Intrinsic value of Eaton Vance Corporation - EV

Previous Close

$39.71

  Intrinsic Value

$32.12

stock screener

  Rating & Target

hold

-19%

Previous close

$39.71

 
Intrinsic value

$32.12

 
Up/down potential

-19%

 
Rating

hold

Our model is not good at valuating stocks of financial companies, such as EV.

We calculate the intrinsic value of EV 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 4.6

 

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
  1,736
  1,776
  1,822
  1,873
  1,930
  1,992
  2,060
  2,133
  2,212
  2,297
  2,388
  2,485
  2,588
  2,698
  2,814
  2,938
  3,068
  3,206
  3,352
  3,506
  3,669
  3,840
  4,021
  4,211
  4,411
  4,622
  4,845
  5,078
  5,324
  5,583
Variable operating expenses, $m
  1,011
  1,034
  1,060
  1,088
  1,120
  1,155
  1,194
  1,235
  1,280
  1,327
  1,344
  1,399
  1,457
  1,519
  1,584
  1,654
  1,727
  1,805
  1,887
  1,974
  2,065
  2,162
  2,263
  2,371
  2,483
  2,602
  2,727
  2,859
  2,997
  3,143
Fixed operating expenses, $m
  161
  165
  169
  172
  176
  180
  184
  188
  192
  196
  201
  205
  210
  214
  219
  224
  229
  234
  239
  244
  250
  255
  261
  266
  272
  278
  284
  291
  297
  304
Total operating expenses, $m
  1,172
  1,199
  1,229
  1,260
  1,296
  1,335
  1,378
  1,423
  1,472
  1,523
  1,545
  1,604
  1,667
  1,733
  1,803
  1,878
  1,956
  2,039
  2,126
  2,218
  2,315
  2,417
  2,524
  2,637
  2,755
  2,880
  3,011
  3,150
  3,294
  3,447
Operating income, $m
  563
  577
  593
  612
  633
  656
  682
  710
  741
  773
  843
  881
  921
  965
  1,011
  1,060
  1,112
  1,167
  1,226
  1,288
  1,354
  1,423
  1,497
  1,574
  1,656
  1,742
  1,833
  1,929
  2,030
  2,136
EBITDA, $m
  622
  636
  653
  673
  695
  719
  746
  775
  806
  840
  877
  916
  958
  1,003
  1,051
  1,102
  1,156
  1,213
  1,274
  1,338
  1,406
  1,478
  1,554
  1,634
  1,719
  1,808
  1,902
  2,001
  2,106
  2,216
Interest expense (income), $m
  26
  81
  83
  86
  90
  94
  99
  104
  109
  115
  121
  128
  135
  143
  151
  159
  169
  178
  189
  200
  211
  223
  236
  250
  264
  279
  295
  312
  329
  348
  367
Earnings before tax, $m
  483
  494
  507
  522
  539
  558
  579
  601
  626
  652
  715
  746
  779
  814
  852
  891
  934
  979
  1,026
  1,077
  1,130
  1,187
  1,247
  1,310
  1,377
  1,447
  1,521
  1,600
  1,682
  1,769
Tax expense, $m
  130
  133
  137
  141
  146
  151
  156
  162
  169
  176
  193
  201
  210
  220
  230
  241
  252
  264
  277
  291
  305
  320
  337
  354
  372
  391
  411
  432
  454
  478
Net income, $m
  352
  360
  370
  381
  393
  407
  422
  439
  457
  476
  522
  545
  569
  594
  622
  651
  682
  714
  749
  786
  825
  866
  910
  956
  1,005
  1,056
  1,111
  1,168
  1,228
  1,292

