Intrinsic value of CBIZ, Inc. - CBZ

Previous Close

$23.16

  Intrinsic Value

$29.68

stock screener

  Rating & Target

buy

+28%

Previous close

$23.16

 
Intrinsic value

$29.68

 
Up/down potential

+28%

 
Rating

buy

We calculate the intrinsic value of CBZ 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 1.3

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  940
  962
  987
  1,015
  1,045
  1,079
  1,116
  1,156
  1,198
  1,244
  1,294
  1,346
  1,402
  1,461
  1,525
  1,591
  1,662
  1,737
  1,816
  1,899
  1,987
  2,080
  2,178
  2,281
  2,390
  2,504
  2,624
  2,751
  2,884
  3,024
Variable operating expenses, $m
  571
  582
  595
  610
  627
  645
  665
  686
  710
  734
  697
  725
  756
  788
  822
  858
  896
  936
  979
  1,024
  1,071
  1,121
  1,174
  1,229
  1,288
  1,349
  1,414
  1,483
  1,554
  1,630
Fixed operating expenses, $m
  280
  286
  292
  299
  305
  312
  319
  326
  333
  341
  348
  356
  364
  372
  380
  388
  397
  405
  414
  423
  433
  442
  452
  462
  472
  482
  493
  504
  515
  526
Total operating expenses, $m
  851
  868
  887
  909
  932
  957
  984
  1,012
  1,043
  1,075
  1,045
  1,081
  1,120
  1,160
  1,202
  1,246
  1,293
  1,341
  1,393
  1,447
  1,504
  1,563
  1,626
  1,691
  1,760
  1,831
  1,907
  1,987
  2,069
  2,156
Operating income, $m
  90
  94
  99
  105
  113
  122
  132
  143
  156
  169
  248
  265
  283
  302
  323
  346
  370
  395
  423
  452
  484
  517
  552
  590
  630
  672
  717
  765
  815
  868
EBITDA, $m
  166
  170
  176
  183
  191
  200
  210
  222
  235
  250
  266
  283
  302
  322
  344
  367
  392
  419
  447
  478
  510
  545
  582
  621
  662
  706
  752
  801
  854
  909
Interest expense (income), $m
  6
  7
  8
  9
  9
  10
  11
  13
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  33
  35
  38
  41
  44
  47
  51
  54
  58
  62
  66
  70
  75
Earnings before tax, $m
  83
  86
  90
  96
  102
  110
  119
  129
  140
  153
  230
  245
  261
  278
  297
  318
  339
  363
  388
  414
  443
  473
  505
  539
  576
  614
  655
  699
  745
  793
Tax expense, $m
  22
  23
  24
  26
  28
  30
  32
  35
  38
  41
  62
  66
  70
  75
  80
  86
  92
  98
  105
  112
  120
  128
  136
  146
  155
  166
  177
  189
  201
  214
Net income, $m
  60
  63
  66
  70
  75
  80
  87
  94
  102
  111
  168
  179
  191
  203
  217
  232
  248
  265
  283
  302
  323
  345
  369
  394
  420
  448
  478
  510
  543
  579

