Intrinsic value of Dun&Bradstreet - DNB

Previous Close

$119.73

  Intrinsic Value

$14.58

stock screener

  Rating & Target

str. sell

-88%

Previous close

$119.73

 
Intrinsic value

$14.58

 
Up/down potential

-88%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DNB 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.09
  3.60
  3.74
  3.87
  3.98
  4.08
  4.17
  4.26
  4.33
  4.40
  4.46
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
Revenue, $m
  1,704
  1,765
  1,831
  1,902
  1,978
  2,059
  2,145
  2,236
  2,333
  2,435
  2,544
  2,658
  2,780
  2,908
  3,043
  3,185
  3,335
  3,493
  3,660
  3,835
  4,020
  4,214
  4,418
  4,633
  4,859
  5,096
  5,346
  5,608
  5,884
  6,174
  6,479
Variable operating expenses, $m
 
  1,406
  1,457
  1,510
  1,568
  1,629
  1,694
  1,764
  1,837
  1,915
  1,998
  2,020
  2,112
  2,209
  2,312
  2,420
  2,534
  2,654
  2,781
  2,914
  3,054
  3,201
  3,357
  3,520
  3,691
  3,872
  4,062
  4,261
  4,470
  4,691
  4,922
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
  1,441
  1,406
  1,457
  1,510
  1,568
  1,629
  1,694
  1,764
  1,837
  1,915
  1,998
  2,020
  2,112
  2,209
  2,312
  2,420
  2,534
  2,654
  2,781
  2,914
  3,054
  3,201
  3,357
  3,520
  3,691
  3,872
  4,062
  4,261
  4,470
  4,691
  4,922
Operating income, $m
  262
  359
  375
  392
  410
  429
  450
  472
  495
  520
  546
  639
  668
  699
  731
  765
  801
  839
  879
  921
  966
  1,012
  1,061
  1,113
  1,167
  1,224
  1,284
  1,347
  1,414
  1,483
  1,557
EBITDA, $m
  331
  453
  470
  488
  507
  528
  550
  573
  598
  625
  652
  682
  713
  746
  780
  817
  855
  896
  939
  984
  1,031
  1,081
  1,133
  1,188
  1,246
  1,307
  1,371
  1,438
  1,509
  1,583
  1,662
Interest expense (income), $m
  52
  56
  5
  7
  9
  12
  15
  18
  21
  24
  28
  31
  35
  39
  44
  49
  53
  59
  64
  70
  76
  82
  89
  96
  103
  111
  119
  127
  136
  146
  156
Earnings before tax, $m
  204
  303
  370
  385
  401
  417
  435
  454
  474
  496
  518
  607
  633
  659
  687
  717
  748
  781
  815
  852
  890
  930
  973
  1,017
  1,064
  1,114
  1,166
  1,220
  1,277
  1,338
  1,401
Tax expense, $m
  100
  82
  100
  104
  108
  113
  118
  123
  128
  134
  140
  164
  171
  178
  186
  194
  202
  211
  220
  230
  240
  251
  263
  275
  287
  301
  315
  329
  345
  361
  378
Net income, $m
  97
  221
  270
  281
  292
  305
  318
  332
  346
  362
  378
  443
  462
  481
  502
  523
  546
  570
  595
  622
  650
  679
  710
  743
  777
  813
  851
  891
  932
  976
  1,023

