Intrinsic value of Elevate Credit - ELVT

Previous Close

$9.78

  Intrinsic Value

$31.07

stock screener

  Rating & Target

str. buy

+218%

Previous close

$9.78

 
Intrinsic value

$31.07

 
Up/down potential

+218%

 
Rating

str. buy

We calculate the intrinsic value of ELVT 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 2017), $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 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.00
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
Revenue, $m
  781
  897
  1,022
  1,155
  1,296
  1,445
  1,602
  1,766
  1,938
  2,117
  2,304
  2,499
  2,702
  2,912
  3,131
  3,359
  3,595
  3,841
  4,096
  4,362
  4,638
  4,926
  5,226
  5,538
  5,864
  6,203
  6,557
  6,927
  7,313
  7,717
Variable operating expenses, $m
  586
  673
  766
  865
  971
  1,082
  1,199
  1,321
  1,449
  1,583
  1,718
  1,864
  2,015
  2,172
  2,335
  2,505
  2,681
  2,864
  3,055
  3,253
  3,459
  3,674
  3,897
  4,130
  4,373
  4,626
  4,890
  5,166
  5,454
  5,755
Fixed operating expenses, $m
  101
  103
  106
  108
  110
  113
  115
  118
  120
  123
  126
  129
  131
  134
  137
  140
  143
  146
  150
  153
  156
  160
  163
  167
  171
  174
  178
  182
  186
  190
Total operating expenses, $m
  687
  776
  872
  973
  1,081
  1,195
  1,314
  1,439
  1,569
  1,706
  1,844
  1,993
  2,146
  2,306
  2,472
  2,645
  2,824
  3,010
  3,205
  3,406
  3,615
  3,834
  4,060
  4,297
  4,544
  4,800
  5,068
  5,348
  5,640
  5,945
Operating income, $m
  93
  120
  150
  181
  215
  250
  288
  327
  368
  411
  460
  507
  556
  606
  659
  714
  771
  830
  892
  956
  1,023
  1,093
  1,165
  1,241
  1,320
  1,403
  1,489
  1,579
  1,673
  1,772
EBITDA, $m
  175
  213
  255
  300
  347
  397
  450
  506
  564
  625
  688
  754
  823
  894
  969
  1,046
  1,126
  1,210
  1,297
  1,387
  1,482
  1,580
  1,682
  1,789
  1,900
  2,016
  2,137
  2,264
  2,397
  2,535
Interest expense (income), $m
  61
  83
  83
  83
  83
  83
  83
  83
  83
  83
  82
  82
  82
  82
  82
  82
  82
  82
  82
  82
  81
  81
  81
  81
  81
  81
  81
  80
  80
  80
  80
Earnings before tax, $m
  10
  37
  67
  98
  132
  168
  205
  244
  285
  329
  378
  425
  473
  524
  577
  632
  689
  748
  810
  875
  942
  1,011
  1,084
  1,160
  1,239
  1,322
  1,408
  1,499
  1,593
  1,692
Tax expense, $m
  3
  10
  18
  27
  36
  45
  55
  66
  77
  89
  102
  115
  128
  141
  156
  171
  186
  202
  219
  236
  254
  273
  293
  313
  335
  357
  380
  405
  430
  457
Net income, $m
  7
  27
  49
  72
  96
  122
  150
  178
  208
  240
  276
  310
  345
  383
  421
  461
  503
  546
  591
  638
  687
  738
  791
  847
  905
  965
  1,028
  1,094
  1,163
  1,235

