucora, 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 Blucora, Inc. at the current share price and the inputted number of shares is $1.7 billion.

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