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  354
  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
  2,209
  1,921
  1,993
  2,070
  2,152
  2,240
  2,334
  2,433
  2,538
  2,650
  2,768
  2,893
  3,025
  3,164
  3,311
  3,466
  3,629
  3,801
  3,982
  4,173
  4,374
  4,585
  4,807
  5,041
  5,287
  5,545
  5,817
  6,103
  6,403
  6,718
  7,050
Adjusted assets (=assets-cash), $m
  1,855
  1,921
  1,993
  2,070
  2,152
  2,240
  2,334
  2,433
  2,538
  2,650
  2,768
  2,893
  3,025
  3,164
  3,311
  3,466
  3,629
  3,801
  3,982
  4,173
  4,374
  4,585
  4,807
  5,041
  5,287
  5,545
  5,817
  6,103
  6,403
  6,718
  7,050
Revenue / Adjusted assets
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
Average production assets, $m
  450
  466
  483
  502
  522
  543
  566
  590
  616
  643
  672
  702
  734
  768
  803
  841
  880
  922
  966
  1,012
  1,061
  1,112
  1,166
  1,223
  1,283
  1,345
  1,411
  1,481
  1,553
  1,630
  1,710
Working capital, $m
  -66
  -411
  -427
  -443
  -461
  -480
  -500
  -521
  -543
  -567
  -593
  -619
  -648
  -677
  -709
  -742
  -777
  -814
  -853
  -894
  -937
  -982
  -1,029
  -1,079
  -1,132
  -1,187
  -1,246
  -1,307
  -1,371
  -1,439
  -1,510
Total debt, $m
  1,617
  135
  200
  269
  343
  422
  506
  596
  690
  791
  897
  1,010
  1,128
  1,254
  1,386
  1,525
  1,672
  1,827
  1,990
  2,162
  2,343
  2,533
  2,733
  2,943
  3,164
  3,397
  3,641
  3,898
  4,169
  4,452
  4,751
Total liabilities, $m
  3,211
  1,729
  1,794
  1,863
  1,937
  2,016
  2,100
  2,190
  2,284
  2,385
  2,491
  2,604
  2,722
  2,848
  2,980
  3,119
  3,266
  3,421
  3,584
  3,756
  3,937
  4,127
  4,327
  4,537
  4,758
  4,991
  5,235
  5,492
  5,763
  6,046
  6,345
Total equity, $m
  -1,002
  192
  199
  207
  215
  224
  233
  243
  254
  265
  277
  289
  302
  316
  331
  347
  363
  380
  398
  417
  437
  459
  481
  504
  529
  555
  582
  610
  640
  672
  705
Total liabilities and equity, $m
  2,209
  1,921
  1,993
  2,070
  2,152
  2,240
  2,333
  2,433
  2,538
  2,650
  2,768
  2,893
  3,024
  3,164
  3,311
  3,466
  3,629
  3,801
  3,982
  4,173
  4,374
  4,586
  4,808
  5,041
  5,287
  5,546
  5,817
  6,102
  6,403
  6,718
  7,050
Debt-to-equity ratio
  -1.614
  0.700
  1.000
  1.300
  1.590
  1.880
  2.170
  2.450
  2.720
  2.980
  3.240
  3.490
  3.730
  3.960
  4.190
  4.400
  4.610
  4.810
  5.000
  5.180
  5.360
  5.520
  5.680
  5.840
  5.990
  6.130
  6.260
  6.390
  6.510
  6.630
  6.740
Adjusted equity ratio
  -0.719
  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
  97
  221
  270
  281
  292
  305
  318
  332
  346
  362
  378
  443
  462
  481
  502
  523
  546
  570
  595
  622
  650
  679
  710
  743
  777
  813
  851
  891
  932
  976
  1,023
Depreciation, amort., depletion, $m
  69
  94
  95
  96
  97
  99
  100
  101
  103
  105
  106
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  95
  100
  105
Funds from operations, $m
  305
  315
  365
  377
  390
  403
  418
  433
  449
  467
  485
  486
  507
  528
  551
  575
  600
  627
  655
  684
  715
  747
  782
  818
  856
  896
  937
  981
  1,028
  1,076
  1,127
Change in working capital, $m
  -18
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -68
  -71
Cash from operations, $m
  323
  329
  380
  393
  407
  422
  438
  454
  472
  490
  510
  513
  535
  558
  582
  608
  635
  663
  693
  725
  758
  793
  829
  868
  908
  951
  996
  1,043
  1,092
  1,144
  1,198
Maintenance CAPEX, $m
  0
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -95
  -100
New CAPEX, $m
  -60
  -16
  -17
  -19
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
  -80
Cash from investing activities, $m
  -58
  -44
  -46
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -105
  -111
  -116
  -122
  -129
  -135
  -142
  -149
  -156
  -164
  -172
  -180
Free cash flow, $m
  265
  286
  334
  345
  357
  369
  382
  395
  410
  426
  442
  442
  460
  479
  500
  521
  544
  568
  593
  619
  647
  676
  707
  740
  774
  809
  847
  887
  928
  972
  1,018
Issuance/(repayment) of debt, $m
  -203
  -1,459
  65
  69
  74
  79
  84
  89
  95
  100
  106
  112
  119
  125
  132
  139
  147
  155
  163
  172
  181
  190
  200
  210
  221
  233
  245
  257
  270
  284
  298
Issuance/(repurchase) of shares, $m
  44
  1,304
  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  
  -154
  -155
  65
  69
  74
  79
  84
  89
  95
  100
  106
  112
  119
  125
  132
  139
  147
  155
  163
  172
  181
  190
  200
  210
  221
  233
  245
  257
  270
  284
  298
Total cash flow (excl. dividends), $m
  58
  130
  399
  414
  431
  448
  466
  485
  505
  526
  548
  554
  579
  605
  632
  661
  691
  722
  756
  791
  828
  866
  907
  950
  995
  1,042
  1,092
  1,144
  1,199
  1,256
  1,316
Retained Cash Flow (-), $m
  -115
  -1,525
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
Prev. year cash balance distribution, $m
 
