Intrinsic value of BlackLine - BL

Previous Close

$38.80

  Intrinsic Value

$11.09

stock screener

  Rating & Target

str. sell

-71%

Previous close

$38.80

 
Intrinsic value

$11.09

 
Up/down potential

-71%

 
Rating

str. sell

We calculate the intrinsic value of BL 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 2.1

 

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, %
  32.10
  29.39
  26.95
  24.76
  22.78
  21.00
  19.40
  17.96
  16.67
  15.50
  14.45
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
Revenue, $m
  234
  303
  384
  479
  588
  712
  850
  1,003
  1,170
  1,351
  1,547
  1,755
  1,978
  2,213
  2,460
  2,721
  2,993
  3,278
  3,576
  3,885
  4,208
  4,543
  4,891
  5,253
  5,629
  6,020
  6,427
  6,849
  7,289
  7,746
Variable operating expenses, $m
  232
  293
  366
  451
  548
  658
  781
  917
  1,066
  1,228
  1,379
  1,565
  1,763
  1,973
  2,193
  2,426
  2,669
  2,923
  3,188
  3,464
  3,751
  4,050
  4,360
  4,683
  5,019
  5,367
  5,729
  6,106
  6,498
  6,906
Fixed operating expenses, $m
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  42
  43
  44
  45
  46
  47
  48
  49
  51
  52
  53
  54
  55
  56
  58
  59
  60
  61
Total operating expenses, $m
  265
  326
  400
  486
  584
  694
  818
  955
  1,105
  1,268
  1,420
  1,607
  1,805
  2,016
  2,237
  2,471
  2,715
  2,970
  3,236
  3,513
  3,802
  4,102
  4,413
  4,737
  5,074
  5,423
  5,787
  6,165
  6,558
  6,967
Operating income, $m
  -31
  -24
  -16
  -6
  5
  18
  32
  47
  65
  84
  127
  149
  172
  197
  223
  250
  278
  308
  340
  372
  406
  441
  478
  516
  556
  597
  640
  684
  731
  779
EBITDA, $m
  7
  17
  30
  45
  63
  83
  105
  130
  157
  187
  219
  253
  289
  328
  368
  411
  456
  503
  551
  602
  655
  710
  768
  827
  889
  954
  1,021
  1,090
  1,163
  1,238
Interest expense (income), $m
  9
  0
  2
  5
  9
  13
  18
  23
  29
  36
  43
  51
  60
  69
  79
  89
  100
  111
  123
  136
  149
  162
  176
  191
  206
  222
  238
  256
  273
  292
  311
Earnings before tax, $m
  -31
  -26
  -21
  -15
  -8
  0
  8
  18
  29
  40
  76
  89
  103
  118
  134
  150
  167
  185
  204
  223
  244
  265
  287
  310
  334
  358
  384
  411
  439
  468
Tax expense, $m
  0
  0
  0
  0
  0
  0
  2
  5
  8
  11
  20
  24
  28
  32
  36
  40
  45
  50
  55
  60
  66
  72
  77
  84
  90
  97
  104
  111
  118
  126
Net income, $m
  -31
  -26
  -21
  -15
  -8
  0
  6
  13
  21
  29
  55
  65
  75
  86
  97
  109
  122
  135
  149
  163
  178
  193
  209
  226
  244
  262
  280
  300
  320
  342

