Intrinsic value of Ellie Mae, Inc. - ELLI

Previous Close

$98.94

  Intrinsic Value

$16.22

stock screener

  Rating & Target

str. sell

-84%

Previous close

$98.94

 
Intrinsic value

$16.22

 
Up/down potential

-84%

 
Rating

str. sell

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.

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 3.4

 

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, %
  2.80
  3.02
  3.22
  3.40
  3.56
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
Revenue, $m
  493
  508
  525
  543
  562
  583
  605
  629
  654
  681
  710
  741
  773
  808
  844
  882
  923
  966
  1,011
  1,058
  1,108
  1,161
  1,217
  1,275
  1,337
  1,401
  1,469
  1,541
  1,616
  1,695
Variable operating expenses, $m
  444
  456
  470
  486
  502
  520
  539
  560
  582
  605
  610
  636
  664
  693
  724
  757
  792
  829
  867
  908
  951
  996
  1,044
  1,094
  1,147
  1,203
  1,261
  1,322
  1,387
  1,455
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
  444
  456
  470
  486
  502
  520
  539
  560
  582
  605
  610
  636
  664
  693
  724
  757
  792
  829
  867
  908
  951
  996
  1,044
  1,094
  1,147
  1,203
  1,261
  1,322
  1,387
  1,455
Operating income, $m
  50
  52
  54
  57
  60
  63
  66
  69
  73
  77
  101
  105
  110
  115
  120
  125
  131
  137
  143
  150
  157
  165
  173
  181
  190
  199
  208
  219
  229
  241
EBITDA, $m
  125
  129
  133
  138
  143
  148
  153
  160
  166
  173
  180
  188
  196
  205
  214
  224
  234
  245
  256
  269
  281
  295
  309
  324
  339
  356
  373
  391
  410
  430
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
Earnings before tax, $m
  50
  52
  54
  56
  59
  62
  64
  68
  71
  74
  98
  102
  107
  111
  116
  121
  126
  132
  137
  144
  150
  157
  164
  172
  180
  188
  197
  207
  216
  227
Tax expense, $m
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
Net income, $m
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  72
  75
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  166

