Intrinsic value of Endurance International Group Holdings - EIGI

Previous Close

$8.75

  Intrinsic Value

$1.15

stock screener

  Rating & Target

str. sell

-87%

Previous close

$8.75

 
Intrinsic value

$1.15

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of EIGI 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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,200
  1,228
  1,260
  1,295
  1,334
  1,377
  1,424
  1,475
  1,530
  1,588
  1,651
  1,718
  1,790
  1,865
  1,946
  2,031
  2,121
  2,217
  2,318
  2,424
  2,537
  2,655
  2,780
  2,912
  3,050
  3,196
  3,350
  3,512
  3,682
  3,860
Variable operating expenses, $m
  1,239
  1,262
  1,289
  1,318
  1,351
  1,388
  1,427
  1,470
  1,516
  1,565
  1,387
  1,443
  1,503
  1,567
  1,635
  1,706
  1,782
  1,862
  1,947
  2,037
  2,131
  2,230
  2,335
  2,446
  2,562
  2,685
  2,814
  2,950
  3,093
  3,243
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
  1,239
  1,262
  1,289
  1,318
  1,351
  1,388
  1,427
  1,470
  1,516
  1,565
  1,387
  1,443
  1,503
  1,567
  1,635
  1,706
  1,782
  1,862
  1,947
  2,037
  2,131
  2,230
  2,335
  2,446
  2,562
  2,685
  2,814
  2,950
  3,093
  3,243
Operating income, $m
  -39
  -34
  -29
  -23
  -17
  -10
  -3
  5
  14
  23
  264
  275
  286
  298
  311
  325
  339
  355
  371
  388
  406
  425
  445
  466
  488
  511
  536
  562
  589
  617
EBITDA, $m
  296
  302
  310
  319
  329
  339
  351
  363
  377
  391
  407
  423
  441
  459
  479
  500
  522
  546
  571
  597
  625
  654
  685
  717
  751
  787
  825
  865
  907
  951
Interest expense (income), $m
  119
  155
  144
  148
  153
  159
  165
  172
  180
  188
  197
  206
  216
  227
  239
  251
  264
  277
  292
  307
  324
  341
  359
  378
  398
  419
  441
  465
  490
  516
  543
Earnings before tax, $m
  -193
  -178
  -177
  -177
  -176
  -176
  -175
  -174
  -174
  -173
  58
  59
  59
  60
  60
  61
  62
  63
  63
  64
  65
  66
  67
  68
  69
  70
  71
  72
  73
  74
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  16
  16
  16
  16
  16
  17
  17
  17
  17
  17
  18
  18
  18
  18
  19
  19
  19
  19
  20
  20
Net income, $m
  -193
  -178
  -177
  -177
  -176
  -176
  -175
  -174
  -174
  -173
  42
  43
  43
  44
  44
  45
  45
  46
  46
  47
  47
  48
  49
  49
  50
  51
  52
  53
  53
  54