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
  609
  788
  1,000
  1,248
  1,532
  1,854
  2,214
  2,612
  3,047
  3,519
  4,027
  4,571
  5,150
  5,762
  6,407
  7,085
  7,795
  8,537
  9,311
  10,118
  10,957
  11,830
  12,737
  13,680
  14,660
  15,678
  16,736
  17,837
  18,982
  20,173
Adjusted assets (=assets-cash), $m
  609
  788
  1,000
  1,248
  1,532
  1,854
  2,214
  2,612
  3,047
  3,519
  4,027
  4,571
  5,150
  5,762
  6,407
  7,085
  7,795
  8,537
  9,311
  10,118
  10,957
  11,830
  12,737
  13,680
  14,660
  15,678
  16,736
  17,837
  18,982
  20,173
Revenue / Adjusted assets
  0.384
  0.385
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
Average production assets, $m
  173
  224
  285
  355
  436
  528
  630
  743
  867
  1,001
  1,146
  1,301
  1,465
  1,640
  1,823
  2,016
  2,218
  2,429
  2,650
  2,879
  3,118
  3,366
  3,624
  3,893
  4,171
  4,461
  4,762
  5,075
  5,401
  5,740
Working capital, $m
  -77
  -100
  -127
  -158
  -194
  -235
  -281
  -331
  -386
  -446
  -510
  -579
  -653
  -730
  -812
  -898
  -988
  -1,082
  -1,180
  -1,282
  -1,388
  -1,499
  -1,614
  -1,734
  -1,858
  -1,987
  -2,121
  -2,260
  -2,405
  -2,556
Total debt, $m
  46
  102
  168
  245
  333
  433
  545
  669
  804
  951
  1,109
  1,278
  1,458
  1,648
  1,849
  2,060
  2,281
  2,512
  2,752
  3,003
  3,264
  3,536
  3,818
  4,111
  4,416
  4,732
  5,061
  5,404
  5,760
  6,130
Total liabilities, $m
  189
  245
  311
  388
  477
  577
  689
  812
  948
  1,094
  1,253
  1,422
  1,602
  1,792
  1,993
  2,203
  2,424
  2,655
  2,896
  3,147
  3,408
  3,679
  3,961
  4,254
  4,559
  4,876
  5,205
  5,547
  5,903
  6,274
Total equity, $m
  420
  543
  689
  860
  1,056
  1,277
  1,525
  1,799
  2,099
  2,425
  2,775
  3,150
  3,548
  3,970
  4,415
  4,882
  5,371
  5,882
  6,416
  6,971
  7,549
  8,151
  8,776
  9,425
  10,100
  10,802
  11,531
  12,289
  13,078
  13,899
Total liabilities and equity, $m
  609
  788
  1,000
  1,248
  1,533
  1,854
  2,214
  2,611
  3,047
  3,519
  4,028
  4,572
  5,150
  5,762
  6,408
  7,085
  7,795
  8,537
  9,312
  10,118
  10,957
  11,830
  12,737
  13,679
  14,659
  15,678
  16,736
  17,836
  18,981
  20,173
Debt-to-equity ratio
  0.110
  0.190
  0.240
  0.280
  0.320
  0.340
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
Adjusted equity ratio
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -31
  -26
  -21
  -15
  -8
  0
  6
  13
  21
  29
  55
  65
  75
  86
  97
  109
  122
  135
  149
  163
  178
  193
  209
  226
  244
  262
  280
  300
  320
  342
Depreciation, amort., depletion, $m
  37
  41
  46
  52
  58
  65
  74
  83
  93
  103
  92
  104
  117
  131
  146
  161
  177
  194
  212
  230
  249
  269
  290
  311
  334
  357
  381
  406
  432
  459
Funds from operations, $m
  7
  15
  25
  36
  50
  65
  80
  96
  114
  133
  147
  169
  192
  217
  243
  271
  299
  329
  361
  393
  427
  463
  499
  538
  577
  618
  661
  706
  752
  801
Change in working capital, $m
  -19
  -23
