Intrinsic value of Benefitfocus - BNFT

Previous Close

$43.00

  Intrinsic Value

$4.56

stock screener

  Rating & Target

str. sell

-89%

Previous close

$43.00

 
Intrinsic value

$4.56

 
Up/down potential

-89%

 
Rating

str. sell

We calculate the intrinsic value of BNFT 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 1.4

 

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, %
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
Revenue, $m
  282
  309
  337
  366
  397
  428
  461
  495
  531
  567
  606
  645
  687
  730
  775
  821
  870
  921
  974
  1,029
  1,087
  1,147
  1,210
  1,276
  1,345
  1,417
  1,492
  1,571
  1,654
  1,740
Variable operating expenses, $m
  64
  70
  76
  83
  90
  97
  104
  112
  120
  128
  136
  145
  155
  164
  175
  185
  196
  207
  219
  232
  245
  258
  273
  287
  303
  319
  336
  354
  373
  392
Fixed operating expenses, $m
  223
  228
  233
  238
  243
  248
  254
  259
  265
  271
  277
  283
  289
  296
  302
  309
  316
  323
  330
  337
  344
  352
  360
  368
  376
  384
  392
  401
  410
  419
Total operating expenses, $m
  287
  298
  309
  321
  333
  345
  358
  371
  385
  399
  413
  428
  444
  460
  477
  494
  512
  530
  549
  569
  589
  610
  633
  655
  679
  703
  728
  755
  783
  811
Operating income, $m
  -4
  12
  28
  46
  64
  83
  103
  124
  146
  168
  192
  217
  243
  270
  298
  328
  358
  391
  425
  460
  498
  537
  578
  621
  666
  714
  764
  816
  872
  930
EBITDA, $m
  13
  31
  49
  68
  88
  109
  131
  154
  178
  203
  229
  256
  284
  314
  345
  377
  411
  446
  484
  522
  563
  606
  651
  698
  747
  799
  854
  911
  971
  1,035
Interest expense (income), $m
  7
  13
  12
  14
  16
  18
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  70
  74
  79
  84
  89
  94
  100
  106
  112
  118
Earnings before tax, $m
  -17
  0
  14
  30
  46
  62
  80
  98
  117
  137
  158
  180
  203
  227
  251
  277
  305
  333
  363
  395
  428
  463
  499
  537
  577
  620
  664
  711
  760
  812
Tax expense, $m
  0
  0
  4
  8
  12
  17
  22
  26
  32
  37
  43
  49
  55
  61
  68
  75
  82
  90
  98
  107
  116
  125
  135
  145
  156
  167
  179
  192
  205
  219
Net income, $m
  -17
  0
  10
  22
  33
  46
  58
  72
  86
  100
  115
  131
  148
  165
  184
  203
  222
  243
  265
  288
  312
  338
  364
  392
  422
  452
  485
  519
  555
  592

