Intrinsic value of Care.com, Inc. - CRCM

Previous Close

$10.11

  Intrinsic Value

$13.60

stock screener

  Rating & Target

buy

+34%

Previous close

$10.11

 
Intrinsic value

$13.60

 
Up/down potential

+34%

 
Rating

buy

We calculate the intrinsic value of CRCM 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, %
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
Revenue, $m
  216
  242
  269
  297
  327
  358
  390
  424
  459
  495
  533
  573
  613
  656
  700
  746
  794
  844
  896
  950
  1,006
  1,064
  1,126
  1,189
  1,256
  1,326
  1,399
  1,475
  1,554
  1,638
Variable operating expenses, $m
  196
  218
  242
  267
  293
  320
  348
  377
  408
  440
  466
  500
  536
  573
  612
  652
  694
  737
  782
  829
  879
  930
  983
  1,039
  1,097
  1,158
  1,222
  1,288
  1,358
  1,430
Fixed operating expenses, $m
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
Total operating expenses, $m
  205
  227
  252
  277
  303
  330
  358
  388
  419
  451
  477
  512
  548
  585
  624
  665
  707
  750
  796
  843
  893
  945
  998
  1,054
  1,113
  1,174
  1,238
  1,305
  1,375
  1,447
Operating income, $m
  11
  14
  17
  21
  24
  28
  32
  36
  40
  44
  56
  61
  66
  71
  76
  82
  87
  93
  100
  106
  113
  120
  128
  135
  143
  152
  161
  170
  180
  190
EBITDA, $m
  20
  23
  26
  30
  33
  37
  41
  46
  50
  55
  59
  64
  70
  75
  81
  86
  92
  99
  105
  112
  119
  127
  135
  143
  151
  160
  170
  179
  190
  200
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  18
  19
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  41
Earnings before tax, $m
  11
  13
  16
  18
  21
  24
  27
  30
  33
  36
  47
  51
  54
  58
  62
  66
  71
  75
  80
  85
  90
  96
  102
  107
  114
  120
  127
  134
  141
  149
Tax expense, $m
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
Net income, $m
  8
  10
  11
  13
  15
  17
  20
  22
  24
  27
  34
  37
  40
  42
  45
  49
  52
  55
  59
  62
  66
  70
  74
  78
  83
  88
  93
  98
  103
  109

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
  210
  235
  261
  288
  317
  347
  378
  411
  445
  480
  517
  555
  595
  636
  679
  724
  770
  818
  869
  921
  976
  1,032
  1,092
  1,154
  1,218
  1,286
  1,357
  1,430
  1,508
  1,588
Adjusted assets (=assets-cash), $m
  210
  235
  261
  288
  317
  347
  378
  411
  445
  480
  517
  555
  595
  636
  679
  724
  770
  818
  869
  921
  976
  1,032
  1,092
  1,154
  1,218
  1,286
  1,357
  1,430
  1,508
  1,588
Revenue / Adjusted assets
  1.029
  1.030
  1.031
  1.031
  1.032
  1.032
  1.032
  1.032
  1.031
  1.031
  1.031
  1.032
  1.030
  1.031
  1.031
  1.030
  1.031
  1.032
  1.031
  1.031
  1.031
  1.031
  1.031
  1.030
  1.031
  1.031
  1.031
  1.031
  1.031
  1.031
Average production assets, $m
  42
  46
  52
  57
  63
  69
  75
  81
  88
  95
  102
  110
  118
  126
  134
  143
  152
  162
  172
  182
  193
  204
  216
  228
  241
  255
  269
  283
  298
  314
Working capital, $m
  -31
  -34
  -38
  -42
  -46
  -51
  -55
  -60
  -65
  -70
  -76
  -81
  -87
  -93
  -99
  -106
  -113
  -120
  -127
  -135
  -143
  -151
  -160
  -169
  -178
  -188
  -199
  -209
  -221
  -233
Total debt, $m
  13
  28
  42
  58
  74
  92
  109
  128
  147
  167
  188
  210
  233
  256
  281
  306
  332
  360
  388
  418
  449
  482
  515
  551
  587
  626
  666
  708
  752
  798
Total liabilities, $m
  119
  133
  148
  164
  180
  197
  215
  234
  253
  273
  294
  316
  339
  362
  386
  412
  438
  466
  494
  524
  555
  587
  621
  656
  693
  732
  772
  814
  858
  904
Total equity, $m
  90
  101
  112
  124
  137
  150
  163
  177
  192
  207
  223
  239
  256
  274
  293
  312
  332
  353
  374
  397
  420
  445
  471
  497
  525
  554
  585
  617
  650
  685
Total liabilities and equity, $m
  209
  234
  260
  288
  317
  347
  378
  411
  445
  480
  517
  555
  595
  636
  679
  724
  770
  819
  868
  921
  975
  1,032
  1,092
  1,153
  1,218
  1,286
  1,357
  1,431
  1,508
  1,589
Debt-to-equity ratio
  0.150
  0.270
  0.380
  0.470
  0.550
  0.610
  0.670
  0.720
  0.770
  0.810
  0.850
  0.880
  0.910
  0.930
  0.960
  0.980
  1.000
  1.020
  1.040
  1.050
  1.070
  1.080
  1.100
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.170
Adjusted equity ratio
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  10
  11
  13
  15
  17
  20
  22
  24
  27
  34
  37
  40
  42
  45
  49
  52
  55
  59
  62
  66
  70
  74
  78
  83
  88
  93
  98
  103
  109
Depreciation, amort., depletion, $m
  9
  9
  9
  9
  9
  9
  10
  10
  10
  10
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
Funds from operations, $m
  17
  18
  20
  22
  25
  27
  29
  32
  34
  37
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  77
  81
  86
  91
  96
  102
  107
  113
  119
Change in working capital, $m
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Cash from operations, $m
  20
  22
  24
  26
  29
  31
  34
  36
  39
  42
  43
  46
  49
  53
  56
  60
  64
  68
  72
  76
  80
  85
  90
  95
  100
  106
  112
  118
  125
  131
Maintenance CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
New CAPEX, $m
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
Cash from investing activities, $m
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -10
  -10
  -10
  -11
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -21
  -22
  -24
  -24
  -26
Free cash flow, $m
  14
  16
  17
  19
  21
  23
  25
  27
  30
  32
  33
  35
  38
  41
  44
  47
  50
  53
  56
  60
  64
  67
  71
  76
  80
  85
  89
  95
  100
  105
Issuance/(repayment) of debt, $m
  13
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
Issuance/(repurchase) of shares, $m
  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
  0
  0
  0
Cash from financing (excl. dividends), $m  
  15
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
Total cash flow (excl. dividends), $m
  30
  31
  32
  35
  38
  40
  43
  46
  49
  52
  54
  57
  60
  64
  68
  72
  76
  80
  85
  90
  95
  100
  105
  111
  117
  123
  130
  137
  144
  151
Retained Cash Flow (-), $m
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
Prev. year cash balance distribution, $m
  82
  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
  102
  20
  21
  23
  25
  27
  30
  32
  34
  37
  38
  40
  43
  46
  49
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  110
  116
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
  97
  19
  18
  19
  20
  20
  20
  20
  20
  19
  18
  17
  16
  16
  15
  13
  12
  11
  10
  9
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  98.7
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2