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
  2,650
  2,711
  2,781
  2,859
  2,945
  3,040
  3,144
  3,256
  3,377
  3,506
  3,645
  3,793
  3,951
  4,118
  4,296
  4,484
  4,683
  4,894
  5,117
  5,352
  5,600
  5,861
  6,137
  6,428
  6,734
  7,056
  7,395
  7,752
  8,127
  8,522
Adjusted assets (=assets-cash), $m
  2,650
  2,711
  2,781
  2,859
  2,945
  3,040
  3,144
  3,256
  3,377
  3,506
  3,645
  3,793
  3,951
  4,118
  4,296
  4,484
  4,683
  4,894
  5,117
  5,352
  5,600
  5,861
  6,137
  6,428
  6,734
  7,056
  7,395
  7,752
  8,127
  8,522
Revenue / Adjusted assets
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
Average production assets, $m
  1,316
  1,346
  1,380
  1,419
  1,462
  1,510
  1,561
  1,617
  1,677
  1,741
  1,810
  1,883
  1,961
  2,045
  2,133
  2,226
  2,325
  2,430
  2,540
  2,657
  2,780
  2,910
  3,047
  3,191
  3,343
  3,503
  3,671
  3,849
  4,035
  4,231
Working capital, $m
  -395
  -404
  -414
  -426
  -439
  -453
  -469
  -485
  -503
  -523
  -543
  -565
  -589
  -614
  -640
  -668
  -698
  -729
  -763
  -798
  -835
  -874
  -915
  -958
  -1,004
  -1,052
  -1,102
  -1,155
  -1,211
  -1,270
Total debt, $m
  1,774
  1,829
  1,892
  1,962
  2,040
  2,126
  2,219
  2,320
  2,429
  2,545
  2,670
  2,803
  2,945
  3,096
  3,256
  3,425
  3,604
  3,794
  3,994
  4,206
  4,429
  4,665
  4,913
  5,174
  5,450
  5,740
  6,045
  6,366
  6,704
  7,059
Total liabilities, $m
  2,385
  2,440
  2,502
  2,573
  2,651
  2,736
  2,830
  2,931
  3,039
  3,156
  3,281
  3,414
  3,556
  3,706
  3,866
  4,035
  4,215
  4,404
  4,605
  4,816
  5,040
  5,275
  5,523
  5,785
  6,060
  6,350
  6,655
  6,977
  7,314
  7,670
Total equity, $m
  265
  271
  278
  286
  295
  304
  314
  326
  338
  351
  365
  379
  395
  412
  430
  448
  468
  489
  512
  535
  560
  586
  614
  643
  673
  706
  739
  775
  813
  852
Total liabilities and equity, $m
  2,650
  2,711
  2,780
  2,859
  2,946
  3,040
  3,144
  3,257
  3,377
  3,507
  3,646
  3,793
  3,951
  4,118
  4,296
  4,483
  4,683
  4,893
  5,117
  5,351
  5,600
  5,861
  6,137
  6,428
  6,733
  7,056
  7,394
  7,752
  8,127
  8,522
Debt-to-equity ratio
  6.700
  6.750
  6.800
  6.860
  6.930
  6.990
  7.060
  7.130
  7.190
  7.260
  7.330
  7.390
  7.450
  7.520
  7.580
  7.640
  7.700
  7.750
  7.810
  7.860
  7.910
  7.960
  8.010
  8.050
  8.090
  8.130
  8.170
  8.210
  8.250
  8.280
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
  -193
  -178
  -177
  -177
  -176
  -176
  -175
  -174
  -174
  -173
  42
  43
  43
  44
  44
  45
  45
  46
  46
  47
  47
  48
  49
  49
  50
  51
  52
  53
  53
  54
Depreciation, amort., depletion, $m
  334
  337
  339
  342
  346
  349
  354
  358
  363
  368
  143
  148
  154
  161
  168
  175
  183
  191
  200
  209
  219
  229
  240
  251
  263
  276
  289
  303
  318
  333
Funds from operations, $m
  141
  159
  162
  166
  170
  174
  179
  183
  189
  194
  185
  191
  198
  205
  212
  220
  228
  237
  246
  256
  266
  277
  289
  301
  313
  327
  341
  356
  371
  388
Change in working capital, $m
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
Cash from operations, $m
  149
  168
  172
  177
  183
  188
  194
  200
  207
  214
  205
  213
  221
  230
  239
  248
  258
  268
  279
  291
  303
  316
  330
  344
  359
  375
  391
  409
  427
  446
Maintenance CAPEX, $m
  -102
  -104
  -106
  -109
  -112
  -115
  -119
  -123
  -127
  -132
  -137
  -143
  -148
  -154
  -161
  -168
  -175
  -183
  -191
  -200
  -209
  -219
  -229
  -240
  -251
  -263
  -276
  -289
  -303
  -318
New CAPEX, $m
  -26
  -30
  -35
  -39
  -43
  -47
  -51
  -56
  -60
  -64
  -69
  -73
  -78
  -83
  -88
  -93
  -99
  -105
  -111
  -117
  -123
  -130
  -137
  -144
  -152
  -160
  -168
  -177
  -186
  -196
Cash from investing activities, $m
  -128
  -134
  -141
  -148
  -155
  -162
  -170
  -179
  -187
  -196
  -206
  -216
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -317
  -332
  -349
  -366
  -384
  -403
  -423
  -444
  -466
  -489
  -514
Free cash flow, $m
  21
  34
  32
  30
  28
  26
  24
  22
  20
  17
  0
  -3
  -5
  -8
  -11
  -13
  -16
  -19
  -22
  -26
  -29
  -33
  -36
  -40
  -44
  -48
  -53
  -57
  -62
  -67
Issuance/(repayment) of debt, $m
  -133
  55
  63
  70
  78
  86
  93
  101
  109
  117
  125
  133
  142
  151
  160
  169
  179
  190
  200
  212
  223
  235
  248
  261
  275
  290
  305
  321
  338
  355
Issuance/(repurchase) of shares, $m
  375
  184
  184
  185
  185
  185
  185
  186
  186
  186
  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  
  242
  239
  247
  255
  263
  271
  278
  287
  295
  303
  125
  133
  142
  151
  160
  169
  179
  190
  200
  212
  223
  235
  248
  261
  275
  290
  305
  321
  338
  355
Total cash flow (excl. dividends), $m
  263
  273
  279
  285
  291
  296
  302
  308
  314
  320
  124
  130
  136
  143
  149
  156
  163
  170
  178
  186
  194
  203
  212
  221
  231
  242
  252
  264
  276
  288
Retained Cash Flow (-), $m
  -375
  -184
  -184
  -185
  -185
  -185
  -185
  -186
  -186
  -186
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -39
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
  -112
  89
  95
  100
  106
  111
  117
  122
  128
  134
  110
  115
  121
  126
  131
  137
  143
  149
  156
  162
  169
  177
  184
  192
  201
  209
  218
  228
  238
  248
Discount rate, %
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.71
  24.89
  26.14
  27.44
  28.81
  30.25
  31.77
  33.36
  35.02
  36.77
  38.61
  40.54
  42.57
  44.70
  46.93
  49.28
  51.75
  54.33
PV of cash for distribution, $m
  -99
  68
  63
  57
  50
  44
  37
  31
  26
  21
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  68.9
  64.4
  60.3
  56.6
  53.1
  50.0
  47.1
  44.5
  42.1
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9
  39.9

