Intrinsic value of Cross Country Healthcare, Inc. - CCRN

Previous Close

$9.15

  Intrinsic Value

$1.41

stock screener

  Rating & Target

str. sell

-85%

Previous close

$9.15

 
Intrinsic value

$1.41

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of CCRN 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 0.3

 

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
  832
  851
  873
  898
  925
  955
  988
  1,023
  1,061
  1,101
  1,145
  1,191
  1,241
  1,293
  1,349
  1,408
  1,471
  1,537
  1,607
  1,681
  1,759
  1,841
  1,928
  2,019
  2,115
  2,216
  2,323
  2,435
  2,553
  2,677
Variable operating expenses, $m
  406
  415
  426
  438
  451
  466
  482
  499
  517
  537
  557
  579
  603
  629
  656
  685
  715
  747
  781
  817
  855
  895
  937
  982
  1,028
  1,078
  1,129
  1,184
  1,241
  1,302
Fixed operating expenses, $m
  450
  460
  470
  480
  491
  501
  512
  524
  535
  547
  559
  571
  584
  597
  610
  623
  637
  651
  665
  680
  695
  710
  726
  742
  758
  775
  792
  809
  827
  845
Total operating expenses, $m
  856
  875
  896
  918
  942
  967
  994
  1,023
  1,052
  1,084
  1,116
  1,150
  1,187
  1,226
  1,266
  1,308
  1,352
  1,398
  1,446
  1,497
  1,550
  1,605
  1,663
  1,724
  1,786
  1,853
  1,921
  1,993
  2,068
  2,147
Operating income, $m
  -24
  -24
  -22
  -20
  -17
  -12
  -6
  0
  8
  17
  29
  41
  54
  68
  83
  100
  119
  139
  160
  184
  209
  236
  264
  295
  328
  364
  401
  442
  484
  530
EBITDA, $m
  -16
  -16
  -14
  -12
  -8
  -3
  3
  10
  18
  27
  38
  50
  63
  78
  94
  111
  130
  151
  173
  197
  222
  250
  279
  311
  345
  381
  419
  460
  504
  550
Interest expense (income), $m
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  31
  33
Earnings before tax, $m
  -29
  -29
  -28
  -26
  -23
  -19
  -14
  -8
  0
  8
  19
  30
  42
  56
  71
  87
  104
  123
  144
  166
  190
  215
  243
  272
  304
  338
  374
  412
  453
  497
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  2
  5
  8
  11
  15
  19
  23
  28
  33
  39
  45
  51
  58
  66
  74
  82
  91
  101
  111
  122
  134
Net income, $m
  -29
  -29
  -28
  -26
  -23
  -19
  -14
  -8
  0
  6
  14
  22
  31
  41
  51
  63
  76
  90
  105
  121
  138
  157
  177
  199
  222
  247
  273
  301
  331
  363

