Intrinsic value of Exponent, Inc. - EXPO

Previous Close

$59.22

  Intrinsic Value

$28.46

stock screener

  Rating & Target

str. sell

-52%

Previous close

$59.22

 
Intrinsic value

$28.46

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of EXPO 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 3.1

 

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, %
  4.40
  4.46
  4.51
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
Revenue, $m
  397
  414
  433
  453
  474
  496
  519
  543
  569
  596
  625
  655
  687
  720
  755
  792
  830
  871
  914
  959
  1,006
  1,056
  1,108
  1,163
  1,220
  1,281
  1,344
  1,411
  1,481
  1,555
Variable operating expenses, $m
  151
  158
  165
  172
  180
  188
  197
  206
  215
  225
  231
  242
  254
  266
  279
  293
  307
  322
  338
  355
  372
  390
  410
  430
  451
  474
  497
  522
  548
  575
Fixed operating expenses, $m
  149
  152
  156
  159
  163
  166
  170
  174
  178
  181
  185
  190
  194
  198
  202
  207
  211
  216
  221
  226
  231
  236
  241
  246
  252
  257
  263
  269
  274
  280
Total operating expenses, $m
  300
  310
  321
  331
  343
  354
  367
  380
  393
  406
  416
  432
  448
  464
  481
  500
  518
  538
  559
  581
  603
  626
  651
  676
  703
  731
  760
  791
  822
  855
Operating income, $m
  96
  104
  112
  121
  131
  141
  152
  164
  176
  190
  208
  223
  239
  256
  273
  292
  312
  333
  355
  379
  403
  430
  457
  486
  517
  550
  584
  621
  659
  699
EBITDA, $m
  107
  115
  123
  133
  143
  153
  165
  177
  189
  203
  217
  233
  249
  266
  284
  304
  324
  346
  369
  393
  418
  445
  474
  504
  535
  569
  604
  641
  681
  722
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
Earnings before tax, $m
  96
  104
  112
  120
  130
  139
  150
  161
  173
  185
  203
  218
  233
  249
  266
  284
  303
  323
  344
  367
  391
  416
  442
  470
  500
  531
  564
  599
  636
  675
Tax expense, $m
  26
  28
  30
  32
  35
  38
  40
  43
  47
  50
  55
  59
  63
  67
  72
  77
  82
  87
  93
  99
  105
  112
  119
  127
  135
  143
  152
  162
  172
  182
Net income, $m
  70
  76
  82
  88
  95
  102
  109
  118
  126
  135
  149
  159
  170
  182
  194
  207
  221
  236
  251
  268
  285
  304
  323
  343
  365
  388
  412
  438
  464
  493

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
  375
  391
  409
  428
  447
  468
  490
  513
  537
  563
  590
  618
  648
  680
  713
  748
  784
  823
  863
  905
  950
  997
  1,046
  1,098
  1,152
  1,209
  1,269
  1,332
  1,399
  1,468
Adjusted assets (=assets-cash), $m
  375
  391
  409
  428
  447
  468
  490
  513
  537
  563
  590
  618
  648
  680
  713
  748
  784
  823
  863
  905
  950
  997
  1,046
  1,098
  1,152
  1,209
  1,269
  1,332
  1,399
  1,468
Revenue / Adjusted assets
  1.059
  1.059
  1.059
  1.058
  1.060
  1.060
  1.059
  1.058
  1.060
  1.059
  1.059
  1.060
  1.060
  1.059
  1.059
  1.059
  1.059
  1.058
  1.059
  1.060
  1.059
  1.059
  1.059
  1.059
  1.059
  1.060
  1.059
  1.059
  1.059
  1.059
Average production assets, $m
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
  103
  108
  113
  119
  125
  131
  137
  144
  151
  159
  166
  175
  183
Working capital, $m
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  52
  55
  58
  60
  63
  67
  70
  73
  77
  81
Total debt, $m
  7
  14
  22
  30
  38
  47
  57
  67
  77
  88
  100
  112
  125
  139
  153
  168
  184
  200
  218
  236
  255
  276
  297
  319
  343
  367
  393
  421
  449
  479
Total liabilities, $m
  162
  169
  177
  185
  193
  202
  212
  222
  232
  243
  255
  267
  280
  294
  308
  323
  339
  355
  373
  391
  410
  431
  452
  474
  498
  522
  548
  576
  604
  634
Total equity, $m
  213
  222
  232
  243
  254
  266
  278
  291
  305
  320
  335
  351
  368
  386
  405
  425
  445
  467
  490
  514
  540
  566
  594
  624
  654
  687
  721
  757
  794
  834
Total liabilities and equity, $m
  375
  391
  409
  428
  447
  468
  490
  513
  537
  563
  590
  618
  648
  680
  713
  748
  784
  822
  863
  905
  950
  997
  1,046
  1,098
  1,152
  1,209
  1,269
  1,333
  1,398
  1,468
Debt-to-equity ratio
  0.030
  0.060
  0.090
  0.120
  0.150
  0.180
  0.200
  0.230
  0.250
  0.280
  0.300
  0.320
  0.340
  0.360
  0.380
  0.400
  0.410
  0.430
  0.440
  0.460
  0.470
  0.490
  0.500
  0.510
  0.520
  0.530
  0.550
  0.560
  0.570
  0.570
Adjusted equity ratio
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  70
  76
  82
  88
  95
  102
  109
  118
  126
  135
  149
  159
  170
  182
  194
  207
  221
  236
  251
  268
  285
  304
  323
  343
  365
  388
  412
  438
  464
  493
Depreciation, amort., depletion, $m
  10
  11
  11
  11
  12
  12
  12
  13
  13
  13
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
Funds from operations, $m
  81
  86
  93
  99
  106
  114
  122
  130
  139
  149
  158
  169
  180
  192
  205
  219
  233
  249
  265
  282
  300
  319
  339
  361
  383
  407
  432
  458
  486
  516
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
Cash from operations, $m
  80
  85
  92
  98
  105
  112
  120
  129
  138
  147
  156
  167
  178
  191
  203
  217
  231
  246
  263
  280
  298
  316
  337
  358
  380
  404
  429
  455
  483
  512
Maintenance CAPEX, $m
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
New CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
Cash from investing activities, $m
  -8
  -8
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -18
  -20
  -21
  -22
  -22
  -24
  -25
  -26
  -28
  -29
  -31
Free cash flow, $m
  72
  78
  83
  89
  96
  103
  110
  118
  127
  136
  144
  154
  165
  176
  189
  201
  215
  229
  245
  261
  278
  296
  315
  335
  356
  379
  402
  427
  453
  481
Issuance/(repayment) of debt, $m
  7
  7
  8
  8
  9
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
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  
  7
  7
  8
  8
  9
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
Total cash flow (excl. dividends), $m
  79
  85
  91
  97
  104
  112
  120
  128
  137
  147
  156
  167
  178
  190
  203
  216
  231
  246
  262
  279
  297
  316
  336
  357
  380
  403
  428
  454
  482
  511
Retained Cash Flow (-), $m
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -39
Prev. year cash balance distribution, $m
  110
  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
  180
  75
  81
  87
  93
  100
  107
  115
  123
  132
  140
  150
  161
  172
  184
  197
  210
  224
  239
  255
  272
  289
  308
  328
  349
  371
  394
  419
  444
  472
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
  173
  69
  70
  71
  72
  73
  73
  72
  71
  69
  67
  64
  61
  58
  54
  50
  46
  41
  37
  32
  28
  24
  20
  17
  14
  11
  8
  6
  5
  4
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

