Intrinsic value of Ebix, Inc. - EBIX

Previous Close

$37.81

  Intrinsic Value

$122.23

stock screener

  Rating & Target

str. buy

+223%

Previous close

$37.81

 
Intrinsic value

$122.23

 
Up/down potential

+223%

 
Rating

str. buy

We calculate the intrinsic value of EBIX 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 1.2

 

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, %
  30.20
  27.68
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.79
  12.91
  12.12
  11.41
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
Revenue, $m
  648
  828
  1,038
  1,281
  1,557
  1,866
  2,209
  2,586
  2,996
  3,438
  3,912
  4,417
  4,953
  5,518
  6,112
  6,734
  7,385
  8,065
  8,773
  9,511
  10,278
  11,075
  11,903
  12,765
  13,659
  14,589
  15,556
  16,562
  17,609
  18,698
Variable operating expenses, $m
  445
  567
  710
  875
  1,062
  1,272
  1,505
  1,761
  2,039
  2,340
  2,656
  2,999
  3,363
  3,746
  4,150
  4,572
  5,014
  5,476
  5,957
  6,457
  6,978
  7,519
  8,082
  8,667
  9,274
  9,906
  10,562
  11,245
  11,956
  12,695
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
  445
  567
  710
  875
  1,062
  1,272
  1,505
  1,761
  2,039
  2,340
  2,656
  2,999
  3,363
  3,746
  4,150
  4,572
  5,014
  5,476
  5,957
  6,457
  6,978
  7,519
  8,082
  8,667
  9,274
  9,906
  10,562
  11,245
  11,956
  12,695
Operating income, $m
  203
  261
  328
  406
  495
  594
  704
  825
  957
  1,099
  1,256
  1,418
  1,590
  1,771
  1,962
  2,162
  2,371
  2,589
  2,817
  3,053
  3,300
  3,555
  3,821
  4,098
  4,385
  4,684
  4,994
  5,317
  5,653
  6,003
EBITDA, $m
  230
  293
  368
  454
  552
  662
  783
  917
  1,062
  1,219
  1,387
  1,566
  1,756
  1,956
  2,167
  2,387
  2,618
  2,859
  3,110
  3,372
  3,643
  3,926
  4,220
  4,525
  4,842
  5,172
  5,515
  5,871
  6,242
  6,629
Interest expense (income), $m
  7
  40
  58
  80
  106
  136
  170
  208
  250
  296
  347
  401
  459
  521
  587
  656
  729
  806
  886
  969
  1,056
  1,147
  1,241
  1,339
  1,441
  1,547
  1,657
  1,771
  1,890
  2,013
  2,142
Earnings before tax, $m
  163
  203
  248
  300
  359
  424
  496
  575
  661
  752
  855
  959
  1,069
  1,184
  1,306
  1,433
  1,565
  1,703
  1,847
  1,997
  2,153
  2,314
  2,482
  2,657
  2,838
  3,027
  3,223
  3,427
  3,640
  3,861
Tax expense, $m
  44
  55
  67
  81
  97
  115
  134
  155
  178
  203
  231
  259
  289
  320
  353
  387
  423
  460
  499
  539
  581
  625
  670
  717
  766
  817
  870
  925
  983
  1,042
Net income, $m
  119
  148
  181
  219
  262
  310
  362
  420
  482
  549
  624
  700
  780
  865
  953
  1,046
  1,143
  1,243
  1,348
  1,458
  1,571
  1,689
  1,812
  1,940
  2,072
  2,210
  2,353
  2,502
  2,657
  2,819

