Intrinsic value of Civitas Solutions - CIVI

Previous Close

$13.16

  Intrinsic Value

$24.10

stock screener

  Rating & Target

str. buy

+83%

Previous close

$13.16

 
Intrinsic value

$24.10

 
Up/down potential

+83%

 
Rating

str. buy

We calculate the intrinsic value of CIVI 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 0.5

 

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, %
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
Revenue, $m
  1,601
  1,733
  1,870
  2,013
  2,161
  2,315
  2,475
  2,642
  2,815
  2,995
  3,182
  3,377
  3,580
  3,792
  4,013
  4,243
  4,484
  4,735
  4,997
  5,271
  5,558
  5,858
  6,172
  6,500
  6,843
  7,203
  7,580
  7,975
  8,389
  8,823
Variable operating expenses, $m
  1,531
  1,652
  1,778
  1,909
  2,045
  2,187
  2,334
  2,487
  2,646
  2,812
  2,925
  3,104
  3,291
  3,486
  3,689
  3,901
  4,122
  4,353
  4,594
  4,846
  5,109
  5,385
  5,673
  5,975
  6,291
  6,622
  6,968
  7,331
  7,711
  8,110
Fixed operating expenses, $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 operating expenses, $m
  1,531
  1,652
  1,778
  1,909
  2,045
  2,187
  2,334
  2,487
  2,646
  2,812
  2,925
  3,104
  3,291
  3,486
  3,689
  3,901
  4,122
  4,353
  4,594
  4,846
  5,109
  5,385
  5,673
  5,975
  6,291
  6,622
  6,968
  7,331
  7,711
  8,110
Operating income, $m
  71
  81
  92
  104
  116
  128
  141
  155
  169
  183
  257
  273
  289
  306
  324
  343
  362
  382
  404
  426
  449
  473
  498
  525
  553
  582
  612
  644
  678
  713
EBITDA, $m
  180
  195
  211
  227
  243
  261
  279
  297
  317
  337
  358
  380
  403
  427
  452
  478
  505
  533
  563
  593
  626
  659
  695
  732
  770
  811
  853
  898
  944
  993
Interest expense (income), $m
  0
  34
  38
  42
  47
  52
  56
  61
  67
  72
  78
  83
  90
  96
  102
  109
  116
  124
  132
  140
  148
  157
  167
  176
  187
  197
  208
  220
  232
  245
  258
Earnings before tax, $m
  37
  43
  50
  57
  64
  72
  80
  88
  97
  106
  174
  183
  193
  204
  215
  226
  238
  251
  264
  277
  292
  307
  322
  338
  356
  373
  392
  412
  433
  454
Tax expense, $m
  10
  12
  13
  15
  17
  19
  22
  24
  26
  29
  47
  49
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  123
Net income, $m
  27
  32
  36
  42
  47
  53
  58
  64
  71
  77
  127
  134
  141
  149
  157
  165
  174
  183
  193
  202
  213
  224
  235
  247
  260
  273
  286
  301
  316
  332