  -27
  -31
  -36
  -41
  -46
  -50
  -55
  -60
  -64
  -69
  -73
  -78
  -82
  -86
  -90
  -94
  -98
  -102
  -106
  -111
  -115
  -119
  -124
  -129
  -134
  -139
  -145
  -151
Cash from operations, $m
  25
  38
  52
  68
  86
  106
  125
  146
  169
  193
  211
  238
  266
  295
  325
  357
  389
  424
  459
  496
  534
  573
  614
  657
  701
  747
  795
  845
  897
  952
Maintenance CAPEX, $m
  -10
  -14
  -18
  -23
  -28
  -35
  -42
  -50
  -59
  -69
  -80
  -92
  -104
  -117
  -131
  -146
  -161
  -177
  -194
  -212
  -230
  -249
  -269
  -290
  -311
  -334
  -357
  -381
  -406
  -432
New CAPEX, $m
  -42
  -51
  -60
  -70
  -81
  -92
  -102
  -113
  -124
  -134
  -145
  -155
  -165
  -174
  -184
  -193
  -202
  -211
  -220
  -229
  -239
  -248
  -258
  -268
  -279
  -290
  -301
  -313
  -326
  -339
Cash from investing activities, $m
  -52
  -65
  -78
  -93
  -109
  -127
  -144
  -163
  -183
  -203
  -225
  -247
  -269
  -291
  -315
  -339
  -363
  -388
  -414
  -441
  -469
  -497
  -527
  -558
  -590
  -624
  -658
  -694
  -732
  -771
Free cash flow, $m
  -27
  -27
  -27
  -25
  -23
  -21
  -19
  -17
  -15
  -11
  -13
  -8
  -3
  3
  10
  18
  26
  35
  44
  54
  65
  76
  87
  99
  111
  124
  137
  151
  166
  181
Issuance/(repayment) of debt, $m
  46
  56
  66
  77
  88
  100
  112
  124
  135
  147
  158
  169
  180
  190
  201
  211
  221
  231
  241
  251
  261
  271
  282
  293
  305
  317
  329
  342
  356
  371
Issuance/(repurchase) of shares, $m
  133
  150
  168
  186
  204
  222
  242
  261
  279
  296
  295
  310
  323
  336
  347
  358
  367
  376
  385
  393
  400
  408
  416
  423
  432
  440
  449
  458
  468
  479
Cash from financing (excl. dividends), $m  
  179
  206
  234
  263
  292
  322
  354
  385
  414
  443
  453
  479
  503
  526
  548
  569
  588
  607
  626
  644
  661
  679
  698
  716
  737
  757
  778
  800
  824
  850
Total cash flow (excl. dividends), $m
  151
  178
  207
  237
  269
  302
  334
  367
  400
  432
  440
  470
  500
  530
  558
  586
  614
  642
  670
  698
  726
  755
  785
  815
  847
  881
  915
  952
  990
  1,030
Retained Cash Flow (-), $m
  -133
  -150
  -168
  -186
  -204
  -222
  -248
  -274
  -300
  -325
  -350
  -375
  -399
  -422
  -445
  -467
  -489
  -511
  -533
  -556
  -578
  -601
  -625
  -650
  -675
  -702
  -729
  -758
  -789
  -821
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
  19
  28
  39
  52
  65
  79
  87
  93
  100
  106
  89
  96
  102
  108
  114
  119
  125
  131
  136
  142
  148
  154
  160
  166
  172
  179
  186
  194
  201
  210
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
  18
  26
  34
  42
  50
  58
  58
  58
  57
  56
  42
  41
  39
  36
  33
  30
  27
  24
  21
  18
  15
  13
  10
  8
  7
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  94.0
  89.2
  85.2
  81.9
  79.0
  76.6
  74.4
  72.6
  70.9
  69.4
  68.2
  67.0
  66.0
  65.1
  64.2
  63.4
  62.7
  62.1
  61.4
  60.9
  60.4
  59.9
  59.4
  59.0
  58.6
  58.2
  57.8
  57.5
  57.1
  56.8

