Intrinsic value of FireEye, Inc. - FEYE

Previous Close

$16.94

  Intrinsic Value

$0.69

stock screener

  Rating & Target

str. sell

-96%

Previous close

$16.94

 
Intrinsic value

$0.69

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of FEYE 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, %
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.11
  5.09
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
Revenue, $m
  878
  928
  979
  1,033
  1,090
  1,149
  1,211
  1,275
  1,343
  1,414
  1,488
  1,565
  1,647
  1,732
  1,821
  1,915
  2,013
  2,116
  2,224
  2,338
  2,456
  2,581
  2,712
  2,849
  2,993
  3,145
  3,303
  3,470
  3,644
  3,828
Variable operating expenses, $m
  1,148
  1,213
  1,280
  1,350
  1,423
  1,499
  1,579
  1,663
  1,751
  1,843
  1,930
  2,031
  2,136
  2,247
  2,363
  2,484
  2,612
  2,745
  2,886
  3,033
  3,187
  3,349
  3,518
  3,696
  3,883
  4,079
  4,285
  4,501
  4,728
  4,966
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
  1,148
  1,213
  1,280
  1,350
  1,423
  1,499
  1,579
  1,663
  1,751
  1,843
  1,930
  2,031
  2,136
  2,247
  2,363
  2,484
  2,612
  2,745
  2,886
  3,033
  3,187
  3,349
  3,518
  3,696
  3,883
  4,079
  4,285
  4,501
  4,728
  4,966
Operating income, $m
  -270
  -285
  -300
  -316
  -333
  -350
  -369
  -388
  -408
  -429
  -442
  -465
  -490
  -515
  -541
  -569
  -599
  -629
  -661
  -695
  -730
  -767
  -806
  -847
  -890
  -935
  -982
  -1,031
  -1,083
  -1,138
EBITDA, $m
  -212
  -224
  -237
  -250
  -264
  -278
  -293
  -308
  -325
  -342
  -360
  -379
  -398
  -419
  -440
  -463
  -487
  -512
  -538
  -565
  -594
  -624
  -656
  -689
  -724
  -760
  -799
  -839
  -881
  -926
Interest expense (income), $m
  12
  63
  69
  77
  85
  94
  103
  112
  122
  132
  143
  154
  166
  178
  191
  205
  219
  234
  250
  266
  283
  301
  320
  340
  361
  383
  405
  429
  455
  481
  509
Earnings before tax, $m
  -333
  -354
  -377
  -401
  -427
  -453
  -481
  -510
  -540
  -572
  -597
  -631
  -668
  -706
  -746
  -788
  -833
  -879
  -927
  -978
  -1,031
  -1,087
  -1,146
  -1,208
  -1,272
  -1,340
  -1,411
  -1,486
  -1,565
  -1,647
Tax expense, $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
Net income, $m
  -333
  -354
  -377
  -401
  -427
  -453
  -481
  -510
  -540
  -572
  -597
  -631
  -668
  -706
  -746
  -788
  -833
  -879
  -927
  -978
  -1,031
  -1,087
  -1,146
  -1,208
  -1,272
  -1,340
  -1,411
  -1,486
  -1,565
  -1,647

