Intrinsic value of Cross Country Healthcare - CCRN

Previous Close

$8.92

  Intrinsic Value

$8.81

stock screener

  Rating & Target

hold

-1%

Previous close

$8.92

 
Intrinsic value

$8.81

 
Up/down potential

-1%

 
Rating

hold

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
  882
  903
  926
  952
  981
  1,012
  1,047
  1,084
  1,124
  1,168
  1,214
  1,263
  1,315
  1,371
  1,430
  1,493
  1,559
  1,630
  1,704
  1,782
  1,865
  1,952
  2,043
  2,140
  2,242
  2,349
  2,462
  2,581
  2,706
  2,838
Variable operating expenses, $m
  727
  743
  761
  782
  805
  831
  858
  888
  920
  955
  971
  1,011
  1,053
  1,097
  1,145
  1,195
  1,248
  1,304
  1,363
  1,426
  1,492
  1,562
  1,635
  1,713
  1,794
  1,880
  1,971
  2,066
  2,166
  2,271
Fixed operating expenses, $m
  146
  149
  153
  156
  159
  163
  167
  170
  174
  178
  182
  186
  190
  194
  198
  203
  207
  212
  216
  221
  226
  231
  236
  241
  246
  252
  257
  263
  269
  275
Total operating expenses, $m
  873
  892
  914
  938
  964
  994
  1,025
  1,058
  1,094
  1,133
  1,153
  1,197
  1,243
  1,291
  1,343
  1,398
  1,455
  1,516
  1,579
  1,647
  1,718
  1,793
  1,871
  1,954
  2,040
  2,132
  2,228
  2,329
  2,435
  2,546
Operating income, $m
  10
  10
  12
  14
  16
  19
  22
  26
  30
  35
  61
  67
  73
  80
  87
  96
  104
  114
  124
  135
  147
  159
  172
  186
  201
  217
  234
  253
  272
  292
EBITDA, $m
  36
  37
  38
  40
  43
  46
  49
  53
  58
  63
  68
  75
  81
  89
  96
  105
  114
  124
  135
  146
  158
  171
  185
  200
  216
  232
  250
  269
  289
  310
Interest expense (income), $m
  4
  5
  6
  6
  6
  7
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
  30
  32
Earnings before tax, $m
  4
  5
  6
  7
  9
  12
  15
  18
  22
  26
  51
  56
  62
  68
  75
  82
  90
  99
  108
  118
  128
  139
  151
  164
  178
  192
  208
  224
  242
  260
Tax expense, $m
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  14
  15
  17
  18
  20
  22
  24
  27
  29
  32
  35
  38
  41
  44
  48
  52
  56
  61
  65
  70
Net income, $m
  3
  4
  4
  5
  7
  9
  11
  13
  16
  19
  37
  41
  45
  50
  55
  60
  66
  72
  79
  86
  93
  102
  110
  120
  130
  140
  152
  164
  176
  190

