Intrinsic value of Instructure, Inc. - INST

Previous Close

$39.29

  Intrinsic Value

$5.21

stock screener

  Rating & Target

str. sell

-87%

Previous close

$39.29

 
Intrinsic value

$5.21

 
Up/down potential

-87%

 
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 1.4

 

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, %
  25.70
  23.63
  21.77
  20.09
  18.58
  17.22
  16.00
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
Revenue, $m
  264
  326
  397
  477
  566
  663
  769
  884
  1,007
  1,138
  1,277
  1,424
  1,579
  1,741
  1,910
  2,087
  2,271
  2,463
  2,663
  2,871
  3,087
  3,311
  3,544
  3,786
  4,038
  4,300
  4,572
  4,856
  5,151
  5,459
Variable operating expenses, $m
  266
  329
  400
  480
  568
  666
  772
  887
  1,010
  1,141
  1,279
  1,426
  1,580
  1,742
  1,912
  2,089
  2,274
  2,466
  2,666
  2,873
  3,089
  3,314
  3,547
  3,790
  4,042
  4,304
  4,577
  4,860
  5,156
  5,464
Fixed operating expenses, $m
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
Total operating expenses, $m
  310
  374
  446
  527
  616
  715
  822
  938
  1,062
  1,194
  1,334
  1,482
  1,637
  1,800
  1,972
  2,150
  2,336
  2,530
  2,731
  2,939
  3,157
  3,383
  3,618
  3,862
  4,116
  4,380
  4,654
  4,939
  5,237
  5,547
Operating income, $m
  -46
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -55
  -56
  -56
  -57
  -59
  -60
  -61
  -63
  -64
  -66
  -68
  -69
  -71
  -73
  -74
  -76
  -78
  -80
  -82
  -84
  -86
  -88
EBITDA, $m
  -35
  -34
  -33
  -31
  -29
  -27
  -25
  -22
  -19
  -16
  -12
  -9
  -5
  -1
  4
  8
  13
  18
  23
  28
  34
  40
  46
  53
  59
  66
  74
  81
  89
  98
Interest expense (income), $m
  0
  0
  2
  4
  7
  10
  13
  17
  21
  25
  30
  35
  40
  45
  51
  57
  64
  70
  77
  84
  92
  100
  108
  116
  125
  134
  143
  153
  163
  174
  185
Earnings before tax, $m
  -46
  -49
  -53
  -56
  -60
  -65
  -70
  -75
  -80
  -86
  -91
  -97
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -161
  -170
  -180
  -190
  -201
  -212
  -223
  -235
  -247
  -260
  -273
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
  -46
  -49
  -53
  -56
  -60
  -65
  -70
  -75
  -80
  -86
  -91
  -97
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -161
  -170
  -180
  -190
  -201
  -212
  -223
  -235
  -247
  -260
  -273