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
  -93
  -107
  -121
  -137
  -154
  -172
  -190
  -210
  -230
  -251
  -274
  -297
  -321
  -346
  -372
  -399
  -427
  -456
  -487
  -518
  -551
  -585
  -621
  -658
  -696
  -737
  -779
  -823
  -869
  -917
Adjusted assets (=assets-cash), $m
  -93
  -107
  -121
  -137
  -154
  -172
  -190
  -210
  -230
  -251
  -274
  -297
  -321
  -346
  -372
  -399
  -427
  -456
  -487
  -518
  -551
  -585
  -621
  -658
  -696
  -737
  -779
  -823
  -869
  -917
Revenue / Adjusted assets
  -8.398
  -8.383
  -8.446
  -8.431
  -8.416
  -8.401
  -8.432
  -8.410
  -8.426
  -8.434
  -8.409
  -8.414
  -8.417
  -8.416
  -8.417
  -8.419
  -8.419
  -8.423
  -8.411
  -8.421
  -8.417
  -8.421
  -8.415
  -8.416
  -8.425
  -8.417
  -8.417
  -8.417
  -8.415
  -8.415
Average production assets, $m
  772
  887
  1,011
  1,142
  1,282
  1,429
  1,584
  1,746
  1,916
  2,094
  2,279
  2,472
  2,672
  2,880
  3,097
  3,322
  3,556
  3,799
  4,051
  4,314
  4,587
  4,872
  5,168
  5,477
  5,799
  6,135
  6,485
  6,851
  7,233
  7,632
Working capital, $m
  -665
  -764
  -871
  -984
  -1,104
  -1,231
  -1,365
  -1,505
  -1,651
  -1,804
  -1,963
  -2,129
  -2,302
  -2,481
  -2,668
  -2,862
  -3,063
  -3,272
  -3,490
  -3,716
  -3,952
  -4,197
  -4,452
  -4,718
  -4,996
  -5,285
  -5,587
  -5,902
  -6,231
  -6,575
Total debt, $m
  522
  522
  522
  521
  521
  520
  520
  519
  519
  518
  518
  517
  517
  516
  515
  515
  514
  513
  512
  512
  511
  510
  509
  508
  507
  506
  505
  504
  503
  502
Total liabilities, $m
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -21
  -22
  -23
Total equity, $m
  -90
  -104
  -118
  -134
  -150
  -167
  -185
  -205
  -224
  -245
  -267
  -289
  -313
  -337
  -363
  -389
  -416
  -445
  -474
  -505
  -537
  -570
  -605
  -641
  -679
  -718
  -759
  -802
  -847
  -894
Total liabilities and equity, $m
  -92
  -107
  -121
  -137
  -154
  -171
  -190
  -210
  -230
  -251
  -274
  -296
  -321
  -346
  -372
  -399
  -427
  -456
  -486
  -518
  -551
  -585
  -621
  -657
  -696
  -736
  -778
  -823
  -869
  -917
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975
  0.975

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  27
  49
  72
  96
  122
  150
  178
  208
  240
  276
  310
  345
  383
  421
  461
  503
  546
  591
  638
  687
  738
  791
  847
  905
  965
  1,028
  1,094
  1,163
  1,235
Depreciation, amort., depletion, $m
  81
  93
  105
  118
  132
  147
  163
  179
  196
  214
  228
  247
  267
  288
  310
  332
  356
  380
  405
  431
  459
  487
  517
  548
  580
  613
  649
  685
  723
  763
Funds from operations, $m
  89
  120
  154
  190
  229
  269
  312
  357
  404
  453
  504
  557
  613
  671
  731
  793
  858
  926
  997
  1,070
  1,146
  1,226
  1,308
  1,395
  1,485
  1,579
  1,677
  1,779
  1,886
  1,998
Change in working capital, $m
  -92
  -99
  -106
  -113
  -120
  -127
  -134
  -140
  -146
  -153
  -159
  -166
  -173
  -179
  -187
  -194
  -201
  -209
  -218
  -226
  -236
  -245
  -255
  -266
  -277
  -289
  -302
  -315
  -329
  -344
Cash from operations, $m
  180
  219
  260
  304
  349
  396
  446
  497
  551
  606
  663
  723
  785
  850
  917
  987
  1,060
  1,135
  1,214
  1,296
  1,382
  1,471
  1,564
  1,661
  1,762
  1,868
  1,979
  2,094
  2,215
  2,342
Maintenance CAPEX, $m
  -67
  -77
  -89
  -101
  -114
  -128
  -143
  -158
  -175
  -192
  -209
  -228
  -247
  -267
  -288
  -310
  -332
  -356
  -380
  -405
  -431
  -459
  -487
  -517
  -548
  -580
  -613
  -649
  -685
  -723
New CAPEX, $m
  -106
  -115
  -123
  -132
  -140
  -147
  -155
  -163
  -170
  -177
  -185
  -193
  -200
  -208
  -216
  -225
  -234
  -243
  -253
  -263
  -273
  -285
  -296
  -309
  -322
  -336
  -350
  -366
  -382
  -399
Cash from investing activities, $m
  -173
  -192
  -212
  -233
  -254
  -275
  -298
  -321
  -345
  -369
  -394
  -421
  -447
  -475
  -504
  -535
  -566
  -599
  -633
  -668
  -704
  -744
  -783
  -826
  -870
  -916
  -963
  -1,015
  -1,067
  -1,122
Free cash flow, $m
  7
  27
  48
  71
  95
  121
  148
  176
  206
  237
  269
  302
  338
  375
  413
  453
  494
  537
  582
  628
  677
  727
  780
  835
  892
  952
  1,015
  1,080
  1,148
  1,220
Issuance/(repayment) of debt, $m
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Issuance/(repurchase) of shares, $m
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
Cash from financing (excl. dividends), $m  
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
Total cash flow (excl. dividends), $m
  -5
  13
  33
  55
  78
  103
  129
  157
  186
  216
  246
  279
  314
  350
  387
  425
  466
  508
  551
  597
  644
  693
  744
  798
  854
  912
  973
  1,036
  1,102
  1,172
Retained Cash Flow (-), $m
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
Prev. year cash balance distribution, $m
  78
  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
  6
  7
  8
  9
  10
  12
  13
  14
  16
  17
  19
  21
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  66
Cash available for distribution, $m
  85
  27
  48
  71
  95
  120
  147
  176
  206
  237
  268
  302
  337
  374
  412
  452
  493
  536
  581
  627
  676
  727
  779
  834
  891
  951
  1,014
  1,079
  1,147
  1,218
Discount rate, %
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
  79
  23
  37
  49
  59
  67
  72
  74
  74
  72
  69
  64
  58
  51
  44
  37
  31
  25
  20
  15
  11
  8
  6
  4
  3
  2
  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