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
  477
  488
  500
  515
  530
  547
  566
  586
  608
  631
  656
  683
  711
  741
  773
  807
  843
  881
  921
  963
  1,008
  1,055
  1,105
  1,157
  1,212
  1,270
  1,331
  1,395
  1,463
  1,534
Adjusted assets (=assets-cash), $m
  477
  488
  500
  515
  530
  547
  566
  586
  608
  631
  656
  683
  711
  741
  773
  807
  843
  881
  921
  963
  1,008
  1,055
  1,105
  1,157
  1,212
  1,270
  1,331
  1,395
  1,463
  1,534
Revenue / Adjusted assets
  1.849
  1.850
  1.852
  1.849
  1.851
  1.850
  1.850
  1.850
  1.849
  1.851
  1.851
  1.849
  1.850
  1.850
  1.850
  1.850
  1.849
  1.850
  1.850
  1.850
  1.850
  1.850
  1.849
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
Average production assets, $m
  105
  107
  110
  113
  117
  120
  125
  129
  134
  139
  144
  150
  157
  163
  170
  178
  186
  194
  203
  212
  222
  232
  243
  255
  267
  280
  293
  307
  322
  338
Working capital, $m
  98
  100
  103
  106
  109
  112
  116
  120
  125
  130
  135
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  249
  261
  273
  287
  300
  315
Total debt, $m
  104
  109
  115
  122
  130
  138
  148
  157
  168
  180
  192
  205
  219
  234
  250
  266
  284
  303
  323
  343
  365
  389
  413
  439
  466
  495
  525
  556
  590
  625
Total liabilities, $m
  235
  241
  247
  254
  261
  270
  279
  289
  300
  311
  323
  337
  351
  365
  381
  398
  416
  434
  454
  475
  497
  520
  545
  570
  597
  626
  656
  688
  721
  756
Total equity, $m
  242
  247
  254
  261
  269
  277
  287
  297
  308
  320
  333
  346
  361
  376
  392
  409
  427
  447
  467
  488
  511
  535
  560
  587
  614
  644
  675
  707
  742
  778
Total liabilities and equity, $m
  477
  488
  501
  515
  530
  547
  566
  586
  608
  631
  656
  683
  712
  741
  773
  807
  843
  881
  921
  963
  1,008
  1,055
  1,105
  1,157
  1,211
  1,270
  1,331
  1,395
  1,463
  1,534
Debt-to-equity ratio
  0.430
  0.440
  0.450
  0.470
  0.480
  0.500
  0.510
  0.530
  0.550
  0.560
  0.580
  0.590
  0.610
  0.620
  0.640
  0.650
  0.660
  0.680
  0.690
  0.700
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.800
Adjusted equity ratio
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  4
  4
  5
  7
  9
  11
  13
  16
  19
  37
  41
  45
  50
  55
  60
  66
  72
  79
  86
  93
  102
  110
  120
  130
  140
  152
  164
  176
  190
Depreciation, amort., depletion, $m
  26
  26
  26
  27
  27
  27
  27
  27
  28
  28
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
Funds from operations, $m
  29
  30
  31
  32
  34
  35
  38
  40
  43
  47
  45
  49
  53
  58
  64
  69
  76
  82
  89
  97
  105
  114
  123
  133
  144
  155
  167
  180
  193
  208
Change in working capital, $m
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Cash from operations, $m
  27
  27
  28
  29
  30
  32
  34
  36
  39
  42
  40
  44
  48
  52
  57
  62
  68
  74
  81
  88
  96
  104
  113
  123
  133
  143
  155
  167
  180
  193
Maintenance CAPEX, $m
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
New CAPEX, $m
  -2
  -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
  -13
  -14
  -15
  -16
Cash from investing activities, $m
  -7
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -12
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -25
  -27
  -28
  -30
  -31
  -33
Free cash flow, $m
  20
  19
  20
  20
  21
  22
  23
  25
  27
  30
  27
  30
  33
  37
  41
  46
  51
  56
  62
  68
  75
  82
  90
  98
  107
  116
  126
  137
  148
  161
Issuance/(repayment) of debt, $m
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
Issuance/(repurchase) of shares, $m
  2
  2
  2
  2
  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
Cash from financing (excl. dividends), $m  
  7
  7
  8
  9
  9
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
Total cash flow (excl. dividends), $m
  26
  27
  28
  29
  30
  31
  33
  35
  38
  41
  39
  43
  47
  52
  57
  63
  69
  75
  82
  89
  97
  105
  114
  124
  134
  145
  156
  169
  182
  196
Retained Cash Flow (-), $m
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
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
  21
  21
  22
  22
  22
  22
  23
  25
  27
  29
  27
  30
  33
  37
  41
  45
  50
  56
  61
  68
  74
  82
  89
  97
  106
  116
  126
  136
  147
  160
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
  20
  20
  19
  18
  17
  16
  16
  16
  16
  15
  13
  13
  13
  12
  12
  12
  11
  10
  9
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
Current shareholders' claim on cash, %
  99.5
  98.9
  98.3
  97.8
  97.5
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4

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 (CCRN)

Valuation Ratios
P/E Ratio 36.1
Price to Sales 0.3
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 9.6
Price to Free Cash Flow 13.1
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 $865.048 million for the last fiscal year's total revenue generated by Cross Country Healthcare. The default revenue input number comes from 0001 income statement of Cross Country Healthcare. 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 4.3%, whose default value for CCRN is calculated based on our internal credit rating of Cross Country Healthcare, 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.
    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 82.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $143 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 5.4% for Cross Country Healthcare.

Corporate tax rate of 27% is the nominal tax rate for Cross Country Healthcare. 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 11.9%.

Life of production assets of 18.9 years is the average useful life of capital assets used in Cross Country Healthcare 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 11.1%. 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 - $237.089 million for Cross Country Healthcare - 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 36.295 million for Cross Country Healthcare 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 at the current share price and the inputted number of shares is $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Cross Country Healthcare CEO to retire   [Sep-11-18 07:05AM  American City Business Journals]
▶ Cross Country Healthcare shares fall nearly one-third after 'surprise' on revenue   [Aug-03-18 09:51AM  American City Business Journals]
▶ Cross Country: 2Q Earnings Snapshot   [06:21PM  Associated Press]
▶ Cross Country: 1Q Earnings Snapshot   [May-02-18 05:34PM  Associated Press]
▶ Flavor Of The Month: Innoviva And More   [Mar-29-18 10:02AM  Simply Wall St.]
▶ Cross Country Healthcare, Inc. to Host Earnings Call   [Mar-01-18 07:40AM  ACCESSWIRE]
▶ Cross Country misses Street 4Q forecasts   [Feb-28-18 06:12PM  Associated Press]
▶ Cross Country Healthcare names new CFO amid organizational shakeup   [Jan-26-18 02:34PM  American City Business Journals]
▶ CROSS COUNTRY HEALTHCARE INC to Host Earnings Call   [Nov-02-17 07:50AM  ACCESSWIRE]
▶ Cross Country posts 3Q profit   [Nov-01-17 06:47PM  Associated Press]
▶ Cross Country misses 2Q revenue forecasts   [12:47AM  Associated Press]
▶ Cross Country Healthcare To Acquire Assets of Advantage RN   [Jun-13-17 04:15PM  Business Wire]
▶ Cross Country reports 1Q loss   [05:02AM  Associated Press]

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