Intrinsic value of ELLIE MAE - ELLI

Previous Close

$90.79

  Intrinsic Value

$30.88

stock screener

  Rating & Target

str. sell

-66%

Previous close

$90.79

 
Intrinsic value

$30.88

 
Up/down potential

-66%

 
Rating

str. sell

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

We calculate the intrinsic value of ELLI 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of ELLIE MAE (ELLI) stock.

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, %
  41.73
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
Revenue, $m
  360
  385
  411
  439
  467
  496
  527
  559
  592
  627
  663
  701
  741
  782
  825
  870
  917
  966
  1,018
  1,072
  1,128
  1,187
  1,249
  1,314
  1,382
  1,453
  1,528
  1,607
  1,689
  1,775
  1,865
Variable operating expenses, $m
 
  309
  329
  351
  373
  396
  420
  445
  471
  498
  526
  548
  579
  611
  645
  680
  717
  756
  796
  838
  882
  929
  977
  1,028
  1,081
  1,137
  1,195
  1,257
  1,321
  1,388
  1,459
Fixed operating expenses, $m
 
  16
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  22
  22
  23
  23
  24
  24
  25
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
Total operating expenses, $m
  305
  325
  346
  368
  391
  414
  439
  464
  490
  518
  546
  569
  601
  633
  668
  703
  741
  780
  821
  864
  908
  956
  1,005
  1,056
  1,110
  1,167
  1,225
  1,288
  1,353
  1,421
  1,493
Operating income, $m
  56
  60
  65
  71
  77
  83
  89
  95
  102
  109
  117
  132
  140
  148
  157
  166
  176
  186
  197
  208
  220
  232
  245
  258
  272
  287
  302
  319
  336
  354
  373
EBITDA, $m
  82
  85
  91
  98
  105
  112
  120
  128
  136
  145
  154
  163
  173
  184
  194
  206
  217
  230
  243
  256
  270
  285
  301
  317
  335
  353
  371
  391
  412
  434
  457
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
Earnings before tax, $m
  57
  60
  65
  70
  76
  82
  87
  94
  100
  107
  114
  129
  137
  145
  153
  162
  171
  181
  191
  202
  213
  225
  237
  250
  263
  277
  292
  308
  324
  342
  360
Tax expense, $m
  19
  16
  18
  19
  20
  22
  24
  25
  27
  29
  31
  35
  37
  39
  41
  44
  46
  49
  52
  54
  57
  61
  64
  67
  71
  75
  79
  83
  88
  92
  97
Net income, $m
  38
  44
  47
  51
  55
  60
  64
  68
  73
  78
  83
  94
  100
  106
  112
  118
  125
  132
  139
  147
  155
  164
  173
  182
  192
  203
  213
  225
  237
  249
  262