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
  711
  732
  756
  782
  810
  839
  872
  906
  943
  982
  1,023
  1,068
  1,114
  1,164
  1,216
  1,271
  1,330
  1,391
  1,456
  1,525
  1,597
  1,673
  1,753
  1,837
  1,926
  2,019
  2,117
  2,220
  2,329
  2,443
Adjusted assets (=assets-cash), $m
  711
  732
  756
  782
  810
  839
  872
  906
  943
  982
  1,023
  1,068
  1,114
  1,164
  1,216
  1,271
  1,330
  1,391
  1,456
  1,525
  1,597
  1,673
  1,753
  1,837
  1,926
  2,019
  2,117
  2,220
  2,329
  2,443
Revenue / Adjusted assets
  0.693
  0.694
  0.694
  0.694
  0.694
  0.695
  0.694
  0.694
  0.694
  0.693
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
Average production assets, $m
  326
  336
  346
  358
  371
  385
  399
  415
  432
  450
  469
  489
  510
  533
  557
  582
  609
  637
  667
  698
  732
  766
  803
  842
  882
  925
  970
  1,017
  1,067
  1,119
Working capital, $m
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
Total debt, $m
  3
  7
  10
  14
  19
  23
  28
  34
  40
  46
  52
  59
  66
  74
  82
  91
  100
  110
  120
  130
  142
  153
  166
  179
  193
  207
  223
  239
  256
  274
Total liabilities, $m
  111
  114
  118
  122
  126
  131
  136
  141
  147
  153
  160
  167
  174
  182
  190
  198
  207
  217
  227
  238
  249
  261
  273
  287
  300
  315
  330
  346
  363
  381
Total equity, $m
  600
  618
  638
  660
  683
  709
  736
  765
  796
  829
  864
  901
  940
  982
  1,026
  1,073
  1,122
  1,174
  1,229
  1,287
  1,348
  1,412
  1,480
  1,551
  1,626
  1,704
  1,787
  1,874
  1,966
  2,062
Total liabilities and equity, $m
  711
  732
  756
  782
  809
  840
  872
  906
  943
  982
  1,024
  1,068
  1,114
  1,164
  1,216
  1,271
  1,329
  1,391
  1,456
  1,525
  1,597
  1,673
  1,753
  1,838
  1,926
  2,019
  2,117
  2,220
  2,329
  2,443
Debt-to-equity ratio
  0.010
  0.010
  0.020
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.060
  0.060
  0.070
  0.070
  0.080
  0.080
  0.080
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
Adjusted equity ratio
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  72
  75
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  166
Depreciation, amort., depletion, $m
  75
  77
  79
  81
  83
  85
  88
  90
  93
  96
  79
  83
  87
  90
  94
  99
  103
  108
  113
  118
  124
  130
  136
  143
  150
  157
  164
  172
  181
  190
Funds from operations, $m
  112
  115
  118
  122
  126
  130
  135
  140
  145
  151
  151
  158
  164
  171
  179
  187
  195
  204
  213
  223
  234
  245
  256
  268
  281
  294
  308
  323
  339
  355
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  112
  115
  118
  122
  126
  130
  135
  140
  145
  151
  152
  158
  165
  172
  179
  187
  196
  205
  214
  224
  234
  245
  257
  269
  282
  295
  309
  324
  340
  356
Maintenance CAPEX, $m
  -54
  -55
  -57
  -59
  -61
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -83
  -87
  -90
  -94
  -99
  -103
  -108
  -113
  -118
  -124
  -130
  -136
  -143
  -150
  -157
  -164
  -172
  -181
New CAPEX, $m
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
Cash from investing activities, $m
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -99
  -104
  -110
  -114
  -119
  -126
  -131
  -138
  -144
  -151
  -159
  -167
  -175
  -184
  -193
  -202
  -211
  -222
  -233
Free cash flow, $m
  49
  50
  51
  52
  53
  54
  55
  57
  58
  60
  56
  58
  60
  63
  65
  68
  70
  73
  76
  79
  83
  86
  90
  94
  98
  103
  107
  112
  118
  123
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
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  
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
Total cash flow (excl. dividends), $m
  53
  53
  54
  56
  57
  59
  60
  62
  64
  66
  63
  65
  68
  70
  73
  76
  79
  83
  86
  90
  94
  98
  103
  107
  112
  117
  123
  128
  134
  141
Retained Cash Flow (-), $m
  -16
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -92
  -96
Prev. year cash balance distribution, $m
  220
  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
  257
  35
  35
  34
  34
  33
  33
  33
  33
  33
  28
  28
  28
  29
  29
  29
  30
  31
  31
  32
  33
  34
  35
  36
  37
  39
  40
  41
  43
  45
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
  246
  32
  30
  28
  26
  24
  22
  21
  19
  17
  13
  12
  11
  10
  9
  7
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
  0
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

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, Inc. (ELLI)

Valuation Ratios
P/E Ratio 87.7
Price to Sales 9.3
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 32.4
Price to Free Cash Flow 77.5
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 $480 million for the last fiscal year's total revenue generated by Ellie Mae, Inc.. The default revenue input number comes from 0001 income statement of Ellie Mae, 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 ELLI stock valuation model: a) initial revenue growth rate of 2.8% 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, 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 Ellie Mae, 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 ELLI stock the variable cost ratio is equal to 90%.

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 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 5.4% for Ellie Mae, Inc..

Corporate tax rate of 27% is the nominal tax rate for Ellie Mae, 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 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 66%.

Life of production assets of 5.9 years is the average useful life of capital assets used in Ellie Mae, 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 ELLI is equal to -1.1%. 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 - $804.069 million for Ellie Mae, 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 34.762 million for Ellie Mae, 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 Ellie Mae, Inc. at the current share price and the inputted number of shares is $3.4 billion.

RELATED COMPANIES Price Int.Val. Rating
CLGX CoreLogic, Inc 40.19 47.45  buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.