Intrinsic value of Castlight Health, inc. - CSLT

Previous Close

$3.11

  Intrinsic Value

$3.44

stock screener

  Rating & Target

hold

+10%

Previous close

$3.11

 
Intrinsic value

$3.44

 
Up/down potential

+10%

 
Rating

hold

We calculate the intrinsic value of CSLT 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 0.4

 

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, %
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
  5.43
  5.39
Revenue, $m
  177
  198
  222
  246
  271
  298
  326
  355
  385
  417
  450
  484
  519
  556
  594
  634
  675
  718
  763
  809
  858
  909
  961
  1,016
  1,074
  1,134
  1,197
  1,262
  1,331
  1,402
Variable operating expenses, $m
  49
  54
  59
  65
  70
  76
  82
  88
  95
  102
  98
  106
  114
  122
  130
  139
  148
  157
  167
  177
  188
  199
  210
  222
  235
  248
  262
  276
  291
  307
Fixed operating expenses, $m
  158
  162
  165
  169
  173
  177
  181
  184
  189
  193
  197
  201
  206
  210
  215
  220
  224
  229
  234
  240
  245
  250
  256
  261
  267
  273
  279
  285
  291
  298
Total operating expenses, $m
  207
  216
  224
  234
  243
  253
  263
  272
  284
  295
  295
  307
  320
  332
  345
  359
  372
  386
  401
  417
  433
  449
  466
  483
  502
  521
  541
  561
  582
  605
Operating income, $m
  -31
  -18
  -3
  12
  28
  45
  63
  82
  102
  122
  154
  177
  200
  224
  249
  276
  303
  332
  362
  393
  426
  460
  495
  533
  572
  613
  656
  701
  748
  798
EBITDA, $m
  -16
  -2
  13
  29
  45
  63
  82
  101
  121
  143
  165
  188
  212
  237
  263
  290
  319
  348
  379
  411
  445
  480
  517
  556
  597
  639
  683
  730
  779
  830
Interest expense (income), $m
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  14
  16
  17
  18
  19
  20
  21
  23
  24
Earnings before tax, $m
  -31
  -18
  -4
  11
  26
  43
  60
  78
  98
  117
  149
  170
  193
  216
  241
  267
  293
  321
  350
  380
  412
  445
  480
  516
  554
  594
  636
  680
  726
  774
Tax expense, $m
  0
  0
  0
  3
  7
  12
  16
  21
  26
  32
  40
  46
  52
  58
  65
  72
  79
  87
  94
  103
  111
  120
  130
  139
  150
  160
  172
  183
  196
  209
Net income, $m
  -31
  -18
  -4
  8
  19
  31
  44
  57
  71
  86
  109
  124
  141
  158
  176
  195
  214
  234
  255
  278
  301
  325
  350
  377
  405
  434
  464
  496
  530
  565

