Intrinsic value of Euronet Worldwide, Inc. - EEFT

Previous Close

$138.82

  Intrinsic Value

$135.91

stock screener

  Rating & Target

hold

-2%

Previous close

$138.82

 
Intrinsic value

$135.91

 
Up/down potential

-2%

 
Rating

hold

We calculate the intrinsic value of EEFT 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 7.2

 

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, %
  7.40
  7.16
  6.94
  6.75
  6.57
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
Revenue, $m
  2,725
  2,920
  3,123
  3,333
  3,552
  3,780
  4,018
  4,265
  4,522
  4,790
  5,070
  5,361
  5,666
  5,984
  6,316
  6,663
  7,025
  7,405
  7,802
  8,217
  8,652
  9,107
  9,584
  10,084
  10,607
  11,156
  11,731
  12,334
  12,966
  13,629
Variable operating expenses, $m
  1,840
  1,969
  2,104
  2,244
  2,390
  2,541
  2,699
  2,863
  3,034
  3,212
  3,369
  3,563
  3,765
  3,976
  4,197
  4,427
  4,668
  4,920
  5,184
  5,460
  5,749
  6,052
  6,369
  6,701
  7,048
  7,413
  7,795
  8,196
  8,616
  9,056
Fixed operating expenses, $m
  484
  495
  506
  517
  528
  540
  552
  564
  577
  589
  602
  615
  629
  643
  657
  671
  686
  701
  717
  732
  749
  765
  782
  799
  817
  835
  853
  872
  891
  911
Total operating expenses, $m
  2,324
  2,464
  2,610
  2,761
  2,918
  3,081
  3,251
  3,427
  3,611
  3,801
  3,971
  4,178
  4,394
  4,619
  4,854
  5,098
  5,354
  5,621
  5,901
  6,192
  6,498
  6,817
  7,151
  7,500
  7,865
  8,248
  8,648
  9,068
  9,507
  9,967
Operating income, $m
  401
  455
  512
  572
  634
  699
  767
  838
  911
  989
  1,099
  1,183
  1,272
  1,365
  1,462
  1,564
  1,671
  1,783
  1,901
  2,024
  2,154
  2,291
  2,434
  2,584
  2,742
  2,908
  3,083
  3,266
  3,459
  3,662
EBITDA, $m
  501
  561
  623
  688
  756
  827
  901
  978
  1,059
  1,143
  1,231
  1,323
  1,420
  1,521
  1,627
  1,738
  1,855
  1,977
  2,105
  2,239
  2,380
  2,529
  2,684
  2,848
  3,019
  3,200
  3,389
  3,589
  3,798
  4,018
Interest expense (income), $m
  14
  44
  54
  65
  76
  88
  100
  113
  127
  140
  155
  170
  185
  202
  219
  237
  255
  275
  295
  316
  338
  362
  386
  411
  438
  466
  495
  526
  558
  592
  628
Earnings before tax, $m
  357
  401
  447
  496
  546
  599
  654
  711
  771
  834
  929
  998
  1,070
  1,146
  1,225
  1,309
  1,396
  1,488
  1,585
  1,686
  1,793
  1,905
  2,022
  2,146
  2,276
  2,413
  2,557
  2,708
  2,867
  3,035
Tax expense, $m
  96
  108
  121
  134
  147
  162
  176
  192
  208
  225
  251
  269
  289
  309
  331
  353
  377
  402
  428
  455
  484
  514
  546
  579
  615
  651
  690
  731
  774
  819
Net income, $m
  261
  293
  327
  362
  399
  437
  477
  519
  563
  609
  678
  728
  781
  837
  895
  955
  1,019
  1,086
  1,157
  1,231
  1,309
  1,390
  1,476
  1,567
  1,662
  1,761
  1,866
  1,977
  2,093
  2,215