Exponent, Inc. (Exponent), along with its subsidiaries, is a science and engineering consulting company. Exponent provides engineering and scientific consulting services to clients around the world. Its service offerings are provided on a project-by-project basis. It operates in two segments: Engineering and Other Scientific, and Environmental and Health. Its Engineering and Other Scientific segment includes biomechanics, biomedical engineering, buildings and structures, civil engineering, construction consulting, materials and corrosion engineering, mechanical engineering, polymer science and materials chemistry, statistical and data sciences, thermal sciences and vehicle analysis services. Its Environmental and Health segment includes chemical regulation and food safety; ecological and biological sciences; environmental and earth sciences, and health sciences. Exponent serves clients in automotive, government, health, insurance, manufacturing and technology, among others.

FINANCIAL RATIOS  of  Exponent, Inc. (EXPO)

Valuation Ratios
P/E Ratio 32.3
Price to Sales 4.8
Price to Book 5.6
Price to Tangible Book
Price to Cash Flow 22.6
Price to Free Cash Flow 28.6
Growth Rates
Sales Growth Rate 0.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 180%
Cap. Spend. - 3 Yr. Gr. Rate 18.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.9%
Ret/ On Assets - 3 Yr. Avg. 11.7%
Return On Total Capital 17.5%
Ret/ On T. Cap. - 3 Yr. Avg. 17.3%
Return On Equity 17.5%
Return On Equity - 3 Yr. Avg. 17.3%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 33.7%
Gross Margin - 3 Yr. Avg. 34.6%
EBITDA Margin 23.8%
EBITDA Margin - 3 Yr. Avg. 24%
Operating Margin 19.7%
Oper. Margin - 3 Yr. Avg. 20.9%
Pre-Tax Margin 21.9%
Pre-Tax Margin - 3 Yr. Avg. 22.3%
Net Profit Margin 14.9%
Net Profit Margin - 3 Yr. Avg. 14.1%
Effective Tax Rate 31.9%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 40.4%

EXPO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXPO stock intrinsic value calculation we used $380 million for the last fiscal year's total revenue generated by Exponent, Inc.. The default revenue input number comes from 0001 income statement of Exponent, 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 EXPO stock valuation model: a) initial revenue growth rate of 4.4% 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 EXPO is calculated based on our internal credit rating of Exponent, 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 Exponent, 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 EXPO stock the variable cost ratio is equal to 38.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $146 million in the base year in the intrinsic value calculation for EXPO 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 Exponent, Inc..

Corporate tax rate of 27% is the nominal tax rate for Exponent, 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 EXPO 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 EXPO are equal to 11.8%.

Life of production assets of 8 years is the average useful life of capital assets used in Exponent, 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 EXPO is equal to 5.2%. 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 - $313.909 million for Exponent, 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 51.579 million for Exponent, 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 Exponent, Inc. at the current share price and the inputted number of shares is $3.1 billion.

RELATED COMPANIES Price Int.Val. Rating
CRAI CRA Internatio 34.96 150.26  str.buy
GPX GP Strategies 14.74 26.36  str.buy
FCN FTI Consulting 84.47 199.16  str.buy
MG Mistras Group 13.97 18.18  buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

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