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  423
  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
  752
  352
  376
  401
  427
  454
  482
  511
  541
  573
  606
  641
  677
  715
  754
  795
  838
  883
  930
  980
  1,031
  1,085
  1,142
  1,201
  1,263
  1,329
  1,397
  1,469
  1,544
  1,623
  1,705
Adjusted assets (=assets-cash), $m
  329
  352
  376
  401
  427
  454
  482
  511
  541
  573
  606
  641
  677
  715
  754
  795
  838
  883
  930
  980
  1,031
  1,085
  1,142
  1,201
  1,263
  1,329
  1,397
  1,469
  1,544
  1,623
  1,705
Revenue / Adjusted assets
  1.094
  1.094
  1.093
  1.095
  1.094
  1.093
  1.093
  1.094
  1.094
  1.094
  1.094
  1.094
  1.095
  1.094
  1.094
  1.094
  1.094
  1.094
  1.095
  1.094
  1.094
  1.094
  1.094
  1.094
  1.094
  1.093
  1.094
  1.094
  1.094
  1.094
  1.094
Average production assets, $m
  124
  132
  141
  150
  160
  170
  181
  192
  203
  215
  228
  240
  254
  268
  283
  298
  315
  331
  349
  368
  387
  407
  428
  451
  474
  499
  524
  551
  579
  609
  640
Working capital, $m
  398
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -44
  -47
  -50
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -108
  -113
  -119
  -125
Total debt, $m
  1
  7
  14
  21
  29
  37
  45
  53
  62
  71
  81
  91
  102
  113
  124
  136
  149
  162
  176
  190
  205
  221
  237
  255
  273
  292
  312
  333
  355
  378
  402
Total liabilities, $m
  97
  103
  110
  117
  125
  133
  141
  149
  158
  167
  177
  187
  198
  209
  220
  232
  245
  258
  272
  286
  301
  317
  333
  351
  369
  388
  408
  429
  451
  474
  498
Total equity, $m
  655
  249
  266
  284
  302
  321
  341
  362
  383
  406
  429
  454
  479
  506
  534
  563
  593
  625
  659
  694
  730
  768
  808
  850
  894
  941
  989
  1,040
  1,093
  1,149
  1,207
Total liabilities and equity, $m
  752
  352
  376
  401
  427
  454
  482
  511
  541
  573
  606
  641
  677
  715
  754
  795
  838
  883
  931
  980
  1,031
  1,085
  1,141
  1,201
  1,263
  1,329
  1,397
  1,469
  1,544
  1,623
  1,705
Debt-to-equity ratio
  0.002
  0.030
  0.050
  0.070
  0.090
  0.110
  0.130
  0.150
  0.160
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.270
  0.280
  0.290
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.320
  0.330
  0.330
Adjusted equity ratio
  0.705
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  38
  44
  47
  51
  55
  60
  64
  68
  73
  78
  83
  94
  100
  106
  112
  118
  125
  132
  139
  147
  155
  164
  173
  182
  192
  203
  213
  225
  237
  249
  262
Depreciation, amort., depletion, $m
  26
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  32
  33
  35
  37
  39
  41
  44
  46
  48
  51
  54
  56
  59
  62
  66
  69
  73
  76
  80
  84
Funds from operations, $m
  112
  69
  74
  79
  84
  89
  95
  101
  107
  114
  121
  126
  133
  141
  149
  157
  166
  176
  185
  196
  206
  218
  229
  242
  255
  268
  282
  297
  313
  329
  347
Change in working capital, $m
  9
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from operations, $m
  103
  70
  75
  80
  86
  91
  97
  103
  110
  116
  123
  128
  136
  144
  152
  161
  170
  179
  189
  199
  210
  221
  233
  246
  259
  273
  287
  303
  318
  335
  353
Maintenance CAPEX, $m
  0
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -66
  -69
  -73
  -76
  -80
New CAPEX, $m
  -60
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
Cash from investing activities, $m
  -45
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -36
  -39
  -40
  -43
  -46
  -47
  -50
  -52
  -55
  -58
  -62
  -65
  -67
  -71
  -75
  -78
  -82
  -86
  -92
  -96
  -101
  -106
  -111
Free cash flow, $m
  58
  46
  49
  53
  56
  60
  64
  69
  73
  78
  82
  85
  91
  96
  102
  108
  114
  121
  128
  135
  142
  150
  159
  167
  176
  186
  196
  207
  218
  229
  242
Issuance/(repayment) of debt, $m
  -4
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
Issuance/(repurchase) of shares, $m
  289
  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  
  288
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  347
  52
  56
  60
  64
  68
  72
  77
  82
  87
  92
  95
  101
  107
  113
  120
  127
  134
  141
  149
  157
  166
  175
  185
  195
  205
  216
  228
  240
  252
  266
Retained Cash Flow (-), $m
  -364
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
Prev. year cash balance distribution, $m
 
  422
  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
 
  458
  39
  42
  46
  49
  53
  56
  60
  64
  69
  71
  76
  80
  85
  91
  96
  102
  108
  114
  121
  128
  135
  143
  151
  159
  168
  177
  186
  197
  207
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
 
  439
  36
  37
  37
  38
  38
  38
  38
  37
  36
  34
  32
  31
  29
  27
  24
  22
  20
  18
  15
  13
  11
  9
  8
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Ellie Mae, Inc. is a provider of on-demand software solutions and services for the residential mortgage industry in the United States. Banks, credit unions, mortgage lenders and mortgage brokers use the Company's Encompass mortgage management solution to originate and fund mortgages. The Company's Encompass software is an enterprise solution that handles functions involved in running the business of originating mortgages, including customer relationship management; loan processing; underwriting; preparation of application, disclosure and closing documents; funding and closing the loan for the borrower; compliance with regulatory and investor requirements, and overall enterprise management. It delivers Encompass software in an on-demand Software-as-a-Service (SaaS). It also hosts the Ellie Mae Network, an electronic platform that allows Encompass users to conduct electronic business transactions with investors and service providers they work with in order to process and fund loans.