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
  2,098
  2,679
  3,360
  4,145
  5,038
  6,039
  7,150
  8,370
  9,696
  11,127
  12,662
  14,296
  16,028
  17,856
  19,779
  21,794
  23,901
  26,101
  28,393
  30,779
  33,261
  35,841
  38,523
  41,309
  44,205
  47,215
  50,344
  53,599
  56,986
  60,512
Adjusted assets (=assets-cash), $m
  2,098
  2,679
  3,360
  4,145
  5,038
  6,039
  7,150
  8,370
  9,696
  11,127
  12,662
  14,296
  16,028
  17,856
  19,779
  21,794
  23,901
  26,101
  28,393
  30,779
  33,261
  35,841
  38,523
  41,309
  44,205
  47,215
  50,344
  53,599
  56,986
  60,512
Revenue / Adjusted assets
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
Average production assets, $m
  651
  831
  1,042
  1,286
  1,563
  1,874
  2,218
  2,597
  3,008
  3,452
  3,928
  4,435
  4,973
  5,540
  6,136
  6,761
  7,415
  8,097
  8,808
  9,549
  10,319
  11,119
  11,951
  12,816
  13,714
  14,648
  15,619
  16,628
  17,679
  18,773
Working capital, $m
  -53
  -68
  -85
  -105
  -128
  -153
  -181
  -212
  -246
  -282
  -321
  -362
  -406
  -452
  -501
  -552
  -606
  -661
  -719
  -780
  -843
  -908
  -976
  -1,047
  -1,120
  -1,196
  -1,276
  -1,358
  -1,444
  -1,533
Total debt, $m
  1,078
  1,486
  1,965
  2,517
  3,145
  3,849
  4,630
  5,487
  6,419
  7,426
  8,504
  9,653
  10,871
  12,156
  13,507
  14,924
  16,405
  17,952
  19,563
  21,241
  22,985
  24,799
  26,684
  28,643
  30,679
  32,795
  34,995
  37,283
  39,664
  42,143
Total liabilities, $m
  1,475
  1,883
  2,362
  2,914
  3,542
  4,246
  5,027
  5,884
  6,816
  7,823
  8,901
  10,050
  11,268
  12,553
  13,904
  15,321
  16,802
  18,349
  19,960
  21,638
  23,382
  25,196
  27,081
  29,040
  31,076
  33,192
  35,392
  37,680
  40,061
  42,540
Total equity, $m
  623
  796
  998
  1,231
  1,496
  1,794
  2,124
  2,486
  2,880
  3,305
  3,760
  4,246
  4,760
  5,303
  5,874
  6,473
  7,099
  7,752
  8,433
  9,141
  9,879
  10,645
  11,441
  12,269
  13,129
  14,023
  14,952
  15,919
  16,925
  17,972
Total liabilities and equity, $m
  2,098
  2,679
  3,360
  4,145
  5,038
  6,040
  7,151
  8,370
  9,696
  11,128
  12,661
  14,296
  16,028
  17,856
  19,778
  21,794
  23,901
  26,101
  28,393
  30,779
  33,261
  35,841
  38,522
  41,309
  44,205
  47,215
  50,344
  53,599
  56,986
  60,512
Debt-to-equity ratio
  1.730
  1.870
  1.970
  2.040
  2.100
  2.150
  2.180
  2.210
  2.230
  2.250
  2.260
  2.270
  2.280
  2.290
  2.300
  2.310
  2.310
  2.320
  2.320
  2.320
  2.330
  2.330
  2.330
  2.330
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
Adjusted equity ratio
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  119
  148
  181
  219
  262
  310
  362
  420
  482
  549
  624
  700
  780
  865
  953
  1,046
  1,143
  1,243
  1,348
  1,458
  1,571
  1,689
  1,812
  1,940
  2,072
  2,210
  2,353
  2,502
  2,657
  2,819
Depreciation, amort., depletion, $m
  27
  33
  40
  48
  57
  67
  79
  92
  105
  120
  131
  148
  166
  185
  205
  225
  247
  270
  294
  318
  344
  371
  398
  427
  457
  488
  521
  554
  589
  626
Funds from operations, $m
  146
  181
  221
  267
  319
  377
  441
  512
  587
  669
  755
  848
  946
  1,049
  1,158
  1,271
  1,390
  1,513
  1,642
  1,776
  1,915
  2,060
  2,210
  2,367
  2,529
  2,698
  2,874
  3,056
  3,246
  3,444
Change in working capital, $m
  -12
  -15
  -17
  -20
  -23
  -25
  -28
  -31
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -51
  -53
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -73
  -76
  -79
  -82
  -86
  -89
Cash from operations, $m
  158
  195
  238
  287
  342
  403
  470
  542
  621
  705
  794
  889
  990
  1,096
  1,206
  1,322
  1,443
  1,569
  1,700
  1,836
  1,978
  2,125
  2,278
  2,437
  2,603
  2,774
  2,953
  3,139
  3,332
  3,534
Maintenance CAPEX, $m
  -17
  -22
  -28
  -35
  -43
  -52
  -62
  -74
  -87
  -100
  -115
  -131
  -148
  -166
  -185
  -205
  -225
  -247
  -270
  -294
  -318
  -344
  -371
  -398
  -427
  -457
  -488
  -521
  -554
  -589
New CAPEX, $m
  -151
  -180
  -211
  -244
  -277
  -311
  -345
  -378
  -411
  -444
  -476
  -507
  -537
  -567
  -596
  -625
  -654
  -682
  -711
  -740
  -770
  -800
  -832
  -864
  -898
  -934
  -971
  -1,010
  -1,051
  -1,094
Cash from investing activities, $m
  -168
  -202
  -239
  -279
  -320
  -363
  -407
  -452
  -498
  -544
  -591
  -638
  -685
  -733
  -781
  -830
  -879
  -929
  -981
  -1,034
  -1,088
  -1,144
  -1,203
  -1,262
  -1,325
  -1,391
  -1,459
  -1,531
  -1,605
  -1,683
Free cash flow, $m
  -10
  -7
  -1
  8
  22
  40
  62
  90
  123
  161
  203
  251
  305
  363
  425
  493
  564
  640
  719
  803
  890
  981
  1,076
  1,175
  1,277
  1,383
  1,494
  1,608
  1,727
  1,851
Issuance/(repayment) of debt, $m
  342
  408
  479
  552
  628
  704
  781
  857
  932
  1,006
  1,078
  1,149
  1,218
  1,285
  1,351
  1,417
  1,481
  1,546
  1,611
  1,677
  1,745
  1,814
  1,885
  1,959
  2,036
  2,116
  2,200
  2,288
  2,381
  2,479
Issuance/(repurchase) of shares, $m
  26
  25
  21
  14
  3
  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  
  368
  433
  500
  566
  631
  704
  781
  857
  932
  1,006
  1,078
  1,149
  1,218
  1,285
  1,351
  1,417
  1,481
  1,546
  1,611
  1,677
  1,745
  1,814
  1,885
  1,959
  2,036
  2,116
  2,200
  2,288
  2,381
  2,479
Total cash flow (excl. dividends), $m
  359
  426
  499
  575
  653
  744
  843
  947
  1,056
  1,167
  1,281
  1,400
  1,522
  1,648
  1,777
  1,909
  2,045
  2,186
  2,331
  2,480
  2,635
  2,795
  2,961
  3,133
  3,313
  3,499
  3,694
  3,897
  4,108
  4,329
Retained Cash Flow (-), $m
  -145
  -173
  -202
  -233
  -265
  -297
  -330
  -362
  -394
  -425
  -456
  -485
  -514
  -543
  -571
  -598
  -626
  -653
  -681
  -709
  -737
  -766
  -796
  -828
  -860
  -894
  -929
  -967
  -1,006
  -1,047
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
  214
  254
  297
  341
  387
  446
  513
  585
  662
  742
  826
  915
  1,008
  1,105
  1,206
  1,311
  1,420
  1,533
  1,650
  1,771
  1,898
  2,029
  2,165
  2,306
  2,453
  2,605
  2,764
  2,930
  3,102
  3,282
Discount rate, %
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
  198
  218
  233
  244
  249
  256
  260
  260
  254
  244
  229
  211
  191
  169
  147
  125
  104
  85
  68
  53
  40
  30
  21
  15
  10
  7
  4
  3
  2
  1
Current shareholders' claim on cash, %
  97.8
  96.2
  95.2
  94.6
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5

