Intrinsic value of Instructure - INST

Previous Close

$37.32

  Intrinsic Value

$11.30

stock screener

  Rating & Target

str. sell

-70%

Previous close

$37.32

 
Intrinsic value

$11.30

 
Up/down potential

-70%

 
Rating

str. sell

We calculate the intrinsic value of INST 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 1.3

 

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, %
  29.90
  27.41
  25.17
  23.15
  21.34
  19.70
  18.23
  16.91
  15.72
  14.65
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
Revenue, $m
  206
  263
  329
  405
  492
  588
  696
  813
  941
  1,079
  1,227
  1,384
  1,550
  1,726
  1,911
  2,104
  2,307
  2,518
  2,738
  2,967
  3,205
  3,452
  3,710
  3,977
  4,255
  4,544
  4,844
  5,156
  5,481
  5,820
Variable operating expenses, $m
  194
  246
  308
  379
  459
  549
  649
  758
  877
  1,005
  1,140
  1,286
  1,441
  1,604
  1,776
  1,956
  2,144
  2,340
  2,545
  2,758
  2,979
  3,209
  3,448
  3,697
  3,955
  4,223
  4,502
  4,793
  5,095
  5,409
Fixed operating expenses, $m
  62
  64
  65
  67
  68
  70
  71
  73
  74
  76
  77
  79
  81
  83
  85
  86
  88
  90
  92
  94
  96
  98
  101
  103
  105
  107
  110
  112
  115
  117
Total operating expenses, $m
  256
  310
  373
  446
  527
  619
  720
  831
  951
  1,081
  1,217
  1,365
  1,522
  1,687
  1,861
  2,042
  2,232
  2,430
  2,637
  2,852
  3,075
  3,307
  3,549
  3,800
  4,060
  4,330
  4,612
  4,905
  5,210
  5,526
Operating income, $m
  -50
  -47
  -44
  -40
  -36
  -30
  -24
  -17
  -10
  -2
  9
  18
  28
  39
  50
  62
  74
  87
  101
  115
  130
  145
  161
  177
  195
  213
  232
  251
  272
  293
EBITDA, $m
  -41
  -37
  -32
  -25
  -18
  -9
  0
  10
  22
  34
  48
  62
  77
  93
  111
  128
  147
  167
  187
  209
  231
  254
  278
  303
  329
  356
  385
  414
  445
  477
Interest expense (income), $m
  0
  0
  2
  5
  7
  11
  15
  19
  24
  29
  34
  41
  47
  54
  61
  69
  77
  86
  95
  104
  114
  124
  134
  145
  156
  168
  180
  193
  206
  220
  234
Earnings before tax, $m
  -50
  -49
  -49
  -48
  -46
  -45
  -43
  -41
  -39
  -36
  -32
  -29
  -26
  -22
  -19
  -15
  -11
  -7
  -3
  1
  6
  11
  16
  21
  27
  32
  38
  45
  52
  59
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  2
  3
  4
  6
  7
  9
  10
  12
  14
  16
Net income, $m
  -50
  -49
  -49
  -48
  -46
  -45
  -43
  -41
  -39
  -36
  -32
  -29
  -26
  -22
  -19
  -15
  -11
  -7
  -3
  1
  4
  8
  11
  15
  19
  24
  28
  33
  38
  43