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
  3,617
  3,700
  3,795
  3,902
  4,020
  4,150
  4,291
  4,444
  4,609
  4,786
  4,975
  5,177
  5,392
  5,620
  5,863
  6,120
  6,392
  6,679
  6,983
  7,304
  7,643
  8,000
  8,376
  8,773
  9,190
  9,630
  10,093
  10,580
  11,092
  11,631
Adjusted assets (=assets-cash), $m
  3,617
  3,700
  3,795
  3,902
  4,020
  4,150
  4,291
  4,444
  4,609
  4,786
  4,975
  5,177
  5,392
  5,620
  5,863
  6,120
  6,392
  6,679
  6,983
  7,304
  7,643
  8,000
  8,376
  8,773
  9,190
  9,630
  10,093
  10,580
  11,092
  11,631
Revenue / Adjusted assets
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
Average production assets, $m
  227
  233
  239
  245
  253
  261
  270
  279
  290
  301
  313
  326
  339
  353
  369
  385
  402
  420
  439
  459
  481
  503
  527
  552
  578
  606
  635
  665
  697
  731
Working capital, $m
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -90
  -93
  -96
  -100
  -104
  -109
  -113
  -118
  -123
  -129
  -135
  -141
  -147
  -154
  -161
  -169
  -177
  -185
  -194
  -203
  -213
  -224
  -234
Total debt, $m
  1,543
  1,602
  1,669
  1,744
  1,827
  1,918
  2,017
  2,125
  2,241
  2,365
  2,498
  2,640
  2,791
  2,952
  3,122
  3,303
  3,494
  3,696
  3,910
  4,136
  4,374
  4,625
  4,889
  5,168
  5,462
  5,771
  6,096
  6,439
  6,799
  7,178
Total liabilities, $m
  2,543
  2,601
  2,668
  2,743
  2,826
  2,917
  3,017
  3,124
  3,240
  3,364
  3,497
  3,639
  3,791
  3,951
  4,122
  4,302
  4,493
  4,696
  4,909
  5,135
  5,373
  5,624
  5,888
  6,167
  6,461
  6,770
  7,095
  7,438
  7,798
  8,177
Total equity, $m
  1,074
  1,099
  1,127
  1,159
  1,194
  1,233
  1,274
  1,320
  1,369
  1,421
  1,478
  1,538
  1,601
  1,669
  1,741
  1,818
  1,898
  1,984
  2,074
  2,169
  2,270
  2,376
  2,488
  2,606
  2,730
  2,860
  2,998
  3,142
  3,294
  3,455
Total liabilities and equity, $m
  3,617
  3,700
  3,795
  3,902
  4,020
  4,150
  4,291
  4,444
  4,609
  4,785
  4,975
  5,177
  5,392
  5,620
  5,863
  6,120
  6,391
  6,680
  6,983
  7,304
  7,643
  8,000
  8,376
  8,773
  9,191
  9,630
  10,093
  10,580
  11,092
  11,632
Debt-to-equity ratio
  1.440
  1.460
  1.480
  1.500
  1.530
  1.560
  1.580
  1.610
  1.640
  1.660
  1.690
  1.720
  1.740
  1.770
  1.790
  1.820
  1.840
  1.860
  1.890
  1.910
  1.930
  1.950
  1.970
  1.980
  2.000
  2.020
  2.030
  2.050
  2.060
  2.080
Adjusted equity ratio
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  352
  360
  370
  381
  393
  407
  422
  439
  457
  476
  522
  545
  569
  594
  622
  651
  682
  714
  749
  786
  825
  866
  910
  956
  1,005
  1,056
  1,111
  1,168
  1,228
  1,292
Depreciation, amort., depletion, $m
  59
  59
  60
  61
  62
  62
  63
  64
  66
  67
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  76
  79
Funds from operations, $m
  411
  420
  430
  442
  455
  470
  486
  503
  522
  543
  556
  580
  605
  633
  662
  693
  725
  760
  797
  836
  877
  921
  967
  1,016
  1,068
  1,122
  1,180
  1,240
  1,304
  1,371
Change in working capital, $m
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Cash from operations, $m
  412
  421
  432
  444
  457
  472
  489
  506
  526
  547
  560
  584
  610
  637
  667
  698
  731
  766
  803
  843
  884
  928
  975
  1,024
  1,076
  1,131
  1,189
  1,250
  1,314
  1,382
Maintenance CAPEX, $m
  -24
  -25
  -25
  -26
  -27
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
New CAPEX, $m
  -4
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
Cash from investing activities, $m
  -28
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -40
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -79
  -82
  -86
  -91
  -95
  -100
  -104
  -110
Free cash flow, $m
  384
  392
  401
  411
  423
  437
  451
  467
  485
  504
  515
  537
  561
  586
  613
  641
  672
  704
  738
  775
  813
  854
  897
  942
  990
  1,041
  1,094
  1,150
  1,210
  1,272
Issuance/(repayment) of debt, $m
  51
  58
  67
  75
  83
  91
  99
  108
  116
  124
  133
  142
  151
  161
  170
  181
  191
  202
  214
  226
  238
  251
  265
  279
  294
  309
  325
  342
  360
  379
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  
  51
  58
  67
  75
  83
  91
  99
  108
  116
  124
  133
  142
  151
  161
  170
  181
  191
  202
  214
  226
  238
  251
  265
  279
  294
  309
  325
  342
  360
  379
Total cash flow (excl. dividends), $m
  434
  450
  468
  486
  506
  528
  551
  575
  601
  628
  648
  679
  712
  747
  783
  822
  863
  906
  952
  1,000
  1,051
  1,105
  1,161
  1,221
  1,284
  1,350
  1,419
  1,493
  1,570
  1,651
Retained Cash Flow (-), $m
  -21
  -25
  -28
  -32
  -35
  -39
  -42
  -45
  -49
  -53
  -56
  -60
  -64
  -68
  -72
  -76
  -81
  -85
  -90
  -95
  -101
  -106
  -112
  -118
  -124
  -131
  -137
  -145
  -152
  -160
Prev. year cash balance distribution, $m
  55
  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
  468
  425
  439
  455
  471
  489
  509
  530
  552
  576
  592
  619
  648
  679
  711
  746
  782
  821
  862
  905
  951
  999
  1,049
  1,103
  1,160
  1,219
  1,282
  1,348
  1,418
  1,491
Discount rate, %
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
  433
  362
  341
  319
  296
  273
  249
  226
  202
  179
  154
  133
  113
  95
  78
  64
  51
  40
  30
  23
  17
  12
  8
  6
  4
  2
  1
  1
  1
  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

