Intrinsic value of Bottomline Technologies - EPAY

Previous Close

$65.43

  Intrinsic Value

$15.02

stock screener

  Rating & Target

str. sell

-77%

Previous close

$65.43

 
Intrinsic value

$15.02

 
Up/down potential

-77%

 
Rating

str. sell

We calculate the intrinsic value of EPAY 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 2.7

 

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, %
  17.50
  16.25
  15.13
  14.11
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
Revenue, $m
  411
  477
  549
  627
  710
  798
  891
  988
  1,091
  1,198
  1,310
  1,427
  1,549
  1,676
  1,807
  1,944
  2,087
  2,234
  2,388
  2,548
  2,714
  2,887
  3,067
  3,254
  3,449
  3,652
  3,865
  4,086
  4,317
  4,558
Variable operating expenses, $m
  409
  469
  535
  605
  680
  759
  844
  932
  1,025
  1,123
  1,188
  1,294
  1,404
  1,519
  1,638
  1,762
  1,891
  2,025
  2,164
  2,309
  2,460
  2,616
  2,779
  2,949
  3,126
  3,310
  3,502
  3,703
  3,912
  4,131
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
  409
  469
  535
  605
  680
  759
  844
  932
  1,025
  1,123
  1,188
  1,294
  1,404
  1,519
  1,638
  1,762
  1,891
  2,025
  2,164
  2,309
  2,460
  2,616
  2,779
  2,949
  3,126
  3,310
  3,502
  3,703
  3,912
  4,131
Operating income, $m
  2
  8
  15
  22
  30
  38
  47
  56
  66
  76
  123
  134
  145
  157
  169
  182
  196
  209
  224
  239
  254
  271
  287
  305
  323
  342
  362
  383
  405
  427
EBITDA, $m
  67
  77
  89
  102
  115
  129
  144
  160
  177
  194
  212
  231
  251
  272
  293
  315
  338
  362
  387
  413
  440
  468
  497
  528
  559
  592
  627
  662
  700
  739
Interest expense (income), $m
  3
  18
  24
  30
  37
  44
  52
  60
  69
  78
  88
  98
  109
  120
  132
  144
  156
  169
  183
  197
  211
  226
  242
  258
  275
  293
  312
  331
  351
  372
  394
Earnings before tax, $m
  -16
  -16
  -15
  -15
  -14
  -14
  -13
  -13
  -13
  -12
  25
  25
  25
  25
  26
  26
  27
  27
  27
  28
  28
  29
  29
  30
  30
  31
  31
  32
  33
  33
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
Net income, $m
  -16
  -16
  -15
  -15
  -14
  -14
  -13
  -13
  -13
  -12
  18
  18
  18
  19
  19
  19
  19
  20
  20
  20
  21
  21
  21
  22
  22
  22
  23
  23
  24
  24

