Intrinsic value of Ceridian HCM Holding Inc. - CDAY

Previous Close

$51.58

  Intrinsic Value

$59.72

stock screener

  Rating & Target

hold

+16%

Previous close

$51.58

 
Intrinsic value

$59.72

 
Up/down potential

+16%

 
Rating

hold

We calculate the intrinsic value of CDAY 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 7.1

 

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, %
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
Revenue, $m
  819
  895
  975
  1,058
  1,144
  1,234
  1,327
  1,424
  1,524
  1,629
  1,738
  1,851
  1,968
  2,091
  2,218
  2,351
  2,489
  2,634
  2,785
  2,942
  3,106
  3,278
  3,457
  3,645
  3,841
  4,046
  4,261
  4,486
  4,721
  4,968
Variable operating expenses, $m
  588
  623
  660
  698
  737
  778
  821
  866
  912
  960
  798
  850
  904
  961
  1,019
  1,080
  1,144
  1,210
  1,279
  1,352
  1,427
  1,506
  1,588
  1,675
  1,765
  1,859
  1,958
  2,061
  2,169
  2,283
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
  734
  772
  813
  854
  896
  941
  988
  1,036
  1,086
  1,138
  980
  1,036
  1,094
  1,155
  1,217
  1,283
  1,351
  1,422
  1,495
  1,573
  1,653
  1,737
  1,824
  1,916
  2,011
  2,111
  2,215
  2,324
  2,438
  2,558
Operating income, $m
  85
  123
  163
  204
  247
  292
  339
  388
  438
  491
  758
  815
  874
  936
  1,001
  1,068
  1,139
  1,212
  1,289
  1,369
  1,453
  1,541
  1,633
  1,729
  1,830
  1,935
  2,046
  2,162
  2,283
  2,411
EBITDA, $m
  340
  382
  425
  471
  519
  569
  620
  674
  730
  788
  849
  912
  977
  1,046
  1,117
  1,191
  1,269
  1,350
  1,435
  1,523
  1,616
  1,713
  1,814
  1,920
  2,031
  2,147
  2,269
  2,397
  2,531
  2,671
Interest expense (income), $m
  0
  62
  94
  128
  164
  201
  240
  280
  322
  366
  411
  458
  507
  557
  610
  665
  722
  782
  844
  909
  977
  1,048
  1,121
  1,198
  1,279
  1,363
  1,451
  1,544
  1,640
  1,741
  1,847
Earnings before tax, $m
  23
  29
  35
  40
  46
  52
  59
  66
  73
  80
  300
  308
  317
  326
  336
  346
  356
  368
  380
  392
  406
  420
  434
  450
  466
  484
  502
  522
  542
  564
Tax expense, $m
  6
  8
  9
  11
  12
  14
  16
  18
  20
  22
  81
  83
  86
  88
  91
  93
  96
  99
  103
  106
  109
  113
  117
  121
  126
  131
  136
  141
  146
  152
Net income, $m
  17
  21
  25
  29
  34
  38
  43
  48
  53
  59
  219
  225
  231
  238
  245
  252
  260
  268
  277
  286
  296
  306
  317
  328
  340
  353
  367
  381
  396
  412