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
  2,387
  2,521
  2,662
  2,808
  2,962
  3,122
  3,290
  3,465
  3,649
  3,841
  4,043
  4,254
  4,475
  4,706
  4,949
  5,204
  5,471
  5,751
  6,044
  6,352
  6,675
  7,014
  7,370
  7,743
  8,134
  8,545
  8,976
  9,428
  9,903
  10,402
Adjusted assets (=assets-cash), $m
  2,387
  2,521
  2,662
  2,808
  2,962
  3,122
  3,290
  3,465
  3,649
  3,841
  4,043
  4,254
  4,475
  4,706
  4,949
  5,204
  5,471
  5,751
  6,044
  6,352
  6,675
  7,014
  7,370
  7,743
  8,134
  8,545
  8,976
  9,428
  9,903
  10,402
Revenue / Adjusted assets
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
Average production assets, $m
  697
  736
  777
  820
  864
  911
  960
  1,011
  1,065
  1,121
  1,180
  1,241
  1,306
  1,373
  1,444
  1,519
  1,596
  1,678
  1,764
  1,854
  1,948
  2,047
  2,151
  2,259
  2,374
  2,494
  2,619
  2,751
  2,890
  3,035
Working capital, $m
  -437
  -461
  -487
  -514
  -542
  -571
  -602
  -634
  -667
  -703
  -739
  -778
  -818
  -861
  -905
  -952
  -1,001
  -1,052
  -1,105
  -1,162
  -1,221
  -1,283
  -1,348
  -1,416
  -1,488
  -1,563
  -1,642
  -1,724
  -1,811
  -1,902
Total debt, $m
  1,065
  1,186
  1,312
  1,444
  1,582
  1,727
  1,878
  2,035
  2,201
  2,374
  2,555
  2,745
  2,944
  3,153
  3,371
  3,600
  3,841
  4,092
  4,357
  4,634
  4,925
  5,230
  5,550
  5,885
  6,238
  6,607
  6,995
  7,403
  7,830
  8,278
Total liabilities, $m
  2,148
  2,269
  2,395
  2,527
  2,665
  2,810
  2,961
  3,119
  3,284
  3,457
  3,638
  3,828
  4,027
  4,236
  4,454
  4,683
  4,924
  5,176
  5,440
  5,717
  6,008
  6,313
  6,633
  6,968
  7,321
  7,690
  8,078
  8,486
  8,913
  9,362
Total equity, $m
  239
  252
  266
  281
  296
  312
  329
  347
  365
  384
  404
  425
  447
  471
  495
  520
  547
  575
  604
  635
  668
  701
  737
  774
  813
  854
  898
  943
  990
  1,040
Total liabilities and equity, $m
  2,387
  2,521
  2,661
  2,808
  2,961
  3,122
  3,290
  3,466
  3,649
  3,841
  4,042
  4,253
  4,474
  4,707
  4,949
  5,203
  5,471
  5,751
  6,044
  6,352
  6,676
  7,014
  7,370
  7,742
  8,134
  8,544
  8,976
  9,429
  9,903
  10,402
Debt-to-equity ratio
  4.460
  4.700
  4.930
  5.140
  5.340
  5.530
  5.710
  5.870
  6.030
  6.180
  6.320
  6.450
  6.580
  6.700
  6.810
  6.920
  7.020
  7.120
  7.210
  7.290
  7.380
  7.460
  7.530
  7.600
  7.670
  7.730
  7.790
  7.850
  7.910
  7.960
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -333
  -354
  -377
  -401
  -427
  -453
  -481
  -510
  -540
  -572
  -597
  -631
  -668
  -706
  -746
  -788
  -833
  -879
  -927
  -978
  -1,031
  -1,087
  -1,146
  -1,208
  -1,272
  -1,340
  -1,411
  -1,486
  -1,565
  -1,647
Depreciation, amort., depletion, $m
  58
  60
  63
  66
  69
  73
  76
  80
  83
  87
  82
  87
  91
  96
  101
  106
  112
  117
  123
  130
  136
  143
  150
  158
  166
  174
  183
  192
  202
  212
Funds from operations, $m
  -275
  -294
  -314
  -335
  -357
  -381
  -405
  -430
  -457
  -485
  -514
  -545
  -577
  -610
  -645
  -682
  -721
  -761
  -804
  -849
  -895
  -944
  -996
  -1,050
  -1,106
  -1,166
  -1,228
  -1,294
  -1,363
  -1,435
Change in working capital, $m
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
Cash from operations, $m
  -251
  -269
  -288
  -308
  -329
  -351
  -374
  -398
  -423
  -450
  -477
  -506
  -536
  -568
  -601
  -636
  -672
  -710
  -750
  -792
  -836
  -882
  -931
  -982
  -1,035
  -1,091
  -1,149
  -1,211
  -1,276
  -1,343
Maintenance CAPEX, $m
  -46
  -49
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -112
  -117
  -123
  -130
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
New CAPEX, $m
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -132
  -139
  -145
Cash from investing activities, $m
  -84
  -88
  -92
  -97
  -102
  -107
  -113
  -118
  -125
  -130
  -137
  -144
  -152
  -159
  -167
  -175
  -184
  -194
  -203
  -213
  -224
  -235
  -247
  -259
  -272
  -286
  -300
  -315
  -331
  -347
Free cash flow, $m
  -335
  -357
  -381
  -406
  -431
  -459
  -487
  -517
  -548
  -580
  -614
  -650
  -688
  -727
  -768
  -811
  -856
  -904
  -953
  -1,005
  -1,060
  -1,117
  -1,178
  -1,241
  -1,307
  -1,377
  -1,450
  -1,526
  -1,607
  -1,691
Issuance/(repayment) of debt, $m
  102
  121
  126
  132
  138
  144
  151
  158
  165
  173
  181
  190
  199
  209
  219
  229
  240
  252
  264
  277
  291
  305
  320
  336
  352
  370
  388
  407
  427
  449
Issuance/(repurchase) of shares, $m
  360
  367
  391
  416
  442
  469
  498
  528
  559
  591
  617
  653
  690
  729
  771
  814
  859
  907
  957
  1,009
  1,064
  1,121
  1,182
  1,245
  1,312
  1,381
  1,455
  1,531
  1,612
  1,697
Cash from financing (excl. dividends), $m  
  462
  488
  517
  548
  580
  613
  649
  686
  724
  764
  798
  843
  889
  938
  990
  1,043
  1,099
  1,159
  1,221
  1,286
  1,355
  1,426
  1,502
  1,581
  1,664
  1,751
  1,843
  1,938
  2,039
  2,146
Total cash flow (excl. dividends), $m
  128
  131
  137
  143
  149
  155
  162
  169
  176
  184
  184
  192
  202
  211
  221
  232
  243
  255
  268
  281
  294
  309
  324
  340
  357
  374
  393
  412
  433
  454
Retained Cash Flow (-), $m
  -360
  -367
  -391
  -416
  -442
  -469
  -498
  -528
  -559
  -591
  -617
  -653
  -690
  -729
  -771
  -814
  -859
  -907
  -957
  -1,009
  -1,064
  -1,121
  -1,182
  -1,245
  -1,312
  -1,381
  -1,455
  -1,531
  -1,612
  -1,697
Prev. year cash balance distribution, $m
  439
  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
  207
  -236
  -254
  -274
  -293
  -314
  -336
  -359
  -382
  -407
  -433
  -460
  -489
  -518
  -549
  -582
  -616
  -652
  -689
  -728
  -769
  -812
  -858
  -905
  -955
  -1,007
  -1,062
  -1,119
  -1,179
  -1,242
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
  198
  -216
  -221
  -225
  -227
  -228
  -227
  -224
  -220
  -213
  -206
  -196
  -186
  -174
  -161
  -148
  -134
  -120
  -106
  -93
  -80
  -67
  -56
  -46
  -37
  -29
  -23
  -17
  -13
  -9
Current shareholders' claim on cash, %
  75.6
  58.5
  45.3
  34.9
  26.9
  20.7
  15.9
  12.2
  9.3
  7.1
  5.5
  4.2
  3.2
  2.5
  1.9
  1.4
  1.1
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0