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
  709
  824
  949
  1,083
  1,226
  1,378
  1,538
  1,707
  1,884
  2,070
  2,263
  2,465
  2,675
  2,894
  3,122
  3,358
  3,604
  3,859
  4,124
  4,400
  4,687
  4,986
  5,296
  5,620
  5,957
  6,308
  6,675
  7,057
  7,456
  7,873
Adjusted assets (=assets-cash), $m
  709
  824
  949
  1,083
  1,226
  1,378
  1,538
  1,707
  1,884
  2,070
  2,263
  2,465
  2,675
  2,894
  3,122
  3,358
  3,604
  3,859
  4,124
  4,400
  4,687
  4,986
  5,296
  5,620
  5,957
  6,308
  6,675
  7,057
  7,456
  7,873
Revenue / Adjusted assets
  0.580
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
  0.579
Average production assets, $m
  261
  304
  349
  399
  451
  507
  566
  629
  694
  762
  833
  908
  985
  1,066
  1,150
  1,237
  1,327
  1,421
  1,519
  1,620
  1,726
  1,836
  1,950
  2,069
  2,194
  2,323
  2,458
  2,599
  2,746
  2,899
Working capital, $m
  -37
  -43
  -49
  -56
  -64
  -72
  -80
  -89
  -98
  -108
  -118
  -128
  -139
  -151
  -163
  -175
  -188
  -201
  -215
  -229
  -244
  -260
  -276
  -293
  -310
  -329
  -348
  -368
  -389
  -410
Total debt, $m
  244
  309
  380
  455
  536
  622
  713
  809
  909
  1,014
  1,123
  1,238
  1,357
  1,481
  1,609
  1,743
  1,882
  2,027
  2,177
  2,333
  2,495
  2,664
  2,840
  3,023
  3,214
  3,413
  3,620
  3,837
  4,062
  4,298
Total liabilities, $m
  401
  467
  537
  613
  694
  780
  871
  966
  1,066
  1,171
  1,281
  1,395
  1,514
  1,638
  1,767
  1,901
  2,040
  2,184
  2,334
  2,491
  2,653
  2,822
  2,998
  3,181
  3,372
  3,570
  3,778
  3,994
  4,220
  4,456
Total equity, $m
  308
  358
  412
  470
  532
  598
  668
  741
  818
  898
  982
  1,070
  1,161
  1,256
  1,355
  1,457
  1,564
  1,675
  1,790
  1,910
  2,034
  2,164
  2,299
  2,439
  2,585
  2,738
  2,897
  3,063
  3,236
  3,417
Total liabilities and equity, $m
  709
  825
  949
  1,083
  1,226
  1,378
  1,539
  1,707
  1,884
  2,069
  2,263
  2,465
  2,675
  2,894
  3,122
  3,358
  3,604
  3,859
  4,124
  4,401
  4,687
  4,986
  5,297
  5,620
  5,957
  6,308
  6,675
  7,057
  7,456
  7,873
Debt-to-equity ratio
  0.790
  0.860
  0.920
  0.970
  1.010
  1.040
  1.070
  1.090
  1.110
  1.130
  1.140
  1.160
  1.170
  1.180
  1.190
  1.200
  1.200
  1.210
  1.220
  1.220
  1.230
  1.230
  1.240
  1.240
  1.240
  1.250
  1.250
  1.250
  1.260
  1.260
Adjusted equity ratio
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -16
  -16
  -15
  -15
  -14
  -14
  -13
  -13
  -13
  -12
  18
  18
  18
  19
  19
  19
  19
  20
  20
  20
  21
  21
  21
  22
  22
  22
  23
  23
  24
  24
Depreciation, amort., depletion, $m
  65
  69
  74
  79
  85
  91
  97
  104
  111
  119
  90
  98
  106
  115
  124
  133
  143
  153
  163
  174
  186
  197
  210
  223
  236
  250
  264
  279
  295
  312
Funds from operations, $m
  49
  54
  59
  65
  71
  77
  84
  91
  98
  106
  108
  116
  124
  133
  142
  152
  162
  172
  183
  194
  206
  218
  231
  244
  258
  272
  287
  303
  319
  336
Change in working capital, $m
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
Cash from operations, $m
  54
  60
  66
  72
  78
  85
  92
  100
  108
  116
  118
  126
  135
  145
  154
  164
  175
  186
  197
  209
  221
  234
  247
  261
  275
  290
  306
  323
  340
  358
Maintenance CAPEX, $m
  -24
  -28
  -33
  -38
  -43
  -49
  -55
  -61
  -68
  -75
  -82
  -90
  -98
  -106
  -115
  -124
  -133
  -143
  -153
  -163
  -174
  -186
  -197
  -210
  -223
  -236
  -250
  -264
  -279
  -295
New CAPEX, $m
  -39
  -42
  -46
  -49
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -84
  -87
  -90
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -129
  -135
  -141
  -147
  -153
Cash from investing activities, $m
  -63
  -70
  -79
  -87
  -96
  -105
  -114
  -123
  -133
  -143
  -153
  -164
  -175
  -187
  -199
  -211
  -223
  -237
  -251
  -265
  -280
  -296
  -311
  -329
  -347
  -365
  -385
  -405
  -426
  -448
Free cash flow, $m
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -82
  -87
  -91
Issuance/(repayment) of debt, $m
  60
  65
  71
  76
  81
  86
  91
  96
  100
  105
  110
  114
  119
  124
  129
  134
  139
  145
  150
  156
  162
  169
  176
  183
  191
  199
  207
  216
  226
  236
Issuance/(repurchase) of shares, $m
  62
  66
  69
  73
  76
  80
  83
  86
  90
  93
  66
  70
  73
  76
  80
  84
  87
  91
  95
  100
  104
  109
  114
  119
  124
  130
  136
  143
  149
  157
Cash from financing (excl. dividends), $m  
  122
  131
  140
  149
  157
  166
  174
  182
  190
  198
  176
  184
  192
  200
  209
  218
  226
  236
  245
  256
  266
  278
  290
  302
  315
  329
  343
  359
  375
  393
Total cash flow (excl. dividends), $m
  113
  120
  127
  133
  140
  146
  153
  159
  165
  171
  140
  146
  152
  158
  165
  171
  178
  185
  192
  200
  208
  216
  225
  234
  244
  254
  265
  277
  289
  301
Retained Cash Flow (-), $m
  -62
  -66
  -69
  -73
  -76
  -80
  -83
  -86
  -90
  -93
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -115
  -120
  -125
  -130
  -135
  -140
  -146
  -152
  -159
  -166
  -173
  -181
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
  51
  54
  58
  61
  64
  67
  70
  72
  75
  78
  56
  58
  61
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  106
  111
  115
  121
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
  49
  50
  50
  50
  49
  48
  47
  45
  43
  41
  27
  25
  23
  21
  19
  17
  15
  14
  12
  10
  9
  7
  6
  5
  4
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  97.7
  95.7
  93.8
  92.2
  90.7
  89.4
  88.2
  87.1
  86.0
  85.0
  84.4
  83.8
  83.3
  82.7
  82.2
  81.7
  81.2
  80.7
  80.3
  79.8
  79.4
  79.0
  78.6
  78.2
  77.8
  77.4
  77.0
  76.6
  76.2
  75.9