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
  203
  259
  324
  399
  484
  580
  685
  801
  927
  1,063
  1,209
  1,364
  1,528
  1,701
  1,883
  2,073
  2,273
  2,480
  2,697
  2,923
  3,157
  3,401
  3,655
  3,918
  4,192
  4,476
  4,772
  5,080
  5,400
  5,734
Adjusted assets (=assets-cash), $m
  203
  259
  324
  399
  484
  580
  685
  801
  927
  1,063
  1,209
  1,364
  1,528
  1,701
  1,883
  2,073
  2,273
  2,480
  2,697
  2,923
  3,157
  3,401
  3,655
  3,918
  4,192
  4,476
  4,772
  5,080
  5,400
  5,734
Revenue / Adjusted assets
  1.015
  1.015
  1.015
  1.015
  1.017
  1.014
  1.016
  1.015
  1.015
  1.015
  1.015
  1.015
  1.014
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
Average production assets, $m
  33
  42
  52
  64
  78
  93
  110
  129
  149
  171
  194
  219
  245
  273
  302
  332
  364
  398
  433
  469
  506
  545
  586
  628
  672
  718
  765
  815
  866
  919
Working capital, $m
  -80
  -103
  -128
  -158
  -192
  -229
  -271
  -317
  -367
  -421
  -478
  -540
  -605
  -673
  -745
  -821
  -900
  -982
  -1,068
  -1,157
  -1,250
  -1,346
  -1,447
  -1,551
  -1,659
  -1,772
  -1,889
  -2,011
  -2,138
  -2,270
Total debt, $m
  39
  85
  139
  201
  271
  350
  438
  534
  638
  751
  871
  999
  1,135
  1,278
  1,429
  1,587
  1,752
  1,924
  2,104
  2,290
  2,485
  2,687
  2,896
  3,115
  3,341
  3,577
  3,822
  4,077
  4,342
  4,618
Total liabilities, $m
  168
  214
  268
  331
  401
  480
  568
  664
  768
  880
  1,001
  1,129
  1,265
  1,408
  1,559
  1,717
  1,882
  2,054
  2,233
  2,420
  2,614
  2,816
  3,026
  3,244
  3,471
  3,707
  3,951
  4,206
  4,471
  4,747
Total equity, $m
  35
  45
  56
  69
  83
  100
  118
  138
  160
  183
  208
  235
  263
  293
  324
  357
  391
  427
  464
  503
  543
  585
  629
  674
  721
  770
  821
  874
  929
  986
Total liabilities and equity, $m
  203
  259
  324
  400
  484
  580
  686
  802
  928
  1,063
  1,209
  1,364
  1,528
  1,701
  1,883
  2,074
  2,273
  2,481
  2,697
  2,923
  3,157
  3,401
  3,655
  3,918
  4,192
  4,477
  4,772
  5,080
  5,400
  5,733
Debt-to-equity ratio
  1.100
  1.900
  2.490
  2.930
  3.260
  3.510
  3.710
  3.870
  4.000
  4.100
  4.190
  4.260
  4.320
  4.370
  4.410
  4.450
  4.480
  4.510
  4.530
  4.560
  4.580
  4.590
  4.610
  4.620
  4.630
  4.650
  4.660
  4.670
  4.670
  4.680
Adjusted equity ratio
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -50
  -49
  -49
  -48
  -46
  -45
  -43
  -41
  -39
  -36
  -32
  -29
  -26
  -22
  -19
  -15
  -11
  -7
  -3
  1
  4
  8
  11
  15
  19
  24
  28
  33
  38
  43
Depreciation, amort., depletion, $m
  9
  10
  13
  15
  18
  21
  24
  28
  32
  36
  39
  44
  49
  55
  60
  66
  73
  80
  87
  94
  101
  109
  117
  126
  134
  144
  153
  163
  173
  184
Funds from operations, $m
  -41
  -39
  -36
  -33
  -29
  -24
  -19
  -13
  -7
  0
  7
  15
  23
  32
  41
  51