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
  211
  231
  252
  274
  296
  320
  344
  370
  396
  424
  452
  482
  513
  545
  579
  613
  650
  688
  727
  769
  812
  857
  904
  953
  1,004
  1,058
  1,114
  1,173
  1,235
  1,300
Adjusted assets (=assets-cash), $m
  211
  231
  252
  274
  296
  320
  344
  370
  396
  424
  452
  482
  513
  545
  579
  613
  650
  688
  727
  769
  812
  857
  904
  953
  1,004
  1,058
  1,114
  1,173
  1,235
  1,300
Revenue / Adjusted assets
  1.336
  1.338
  1.337
  1.336
  1.341
  1.338
  1.340
  1.338
  1.341
  1.337
  1.341
  1.338
  1.339
  1.339
  1.339
  1.339
  1.338
  1.339
  1.340
  1.338
  1.339
  1.338
  1.338
  1.339
  1.340
  1.339
  1.339
  1.339
  1.339
  1.338
Average production assets, $m
  85
  93
  102
  111
  120
  129
  139
  150
  160
  171
  183
  195
  207
  220
  234
  248
  263
  278
  294
  311
  328
  346
  365
  385
  406
  428
  451
  475
  499
  526
Working capital, $m
  -28
  -31
  -33
  -36
  -39
  -42
  -46
  -49
  -53
  -56
  -60
  -64
  -68
  -72
  -77
  -81
  -86
  -91
  -96
  -102
  -108
  -114
  -120
  -126
  -133
  -140
  -148
  -156
  -164
  -172
Total debt, $m
  104
  122
  141
  161
  181
  202
  224
  247
  271
  296
  322
  348
  376
  405
  435
  467
  499
  533
  569
  606
  645
  686
  728
  772
  818
  867
  918
  971
  1,026
  1,084
Total liabilities, $m
  190
  208
  227
  246
  267
  288
  310
  333
  357
  381
  407
  434
  462
  491
  521
  552
  585
  619
  655
  692
  730
  771
  813
  858
  904
  952
  1,003
  1,056
  1,112
  1,170
Total equity, $m
  21
  23
  25
  27
  30
  32
  34
  37
  40
  42
  45
  48
  51
  55
  58
  61
  65
  69
  73
  77
  81
  86
  90
  95
  100
  106
  111
  117
  124
  130
Total liabilities and equity, $m
  211
  231
  252
  273
  297
  320
  344
  370
  397
  423
  452
  482
  513
  546
  579
  613
  650
  688
  728
  769
  811
  857
  903
  953
  1,004
  1,058
  1,114
  1,173
  1,236
  1,300
Debt-to-equity ratio
  4.950
  5.300
  5.610
  5.880
  6.120
  6.330
  6.520
  6.690
  6.840
  6.980
  7.110
  7.230
  7.330
  7.430
  7.520
  7.610
  7.680
  7.760
  7.820
  7.890
  7.950
  8.000
  8.050
  8.100
  8.150
  8.190
  8.230
  8.270
  8.310
  8.340
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -17
  0
  10
  22
  33
  46
  58
  72
  86
  100
  115
  131
  148
  165
  184
  203
  222
  243
  265
  288
  312
  338
  364
  392
  422
  452
  485
  519
  555
  592
Depreciation, amort., depletion, $m
  17
  19
  21
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  86
  90
  95
  100
  105
Funds from operations, $m
  0
  19
  31
  44
  57
  72
  86
  102
  118
  135
  152
  170
  189
  209
  230
  252
  275
  299
  324
  350
  378
  407
  437
  469
  503
  538
  575
  614
  655
  698
Change in working capital, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
Cash from operations, $m
  2
  21
  34
  47
  60
  75
  90
  105
  121
  138
  156
  174
  194
  214
  235
  257
  280
  304
  329
  356
  384
  413
  444
  476
  510
  545
  582
  622
  663
  706
Maintenance CAPEX, $m
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -100
New CAPEX, $m
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
Cash from investing activities, $m
  -24
  -25
  -27
  -29
  -31
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -51
  -54
  -58
  -61
  -65
  -68
  -72
  -76
  -79
  -84
  -88
  -93
  -98
  -103
  -109
  -114
  -120
  -126
Free cash flow, $m
  -21
  -4
  7
  18
  29
  41
  54
  67
  81
  95
  110
  126
  142
  159
  177
  196
  216
  236
  258
  280
  304
  329
  355
  383
  412
  442
  474
  508
  543
  580
Issuance/(repayment) of debt, $m
  -11
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
  48
  51
  53
  56
  58
Issuance/(repurchase) of shares, $m
  47
  2
  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  
  36
  20
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
  48
  51
  53
  56
  58
Total cash flow (excl. dividends), $m
  15
  16
  25
  37
  50
  62
  76
  90
  105
  120
  136
  152
  170
  188
  207
  227
  248
  270
  293
  318
  343
  370
  398
  427
  458
  491
  525
  561
  598
  638
Retained Cash Flow (-), $m
  -47
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
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
  -32
  14
  23
  35
  47
  60
  73
  87
  102
  117
  133
  149
  167
  185
  204
  224
  245
  266
  289
  313
  339
  365
  393
  422
  453
  485
  519
  555
  592
  632
Discount rate, %
  10.20
  10.71
  11.25
  11.81
  12.40
  13.02
  13.67
  14.35
  15.07
  15.82
  16.61
  17.45
  18.32
  19.23
  20.20
  21.21
  22.27
  23.38
  24.55
  25.77
  27.06
  28.42
  29.84
  31.33
  32.90
  34.54
  36.27
  38.08
  39.99
  41.98
PV of cash for distribution, $m
  -29
  11
  17
  22
  26
  29
  30
  30
  29
  27
  24
  22
  19
  16
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1
  45.1

Benefitfocus, Inc. (Benefitfocus) is a provider of cloud-based benefits management platform for consumers, employers, insurance carriers and brokers. The Benefitfocus Platform allows how organizations and individuals shop for, enroll in, manage and exchange benefits. The Company operates through two business segments: Employer, which derives its revenue from customers that use the Company's services for the provision of benefits to their employees, and administrators acting on behalf of employers, Carrier, which derives its revenue from insurance companies that provide coverage at their own risk. Its solutions support benefits plans, including healthcare, dental, life and disability insurance, and voluntary benefits plans, such as critical illness, supplemental income and wellness programs. It provides a multi-tenant cloud-based benefits management platform to the employer and carrier markets.