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
  3,566
  3,822
  4,087
  4,363
  4,650
  4,948
  5,259
  5,582
  5,919
  6,270
  6,636
  7,018
  7,416
  7,832
  8,267
  8,721
  9,196
  9,692
  10,212
  10,755
  11,325
  11,921
  12,545
  13,199
  13,884
  14,602
  15,355
  16,144
  16,971
  17,839
Adjusted assets (=assets-cash), $m
  3,566
  3,822
  4,087
  4,363
  4,650
  4,948
  5,259
  5,582
  5,919
  6,270
  6,636
  7,018
  7,416
  7,832
  8,267
  8,721
  9,196
  9,692
  10,212
  10,755
  11,325
  11,921
  12,545
  13,199
  13,884
  14,602
  15,355
  16,144
  16,971
  17,839
Revenue / Adjusted assets
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
Average production assets, $m
  755
  809
  865
  923
  984
  1,047
  1,113
  1,181
  1,253
  1,327
  1,404
  1,485
  1,569
  1,657
  1,749
  1,846
  1,946
  2,051
  2,161
  2,276
  2,397
  2,523
  2,655
  2,793
  2,938
  3,090
  3,250
  3,417
  3,592
  3,775
Working capital, $m
  -406
  -435
  -465
  -497
  -529
  -563
  -599
  -635
  -674
  -714
  -755
  -799
  -844
  -892
  -941
  -993
  -1,047
  -1,103
  -1,162
  -1,224
  -1,289
  -1,357
  -1,428
  -1,502
  -1,580
  -1,662
  -1,748
  -1,838
  -1,932
  -2,031
Total debt, $m
  796
  957
  1,124
  1,297
  1,478
  1,665
  1,861
  2,064
  2,276
  2,497
  2,727
  2,967
  3,218
  3,479
  3,753
  4,038
  4,337
  4,649
  4,976
  5,318
  5,676
  6,051
  6,444
  6,855
  7,286
  7,738
  8,211
  8,708
  9,228
  9,774
Total liabilities, $m
  2,243
  2,404
  2,571
  2,744
  2,925
  3,112
  3,308
  3,511
  3,723
  3,944
  4,174
  4,414
  4,665
  4,926
  5,200
  5,485
  5,784
  6,096
  6,423
  6,765
  7,123
  7,498
  7,891
  8,302
  8,733
  9,185
  9,658
  10,155
  10,675
  11,221
Total equity, $m
  1,323
  1,418
  1,516
  1,619
  1,725
  1,836
  1,951
  2,071
  2,196
  2,326
  2,462
  2,604
  2,751
  2,906
  3,067
  3,235
  3,412
  3,596
  3,789
  3,990
  4,201
  4,423
  4,654
  4,897
  5,151
  5,417
  5,697
  5,989
  6,296
  6,618
Total liabilities and equity, $m
  3,566
  3,822
  4,087
  4,363
  4,650
  4,948
  5,259
  5,582
  5,919
  6,270
  6,636
  7,018
  7,416
  7,832
  8,267
  8,720
  9,196
  9,692
  10,212
  10,755
  11,324
  11,921
  12,545
  13,199
  13,884
  14,602
  15,355
  16,144
  16,971
  17,839
Debt-to-equity ratio
  0.600
  0.670
  0.740
  0.800
  0.860
  0.910
  0.950
  1.000
  1.040
  1.070
  1.110
  1.140
  1.170
  1.200
  1.220
  1.250
  1.270
  1.290
  1.310
  1.330
  1.350
  1.370
  1.380
  1.400
  1.410
  1.430
  1.440
  1.450
  1.470
  1.480
Adjusted equity ratio
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371
  0.371

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  261
  293
  327
  362
  399
  437
  477
  519
  563
  609
  678
  728
  781
  837
  895
  955
  1,019
  1,086
  1,157
  1,231
  1,309
  1,390
  1,476
  1,567
  1,662
  1,761
  1,866
  1,977
  2,093
  2,215
Depreciation, amort., depletion, $m
  100
  106
  111
  116
  122
  128
  134
  141
  147
  154
  132
  140
  148
  156
  165
  174
  184
  194
  204
  215
  226
  238
  250
  264
  277
  292
  307
  322
  339
  356
Funds from operations, $m
  361
  398
  437
  478
  521
  565
  611
  660
  710
  763
  811
  869
  929
  993
  1,060
  1,130
  1,203
  1,280
  1,361
  1,446
  1,535
  1,628
  1,727
  1,830
  1,939
  2,053
  2,173
  2,299
  2,432
  2,571
Change in working capital, $m
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
Cash from operations, $m
  389
  427
  468
  510
  553
  599
  647
  696
  749
  803
  852
  912
  975
  1,040
  1,109
  1,181
  1,257
  1,336
  1,420
  1,507
  1,599
  1,696
  1,798
  1,905
  2,017
  2,135
  2,259
  2,389
  2,526
  2,670
Maintenance CAPEX, $m
  -66
  -71
  -76
  -82
  -87
  -93
  -99
  -105
  -111
  -118
  -125
  -132
  -140
  -148
  -156
  -165
  -174
  -184
  -194
  -204
  -215
  -226
  -238
  -250
  -264
  -277
  -292
  -307
  -322
  -339
New CAPEX, $m
  -53
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -184
Cash from investing activities, $m
  -119
  -125
  -132
  -140
  -148
  -156
  -165
  -173
  -182
  -192
  -202
  -213
  -224
  -236
  -248
  -261
  -274
  -289
  -304
  -319
  -335
  -352
  -370
  -388
  -409
  -429
  -451
  -474
  -497
  -523
Free cash flow, $m
  270
  302
  335
  370
  405
  443
  482
  523
  566
  611
  650
  699
  750
  804
  861
  920
  982
  1,048
  1,116
  1,189
  1,264
  1,344
  1,428
  1,516
  1,608
  1,705
  1,808
  1,915
  2,029
  2,148
Issuance/(repayment) of debt, $m
  155
  161
  167
  174
  180
  188
  195
  203
  212
  221
  230
  240
  251
  262
  273
  286
  299
  312
  327
  342
  358
  375
  393
  411
  431
  452
  473
  496
  520
  546
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  155
  161
  167
  174
  180
  188
  195
  203
  212
  221
  230
  240
  251
  262
  273
  286
  299
  312
  327
  342
  358
  375
  393
  411
  431
  452
  473
  496
  520
  546
Total cash flow (excl. dividends), $m
  425
  463
  502
  543
  586
  631
  677
  726
  778
  831
  880
  939
  1,001
  1,066
  1,134
  1,206
  1,281
  1,360
  1,443
  1,531
  1,622
  1,719
  1,820
  1,927
  2,039
  2,157
  2,281
  2,412
  2,549
  2,694
Retained Cash Flow (-), $m
  -90
  -95
  -98
  -102
  -106
  -111
  -115
  -120
  -125
  -130
  -136
  -142
  -148
  -154
  -161
  -169
  -176
  -184
  -193
  -202
  -211
  -221
  -232
  -243
  -254
  -266
  -279
  -293
  -307
  -322
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
  334
  368
  404
  441
  479
  520
  562
  606
  653
  701
  744
  797
  853
  912
  973
  1,037
  1,105
  1,176
  1,250
  1,329
  1,411
  1,498
  1,589
  1,684
  1,785
  1,891
  2,002
  2,119
  2,242
  2,372
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
  320
  337
  351
  363
  372
  377
  380
  379
  375
  368
  353
  340
  324
  306
  286
  264
  240
  217
  193
  169
  146
  124
  104
  86
  69
  55
  43
  33
  24
  18
Current shareholders' claim on cash, %
  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
  100.0