  61
  72
  83
  95
  106
  117
  129
  141
  154
  167
  181
  196
  211
  227
Change in working capital, $m
  -19
  -22
  -26
  -30
  -34
  -38
  -42
  -46
  -50
  -54
  -58
  -61
  -65
  -69
  -72
  -75
  -79
  -82
  -86
  -89
  -93
  -97
  -100
  -104
  -108
  -113
  -117
  -122
  -127
  -132
Cash from operations, $m
  -23
  -17
  -10
  -3
  5
  14
  23
  33
  43
  54
  65
  76
  88
  101
  113
  127
  140
  154
  169
  184
  198
  213
  229
  245
  262
  280
  298
  317
  338
  359
Maintenance CAPEX, $m
  -5
  -7
  -8
  -10
  -13
  -16
  -19
  -22
  -26
  -30
  -34
  -39
  -44
  -49
  -55
  -60
  -66
  -73
  -80
  -87
  -94
  -101
  -109
  -117
  -126
  -134
  -144
  -153
  -163
  -173
New CAPEX, $m
  -7
  -9
  -10
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -47
  -49
  -51
  -53
Cash from investing activities, $m
  -12
  -16
  -18
  -22
  -27
  -31
  -36
  -41
  -46
  -52
  -57
  -64
  -70
  -77
  -84
  -91
  -98
  -106
  -115
  -123
  -132
  -140
  -150
  -159
  -170
  -180
  -191
  -202
  -214
  -226
Free cash flow, $m
  -35
  -32
  -29
  -25
  -21
  -17
  -13
  -8
  -3
  2
  7
  13
  18
  24
  30
  36
  42
  48
  55
  61
  67
  73
  79
  86
  93
  100
  107
  115
  123
  132
Issuance/(repayment) of debt, $m
  39
  46
  54
  62
  71
  79
  88
  96
  104
  112
  120
  128
  136
  143
  151
  158
  165
  172
  179
  187
  194
  202
  210
  218
  227
  236
  245
  255
  265
  276
Issuance/(repurchase) of shares, $m
  58
  59
  60
  61
  61
  61
  61
  61
  60
  60
  57
  55
  54
  52
  50
  48
  46
  43
  40
  38
  36
  34
  32
  30
  28
  25
  23
  20
  17
  15
Cash from financing (excl. dividends), $m  
  97
  105
  114
  123
  132
  140
  149
  157
  164
  172
  177
  183
  190
  195
  201
  206
  211
  215
  219
  225
  230
  236
  242
  248
  255
  261
  268
  275
  282
  291
Total cash flow (excl. dividends), $m
  61
  73
  85
  97
  110
  123
  136
  149
  162
  174
  184
  196
  208
  219
  231
  242
  253
  264
  275
  286
  297
  309
  321
  334
  347
  361
  375
  390
  406
  423
Retained Cash Flow (-), $m
  -58
  -59
  -60
  -61
  -61
  -61
  -61
  -61
  -60
  -60
  -57
  -55
  -54
  -52
  -50
  -48
  -46
  -43
  -40
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
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
  3
  14
  25
  37
  49
  62
  75
  88
  101
  115
  128
  141
  154
  167
  180
  194
  207
  220
  234
  247
  257
  267
  278
  289
  300
  312
  324
  337
  351
  365
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
  3
  13
  22
  30
  38
  45
  51
  55
  58
  60
  61
  60
  59
  56
  53
  49
  45
  41
  36
  31
  27
  22
  18
  15
  12
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  82.3
  70.4
  62.1
  56.0
  51.4
  47.9
  45.1
  42.9
  41.1
  39.6
  38.4
  37.4
  36.6
  35.9
  35.3
  34.8
  34.3
  33.9
  33.6
  33.4
  33.1
  32.9
  32.7
  32.6
  32.4
  32.3
  32.2
  32.2
  32.1
  32.0