FINANCIAL RATIOS  of  Benefitfocus (BNFT)

Valuation Ratios
P/E Ratio -32.7
Price to Sales 5.6
Price to Book -39.7
Price to Tangible Book
Price to Cash Flow -56.9
Price to Free Cash Flow -36.3
Growth Rates
Sales Growth Rate 25.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.3%
Cap. Spend. - 3 Yr. Gr. Rate 7.6%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity -236.4%
Total Debt to Equity -306.1%
Interest Coverage -5
Management Effectiveness
Return On Assets -18.2%
Ret/ On Assets - 3 Yr. Avg. -32%
Return On Total Capital -69.6%
Ret/ On T. Cap. - 3 Yr. Avg. -185.8%
Return On Equity 156.9%
Return On Equity - 3 Yr. Avg. 251.3%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 48.5%
Gross Margin - 3 Yr. Avg. 43.1%
EBITDA Margin -8.6%
EBITDA Margin - 3 Yr. Avg. -23.3%
Operating Margin -14.2%
Oper. Margin - 3 Yr. Avg. -28.8%
Pre-Tax Margin -17.2%
Pre-Tax Margin - 3 Yr. Avg. -32.2%
Net Profit Margin -17.2%
Net Profit Margin - 3 Yr. Avg. -32.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BNFT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BNFT stock intrinsic value calculation we used $256.735 million for the last fiscal year's total revenue generated by Benefitfocus. The default revenue input number comes from 0001 income statement of Benefitfocus. 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 BNFT stock valuation model: a) initial revenue growth rate of 10% 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 10.2%, whose default value for BNFT is calculated based on our internal credit rating of Benefitfocus, 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 Benefitfocus.
    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 BNFT stock the variable cost ratio is equal to 22.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $218 million in the base year in the intrinsic value calculation for BNFT 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 11.5% for Benefitfocus.

Corporate tax rate of 27% is the nominal tax rate for Benefitfocus. 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 BNFT 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 BNFT are equal to 30.2%.

Life of production assets of 4.9 years is the average useful life of capital assets used in Benefitfocus 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 BNFT is equal to -9.9%. 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 - $-8.719 million for Benefitfocus - 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 31.762 million for Benefitfocus 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 Benefitfocus at the current share price and the inputted number of shares is $1.4 billion.

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COMPANY NEWS

▶ Benefitfocus Hosts Ribbon Cutting for New Tulsa Office   [Nov-14-18 10:00AM  PR Newswire]
▶ Benefitfocus Strengthens Commitment to Brokers   [Nov-08-18 04:30PM  PR Newswire]
▶ Benefitfocus to Host Investor Day   [Nov-07-18 09:00AM  GlobeNewswire]
▶ Benefitfocus: 3Q Earnings Snapshot   [07:04PM  Associated Press]
▶ Benefitfocus: 2Q Earnings Snapshot   [07:19PM  Associated Press]
▶ Benefitfocus Announces Secondary Offering   [May-21-18 04:43PM  GlobeNewswire]
▶ Why Benefitfocus Inc. Stock Jumped Today   [12:55PM  Motley Fool]
▶ Benefitfocus: 1Q Earnings Snapshot   [May-03-18 07:15PM  Associated Press]
▶ Benefitfocus Extends Stock Ownership to All Employees   [Apr-24-18 03:00PM  PR Newswire]
▶ Edited Transcript of BNFT presentation 7-Mar-17 2:50pm GMT   [10:59AM  Thomson Reuters StreetEvents]
▶ Benefitfocus reports 4Q loss   [Mar-14-18 05:08PM  Associated Press]
▶ 8 Stocks That Will Hit All-Time Lows in 2018   [Jan-19-18 01:08PM  InvestorPlace]
▶ Benefitfocus Promotes Ray August to Chief Executive Officer   [Nov-20-17 04:30PM  GlobeNewswire]
▶ Benefitfocus reports 3Q loss   [Nov-02-17 07:09PM  Associated Press]
▶ Why MannKind, Intelsat, and Benefitfocus Jumped Today   [Oct-04-17 04:30PM  Motley Fool]
▶ Benefitfocus Expands to Salt Lake City   [Sep-27-17 09:00AM  PR Newswire]
▶ Benefitfocus reports 2Q loss   [Aug-04-17 02:34AM  Associated Press]
▶ ETFs with exposure to Benefitfocus, Inc. : June 2, 2017   [Jun-02-17 01:54PM  Capital Cube]
▶ ETFs with exposure to Benefitfocus, Inc. : May 18, 2017   [May-18-17 01:33PM  Capital Cube]

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