Ebix, Inc. (Ebix) is a supplier of software and e-commerce solutions to the insurance industry. Ebix provides application software products for the insurance industry, including carrier systems, agency systems and exchanges, as well as custom software development. Ebix conducts its operations through four channels, which include Exchanges, Carrier Systems, Broker Systems and Risk Compliance Solutions (RCS). Ebix operates data exchanges in the areas of life insurance, annuities, employee health benefits, risk management, workers compensation, and property and casualty (P&C) insurance. Ebix designs and deploys back-end systems for P&C insurance brokers across the world. Ebix also designs and deploys on-demand and back-end systems for P&C insurance companies. Ebix focus in RCS channel pertains to business process outsourcing services that include providing project management, time and material consulting to clients across the world, and claims adjudication/settlement services.

FINANCIAL RATIOS  of  Ebix, Inc. (EBIX)

Valuation Ratios
P/E Ratio 12.9
Price to Sales 4.1
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 14.4
Price to Free Cash Flow 16.4
Growth Rates
Sales Growth Rate 12.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -41.2%
Cap. Spend. - 3 Yr. Gr. Rate 58.5%
Financial Strength
Quick Ratio 10
Current Ratio 0.2
LT Debt to Equity 60.9%
Total Debt to Equity 63.7%
Interest Coverage 15
Management Effectiveness
Return On Assets 13.6%
Ret/ On Assets - 3 Yr. Avg. 12.5%
Return On Total Capital 14.3%
Ret/ On T. Cap. - 3 Yr. Avg. 13.5%
Return On Equity 22.5%
Return On Equity - 3 Yr. Avg. 18.9%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 71.5%
Gross Margin - 3 Yr. Avg. 74.1%
EBITDA Margin 38.6%
EBITDA Margin - 3 Yr. Avg. 39.5%
Operating Margin 33.6%
Oper. Margin - 3 Yr. Avg. 34.6%
Pre-Tax Margin 32.2%
Pre-Tax Margin - 3 Yr. Avg. 33.7%
Net Profit Margin 31.5%
Net Profit Margin - 3 Yr. Avg. 30.5%
Effective Tax Rate 2.1%
Eff/ Tax Rate - 3 Yr. Avg. 9%
Payout Ratio 10.6%

EBIX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EBIX stock intrinsic value calculation we used $498 million for the last fiscal year's total revenue generated by Ebix, Inc.. The default revenue input number comes from 0001 income statement of Ebix, 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 EBIX stock valuation model: a) initial revenue growth rate of 30.2% 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 7.6%, whose default value for EBIX is calculated based on our internal credit rating of Ebix, 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 Ebix, 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 EBIX stock the variable cost ratio is equal to 68.9%.

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 EBIX 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 Ebix, Inc..

Corporate tax rate of 27% is the nominal tax rate for Ebix, 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 EBIX 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 EBIX are equal to 100.4%.

Life of production assets of 70.5 years is the average useful life of capital assets used in Ebix, 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 EBIX is equal to -8.2%. 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 - $478.195 million for Ebix, 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 30.514 million for Ebix, 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 Ebix, Inc. at the current share price and the inputted number of shares is $1.2 billion.

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