FireEye, Inc. provides intelligence-based cybersecurity solutions that allow organizations to prepare for, prevent, respond to and remediate cyber-attacks. The Company offers various products, such as Threat Detection and Prevention Solutions, which include network security products (NX and Multi-vector Virtual Execution (MVX) Compute Node Series), e-mail security products (EX Series and e-mail threat prevention cloud (ETP), endpoint security products (HX Series) and content security products (FX Series); security management and orchestration products, which include Central Management System and FireEye Security Orchestrator, and forensics and investigation products, which include Threat Analytics Platform (TAP), Malware Analysis (AX Series) and Enterprise Forensics (PX Series and IA Series). Its Subscription and Services offers Threat Intelligence Subscriptions, Security-as-a-Service Offerings, and Customer Support and Maintenance Services.

FINANCIAL RATIOS  of  FireEye, Inc. (FEYE)

Valuation Ratios
P/E Ratio -6.2
Price to Sales 4.1
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow -197.2
Price to Free Cash Flow -58
Growth Rates
Sales Growth Rate 14.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34.5%
Cap. Spend. - 3 Yr. Gr. Rate -9.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 88.2%
Total Debt to Equity 88.2%
Interest Coverage -40
Management Effectiveness
Return On Assets -19.4%
Ret/ On Assets - 3 Yr. Avg. -24.4%
Return On Total Capital -28.8%
Ret/ On T. Cap. - 3 Yr. Avg. -34.4%
Return On Equity -50.9%
Return On Equity - 3 Yr. Avg. -45.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 61.1%
EBITDA Margin -50.1%
EBITDA Margin - 3 Yr. Avg. -69.2%
Operating Margin -62.2%
Oper. Margin - 3 Yr. Avg. -85.4%
Pre-Tax Margin -68.5%
Pre-Tax Margin - 3 Yr. Avg. -89%
Net Profit Margin -67.2%
Net Profit Margin - 3 Yr. Avg. -86%
Effective Tax Rate 1.8%
Eff/ Tax Rate - 3 Yr. Avg. 2.9%
Payout Ratio 0%

FEYE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FEYE stock intrinsic value calculation we used $831 million for the last fiscal year's total revenue generated by FireEye, Inc.. The default revenue input number comes from 0001 income statement of FireEye, 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 FEYE stock valuation model: a) initial revenue growth rate of 5.7% 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 FEYE is calculated based on our internal credit rating of FireEye, 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 FireEye, 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 FEYE stock the variable cost ratio is equal to 130.8%.

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 FEYE 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 6.5% for FireEye, Inc..

Corporate tax rate of 27% is the nominal tax rate for FireEye, 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 FEYE 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 FEYE are equal to 79.3%.

Life of production assets of 14.3 years is the average useful life of capital assets used in FireEye, 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 FEYE is equal to -49.7%. 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 - $650.394 million for FireEye, 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 202.822 million for FireEye, 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 FireEye, Inc. at the current share price and the inputted number of shares is $3.4 billion.

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