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
  1,139
  1,233
  1,330
  1,432
  1,537
  1,647
  1,761
  1,879
  2,002
  2,130
  2,263
  2,402
  2,546
  2,697
  2,854
  3,018
  3,189
  3,368
  3,554
  3,749
  3,953
  4,166
  4,389
  4,623
  4,867
  5,123
  5,391
  5,672
  5,967
  6,275
Adjusted assets (=assets-cash), $m
  1,139
  1,233
  1,330
  1,432
  1,537
  1,647
  1,761
  1,879
  2,002
  2,130
  2,263
  2,402
  2,546
  2,697
  2,854
  3,018
  3,189
  3,368
  3,554
  3,749
  3,953
  4,166
  4,389
  4,623
  4,867
  5,123
  5,391
  5,672
  5,967
  6,275
Revenue / Adjusted assets
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.405
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
  1.406
Average production assets, $m
  509
  551
  595
  640
  687
  736
  787
  840
  895
  952
  1,012
  1,074
  1,139
  1,206
  1,276
  1,349
  1,426
  1,506
  1,589
  1,676
  1,767
  1,863
  1,963
  2,067
  2,176
  2,291
  2,411
  2,536
  2,668
  2,806
Working capital, $m
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -47
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -72
  -76
  -80
  -84
  -89
  -94
  -99
  -104
  -109
  -115
Total debt, $m
  707
  787
  869
  955
  1,044
  1,136
  1,233
  1,333
  1,437
  1,545
  1,657
  1,775
  1,897
  2,024
  2,157
  2,295
  2,440
  2,591
  2,748
  2,913
  3,085
  3,266
  3,454
  3,651
  3,858
  4,074
  4,301
  4,538
  4,787
  5,047
Total liabilities, $m
  962
  1,042
  1,124
  1,210
  1,299
  1,391
  1,488
  1,588
  1,692
  1,800
  1,912
  2,030
  2,152
  2,279
  2,412
  2,550
  2,695
  2,846
  3,003
  3,168
  3,340
  3,521
  3,709
  3,906
  4,113
  4,329
  4,556
  4,793
  5,042
  5,302
Total equity, $m
  177
  191
  206
  222
  238
  255
  273
  291
  310
  330
  351
  372
  395
  418
  442
  468
  494
  522
  551
  581
  613
  646
  680
  717
  754
  794
  836
  879
  925
  973
Total liabilities and equity, $m
  1,139
  1,233
  1,330
  1,432
  1,537
  1,646
  1,761
  1,879
  2,002
  2,130
  2,263
  2,402
  2,547
  2,697
  2,854
  3,018
  3,189
  3,368
  3,554
  3,749
  3,953
  4,167
  4,389
  4,623
  4,867
  5,123
  5,392
  5,672
  5,967
  6,275
Debt-to-equity ratio
  4.010
  4.120
  4.210
  4.300
  4.380
  4.450
  4.520
  4.580
  4.630
  4.680
  4.720
  4.770
  4.810
  4.840
  4.880
  4.910
  4.940
  4.960
  4.990
  5.010
  5.040
  5.060
  5.080
  5.100
  5.110
  5.130
  5.150
  5.160
  5.180
  5.190
Adjusted equity ratio
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  27
  32
  36
  42
  47
  53
  58
  64
  71
  77
  127
  134
  141
  149
  157
  165
  174
  183
  193
  202
  213
  224
  235
  247
  260
  273
  286
  301
  316
  332
Depreciation, amort., depletion, $m
  110
  114
  118
  123
  127
  132
  137
  143
  148
  154
  101
  107
  114
  121
  128
  135
  143
  151
  159
  168
  177
  186
  196
  207
  218
  229
  241
  254
  267
  281
Funds from operations, $m
  136
  145
  155
  164
  174
  185
  196
  207
  219
  231
  228
  241
  255
  269
  284
  300
  316
  334
  351
  370
  390
  410
  431
  454
  477
  502
  527
  554
  583
  612
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
Cash from operations, $m
  138
  147
  156
  166
  176
  187
  198
  209
  221
  233
  230
  244
  258
  272
  287
  303
  320
  337
  355
  374
  393
  414
  435
  458
  482
  506
  532
  559
  588
  618
Maintenance CAPEX, $m
  -47
  -51
  -55
  -59
  -64
  -69
  -74
  -79
  -84
  -90
  -95
  -101
  -107
  -114
  -121
  -128
  -135
  -143
  -151
  -159
  -168
  -177
  -186
  -196
  -207
  -218
  -229
  -241
  -254
  -267
New CAPEX, $m
  -39
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -95
  -100
  -104
  -109
  -114
  -120
  -126
  -132
  -138
Cash from investing activities, $m
  -86
  -93
  -99
  -104
  -111
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -181
  -191
  -201
  -211
  -223
  -234
  -246
  -259
  -272
  -286
  -300
  -316
  -332
  -349
  -367
  -386
  -405
Free cash flow, $m
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  76
  80
  86
  91
  96
  102
  108
  114
  121
  128
  135
  142
  149
  157
  166
  174
  183
  193
  203
  213
Issuance/(repayment) of debt, $m
  76
  79
  82
  86
  89
  93
  96
  100
  104
  108
  113
  117
  122
  127
  133
  138
  145
  151
  158
  165
  172
  180
  189
  197
  207
  216
  227
  237
  249
  261
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  
  76
  79
  82
  86
  89
  93
  96
  100
  104
  108
  113
  117
  122
  127
  133
  138
  145
  151
  158
  165
  172
  180
  189
  197
  207
  216
  227
  237
  249
  261
Total cash flow (excl. dividends), $m
  127
  133
  140
  147
  154
  162
  169
  178
  186
  195
  188
  198
  208
  218
  229
  241
  253
  265
  279
  292
  307
  322
  338
  355
  372
  391
  410
  430
  451
  474
Retained Cash Flow (-), $m
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
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
  114
  119
  125
  131
  138
  145
  152
  159
  167
  175
  167
  176
  185
  195
  205
  215
  226
  238
  250
  262
  275
  289
  303
  318
  334
  351
  368
  387
  406
  426
Discount rate, %
  10.10
  10.61
  11.14
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.05
  20.00
  21.00
  22.05
  23.15
  24.31
  25.52
  26.80
  28.14
  29.55
  31.02
  32.57
  34.20
  35.91
  37.71
  39.59
  41.57
PV of cash for distribution, $m
  103
  97
  91
  84
  77
  70
  62
  55
  48
  41
  31
  26
  21
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  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
  100.0