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
  5,572
  6,091
  6,633
  7,197
  7,783
  8,393
  9,027
  9,685
  10,370
  11,081
  11,820
  12,589
  13,390
  14,222
  15,090
  15,993
  16,935
  17,918
  18,943
  20,013
  21,130
  22,297
  23,518
  24,794
  26,128
  27,525
  28,986
  30,516
  32,119
  33,797
Adjusted assets (=assets-cash), $m
  5,572
  6,091
  6,633
  7,197
  7,783
  8,393
  9,027
  9,685
  10,370
  11,081
  11,820
  12,589
  13,390
  14,222
  15,090
  15,993
  16,935
  17,918
  18,943
  20,013
  21,130
  22,297
  23,518
  24,794
  26,128
  27,525
  28,986
  30,516
  32,119
  33,797
Revenue / Adjusted assets
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
Average production assets, $m
  1,288
  1,409
  1,534
  1,664
  1,800
  1,941
  2,087
  2,240
  2,398
  2,562
  2,733
  2,911
  3,096
  3,289
  3,489
  3,698
  3,916
  4,143
  4,380
  4,628
  4,886
  5,156
  5,438
  5,733
  6,042
  6,365
  6,703
  7,056
  7,427
  7,815
Working capital, $m
  -2,904
  -3,174
  -3,457
  -3,750
  -4,056
  -4,374
  -4,704
  -5,047
  -5,404
  -5,774
  -6,160
  -6,561
  -6,978
  -7,412
  -7,863
  -8,334
  -8,825
  -9,337
  -9,871
  -10,429
  -11,011
  -11,620
  -12,255
  -12,920
  -13,616
  -14,344
  -15,105
  -15,903
  -16,738
  -17,612
Total debt, $m
  1,011
  1,380
  1,764
  2,164
  2,581
  3,014
  3,464
  3,931
  4,417
  4,922
  5,447
  5,993
  6,561
  7,153
  7,768
  8,410
  9,079
  9,776
  10,504
  11,264
  12,057
  12,886
  13,752
  14,658
  15,606
  16,597
  17,635
  18,721
  19,859
  21,051
Total liabilities, $m
  3,956
  4,325
  4,709
  5,110
  5,526
  5,959
  6,409
  6,876
  7,362
  7,867
  8,392
  8,939
  9,507
  10,098
  10,714
  11,355
  12,024
  12,721
  13,449
  14,209
  15,002
  15,831
  16,698
  17,603
  18,551
  19,542
  20,580
  21,667
  22,804
  23,996
Total equity, $m
  1,616
  1,767
  1,924
  2,087
  2,257
  2,434
  2,618
  2,809
  3,007
  3,213
  3,428
  3,651
  3,883
  4,125
  4,376
  4,638
  4,911
  5,196
  5,493
  5,804
  6,128
  6,466
  6,820
  7,190
  7,577
  7,982
  8,406
  8,850
  9,314
  9,801
Total liabilities and equity, $m
  5,572
  6,092
  6,633
  7,197
  7,783
  8,393
  9,027
  9,685
  10,369
  11,080
  11,820
  12,590
  13,390
  14,223
  15,090
  15,993
  16,935
  17,917
  18,942
  20,013
  21,130
  22,297
  23,518
  24,793
  26,128
  27,524
  28,986
  30,517
  32,118
  33,797
Debt-to-equity ratio
  0.630
  0.780
  0.920
  1.040
  1.140
  1.240
  1.320
  1.400
  1.470
  1.530
  1.590
  1.640
  1.690
  1.730
  1.780
  1.810
  1.850
  1.880
  1.910
  1.940
  1.970
  1.990
  2.020
  2.040
  2.060
  2.080
  2.100
  2.120
  2.130
  2.150
Adjusted equity ratio
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  17
  21
  25
  29
  34
  38
  43
  48
  53
  59
  219
  225
  231
  238
  245
  252
  260
  268
  277
  286
  296
  306
  317
  328
  340
  353
  367
  381
  396
  412
Depreciation, amort., depletion, $m
  254
  258
  263
  267
  271
  276
  281
  286
  291
  297
  91
  97
  103
  110
  116
  123
  131
  138
  146
  154
  163
  172
  181
  191
  201
  212
  223
  235
  248
  261
Funds from operations, $m
  271
  280
  288
  296
  305
  314
  324
  334
  345
  356
  310
  322
  334
  348
  361
  376
  391
  407
  423
  441
  459
  478
  498
  520
  542
  565
  590
  616
  643
  672
Change in working capital, $m
  -259
  -271
  -282
  -294
  -306
  -318
  -330
  -343
  -357
  -371
  -385
  -401
  -417
  -434
  -452
  -471
  -491
  -512
  -534
  -558
  -582
  -608
  -636
  -665
  -695
  -728
  -762
  -797
  -835
  -875
Cash from operations, $m
  530
  550
  570
  590
  611
  632
  654
  677
  701
  726
  695
  723
  751
  782
  813
  847
  882
  918
  957
  998
  1,041
  1,087
  1,134
  1,184
  1,237
  1,293
  1,352
  1,413
  1,478
  1,547
Maintenance CAPEX, $m
  -39
  -43
  -47
  -51
  -55
  -60
  -65
  -70
  -75
  -80
  -85
  -91
  -97
  -103
  -110
  -116
  -123
  -131
  -138
  -146
  -154
  -163
  -172
  -181
  -191
  -201
  -212
  -223
  -235
  -248
New CAPEX, $m
  -115
  -120
  -125
  -130
  -136
  -141
  -147
  -152
  -158
  -164
  -171
  -178
  -185
  -193
  -201
  -209
  -218
  -227
  -237
  -247
  -258
  -270
  -282
  -295
  -309
  -323
  -338
  -354