  331
  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
 
  -1,064
  392
  407
  422
  439
  456
  475
  494
  515
  536
  542
  565
  591
  617
  645
  674
  705
  738
  772
  808
  845
  885
  927
  970
  1,016
  1,065
  1,115
  1,168
  1,224
  1,283
Discount rate, %
 
  12.40
  13.02
  13.67
  14.35
  15.07
  15.83
  16.62
  17.45
  18.32
  19.24
  20.20
  21.21
  22.27
  23.38
  24.55
  25.78
  27.07
  28.42
  29.84
  31.33
  32.90
  34.55
  36.27
  38.09
  39.99
  41.99
  44.09
  46.29
  48.61
  51.04
PV of cash for distribution, $m
 
  -946
  307
  277
  247
  218
  189
  162
  137
  113
  92
  72
  56
  43
  33
  24
  17
  12
  8
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

The Dun & Bradstreet Corporation is the source of commercial data, analytics and insight on businesses. The Company operates through two segments: Americas, which consists of its operations in the United States and Canada, and Non-Americas, which consists of its operations in the United Kingdom, Greater China, India, and its European and Asia Pacific Worldwide Networks. The Company provides Risk Management Solutions and Sales and Marketing Solutions. The Company provides DNBi and D&B Credit that are subscription-based online applications, which offers customers real time access to its complete and up-to-date global information, monitoring and portfolio analysis. The Company provides D&B Optimizer solution, which transforms its customers' prospects and data into up-to-date, actionable commercial insight, facilitating a single customer view across multiple systems and touch points, such as marketing and billing databases, and enables a customer to make sales and marketing decisions.

FINANCIAL RATIOS  of  Dun&Bradstreet (DNB)

Valuation Ratios
P/E Ratio 45.4
Price to Sales 2.6
Price to Book -4.4
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 16.8
Growth Rates
Sales Growth Rate 4.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.1%
Financial Strength
Quick Ratio 15
Current Ratio 0
LT Debt to Equity -159.1%
Total Debt to Equity -161.4%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.5%
Ret/ On Assets - 3 Yr. Avg. 10.7%
Return On Total Capital 14.8%
Ret/ On T. Cap. - 3 Yr. Avg. 36.1%
Return On Equity -9.2%
Return On Equity - 3 Yr. Avg. -16.6%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 68.1%
Gross Margin - 3 Yr. Avg. 67.1%
EBITDA Margin 19.1%
EBITDA Margin - 3 Yr. Avg. 23.4%
Operating Margin 15.4%
Oper. Margin - 3 Yr. Avg. 19.9%
Pre-Tax Margin 12%
Pre-Tax Margin - 3 Yr. Avg. 16.8%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 11.5%
Effective Tax Rate 49%
Eff/ Tax Rate - 3 Yr. Avg. 30.4%
Payout Ratio 73.2%

DNB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DNB stock intrinsic value calculation we used $1704 million for the last fiscal year's total revenue generated by Dun&Bradstreet. The default revenue input number comes from 2016 income statement of Dun&Bradstreet. 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 DNB stock valuation model: a) initial revenue growth rate of 3.6% 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 12.4%, whose default value for DNB is calculated based on our internal credit rating of Dun&Bradstreet, 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 Dun&Bradstreet.
    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 DNB stock the variable cost ratio is equal to 79.8%.

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 DNB 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 3.5% for Dun&Bradstreet.

Corporate tax rate of 27% is the nominal tax rate for Dun&Bradstreet. 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 DNB 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 DNB are equal to 26.4%.

Life of production assets of 16.3 years is the average useful life of capital assets used in Dun&Bradstreet 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 DNB is equal to -23.3%. 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 - $-1002 million for Dun&Bradstreet - 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 36.821 million for Dun&Bradstreet 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 Dun&Bradstreet at the current share price and the inputted number of shares is $4.4 billion.

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Financial statements of DNB
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