Eaton Vance Corp. is engaged in the business of managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. The Company operates as an investment advisor to funds and separate accounts. The Company, through its subsidiaries and other affiliates, manages active equity, income and alternative strategies across a range of investment styles and asset classes, including the United States and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through its subsidiary, the Company also manages a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. The Company's open-end fund lineup includes tax-managed equity funds, and non-tax-managed equity and multi-asset funds. The Company's family of closed-end funds includes municipal bond, domestic and global equity, and bank loan.

FINANCIAL RATIOS  of  Eaton Vance Corporation (EV)

Valuation Ratios
P/E Ratio 16.7
Price to Sales 3.1
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 72.4
Price to Free Cash Flow 90.5
Growth Rates
Sales Growth Rate 13.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 18.2%
Cap. Spend. - 3 Yr. Gr. Rate 10.2%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 62.4%
Total Debt to Equity 62.4%
Interest Coverage 19
Management Effectiveness
Return On Assets 14.7%
Ret/ On Assets - 3 Yr. Avg. 13.5%
Return On Total Capital 19.3%
Ret/ On T. Cap. - 3 Yr. Avg. 17.2%
Return On Equity 32.9%
Return On Equity - 3 Yr. Avg. 35.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 84%
Gross Margin - 3 Yr. Avg. 82%
EBITDA Margin 33.6%
EBITDA Margin - 3 Yr. Avg. 32.5%
Operating Margin 31.2%
Oper. Margin - 3 Yr. Avg. 30.2%
Pre-Tax Margin 30.7%
Pre-Tax Margin - 3 Yr. Avg. 29.1%
Net Profit Margin 18.4%
Net Profit Margin - 3 Yr. Avg. 17.6%
Effective Tax Rate 36.9%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 44.7%

EV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EV stock intrinsic value calculation we used $1702 million for the last fiscal year's total revenue generated by Eaton Vance Corporation. The default revenue input number comes from 0001 income statement of Eaton Vance Corporation. 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 EV 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 8%, whose default value for EV is calculated based on our internal credit rating of Eaton Vance Corporation, 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 Eaton Vance Corporation.
    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 EV stock the variable cost ratio is equal to 58.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $158 million in the base year in the intrinsic value calculation for EV 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 Eaton Vance Corporation.

Corporate tax rate of 27% is the nominal tax rate for Eaton Vance Corporation. 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 EV 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 EV are equal to 13.1%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Eaton Vance Corporation 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 EV is equal to -4.2%. 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 - $1107.431 million for Eaton Vance Corporation - 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 115.597 million for Eaton Vance Corporation 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 Eaton Vance Corporation at the current share price and the inputted number of shares is $4.6 billion.

RELATED COMPANIES Price Int.Val. Rating
GROW U.S. Global In 1.95 0.45  str.sell
LM Legg Mason, In 36.53 120.22  str.buy
BEN Franklin Resou 27.37 60.78  str.buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

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