Intrinsic value of Benefitfocus, Inc. - BNFT

Previous Close

$26.84

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$26.84

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
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 0.9

 

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, %
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
Revenue, $m
  285
  313
  342
  372
  403
  436
  470
  505
  541
  579
  619
  660
  702
  747
  793
  841
  891
  944
  998
  1,055
  1,115
  1,177
  1,242
  1,309
  1,380
  1,454
  1,532
  1,613
  1,698
  1,787
Variable operating expenses, $m
  304
  332
  362
  393
  426
  460
  495
  531
  569
  609
  643
  685
  730
  776
  824
  874
  926
  980
  1,037
  1,096
  1,158
  1,223
  1,290
  1,360
  1,434
  1,511
  1,592
  1,676
  1,764
  1,857
Fixed operating expenses, $m
  22
  23
  23
  24
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  30
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
Total operating expenses, $m
  326
  355
  385
  417
  451
  485
  521
  557
  596
  636
  671
  714
  759
  806
  854
  905
  958
  1,013
  1,070
  1,130
  1,193
  1,259
  1,326
  1,397
  1,472
  1,550
  1,632
  1,716
  1,805
  1,899
Operating income, $m
  -41
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -52
  -54
  -57
  -59
  -61
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -95
  -99
  -103
  -108
  -112
EBITDA, $m
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -16
  -16
  -16
  -16
  -15
  -15
  -15
  -14
  -14
  -13
  -13
  -12
Interest expense (income), $m
  7
  18
  8
  10
  11
  13
  14
  16
  18
  20
  21
  23
  25
  27
  30
  32
  34
  37
  39
  42
  45
  47
  50
  54
  57
  60
  64
  68
  72
  76
  80
Earnings before tax, $m
  -58
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -75
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -183
  -192
Tax expense, $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
Net income, $m
  -58
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -75
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -183
  -192