Endurance International Group Holdings, Inc. (Endurance) is a provider of cloud-based platform solutions designed to help small and medium-sized businesses (SMBs) succeed online. The Company operates through two segments: Web Presence and Email Marketing. The Company's Web presence segment consists of Web hosting, domains and the related products and services. Its e-mail marketing segment consists of the products and services offered by Constant Contact, principally e-mail marketing, including event marketing, survey tools and SinglePlatform. The Company's products focuses on Web hosting and other Web presence solutions, such as domains, and it also offers security, site backup, domains, search engine optimization (SEO) and search engine marketing (SEM), Google Adwords, mobile solutions, social media enablement, Website analytics, e-mail marketing and productivity and e-commerce tools, among others. It conducts operations in the United States, Brazil, India, and the Netherlands.

FINANCIAL RATIOS  of  Endurance International Group Holdings (EIGI)

Valuation Ratios
P/E Ratio -16.2
Price to Sales 1.1
Price to Book 9.5
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow 10
Growth Rates
Sales Growth Rate 49.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 19.4%
Cap. Spend. - 3 Yr. Gr. Rate 1.7%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 1574.2%
Total Debt to Equity 1608.1%
Interest Coverage -1
Management Effectiveness
Return On Assets -1%
Ret/ On Assets - 3 Yr. Avg. 0.7%
Return On Total Capital -4.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.3%
Return On Equity -48%
Return On Equity - 3 Yr. Avg. -29.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 48.2%
Gross Margin - 3 Yr. Avg. 43.5%
EBITDA Margin 12%
EBITDA Margin - 3 Yr. Avg. 19.9%
Operating Margin -3.5%
Oper. Margin - 3 Yr. Avg. 1.9%
Pre-Tax Margin -17.1%
Pre-Tax Margin - 3 Yr. Avg. -8.1%
Net Profit Margin -6.6%
Net Profit Margin - 3 Yr. Avg. -5.6%
Effective Tax Rate 57.9%
Eff/ Tax Rate - 3 Yr. Avg. 14.9%
Payout Ratio 0%

EIGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EIGI stock intrinsic value calculation we used $1176.867 million for the last fiscal year's total revenue generated by Endurance International Group Holdings. The default revenue input number comes from 0001 income statement of Endurance International Group Holdings. 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 EIGI stock valuation model: a) initial revenue growth rate of 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 13.2%, whose default value for EIGI is calculated based on our internal credit rating of Endurance International Group Holdings, 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 Endurance International Group Holdings.
    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 EIGI stock the variable cost ratio is equal to 103.6%.

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 EIGI 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 8.1% for Endurance International Group Holdings.

Corporate tax rate of 27% is the nominal tax rate for Endurance International Group Holdings. 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 EIGI 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 EIGI are equal to 109.6%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Endurance International Group Holdings 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 EIGI is equal to -32.9%. 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 - $83.005 million for Endurance International Group Holdings - 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 142.714 million for Endurance International Group Holdings 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 Endurance International Group Holdings at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating
WEB Web.com Group 27.99 25.48  hold
GDDY GoDaddy Cl A 64.56 97.26  buy
GOOGL Alphabet Cl A 1,071.05 2,744.29  str.buy
GCI Gannett 9.76 13.32  buy
IBM International 121.44 191.80  buy
AKAM Akamai Technol 69.46 34.26  str.sell

COMPANY NEWS

▶ 5 Breakout Stocks Offering Admirable Returns   [Nov-06-18 06:54AM  Zacks]
▶ Endurance International: 3Q Earnings Snapshot   [10:10AM  Associated Press]
▶ Former Endurance Group execs pay $1.4M to settle SEC claims   [Aug-22-18 11:35AM  American City Business Journals]
▶ Endurance International: 2Q Earnings Snapshot   [Jul-26-18 10:47AM  Associated Press]
▶ Endurance International: 1Q Earnings Snapshot   [May-01-18 09:51AM  Associated Press]
▶ Endurance International posts 4Q profit   [Feb-13-18 07:43AM  Associated Press]
▶ Endurance International posts 3Q loss   [Oct-31-17 07:45AM  Associated Press]
▶ Endurance International Group names new CEO   [Aug-14-17 05:25PM  American City Business Journals]
▶ Endurance International posts 2Q loss   [Aug-01-17 10:56PM  Associated Press]
▶ HostGator Launches Upgraded Dedicated Server Platform   [Jul-24-17 07:00AM  PR Newswire]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.