Euronet Worldwide, Inc. is an electronic payments provider. The Company offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Its product offerings include automated teller machine (ATM), point-of-sale (POS), card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products. It operates in three segments: EFT Processing Segment provides electronic payment solutions consisting of ATM cash withdrawal and deposit services, outsourced ATM and POS management solutions, and credit and debit card outsourcing; epay Segment provides electronic distribution and processing of prepaid mobile airtime and other electronic payment products and collection services, and Money Transfer Segment provides global consumer-to-consumer money transfer services and global account-to-account money transfer services.

FINANCIAL RATIOS  of  Euronet Worldwide, Inc. (EEFT)

Valuation Ratios
P/E Ratio 41.7
Price to Sales 3.7
Price to Book 8.1
Price to Tangible Book
Price to Cash Flow 19.7
Price to Free Cash Flow 25.8
Growth Rates
Sales Growth Rate 10.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16%
Cap. Spend. - 3 Yr. Gr. Rate 13.1%
Financial Strength
Quick Ratio 21
Current Ratio 0.1
LT Debt to Equity 63.2%
Total Debt to Equity 67.1%
Interest Coverage 18
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 6.2%
Return On Total Capital 12.6%
Ret/ On T. Cap. - 3 Yr. Avg. 10.4%
Return On Equity 20.2%
Return On Equity - 3 Yr. Avg. 15.9%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 40%
Gross Margin - 3 Yr. Avg. 39%
EBITDA Margin 16.7%
EBITDA Margin - 3 Yr. Avg. 14.2%
Operating Margin 12.8%
Oper. Margin - 3 Yr. Avg. 11.3%
Pre-Tax Margin 11.9%
Pre-Tax Margin - 3 Yr. Avg. 9.5%
Net Profit Margin 8.9%
Net Profit Margin - 3 Yr. Avg. 6.9%
Effective Tax Rate 25.3%
Eff/ Tax Rate - 3 Yr. Avg. 28.2%
Payout Ratio 0%

EEFT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EEFT stock intrinsic value calculation we used $2537 million for the last fiscal year's total revenue generated by Euronet Worldwide, Inc.. The default revenue input number comes from 0001 income statement of Euronet Worldwide, 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 EEFT stock valuation model: a) initial revenue growth rate of 7.4% 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 EEFT is calculated based on our internal credit rating of Euronet Worldwide, 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 Euronet Worldwide, 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 EEFT stock the variable cost ratio is equal to 67.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $474 million in the base year in the intrinsic value calculation for EEFT 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 6.8% for Euronet Worldwide, Inc..

Corporate tax rate of 27% is the nominal tax rate for Euronet Worldwide, 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 EEFT 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 EEFT are equal to 27.7%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Euronet Worldwide, 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 EEFT is equal to -14.9%. 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 - $1232.673 million for Euronet Worldwide, 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 51.900 million for Euronet Worldwide, 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 Euronet Worldwide, Inc. at the current share price and the inputted number of shares is $7.2 billion.

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