Elevate Credit, Inc. provides online credit solutions to non-prime consumers, typically defined as those with credit scores of less than 700. The Company uses advanced technology risk analytics to provide financial options to its customers, who are not well-served by either banks or legacy non-prime lenders. It offers online installment loans and lines of credit in the United States, and the United Kingdom. Its products, Rise, Elastic and Sunny, provide customers with access to priced credit and services while helping them with credit building and financial wellness features. Its products include credit building and financial wellness programs, such as credit reporting, free credit monitoring (in the United States) and online financial literacy videos and tools. Rise is an installment loan product. As of March 31, 2016, Rise was available in 15 states in the United States. Sunny is the Company's United Kingdom installment loan product.

FINANCIAL RATIOS  of  Elevate Credit (ELVT)

Valuation Ratios
P/E Ratio -15.5
Price to Sales 0.6
Price to Book 24.3
Price to Tangible Book
Price to Cash Flow 1.4
Price to Free Cash Flow 1.4
Growth Rates
Sales Growth Rate 33.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.1%
Cap. Spend. - 3 Yr. Gr. Rate -9.3%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 3528.6%
Total Debt to Equity 3528.6%
Interest Coverage 1
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. -5.3%
Return On Total Capital -5%
Ret/ On T. Cap. - 3 Yr. Avg. -15.3%
Return On Equity -93.6%
Return On Equity - 3 Yr. Avg. -72%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 85.9%
Gross Margin - 3 Yr. Avg. 80.8%
EBITDA Margin 8.1%
EBITDA Margin - 3 Yr. Avg. -2.6%
Operating Margin 8.1%
Oper. Margin - 3 Yr. Avg. -4%
Pre-Tax Margin -4.3%
Pre-Tax Margin - 3 Yr. Avg. -12.5%
Net Profit Margin -3.8%
Net Profit Margin - 3 Yr. Avg. -9.5%
Effective Tax Rate 12%
Eff/ Tax Rate - 3 Yr. Avg. 19.6%
Payout Ratio 0%

ELVT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ELVT stock intrinsic value calculation we used $673 million for the last fiscal year's total revenue generated by Elevate Credit. The default revenue input number comes from 2017 income statement of Elevate Credit. 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 ELVT stock valuation model: a) initial revenue growth rate of 16% 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 8.1%, whose default value for ELVT is calculated based on our internal credit rating of Elevate Credit, 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 Elevate Credit.
    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 ELVT stock the variable cost ratio is equal to 75.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $99 million in the base year in the intrinsic value calculation for ELVT 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 15.9% for Elevate Credit.

Corporate tax rate of 27% is the nominal tax rate for Elevate Credit. 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 ELVT stock is equal to 0.9%.

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 ELVT are equal to 98.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Elevate Credit 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 ELVT is equal to -85.2%. 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 - $0 million for Elevate Credit - 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 million for Elevate Credit 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 Elevate Credit at the current share price and the inputted number of shares is $0.3 billion.

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