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
  1,207
  1,235
  1,267
  1,302
  1,342
  1,385
  1,432
  1,483
  1,538
  1,597
  1,661
  1,728
  1,800
  1,876
  1,957
  2,043
  2,134
  2,230
  2,331
  2,438
  2,551
  2,670
  2,796
  2,928
  3,068
  3,214
  3,369
  3,532
  3,703
  3,882
Adjusted assets (=assets-cash), $m
  1,207
  1,235
  1,267
  1,302
  1,342
  1,385
  1,432
  1,483
  1,538
  1,597
  1,661
  1,728
  1,800
  1,876
  1,957
  2,043
  2,134
  2,230
  2,331
  2,438
  2,551
  2,670
  2,796
  2,928
  3,068
  3,214
  3,369
  3,532
  3,703
  3,882
Revenue / Adjusted assets
  0.779
  0.779
  0.779
  0.780
  0.779
  0.779
  0.779
  0.780
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
Average production assets, $m
  350
  358
  367
  377
  389
  401
  415
  430
  446
  463
  481
  501
  522
  544
  567
  592
  618
  646
  675
  707
  739
  774
  810
  849
  889
  932
  976
  1,023
  1,073
  1,125
Working capital, $m
  75
  77
  79
  81
  84
  86
  89
  92
  96
  100
  103
  108
  112
  117
  122
  127
  133
  139
  145
  152
  159
  166
  174
  182
  191
  200
  210
  220
  231
  242
Total debt, $m
  146
  160
  175
  193
  213
  234
  258
  283
  311
  340
  372
  405
  441
  479
  519
  562
  607
  655
  705
  759
  815
  874
  937
  1,003
  1,072
  1,145
  1,222
  1,303
  1,388
  1,478
Total liabilities, $m
  601
  615
  631
  649
  668
  690
  713
  739
  766
  796
  827
  861
  896
  934
  975
  1,017
  1,063
  1,110
  1,161
  1,214
  1,270
  1,330
  1,392
  1,458
  1,528
  1,601
  1,678
  1,759
  1,844
  1,933
Total equity, $m
  606
  620
  636
  654
  674
  695
  719
  745
  772
  802
  834
  867
  904
  942
  982
  1,025
  1,071
  1,119
  1,170
  1,224
  1,281
  1,340
  1,404
  1,470
  1,540
  1,614
  1,691
  1,773
  1,859
  1,949
Total liabilities and equity, $m
  1,207
  1,235
  1,267
  1,303
  1,342
  1,385
  1,432
  1,484
  1,538
  1,598
  1,661
  1,728
  1,800
  1,876
  1,957
  2,042
  2,134
  2,229
  2,331
  2,438
  2,551
  2,670
  2,796
  2,928
  3,068
  3,215
  3,369
  3,532
  3,703
  3,882
Debt-to-equity ratio
  0.240
  0.260
  0.280
  0.300
  0.320
  0.340
  0.360
  0.380
  0.400
  0.420
  0.450
  0.470
  0.490
  0.510
  0.530
  0.550
  0.570
  0.590
  0.600
  0.620
  0.640
  0.650
  0.670
  0.680
  0.700
  0.710
  0.720
  0.740
  0.750
  0.760
Adjusted equity ratio
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  60
  63
  66
  70
  75
  80
  87
  94
  102
  111
  168
  179
  191
  203
  217
  232
  248
  265
  283
  302
  323
  345
  369
  394
  420
  448
  478
  510
  543
  579
Depreciation, amort., depletion, $m
  76
  77
  77
  77
  78
  78
  79
  79
  80
  80
  17
  18
  19
  20
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
Funds from operations, $m
  137
  139
  143
  147
  152
  159
  166
  173
  182
  192
  185
  197
  209
  223
  238
  253
  270
  288
  307
  328
  350
  373
  398
  424
  452
  482
  513
  547
  582
  620
Change in working capital, $m
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
Cash from operations, $m
  135
  138
  141
  145
  150
  156
  163
  170
  179
  188
  181
  193
  205
  218
  232
  248
  264
  282
  301
  321
  343
  366
  390
  416
  444
  473
  504
  537
  572
  608
Maintenance CAPEX, $m
  -12
  -13
  -13
  -13
  -14
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
New CAPEX, $m
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
Cash from investing activities, $m
  -19
  -21
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -59
  -62
  -64
  -67
  -71
  -75
  -79
  -82
  -87
  -91
Free cash flow, $m
  116
  117
  119
  121
  125
  129
  134
  140
  147
  155
  146
  156
  166
  177
  189
  203
  217
  232
  248
  266
  285
  304
  326
  348
  373
  398
  425
  454
  485
  518
Issuance/(repayment) of debt, $m
  12
  14
  16
  18
  20
  22
  23
  25
  27
  29
  31
  34
  36
  38
  40
  43
  45
  48
  51
  53
  56
  59
  63
  66
  69
  73
  77
  81
  85
  90
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  
  12
  14
  16
  18
  20
  22
  23
  25
  27
  29
  31
  34
  36
  38
  40
  43
  45
  48
  51
  53
  56
  59
  63
  66
  69
  73
  77
  81
  85
  90
Total cash flow (excl. dividends), $m
  128
  131
  135
  139
  145
  151
  158
  166
  175
  184
  178
  189
  202
  215
  230
  245
  262
  280
  299
  319
  341
  364
  388
  414
  442
  471
  502
  535
  570
  607
Retained Cash Flow (-), $m
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -74
  -78
  -82
  -86
  -90
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
  115
  117
  119
  121
  125
  129
  134
  140
  147
  155
  146
  155
  166
  177
  189
  202
  216
  232
  248
  265
  284
  304
  325
  348
  372
  398
  425
  454
  484
  517
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
  110
  107
  103
  100
  97
  94
  91
  88
  85
  81
  69
  66
  63
  59
  56
  51
  47
  43
  38
  34
  29
  25
  21
  18
  14
  12
  9
  7
  5
  4
Current shareholders' claim on cash, %
  100.0
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CBIZ, Inc. (CBIZ) is engaged in the professional services business. The Company operates its professional services business through acquiring and integrating accounting and financial service providers, group health benefits consulting firms, property and casualty brokerage firms, payroll service providers, and valuation and other service firms throughout the United States. Its segments include Financial Services, Benefits and Insurance Services, National Practices, and Corporate and Other. The Financial Services group includes accounting and tax, government healthcare consulting, financial advisory, valuation, and risk and advisory services. The Benefits and Insurance Services group includes group health benefits consulting, payroll, property and casualty, and retirement plan services. The National Practices segment includes managed networking and hardware services, and healthcare consulting.

FINANCIAL RATIOS  of  CBIZ, Inc. (CBZ)

Valuation Ratios
P/E Ratio 31.3
Price to Sales 1.6
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 17.6
Price to Free Cash Flow 18.7
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -42.9%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.8
LT Debt to Equity 40%
Total Debt to Equity 40.2%
Interest Coverage 12
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.6%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 8.3%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 12.8%
Gross Margin - 3 Yr. Avg. 12.8%
EBITDA Margin 11.9%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 8.3%
Oper. Margin - 3 Yr. Avg. 8.2%
Pre-Tax Margin 8.4%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 5%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate 38.8%
Eff/ Tax Rate - 3 Yr. Avg. 39.9%
Payout Ratio 0%

CBZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBZ stock intrinsic value calculation we used $922 million for the last fiscal year's total revenue generated by CBIZ, Inc.. The default revenue input number comes from 0001 income statement of CBIZ, 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 CBZ stock valuation model: a) initial revenue growth rate of 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 4.3%, whose default value for CBZ is calculated based on our internal credit rating of CBIZ, 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 CBIZ, 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 CBZ stock the variable cost ratio is equal to 60.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $274 million in the base year in the intrinsic value calculation for CBZ 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 CBIZ, Inc..

Corporate tax rate of 27% is the nominal tax rate for CBIZ, 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 CBZ 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 CBZ are equal to 37.2%.

Life of production assets of 27.7 years is the average useful life of capital assets used in CBIZ, 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 CBZ is equal to 8%. 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 - $593.663 million for CBIZ, 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 55.083 million for CBIZ, 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 CBIZ, Inc. at the current share price and the inputted number of shares is $1.3 billion.

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