Care.com, Inc. is an online marketplace for finding and managing family care. As of December 31, 2016, the Company had 22.8 million members, including 12.9 million families and 9.9 million caregivers, spanning 19 countries. Its consumer matching solutions allow families to search for, qualify, vet, connect with and select caregivers. It also provides caregivers with solutions to create personal profiles, describe their skills and experience, and otherwise differentiate and market themselves in a fragmented marketplace. In addition to consumer matching solutions, the Company offers its members products and services to facilitate their interaction with caregivers. It serves employers by providing access to certain of its products and services to employer-sponsored families. In addition, it serves care-related businesses, such as day care centers, nanny agencies and home care agencies, willing to market their services to its care-seeking families and recruit its caregiver members.

FINANCIAL RATIOS  of  Care.com, Inc. (CRCM)

Valuation Ratios
P/E Ratio 41.9
Price to Sales 1.8
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 19.5
Price to Free Cash Flow 19.5
Growth Rates
Sales Growth Rate 16.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. -24.4%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. -35.4%
Return On Equity 6.9%
Return On Equity - 3 Yr. Avg. -35.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 80.2%
Gross Margin - 3 Yr. Avg. 80%
EBITDA Margin 3.1%
EBITDA Margin - 3 Yr. Avg. -11.8%
Operating Margin 1.2%
Oper. Margin - 3 Yr. Avg. -13.4%
Pre-Tax Margin 0.6%
Pre-Tax Margin - 3 Yr. Avg. -15.3%
Net Profit Margin 4.3%
Net Profit Margin - 3 Yr. Avg. -31%
Effective Tax Rate 200%
Eff/ Tax Rate - 3 Yr. Avg. 64.7%
Payout Ratio 0%

CRCM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRCM stock intrinsic value calculation we used $192 million for the last fiscal year's total revenue generated by Care.com, Inc.. The default revenue input number comes from 0001 income statement of Care.com, 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 CRCM stock valuation model: a) initial revenue growth rate of 12.6% 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 4.3%, whose default value for CRCM is calculated based on our internal credit rating of Care.com, 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 Care.com, 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 CRCM stock the variable cost ratio is equal to 91.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9 million in the base year in the intrinsic value calculation for CRCM 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 Care.com, Inc..

Corporate tax rate of 27% is the nominal tax rate for Care.com, 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 CRCM 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 CRCM are equal to 19.2%.

Life of production assets of 33.1 years is the average useful life of capital assets used in Care.com, 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 CRCM is equal to -14.2%. 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 - $162.213 million for Care.com, 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 32.194 million for Care.com, 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 Care.com, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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