BlackLine, Inc. is a holding company. The Company provides cloud-based software platform that is designed to automate and streamline accounting and finance operations. Its platform supports accounting processes, such as the financial close, account reconciliation, intercompany accounting and controls assurance. Its platform consists of seven core cloud-based products, including Account Reconciliation, Task Management, Transaction Matching, Journal Entry, Variance Analysis, Consolidation Integrity Manager and Daily Reconciliation. The Company's solutions include Reconciliation Management and Financial Close Management and Insights. It operates through two geographical regions, which include the United States and International. As of December 31, 2016, its software integrated with, and obtained data from, more than 30 various enterprise resource planning (ERP) systems, including NetSuite, Oracle and Workday, as well as many other financial systems and applications.

FINANCIAL RATIOS  of  BlackLine (BL)

Valuation Ratios
P/E Ratio -51
Price to Sales 16.2
Price to Book 6.8
Price to Tangible Book
Price to Cash Flow -397.9
Price to Free Cash Flow -199
Growth Rates
Sales Growth Rate 46.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -58.3%
Cap. Spend. - 3 Yr. Gr. Rate 20.1%
Financial Strength
Quick Ratio 105
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0.3%
Interest Coverage -4
Management Effectiveness
Return On Assets -8.9%
Ret/ On Assets - 3 Yr. Avg. -7.7%
Return On Total Capital -16%
Ret/ On T. Cap. - 3 Yr. Avg. -12.1%
Return On Equity -17.1%
Return On Equity - 3 Yr. Avg. -13.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 75.6%
Gross Margin - 3 Yr. Avg. 71.8%
EBITDA Margin -16.3%
EBITDA Margin - 3 Yr. Avg. -21.2%
Operating Margin -27.6%
Oper. Margin - 3 Yr. Avg. -34.2%
Pre-Tax Margin -37.4%
Pre-Tax Margin - 3 Yr. Avg. -43.6%
Net Profit Margin -31.7%
Net Profit Margin - 3 Yr. Avg. -31.4%
Effective Tax Rate 15.2%
Eff/ Tax Rate - 3 Yr. Avg. 27.1%
Payout Ratio 0%

BL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BL stock intrinsic value calculation we used $177.031 million for the last fiscal year's total revenue generated by BlackLine. The default revenue input number comes from 0001 income statement of BlackLine. 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 BL stock valuation model: a) initial revenue growth rate of 32.1% 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 BL is calculated based on our internal credit rating of BlackLine, 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 BlackLine.
    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 BL stock the variable cost ratio is equal to 102.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32 million in the base year in the intrinsic value calculation for BL 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 BlackLine.

Corporate tax rate of 27% is the nominal tax rate for BlackLine. 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 BL 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 BL are equal to 74.1%.

Life of production assets of 12.5 years is the average useful life of capital assets used in BlackLine 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 BL is equal to -33%. 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 - $317.305 million for BlackLine - 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 53.939 million for BlackLine 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 BlackLine at the current share price and the inputted number of shares is $2.1 billion.

RELATED COMPANIES Price Int.Val. Rating
BL BlackLine 38.80 11.89  str.sell
ORCL Oracle 48.84 34.20  sell
EPAY Bottomline Tec 53.38 17.89  str.sell
ZEN Zendesk 53.10 0.68  str.sell
IBM International 120.20 191.80  buy

COMPANY NEWS

▶ 3 Reasons This Small-Cap SaaS Stock Is a Buy   [Nov-14-18 09:04AM  Motley Fool]
▶ BlackLine Announces Financial Analyst Day   [Nov-05-18 08:30AM  GlobeNewswire]
▶ BlackLine Releases Oracle ERP Connector   [Oct-30-18 08:58AM  PR Newswire]
▶ 3 Hot Stocks to Buy in October   [Oct-03-18 06:00AM  Motley Fool]
▶ Stocks Today: Why The Nasdaq Composite Is Hanging On To A Gain   [Aug-23-18 03:03PM  Investor's Business Daily]
▶ When Will BlackLine Inc (NASDAQ:BL) Turn A Profit?   [Jun-26-18 09:30AM  Simply Wall St.]
▶ 3 Stocks That Could Put Apple's Returns to Shame   [Jun-07-18 08:00AM  Motley Fool]
▶ BlackLine COO To Speak At SuiteWorld18   [Apr-24-18 04:05PM  PR Newswire]
▶ BlackLine, Inc. to Host Earnings Call   [12:20PM  ACCESSWIRE]
▶ BlackLine Announces Financial Analyst Day   [Nov-08-17 04:05PM  GlobeNewswire]
▶ BlackLine, Inc. to Host Earnings Call   [01:15PM  ACCESSWIRE]
▶ BlackLine Appoints Tammy Coley As Chief Strategy Officer   [Oct-30-17 09:00AM  PR Newswire]
▶ Therese Tucker Named Top Woman Leader In SaaS   [Oct-05-17 09:00AM  PR Newswire]
▶ Whats The Cash Runway For BlackLine Inc (BL)?   [Oct-03-17 03:26PM  Simply Wall St.]

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