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
  436
  446
  457
  470
  484
  500
  517
  535
  555
  576
  599
  623
  649
  677
  706
  737
  770
  804
  841
  880
  920
  963
  1,009
  1,056
  1,107
  1,160
  1,215
  1,274
  1,336
  1,401
Adjusted assets (=assets-cash), $m
  436
  446
  457
  470
  484
  500
  517
  535
  555
  576
  599
  623
  649
  677
  706
  737
  770
  804
  841
  880
  920
  963
  1,009
  1,056
  1,107
  1,160
  1,215
  1,274
  1,336
  1,401
Revenue / Adjusted assets
  1.908
  1.908
  1.910
  1.911
  1.911
  1.910
  1.911
  1.912
  1.912
  1.911
  1.912
  1.912
  1.912
  1.910
  1.911
  1.910
  1.910
  1.912
  1.911
  1.910
  1.912
  1.912
  1.911
  1.912
  1.911
  1.910
  1.912
  1.911
  1.911
  1.911
Average production assets, $m
  112
  114
  117
  120
  124
  128
  132
  137
  142
  148
  153
  160
  166
  173
  181
  189
  197
  206
  215
  225
  236
  247
  258
  271
  283
  297
  311
  326
  342
  359
Working capital, $m
  101
  103
  106
  109
  112
  116
  119
  124
  128
  133
  139
  144
  150
  157
  163
  170
  178
  186
  194
  203
  213
  223
  233
  244
  256
  268
  281
  295
  309
  324
Total debt, $m
  88
  92
  98
  104
  111
  119
  127
  136
  146
  157
  168
  180
  193
  206
  220
  236
  252
  269
  287
  306
  326
  347
  369
  392
  417
  443
  470
  499
  530
  561
Total liabilities, $m
  214
  219
  224
  231
  238
  245
  254
  263
  273
  283
  294
  306
  319
  332
  347
  362
  378
  395
  413
  432
  452
  473
  495
  519
  543
  569
  597
  626
  656
  688
Total equity, $m
  222
  227
  233
  239
  246
  254
  263
  272
  283
  293
  305
  317
  331
  345
  359
  375
  392
  409
  428
  448
  468
  490
  513
  538
  563
  590
  619
  649
  680
  713
Total liabilities and equity, $m
  436
  446
  457
  470
  484
  499
  517
  535
  556
  576
  599
  623
  650
  677
  706
  737
  770
  804
  841
  880
  920
  963
  1,008
  1,057
  1,106
  1,159
  1,216
  1,275
  1,336
  1,401
Debt-to-equity ratio
  0.390
  0.410
  0.420
  0.440
  0.450
  0.470
  0.480
  0.500
  0.520
  0.530
  0.550
  0.570
  0.580
  0.600
  0.610
  0.630
  0.640
  0.660
  0.670
  0.680
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
Adjusted equity ratio
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -29
  -29
  -28
  -26
  -23
  -19
  -14
  -8
  0
  6
  14
  22
  31
  41
  51
  63
  76
  90
  105
  121
  138
  157
  177
  199
  222
  247
  273
  301
  331
  363
Depreciation, amort., depletion, $m
  8
  8
  8
  8
  9
  9
  9
  9
  10
  10
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
Funds from operations, $m
  -21
  -21
  -20
  -18
  -15
  -10
  -5
  2
  9
  16
  23
  31
  41
  51
  62
  74
  87
  102
  117
  134
  152
  171
  192
  214
  238
  264
  291
  320
  351
  383
Change in working capital, $m
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
Cash from operations, $m
  -23
  -23
  -23
  -21
  -18
  -14
  -9
  -3
  5
  11
  18
  26
  35
  44
  55
  67
  80
  94
  109
  125
  143
  161
  182
  203
  227
  251
  278
  306
  336
  368
Maintenance CAPEX, $m
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
New CAPEX, $m
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
Cash from investing activities, $m
  -8
  -9
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -37
Free cash flow, $m
  -31
  -32
  -32
  -31
  -29
  -25
  -21
  -15
  -8
  -3
  3
  11
  19
  28
  38
  49
  60
  73
  88
  103
  119
  137
  156
  176
  198
  222
  247
  273
  302
  332
Issuance/(repayment) of debt, $m
  4
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
Issuance/(repurchase) of shares, $m
  33
  34
  34
  33
  30
  27
  23
  17
  10
  5
  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  
  37
  39
  40
  39
  37
  35
  31
  26
  20
  15
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
Total cash flow (excl. dividends), $m
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  15
  23
  31
  41
  52
  64
  77
  90
  106
  122
  139
  158
  178
  200
  223
  248
  274
  302
  332
  364
Retained Cash Flow (-), $m
  -33
  -34
  -34
  -33
  -30
  -27
  -23
  -17
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
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
  -27
  -27
  -27
  -25
  -22
  -17
  -12
  -6
  2
  2
  3
  10
  18
  27
  37
  48
  60
  73
  87
  102
  118
  136
  155
  175
  197
  221
  246
  272
  301
  331
Discount rate, %
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
  -26
  -25
  -23
  -20
  -16
  -12
  -8
  -3
  1
  1
  1
  4
  6
  8
  9
  10
  10
  10
  10
  9
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
Current shareholders' claim on cash, %
  91.0
  82.6
  75.2
  68.8
  63.5
  59.2
  56.0
  53.7
  52.4
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8
  51.8

Cross Country Healthcare, Inc. is engaged in providing healthcare recruiting, staffing, recruiting and workforce solutions. The Company operates in three segments: Nurse and Allied Staffing, Physician Staffing and Other Human Capital Management Services. The Nurse and Allied Staffing segment provides traditional staffing, including temporary and permanent placement of travel nurses and allied professionals, and branch-based local nurses and allied staffing. The Physician Staffing segment provides physicians in various specialties, certified registered nurse anesthetists, nurse practitioners and physician assistants under its Medical Doctor Associates brand. The Other Human Capital Management Services is engaged in providing retained and contingent search services for physicians, healthcare executives, nurses, advanced practice and allied health professionals. It provides multi-specialty locum tenens services, as well as other human capital management services focused on healthcare.

FINANCIAL RATIOS  of  Cross Country Healthcare, Inc. (CCRN)

Valuation Ratios
P/E Ratio 37
Price to Sales 0.4
Price to Book 2
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow 13.5
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -74.2%
Cap. Spend. - 3 Yr. Gr. Rate -23.2%
Financial Strength
Quick Ratio 11
Current Ratio 0
LT Debt to Equity 56.3%
Total Debt to Equity 57.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. -4%
Return On Equity 5.5%
Return On Equity - 3 Yr. Avg. -4.5%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 26.6%
Gross Margin - 3 Yr. Avg. 26%
EBITDA Margin 2.2%
EBITDA Margin - 3 Yr. Avg. 0.4%
Operating Margin 0.6%
Oper. Margin - 3 Yr. Avg. 0.5%
Pre-Tax Margin 0.6%
Pre-Tax Margin - 3 Yr. Avg. -1.3%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. -1.2%
Effective Tax Rate -80%
Eff/ Tax Rate - 3 Yr. Avg. -36.1%
Payout Ratio 0%

CCRN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CCRN stock intrinsic value calculation we used $816 million for the last fiscal year's total revenue generated by Cross Country Healthcare, Inc.. The default revenue input number comes from 0001 income statement of Cross Country Healthcare, 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 CCRN 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 5.1%, whose default value for CCRN is calculated based on our internal credit rating of Cross Country Healthcare, 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 Cross Country Healthcare, 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 CCRN stock the variable cost ratio is equal to 48.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $440 million in the base year in the intrinsic value calculation for CCRN 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 6.2% for Cross Country Healthcare, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cross Country Healthcare, 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 CCRN 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 CCRN are equal to 13.4%.

Life of production assets of 17.4 years is the average useful life of capital assets used in Cross Country Healthcare, 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 CCRN is equal to 12.1%. 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 - $217.528 million for Cross Country Healthcare, 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 36.140 million for Cross Country Healthcare, 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 Cross Country Healthcare, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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