  -371
  -388
Cash from investing activities, $m
  -154
  -163
  -172
  -181
  -191
  -201
  -212
  -222
  -233
  -244
  -256
  -269
  -282
  -296
  -311
  -325
  -341
  -358
  -375
  -393
  -412
  -433
  -454
  -476
  -500
  -524
  -550
  -577
  -606
  -636
Free cash flow, $m
  376
  387
  398
  409
  420
  431
  443
  455
  468
  482
  439
  454
  469
  486
  503
  521
  541
  561
  582
  605
  629
  654
  680
  708
  738
  769
  802
  836
  873
  911
Issuance/(repayment) of debt, $m
  341
  369
  384
  400
  416
  433
  450
  468
  486
  505
  525
  546
  568
  591
  616
  642
  669
  697
  728
  760
  793
  829
  866
  906
  948
  991
  1,038
  1,086
  1,138
  1,192
Issuance/(repurchase) of shares, $m
  125
  129
  132
  134
  136
  139
  141
  143
  145
  148
  0
  0
  1
  4
  7
  10
  13
  16
  20
  24
  28
  32
  37
  42
  47
  52
  57
  63
  69
  75
Cash from financing (excl. dividends), $m  
  466
  498
  516
  534
  552
  572
  591
  611
  631
  653
  525
  546
  569
  595
  623
  652
  682
  713
  748
  784
  821
  861
  903
  948
  995
  1,043
  1,095
  1,149
  1,207
  1,267
Total cash flow (excl. dividends), $m
  842
  885
  914
  943
  973
  1,003
  1,034
  1,066
  1,100
  1,134
  964
  1,000
  1,038
  1,081
  1,125
  1,173
  1,222
  1,275
  1,330
  1,388
  1,450
  1,515
  1,583
  1,656
  1,732
  1,812
  1,897
  1,986
  2,079
  2,178
Retained Cash Flow (-), $m
  -142
  -151
  -157
  -163
  -170
  -177
  -184
  -191
  -198
  -206
  -214
  -223
  -232
  -242
  -252
  -262
  -273
  -285
  -297
  -310
  -324
  -339
  -354
  -370
  -387
  -405
  -424
  -444
  -465
  -487
Prev. year cash balance distribution, $m
  58
  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
  758
  735
  757
  780
  802
  826
  850
  875
  901
  928
  749
  777
  806
  839
  874
  910
  949
  990
  1,033
  1,078
  1,126
  1,176
  1,230
  1,286
  1,345
  1,407
  1,473
  1,542
  1,615
  1,691
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
  727
  673
  659
  642
  622
  599
  574
  547
  518
  487
  356
  331
  307
  282
  257
  231
  207
  182
  159
  137
  116
  98
  81
  65
  52
  41
  32
  24
  18
  13
Current shareholders' claim on cash, %
  98.2
  96.5
  95.0
  93.6
  92.3
  91.1
  90.0
  88.9
  87.9
  87.0
  87.0
  87.0
  87.0
  87.0
  86.9
  86.9
  86.9
  86.8
  86.7
  86.6
  86.5
  86.4
  86.3
  86.2
  86.1
  86.0
  85.8
  85.7
  85.6
  85.4

FINANCIAL RATIOS  of  Ceridian HCM Holding Inc. (CDAY)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CDAY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CDAY stock intrinsic value calculation we used $746 million for the last fiscal year's total revenue generated by Ceridian HCM Holding Inc.. The default revenue input number comes from 0001 income statement of Ceridian HCM Holding 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 CDAY stock valuation model: a) initial revenue growth rate of 9.8% 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 CDAY is calculated based on our internal credit rating of Ceridian HCM Holding 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 Ceridian HCM Holding 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 CDAY stock the variable cost ratio is equal to 74.3%.

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 CDAY 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 9.3% for Ceridian HCM Holding Inc..

Corporate tax rate of 27% is the nominal tax rate for Ceridian HCM Holding 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 CDAY 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 CDAY are equal to 157.3%.

Life of production assets of 39.7 years is the average useful life of capital assets used in Ceridian HCM Holding 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 CDAY is equal to -354.5%. 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 - $1532 million for Ceridian HCM Holding 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 137.408 million for Ceridian HCM Holding 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 Ceridian HCM Holding Inc. at the current share price and the inputted number of shares is $7.1 billion.

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