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
  217
  238
  260
  283
  307
  331
  357
  384
  412
  441
  471
  502
  534
  568
  603
  640
  678
  718
  759
  802
  848
  895
  944
  996
  1,050
  1,106
  1,165
  1,227
  1,291
  1,359
Adjusted assets (=assets-cash), $m
  217
  238
  260
  283
  307
  331
  357
  384
  412
  441
  471
  502
  534
  568
  603
  640
  678
  718
  759
  802
  848
  895
  944
  996
  1,050
  1,106
  1,165
  1,227
  1,291
  1,359
Revenue / Adjusted assets
  1.313
  1.315
  1.315
  1.314
  1.313
  1.317
  1.317
  1.315
  1.313
  1.313
  1.314
  1.315
  1.315
  1.315
  1.315
  1.314
  1.314
  1.315
  1.315
  1.315
  1.315
  1.315
  1.316
  1.314
  1.314
  1.315
  1.315
  1.315
  1.315
  1.315
Average production assets, $m
  80
  87
  95
  104
  112
  122
  131
  141
  151
  162
  173
  184
  196
  208
  221
  235
  249
  263
  279
  294
  311
  328
  346
  365
  385
  406
  427
  450
  474
  499
Working capital, $m
  -40
  -44
  -48
  -52
  -56
  -61
  -66
  -71
  -76
  -81
  -87
  -92
  -98
  -105
  -111
  -118
  -125
  -132
  -140
  -148
  -156
  -165
  -174
  -183
  -193
  -204
  -214
  -226
  -238
  -250
Total debt, $m
  114
  133
  153
  173
  195
  217
  240
  264
  289
  315
  342
  370
  399
  430
  461
  494
  529
  564
  602
  641
  681
  724
  768
  815
  863
  914
  967
  1,023
  1,081
  1,142
Total liabilities, $m
  195
  214
  234
  255
  276
  298
  321
  345
  370
  396
  423
  452
  481
  511
  543
  576
  610
  646
  683
  722
  763
  805
  850
  896
  945
  995
  1,049
  1,104
  1,162
  1,223
Total equity, $m
  22
  24
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  76
  80
  85
  89
  94
  100
  105
  111
  117
  123
  129
  136
Total liabilities and equity, $m
  217
  238
  260
  283
  307
  331
  357
  383
  411
  440
  470
  502
  534
  568
  603
  640
  678
  718
  759
  802
  848
  894
  944
  996
  1,050
  1,106
  1,166
  1,227
  1,291
  1,359
Debt-to-equity ratio
  5.250
  5.580
  5.870
  6.120
  6.350
  6.540
  6.720
  6.880
  7.020
  7.150
  7.270
  7.380
  7.480
  7.570
  7.650
  7.730
  7.800
  7.870
  7.930
  7.990
  8.040
  8.090
  8.140
  8.180
  8.220
  8.260
  8.300
  8.340
  8.370
  8.400
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
  -58
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -75
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -183
  -192
Depreciation, amort., depletion, $m
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  100
Funds from operations, $m
  -35
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -92
Change in working capital, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from operations, $m
  -32
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -80
Maintenance CAPEX, $m
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -90
  -95
New CAPEX, $m
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
Cash from investing activities, $m
  -21
  -24
  -25
  -27
  -30
  -31
  -33
  -36
  -38
  -41
  -43
  -46
  -49
  -51
  -55
  -57
  -61
  -65
  -68
  -72
  -76
  -79
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
Free cash flow, $m
  -54
  -46
  -49
  -52
  -56
  -59
  -63
  -67
  -70
  -74
  -79
  -83
  -88
  -92
  -97
  -102
  -107
  -113
  -118
  -124
  -131
  -137
  -144
  -151
  -158
  -165
  -173
  -182
  -190
  -199
Issuance/(repayment) of debt, $m
  -124
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
Issuance/(repurchase) of shares, $m
  203
  53
  56
  59
  62
  66
  70
  73
  77
  81
  78
  83
  87
  92
  97
  102
  107
  112
  118
  124
  130
  137
  143
  150
  157
  165
  173
  181
  190
  199
Cash from financing (excl. dividends), $m  
  79
  72
  76
  80
  83
  88
  93
  97
  102
  107
  105
  111
  116
  122
  129
  135
  141
  148
  155
  163
  171
  179
  187
  196
  206
  216
  226
  237
  248
  260
Total cash flow (excl. dividends), $m
  25
  26
  27
  27
  28
  29
  30
  31
  32
  33
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
Retained Cash Flow (-), $m
  -203
  -53
  -56
  -59
  -62
  -66
  -70
  -73
  -77
  -81
  -78
  -83
  -87
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -137
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -199
Prev. year cash balance distribution, $m
  112
  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
  -65
  -27
  -29
  -32
  -34
  -37
  -40
  -42
  -45
  -48
  -52
  -55
  -58
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -109
  -115
  -120
  -126
  -132
  -138
Discount rate, %
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
  -62
  -24
  -24
  -25
  -25
  -24
  -24
  -23
  -22
  -21
  -19
  -18
  -16
  -15
  -13
  -12
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  50.0
  14.6
  4.4
  1.3
  0.4
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

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, Inc. (BNFT)

Valuation Ratios
P/E Ratio -20.4
Price to Sales 3.5
Price to Book -24.7
Price to Tangible Book
Price to Cash Flow -35.5
Price to Free Cash Flow -22.7
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 $259 million for the last fiscal year's total revenue generated by Benefitfocus, Inc.. The default revenue input number comes from 0001 income statement of Benefitfocus, 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 BNFT stock valuation model: a) initial revenue growth rate of 10.2% 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 5.7%, whose default value for BNFT is calculated based on our internal credit rating of Benefitfocus, 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 Benefitfocus, 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 BNFT stock the variable cost ratio is equal to 106.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $22 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 7.4% for Benefitfocus, Inc..

Corporate tax rate of 27% is the nominal tax rate for Benefitfocus, 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 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 27.9%.

Life of production assets of 4.6 years is the average useful life of capital assets used in Benefitfocus, 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 BNFT is equal to -14%. 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 - $-10.21 million for Benefitfocus, 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 32.007 million for Benefitfocus, 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 Benefitfocus, Inc. at the current share price and the inputted number of shares is $0.9 billion.

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