FINANCIAL RATIOS  of  ELLIE MAE (ELLI)

Valuation Ratios
P/E Ratio 80.5
Price to Sales 8.5
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 29.7
Price to Free Cash Flow 71.1
Growth Rates
Sales Growth Rate 41.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15.4%
Cap. Spend. - 3 Yr. Gr. Rate 58.5%
Financial Strength
Quick Ratio 423
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0.2%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.8%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 8%
Ret/ On T. Cap. - 3 Yr. Avg. 7.5%
Return On Equity 8%
Return On Equity - 3 Yr. Avg. 7.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 66.7%
Gross Margin - 3 Yr. Avg. 68.2%
EBITDA Margin 23.1%
EBITDA Margin - 3 Yr. Avg. 20.6%
Operating Margin 15.3%
Oper. Margin - 3 Yr. Avg. 14.1%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 14.3%
Net Profit Margin 10.6%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 33.5%
Payout Ratio 0%

ELLI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ELLI stock intrinsic value calculation we used $360 million for the last fiscal year's total revenue generated by ELLIE MAE. The default revenue input number comes from 2016 income statement of ELLIE MAE. 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 ELLI stock valuation model: a) initial revenue growth rate of 7% 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 ELLI is calculated based on our internal credit rating of ELLIE MAE, 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 ELLIE MAE.
    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 ELLI stock the variable cost ratio is equal to 80.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16 million in the base year in the intrinsic value calculation for ELLI 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 ELLIE MAE.

Corporate tax rate of 27% is the nominal tax rate for ELLIE MAE. 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 ELLI 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 ELLI are equal to 34.3%.

Life of production assets of 7.6 years is the average useful life of capital assets used in ELLIE MAE 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 ELLI is equal to -6.7%. 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 - $655 million for ELLIE MAE - 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 35.347 million for ELLIE MAE 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 ELLIE MAE at the current share price and the inputted number of shares is $3.2 billion.

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COMPANY NEWS

▶ Ellie Mae beats Street 4Q forecasts   [Feb-08-18 06:21PM  Associated Press]
▶ Ellie Mae, Inc. to Host Earnings Call   [12:40PM  ACCESSWIRE]
▶ Ellie Mae Welcomes Its 1,500th Employee   [Jan-18-18 09:00AM  Business Wire]
▶ 5 Top Small-Cap Stocks to Buy in 2018   [Jan-08-18 07:03AM  Motley Fool]
▶ 5 Monster Stocks in the Making to Buy for 2018   [Nov-24-17 08:02AM  Motley Fool]
▶ Ellie Mae Expects a Strong Finish to 2017   [Oct-26-17 05:50PM  Motley Fool]
▶ Ellie Mae tops Street 3Q forecasts   [05:37PM  Associated Press]
▶ Ellie Mae Reports Third Quarter 2017 Results   [04:05PM  Business Wire]
▶ Ellie Mae, Inc. to Host Earnings Call   [09:20AM  ACCESSWIRE]
▶ 3 Potential Catalysts For Ellie Mae   [Oct-18-17 12:03PM  Benzinga]
▶ Ellie Mae Receives 2018 CSO50 Award From IDG's CSO   [Oct-16-17 04:05PM  Business Wire]
▶ ETFs with exposure to Ellie Mae, Inc. : October 5, 2017   [Oct-05-17 10:59AM  Capital Cube]
▶ Ellie Mae Completes Acquisition of Velocify   [Oct-02-17 04:29PM  Business Wire]
▶ 3 Stocks With Facebook-Like Return Potential   [Sep-12-17 09:45AM  Motley Fool]
▶ Ellie Mae Announces Launch of Encompass Direct Mail   [Sep-11-17 04:05PM  Business Wire]
▶ Velocify sales software sells to Ellie Mae for $128 million   [Sep-05-17 06:00PM  American City Business Journals]
▶ Ellie Mae to buy Velocify for $128 million in cash   [Aug-31-17 05:27PM  MarketWatch]
▶ Ellie Mae to Acquire Velocify   [05:00PM  Business Wire]
Financial statements of ELLI
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