Intrinsic value of Cornerstone OnDemand, Inc. - CSOD

Previous Close

$53.19

  Intrinsic Value

$18.85

stock screener

  Rating & Target

str. sell

-65%

Previous close

$53.19

 
Intrinsic value

$18.85

 
Up/down potential

-65%

 
Rating

str. sell

We calculate the intrinsic value of CSOD 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 3.1

 

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, %
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
Revenue, $m
  564
  591
  620
  650
  681
  715
  750
  786
  825
  866
  908
  953
  1,000
  1,050
  1,102
  1,156
  1,214
  1,274
  1,337
  1,404
  1,474
  1,547
  1,624
  1,705
  1,790
  1,879
  1,973
  2,071
  2,175
  2,283
Variable operating expenses, $m
  145
  151
  158
  165
  173
  181
  190
  199
  208
  218
  220
  231
  243
  255
  267
  281
  295
  309
  325
  341
  358
  375
  394
  414
  434
  456
  479
  503
  528
  554
Fixed operating expenses, $m
  425
  435
  444
  454
  464
  474
  484
  495
  506
  517
  529
  540
  552
  564
  577
  589
  602
  615
  629
  643
  657
  671
  686
  701
  717
  733
  749
  765
  782
  799
Total operating expenses, $m
  570
  586
  602
  619
  637
  655
  674
  694
  714
  735
  749
  771
  795
  819
  844
  870
  897
  924
  954
  984
  1,015
  1,046
  1,080
  1,115
  1,151
  1,189
  1,228
  1,268
  1,310
  1,353
Operating income, $m
  -6
  5
  17
  30
  44
  59
  75
  93
  111
  131
  159
  182
  205
  231
  258
  286
  317
  349
  384
  420
  459
  500
  544
  590
  639
  691
  745
  804
  865
  930
EBITDA, $m
  21
  33
  46
  60
  75
  91
  109
  127
  147
  168
  190
  214
  239
  266
  295
  326
  358
  393
  429
  468
  509
  553
  599
  648
  700
  754
  813
  874
  939
  1,008
Interest expense (income), $m
  4
  22
  22
  25
  27
  30
  33
  36
  39
  42
  45
  49
  53
  57
  61
  65
  70
  74
  79
  85
  90
  96
  102
  109
  115
  122
  130
  138
  146
  155
  164
Earnings before tax, $m
  -28
  -17
  -7
  3
  15
  27
  40
  54
  69
  85
  110
  129
  149
  170
  193
  217
  243
  270
  299
  330
  363
  398
  435
  474
  516
  561
  608
  658
  710
  766
Tax expense, $m
  0
  0
  0
  1
  4
  7
  11
  15
  19
  23
  30
  35
  40
  46
  52
  59
  65
  73
  81
  89
  98
  107
  117
  128
  139
  151
  164
  178
  192
  207
Net income, $m
  -28
  -17
  -7
  2
  11
  20
  29
  39
  50
  62
  81
  94
  109
  124
  141
  158
  177
  197
  218
  241
  265
  290
  318
  346
  377
  409
  444
  480
  519
  559