Instructure, Inc. provides cloud-based learning management platform for academic institutions and companies across the world. The Company operates in the cloud-based learning management systems segment. The Company builds its learning management applications, Canvas for the education market and Bridge for the corporate market, to enable its customers to develop, deliver and manage face-to-face and online learning experiences. The Company develops software that students, teachers and employees use to help achieve their education and learning goals. Its applications develop academic and corporate learning by providing a platform for instructors and learners, enabling frequent and open interactions, streamlining workflow, and allowing the creation and sharing of content. The Company's platform runs on a cloud-based architecture that enables users to teach, learn and engage across a range of application environments, operating systems, devices and locations.

FINANCIAL RATIOS  of  Instructure (INST)

Valuation Ratios
P/E Ratio -19.7
Price to Sales 9.6
Price to Book 106.5
Price to Tangible Book
Price to Cash Flow -48.4
Price to Free Cash Flow -35.5
Growth Rates
Sales Growth Rate 52.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.3%
Cap. Spend. - 3 Yr. Gr. Rate 51.6%
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 -46.6%
Ret/ On Assets - 3 Yr. Avg. -59.6%
Return On Total Capital -192.9%
Ret/ On T. Cap. - 3 Yr. Avg. -268%
Return On Equity -192.9%
Return On Equity - 3 Yr. Avg. -268%
Asset Turnover 1
Profitability Ratios
Gross Margin 70.3%
Gross Margin - 3 Yr. Avg. 67.8%
EBITDA Margin -44.1%
EBITDA Margin - 3 Yr. Avg. -67.1%
Operating Margin -47.7%
Oper. Margin - 3 Yr. Avg. -69.2%
Pre-Tax Margin -47.7%
Pre-Tax Margin - 3 Yr. Avg. -71.2%
Net Profit Margin -48.6%
Net Profit Margin - 3 Yr. Avg. -71.5%
Effective Tax Rate -1.9%
Eff/ Tax Rate - 3 Yr. Avg. -0.6%
Payout Ratio 0%

INST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INST stock intrinsic value calculation we used $158.806 million for the last fiscal year's total revenue generated by Instructure. The default revenue input number comes from 0001 income statement of Instructure. 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 INST stock valuation model: a) initial revenue growth rate of 29.9% 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 INST is calculated based on our internal credit rating of Instructure, 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 Instructure.
    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 INST stock the variable cost ratio is equal to 94.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $61 million in the base year in the intrinsic value calculation for INST 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 Instructure.

Corporate tax rate of 27% is the nominal tax rate for Instructure. 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 INST 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 INST are equal to 15.8%.

Life of production assets of 4.6 years is the average useful life of capital assets used in Instructure 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 INST is equal to -39%. 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 - $26.944 million for Instructure - 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 34.829 million for Instructure 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 Instructure at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Instructure: 3Q Earnings Snapshot   [04:35PM  Associated Press]
▶ Instructure Announces CEO Transition   [04:05PM  PR Newswire]
▶ What Are The Drivers Of Instructure Incs (NYSE:INST) Risks?   [Sep-19-18 03:53PM  Simply Wall St.]
▶ Instructure Announces Solid Growth and Expanded Losses   [Aug-05-18 03:16PM  Motley Fool]
▶ Why Instructure, Inc. Stock Fell on Tuesday   [Jul-31-18 12:12PM  Motley Fool]
▶ Instructure: 2Q Earnings Snapshot   [05:10PM  Associated Press]
▶ Instructure, Inc. to Host Earnings Call   [03:00PM  ACCESSWIRE]
▶ Canvas Honors Teacher Of The Year Award Winners   [Jul-25-18 08:00AM  PR Newswire]
▶ Instructure Announces Webcast for Investor Day   [Jul-23-18 04:15PM  PR Newswire]
▶ Canvas by Instructure Showcases Success at Cox College   [Jun-19-18 08:00AM  PR Newswire]
▶ Josh Bersin to Deliver Keynote at InstructureCon 2018   [Jun-12-18 08:00AM  PR Newswire]
▶ Instructure: 1Q Earnings Snapshot   [Apr-30-18 05:20PM  Associated Press]
▶ Instructure, Inc. to Host Earnings Call   [01:15PM  ACCESSWIRE]
▶ Bridge by Instructure Wins EdTech Digest Cool Tool Award   [Apr-24-18 08:00AM  PR Newswire]
▶ Canvas by Instructure Now Available in Canada   [Apr-03-18 08:00AM  PR Newswire]
▶ Instructure reports 4Q loss   [Feb-12-18 04:35PM  Associated Press]
▶ Instructure, Inc. to Host Earnings Call   [12:30PM  ACCESSWIRE]
▶ Instructure reports 3Q loss   [Oct-30-17 05:23PM  Associated Press]

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