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
  257
  289
  323
  358
  396
  435
  475
  518
  562
  608
  655
  705
  757
  810
  866
  924
  984
  1,047
  1,112
  1,180
  1,251
  1,325
  1,401
  1,482
  1,566
  1,653
  1,744
  1,840
  1,940
  2,044
Adjusted assets (=assets-cash), $m
  257
  289
  323
  358
  396
  435
  475
  518
  562
  608
  655
  705
  757
  810
  866
  924
  984
  1,047
  1,112
  1,180
  1,251
  1,325
  1,401
  1,482
  1,566
  1,653
  1,744
  1,840
  1,940
  2,044
Revenue / Adjusted assets
  0.689
  0.685
  0.687
  0.687
  0.684
  0.685
  0.686
  0.685
  0.685
  0.686
  0.687
  0.687
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
Average production assets, $m
  67
  76
  85
  94
  104
  114
  125
  136
  147
  159
  172
  185
  198
  212
  227
  242
  258
  274
  291
  309
  328
  347
  367
  388
  410
  433
  457
  482
  508
  536
Working capital, $m
  -23
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -51
  -55
  -60
  -64
  -69
  -74
  -79
  -84
  -90
  -96
  -101
  -108
  -114
  -121
  -128
  -135
  -143
  -151
  -159
  -168
  -177
  -187
Total debt, $m
  11
  19
  28
  37
  47
  57
  67
  78
  90
  102
  114
  127
  140
  154
  169
  184
  199
  216
  232
  250
  268
  287
  307
  328
  350
  373
  396
  421
  447
  474
Total liabilities, $m
  67
  75
  84
  93
  102
  113
  123
  134
  146
  157
  170
  183
  196
  210
  224
  239
  255
  271
  288
  306
  324
  343
  363
  384
  405
  428
  452
  477
  502
  529
Total equity, $m
  191
  214
  239
  266
  293
  322
  352
  384
  416
  450
  486
  523
  561
  600
  642
  685
  729
  776
  824
  874
  927
  981
  1,038
  1,098
  1,160
  1,225
  1,293
  1,363
  1,437
  1,515
Total liabilities and equity, $m
  258
  289
  323
  359
  395
  435
  475
  518
  562
  607
  656
  706
  757
  810
  866
  924
  984
  1,047
  1,112
  1,180
  1,251
  1,324
  1,401
  1,482
  1,565
  1,653
  1,745
  1,840
  1,939
  2,044
Debt-to-equity ratio
  0.060
  0.090
  0.120
  0.140
  0.160
  0.180
  0.190
  0.200
  0.220
  0.230
  0.240
  0.240
  0.250
  0.260
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.290
  0.300
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.310
Adjusted equity ratio
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -31
  -18
  -4
  8
  19
  31
  44
  57
  71
  86
  109
  124
  141
  158
  176
  195
  214
  234
  255
  278
  301
  325
  350
  377
  405
  434
  464
  496
  530
  565
Depreciation, amort., depletion, $m
  15
  15
  16
  16
  17
  18
  18
  19
  20
  20
  10
  11
  12
  13
  14
  14
  15
  16
  17
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
Funds from operations, $m
  -17
  -3
  12
  24
  36
  49
  62
  76
  91
  106
  119
  136
  153
  171
  189
  209
  229
  251
  273
  296
  320
  346
  372
  400
  429
  460
  492
  525
  560
  597
Change in working capital, $m
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
Cash from operations, $m
  -14
  0
  15
  27
  40
  53
  66
  80
  95
  110
  123
  140
  157
  176
  195
  214
  235
  256
  279
  302
  327
  353
  379
  407
  437
  468
  500
  534
  569
  606
Maintenance CAPEX, $m
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
New CAPEX, $m
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Cash from investing activities, $m
  -12
  -12
  -14
  -14
  -16
  -16
  -18
  -18
  -20
  -21
  -23
  -23
  -25
  -26
  -28
  -29
  -30
  -31
  -33
  -35
  -38
  -39
  -41
  -43
  -45
  -48
  -50
  -52
  -55
  -57
Free cash flow, $m
  -25
  -12
  1
  13
  24
  36
  49
  62
  75
  89
  101
  117
  133
  150
  167
  186
  205
  225
  245
  267
  290
  314
  338
  364
  392
  420
  450
  481
  514
  549
Issuance/(repayment) of debt, $m
  8
  8
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
Issuance/(repurchase) of shares, $m
  54
  42
  29
  18
  8
  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  
  62
  50
  38
  27
  18
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
Total cash flow (excl. dividends), $m
  36
  38
  39
  41
  42
  46
  59
  73
  87
  101
  114
  130
  146
  164
  182
  201
  220
  241
  262
  285
  308
  333
  358
  385
  413
  443
  474
  506
  540
  576
Retained Cash Flow (-), $m
  -54
  -42
  -29
  -26
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -77
Prev. year cash balance distribution, $m
  26
  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
  9
  -4
  10
  14
  15
  17
  29
  41
  54
  67
  78
  93
  108
  124
  140
  158
  176
  194
  214
  234
  256
  278
  301
  326
  351
  378
  406
  435
  466
  498
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
  8
  -4
  9
  12
  11
  13
  20
  26
  31
  35
  37
  40
  41
  42
  41
  40
  38
  36
  33
  30
  26
  23
  20
  17
  14
  11
  9
  7
  5
  4
Current shareholders' claim on cash, %
  87.8
  80.1
  75.6
  73.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2
  72.2

Castlight Health, Inc. offers a health benefits platform that engages employees to make healthcare decisions, and enables employers to communicate and measure their benefit programs. The Company operates through cloud-based products segment. Its technology offering aggregates data and applies analytics to make healthcare data transparent. Its products deliver employee engagement and enable employers to integrate benefit programs into a single platform available to employees and their families. Its health benefits platform engages external data and its substantial user base to provide a single, end-to-end solution that engages employees through personalized and relevant communications. Its offering provides employers the opportunity to communicate, measure, and get value out of their benefits and programs on a real-time basis. It offers cross-sell products, such as Castlight Action, Castlight Pharmacy, Castlight Dental, Castlight Elevate, Castlight Protect and Castlight Rewards.

FINANCIAL RATIOS  of  Castlight Health, inc. (CSLT)

Valuation Ratios
P/E Ratio -5.5
Price to Sales 3.2
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow -8.8
Price to Free Cash Flow -8.3
Growth Rates
Sales Growth Rate 36%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
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 -35.8%
Ret/ On Assets - 3 Yr. Avg. -44.1%
Return On Total Capital -53.6%
Ret/ On T. Cap. - 3 Yr. Avg. -60.7%
Return On Equity -53.6%
Return On Equity - 3 Yr. Avg. -60.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 65.7%
Gross Margin - 3 Yr. Avg. 53.6%
EBITDA Margin -54.9%
EBITDA Margin - 3 Yr. Avg. -114.6%
Operating Margin -57.8%
Oper. Margin - 3 Yr. Avg. -117.6%
Pre-Tax Margin -57.8%
Pre-Tax Margin - 3 Yr. Avg. -117.2%
Net Profit Margin -57.8%
Net Profit Margin - 3 Yr. Avg. -117.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CSLT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSLT stock intrinsic value calculation we used $156 million for the last fiscal year's total revenue generated by Castlight Health, inc.. The default revenue input number comes from 0001 income statement of Castlight Health, 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 CSLT stock valuation model: a) initial revenue growth rate of 13.2% 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 CSLT is calculated based on our internal credit rating of Castlight Health, 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 Castlight Health, 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 CSLT stock the variable cost ratio is equal to 28.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $155 million in the base year in the intrinsic value calculation for CSLT 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 Castlight Health, inc..

Corporate tax rate of 27% is the nominal tax rate for Castlight Health, 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 CSLT 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 CSLT are equal to 38.2%.

Life of production assets of 16.7 years is the average useful life of capital assets used in Castlight Health, 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 CSLT is equal to -13.3%. 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 - $194.671 million for Castlight Health, 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 143.524 million for Castlight Health, 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 Castlight Health, inc. at the current share price and the inputted number of shares is $0.4 billion.

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