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
  845
  886
  929
  974
  1,021
  1,071
  1,124
  1,179
  1,237
  1,298
  1,362
  1,429
  1,499
  1,574
  1,652
  1,734
  1,820
  1,910
  2,005
  2,105
  2,209
  2,319
  2,435
  2,556
  2,684
  2,817
  2,958
  3,105
  3,260
  3,423
Adjusted assets (=assets-cash), $m
  845
  886
  929
  974
  1,021
  1,071
  1,124
  1,179
  1,237
  1,298
  1,362
  1,429
  1,499
  1,574
  1,652
  1,734
  1,820
  1,910
  2,005
  2,105
  2,209
  2,319
  2,435
  2,556
  2,684
  2,817
  2,958
  3,105
  3,260
  3,423
Revenue / Adjusted assets
  0.667
  0.667
  0.667
  0.667
  0.667
  0.668
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
Average production assets, $m
  96
  100
  105
  110
  116
  121
  127
  134
  140
  147
  154
  162
  170
  178
  187
  197
  206
  217
  227
  239
  251
  263
  276
  290
  304
  319
  335
  352
  370
  388
Working capital, $m
  -226
  -237
  -248
  -261
  -273
  -287
  -301
  -315
  -331
  -347
  -364
  -382
  -401
  -421
  -442
  -464
  -487
  -511
  -536
  -563
  -591
  -620
  -651
  -684
  -718
  -754
  -791
  -831
  -872
  -916
Total debt, $m
  345
  381
  420
  460
  503
  548
  595
  645
  697
  752
  809
  870
  933
  1,000
  1,070
  1,144
  1,221
  1,303
  1,388
  1,478
  1,572
  1,671
  1,775
  1,884
  1,999
  2,119
  2,246
  2,379
  2,518
  2,665
Total liabilities, $m
  761
  797
  836
  877
  919
  964
  1,011
  1,061
  1,113
  1,168
  1,225
  1,286
  1,350
  1,416
  1,487
  1,560
  1,638
  1,719
  1,804
  1,894
  1,988
  2,087
  2,191
  2,301
  2,415
  2,536
  2,662
  2,795
  2,934
  3,081
Total equity, $m
  85
  89
  93
  97
  102
  107
  112
  118
  124
  130
  136
  143
  150
  157
  165
  173
  182
  191
  200
  210
  221
  232
  243
  256
  268
  282
  296
  311
  326
  342
Total liabilities and equity, $m
  846
  886
  929
  974
  1,021
  1,071
  1,123
  1,179
  1,237
  1,298
  1,361
  1,429
  1,500
  1,573
  1,652
  1,733
  1,820
  1,910
  2,004
  2,104
  2,209
  2,319
  2,434
  2,557
  2,683
  2,818
  2,958
  3,106
  3,260
  3,423
Debt-to-equity ratio
  4.080
  4.300
  4.520
  4.730
  4.930
  5.120
  5.300
  5.470
  5.630
  5.790
  5.940
  6.090
  6.220
  6.360
  6.480
  6.600
  6.710
  6.820
  6.920
  7.020
  7.120
  7.210
  7.290
  7.370
  7.450
  7.520
  7.590
  7.660
  7.720
  7.780
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -28
  -17
  -7
  2
  11
  20
  29
  39
  50
  62
  81
  94
  109
  124
  141
  158
  177
  197
  218
  241
  265
  290
  318
  346
  377
  409
  444
  480
  519
  559
Depreciation, amort., depletion, $m
  27
  28
  29
  30
  31
  32
  33
  34
  36
  37
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  70
  74
  78
Funds from operations, $m
  -1
  11
  21
  32
  41
  52
  62
  74
  86
  99
  111
  127
  143
  160
  178
  198
  218
  240
  264
  289
  315
  343
  373
  404
  438
  473
  511
  550
  592
  637
Change in working capital, $m
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -39
  -41
  -44
Cash from operations, $m
  10
  22
  33
  44
  54
  65
  76
  89
  102
  116
  129
  145
  162
  180
  199
  220
  241
  265
  289
  315
  343
  372
  404
  437
  472
  509
  548
  590
  634
  681
Maintenance CAPEX, $m
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -74
New CAPEX, $m
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
Cash from investing activities, $m
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -34
  -35
  -36
  -39
  -40
  -42
  -45
  -46
  -49
  -51
  -54
  -56
  -60
  -62
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
Free cash flow, $m
  -13
  -2
  8
  18
  27
  36
  46
  57
  68
  81
  92
  106
  121
  137
  154
  173
  192
  213
  235
  259
  283
  310
  338
  368
  399
  433
  468
  506
  546
  588
Issuance/(repayment) of debt, $m
  10
  37
  39
  41
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  115
  120
  126
  133
  139
  146
Issuance/(repurchase) of shares, $m
  56
  21
  12
  2
  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  
  66
  58
  51
  43
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  115
  120
  126
  133
  139
  146
Total cash flow (excl. dividends), $m
  53
  56
  58
  61
  69
  81
  93
  106
  121
  136
  149
  167
  185
  204
  225
  246
  270
  294
  321
  348
  378
  409
  442
  477
  514
  553
  595
  639
  685
  735
Retained Cash Flow (-), $m
  -56
  -21
  -12
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
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
  -3
  35
  47
  56
  65
  76
  88
  101
  115
  129
  143
  160
  178
  197
  217
  238
  261
  285
  311
  338
  367
  398
  430
  465
  501
  540
  581
  624
  670
  718
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
  -3
  32
  40
  46
  50
  55
  59
  63
  66
  68
  68
  68
  68
  66
  64
  61
  57
  53
  48
  43
  38
  33
  28
  24
  20
  16
  12
  10
  7
  5
Current shareholders' claim on cash, %
  90.9
  88.6
  87.5
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3
  87.3