Civitas Solutions, Inc. is a provider of home- and community-based health and human services to individuals with intellectual, developmental, physical or behavioral disabilities and other special needs. The Company operates through two segments: Human Services and Post-Acute Specialty Rehabilitation Services (SRS). The Human Services segment provides home- and community-based human services to individuals with intellectual and/or developmental disabilities (I/DD), youth with emotional, behavioral and/or medically complex challenges or at-risk youth (ARY), and elders. The SRS segment delivers healthcare and community-based health and human services to individuals having suffered acquired brain injury, spinal injuries, and other catastrophic injuries and illnesses. Within its SRS segment, its NeuroRestorative business unit is focused on rehabilitation and transitional living services, and its CareMeridian business unit is focused on the medically-intensive post-acute care services.

FINANCIAL RATIOS  of  Civitas Solutions (CIVI)

Valuation Ratios
P/E Ratio 82.1
Price to Sales 0.3
Price to Book 3
Price to Tangible Book
Price to Cash Flow 5.1
Price to Free Cash Flow 9.9
Growth Rates
Sales Growth Rate 4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.3%
Cap. Spend. - 3 Yr. Gr. Rate 6.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 382.8%
Total Debt to Equity 387.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.6%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital 0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity 3.9%
Return On Equity - 3 Yr. Avg. 4.4%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 21.3%
Gross Margin - 3 Yr. Avg. 22.1%
EBITDA Margin 5.7%
EBITDA Margin - 3 Yr. Avg. 6.1%
Operating Margin 2.8%
Oper. Margin - 3 Yr. Avg. 3.4%
Pre-Tax Margin 0.5%
Pre-Tax Margin - 3 Yr. Avg. 0.9%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 0.4%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 42.9%
Payout Ratio 0%

CIVI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CIVI stock intrinsic value calculation we used $1474.51 million for the last fiscal year's total revenue generated by Civitas Solutions. The default revenue input number comes from 0001 income statement of Civitas Solutions. 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 CIVI stock valuation model: a) initial revenue growth rate of 8.6% 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 10.1%, whose default value for CIVI is calculated based on our internal credit rating of Civitas Solutions, 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 Civitas Solutions.
    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 CIVI stock the variable cost ratio is equal to 95.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CIVI 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 Civitas Solutions.

Corporate tax rate of 27% is the nominal tax rate for Civitas Solutions. 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 CIVI 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 CIVI are equal to 31.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Civitas Solutions 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 CIVI is equal to -1.3%. 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 - $162.917 million for Civitas Solutions - 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 36.229 million for Civitas Solutions 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 Civitas Solutions at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Civitas Solutions: Fiscal 3Q Earnings Snapshot   [07:43PM  Associated Press]
▶ Civitas Solutions: Fiscal 2Q Earnings Snapshot   [May-10-18 06:08PM  Associated Press]
▶ Civitas expands adult day program with two Mass. acquisitions   [Apr-05-18 06:23AM  American City Business Journals]
▶ Civitas Solutions beats 1Q profit forecasts   [Feb-08-18 06:53PM  Associated Press]
▶ Company News For Dec 14, 2017   [10:28AM  Zacks]
▶ Civitas Solutions reports 4Q loss   [Dec-12-17 04:35PM  Associated Press]
▶ Civitas Solutions beats 3Q profit forecasts   [Aug-09-17 09:33PM  Associated Press]

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