Bottomline Technologies (de), Inc. is engaged in providing a set of cloud-based business payment, digital banking, fraud prevention, payment and financial document solutions. The Company helps businesses pay and get paid. It offers hosted or Software as a Service (SaaS) solutions, as well as software designed to run on-site at the customer's location. It operates through four segments: Payments and Transactional Documents, Hosted Solutions, Digital Banking and Other. The Payments and Transactional Documents segment is a supplier of software products that provide a range of financial business process management solutions, including making and collecting payments and generating and storing business documents. The Hosted Solutions segment provides customers with SaaS technology offerings. The Digital Banking segment provides solutions to banking and financial institution customers. The Other segment consists of its healthcare and cyber fraud and risk management operating segments.

FINANCIAL RATIOS  of  Bottomline Technologies (EPAY)

Valuation Ratios
P/E Ratio -74.2
Price to Sales 7
Price to Book 9.3
Price to Tangible Book
Price to Cash Flow 40.2
Price to Free Cash Flow 74.2
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 16.6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 70.2%
Interest Coverage -12
Management Effectiveness
Return On Assets -4.8%
Ret/ On Assets - 3 Yr. Avg. -3.8%
Return On Total Capital -7.2%
Ret/ On T. Cap. - 3 Yr. Avg. -6%
Return On Equity -11.8%
Return On Equity - 3 Yr. Avg. -9.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53.9%
Gross Margin - 3 Yr. Avg. 56.3%
EBITDA Margin 2.6%
EBITDA Margin - 3 Yr. Avg. 6.2%
Operating Margin -6.3%
Oper. Margin - 3 Yr. Avg. -2.6%
Pre-Tax Margin -10.9%
Pre-Tax Margin - 3 Yr. Avg. -7.1%
Net Profit Margin -9.5%
Net Profit Margin - 3 Yr. Avg. -8.6%
Effective Tax Rate 13.2%
Eff/ Tax Rate - 3 Yr. Avg. -37%
Payout Ratio 0%

EPAY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EPAY stock intrinsic value calculation we used $349.412 million for the last fiscal year's total revenue generated by Bottomline Technologies. The default revenue input number comes from 0001 income statement of Bottomline Technologies. 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 EPAY stock valuation model: a) initial revenue growth rate of 17.5% 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 EPAY is calculated based on our internal credit rating of Bottomline Technologies, 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 Bottomline Technologies.
    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 EPAY stock the variable cost ratio is equal to 101.1%.

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 EPAY 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 9.7% for Bottomline Technologies.

Corporate tax rate of 27% is the nominal tax rate for Bottomline Technologies. 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 EPAY 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 EPAY are equal to 63.6%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Bottomline Technologies 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 EPAY is equal to -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 - $261.956 million for Bottomline Technologies - 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 40.827 million for Bottomline Technologies 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 Bottomline Technologies at the current share price and the inputted number of shares is $2.7 billion.

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COMPANY NEWS

▶ Bottomline Technologies Expands Secure Payments Offerings   [Oct-02-18 12:49PM  GlobeNewswire]
▶ Cara Onions Joins Bottomline Technologies   [Sep-20-18 11:00AM  GlobeNewswire]
▶ 8 Stocks to Lead the Digital Payments Boom   [Sep-19-18 08:00AM  Investopedia]
▶ Top Stock Picks for the Week of September 17th   [Sep-18-18 03:09PM  Zacks]
▶ Bottomline Technologies: Fiscal 3Q Earnings Snapshot   [May-03-18 07:07PM  Associated Press]
▶ Bottomline Technologies Launches New Paymode-X APIs   [Mar-20-18 06:00AM  GlobeNewswire]
▶ Bottomline Technologies Wins Prestigious Payment Award   [Feb-06-18 04:00AM  GlobeNewswire]
▶ Bottomline Technologies posts 2Q profit   [Feb-01-18 05:43PM  Associated Press]
▶ Bottomline Technologies posts 1Q loss   [Nov-02-17 06:42PM  Associated Press]
▶ Bottomline Technologies Expands Global Scale   [Oct-16-17 09:00AM  GlobeNewswire]
▶ Bottomline Technologies Embraces New Standards   [Oct-05-17 11:01AM  GlobeNewswire]

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