Cornerstone OnDemand, Inc. is a cloud computing company. The Company provides learning and human capital management software, delivered as Software-as-a-Service (SaaS). Its human capital management platform combines the talent management solutions with analytics and human resources (HR) administration solutions to enable organizations to manage the employee lifecycle. Its enterprise human capital management platform consists of four product suites: its Recruiting suite, which helps organizations to source and attract candidates, assess and select applicants, onboard new hires and manage the entire recruiting process; its Learning suite, which enables clients to manage training and development programs; its Performance suite, which provides tools to manage goal setting, performance reviews, compensation management and succession planning, and HR Administration suite, which supports employee records administration, workforce planning and compliance reporting.

FINANCIAL RATIOS  of  Cornerstone OnDemand, Inc. (CSOD)

Valuation Ratios
P/E Ratio -44.9
Price to Sales 7.1
Price to Book 111.3
Price to Tangible Book
Price to Cash Flow 85.9
Price to Free Cash Flow 250.5
Growth Rates
Sales Growth Rate 24.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20.7%
Cap. Spend. - 3 Yr. Gr. Rate 7.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 881.5%
Total Debt to Equity 881.5%
Interest Coverage -16
Management Effectiveness
Return On Assets -10.6%
Ret/ On Assets - 3 Yr. Avg. -13.1%
Return On Total Capital -26.7%
Ret/ On T. Cap. - 3 Yr. Avg. -28.5%
Return On Equity -382.9%
Return On Equity - 3 Yr. Avg. -306.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 67.8%
Gross Margin - 3 Yr. Avg. 68.7%
EBITDA Margin -7.1%
EBITDA Margin - 3 Yr. Avg. -13.3%
Operating Margin -13.2%
Oper. Margin - 3 Yr. Avg. -17.3%
Pre-Tax Margin -15.6%
Pre-Tax Margin - 3 Yr. Avg. -21.5%
Net Profit Margin -15.8%
Net Profit Margin - 3 Yr. Avg. -21.9%
Effective Tax Rate -1.5%
Eff/ Tax Rate - 3 Yr. Avg. -1.8%
Payout Ratio 0%

CSOD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSOD stock intrinsic value calculation we used $538 million for the last fiscal year's total revenue generated by Cornerstone OnDemand, Inc.. The default revenue input number comes from 0001 income statement of Cornerstone OnDemand, 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 CSOD stock valuation model: a) initial revenue growth rate of 4.8% 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 CSOD is calculated based on our internal credit rating of Cornerstone OnDemand, 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 Cornerstone OnDemand, 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 CSOD stock the variable cost ratio is equal to 25.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $416 million in the base year in the intrinsic value calculation for CSOD 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 6.5% for Cornerstone OnDemand, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cornerstone OnDemand, 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 CSOD 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 CSOD are equal to 17%.

Life of production assets of 3.8 years is the average useful life of capital assets used in Cornerstone OnDemand, 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 CSOD is equal to -40.1%. 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 - $55.907 million for Cornerstone OnDemand, 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 59.090 million for Cornerstone OnDemand, 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 Cornerstone OnDemand, Inc. at the current share price and the inputted number of shares is $3.1 billion.

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