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
  318
  393
  479
  575
  682
  799
  927
  1,065
  1,213
  1,371
  1,539
  1,716
  1,902
  2,097
  2,301
  2,514
  2,737
  2,968
  3,209
  3,459
  3,719
  3,989
  4,270
  4,561
  4,865
  5,180
  5,509
  5,850
  6,206
  6,577
Adjusted assets (=assets-cash), $m
  318
  393
  479
  575
  682
  799
  927
  1,065
  1,213
  1,371
  1,539
  1,716
  1,902
  2,097
  2,301
  2,514
  2,737
  2,968
  3,209
  3,459
  3,719
  3,989
  4,270
  4,561
  4,865
  5,180
  5,509
  5,850
  6,206
  6,577
Revenue / Adjusted assets
  0.830
  0.830
  0.829
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
Average production assets, $m
  45
  55
  68
  81
  96
  113
  131
  150
  171
  194
  217
  242
  268
  296
  325
  355
  386
  419
  453
  488
  525
  563
  602
  644
  686
  731
  777
  825
  876
  928
Working capital, $m
  -91
  -112
  -137
  -164
  -195
  -228
  -265
  -304
  -346
  -392
  -439
  -490
  -543
  -599
  -657
  -718
  -781
  -847
  -916
  -988
  -1,062
  -1,139
  -1,219
  -1,302
  -1,389
  -1,479
  -1,573
  -1,670
  -1,772
  -1,878
Total debt, $m
  37
  81
  130
  185
  246
  314
  388
  467
  552
  643
  739
  841
  948
  1,060
  1,178
  1,300
  1,428
  1,561
  1,699
  1,843
  1,993
  2,148
  2,309
  2,477
  2,652
  2,833
  3,022
  3,218
  3,423
  3,636
Total liabilities, $m
  183
  226
  275
  331
  392
  460
  533
  613
  698
  789
  885
  987
  1,094
  1,206
  1,323
  1,446
  1,574
  1,707
  1,845
  1,989
  2,138
  2,294
  2,455
  2,623
  2,797
  2,979
  3,167
  3,364
  3,569
  3,782
Total equity, $m
  135
  167
  203
  244
  290
  340
  394
  453
  516
  583
  654
  729
  808
  891
  978
  1,069
  1,163
  1,261
  1,364
  1,470
  1,580
  1,695
  1,815
  1,939
  2,068
  2,202
  2,341
  2,486
  2,638
  2,795
Total liabilities and equity, $m
  318
  393
  478
  575
  682
  800
  927
  1,066
  1,214
  1,372
  1,539
  1,716
  1,902
  2,097
  2,301
  2,515
  2,737
  2,968
  3,209
  3,459
  3,718
  3,989
  4,270
  4,562
  4,865
  5,181
  5,508
  5,850
  6,207
  6,577
Debt-to-equity ratio
  0.280
  0.480
  0.640
  0.760
  0.850
  0.920
  0.980
  1.030
  1.070
  1.100
  1.130
  1.150
  1.170
  1.190
  1.200
  1.220
  1.230
  1.240
  1.250
  1.250
  1.260
  1.270
  1.270
  1.280
  1.280
  1.290
  1.290
  1.290
  1.300
  1.300
Adjusted equity ratio
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -46
  -49
  -53
  -56
  -60
  -65
  -70
  -75
  -80
  -86
  -91
  -97
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -161
  -170
  -180
  -190
  -201
  -212
  -223
  -235
  -247
  -260
  -273
Depreciation, amort., depletion, $m
  11
  13
  15
  18
  21
  24
  28
  32
  36
  41
  43
  48
  54
  59
  65
  71
  77
  84
  91
  98
  105
  113
  120
  129
  137
  146
  155
  165
  175
  186
Funds from operations, $m
  -35
  -36
  -37
  -38
  -39
  -40
  -42
  -43
  -44
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -57
  -59
  -61
  -63
  -65
  -68
  -70
  -72
  -74
  -77
  -79
  -82
  -84
  -87
Change in working capital, $m
  -19
  -21
  -24
  -27
  -31
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -106
Cash from operations, $m
  -17
  -15
  -13
  -11
  -9
  -7
  -5
  -3
  -2
  -1
  1
  2
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  16
  17
  19
Maintenance CAPEX, $m
  -7
  -9
  -11
  -14
  -16
  -19
  -23
  -26
  -30
  -34
  -39
  -43
  -48
  -54
  -59
  -65
  -71
  -77
  -84
  -91
  -98
  -105
  -113
  -120
  -129
  -137
  -146
  -155
  -165
  -175
New CAPEX, $m
  -9
  -11
  -12
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
Cash from investing activities, $m
  -16
  -20
  -23
  -28
  -31
  -36
  -41
  -45
  -51
  -56
  -63
  -68
  -74
  -82
  -88
  -95
  -102
  -110
  -118
  -126
  -135
  -143
  -153
  -161
  -172
  -182
  -192
  -203
  -215
  -227
Free cash flow, $m
  -33
  -34
  -36
  -38
  -40
  -43
  -46
  -49
  -53
  -57
  -62
  -67
  -72
  -77
  -83
  -90
  -96
  -103
  -110
  -118
  -126
  -134
  -142
  -150
  -159
  -169
  -178
  -188
  -198
  -209
Issuance/(repayment) of debt, $m
  37
  43
  49
  55
  61
  68
  74
  79
  85
  91
  96
  102
  107
  112
  117
  123
  128
  133
  138
  144
  149
  155
  161
  168
  174
  181
  189
  197
  205
  213
Issuance/(repurchase) of shares, $m
  74
  81
  89
  97
  106
  115
  124
  134
  143
  153
  162
  172
  183
  194
  205
  217
  229
  241
  254
  267
  281
  295
  310
  325
  341
  357
  374
  392
  411
  430
Cash from financing (excl. dividends), $m  
  111
  124
  138
  152
  167
  183
  198
  213
  228
  244
  258
  274
  290
  306
  322
  340
  357
  374
  392
  411
  430
  450
  471
  493
  515
  538
  563
  589
  616
  643
Total cash flow (excl. dividends), $m
  78
  90
  102
  115
  127
  140
  152
  164
  176
  187
  196
  207
  218
  229
  239
  250
  261
  271
  282
  293
  305
  317
  329
  342
  356
  370
  385
  401
  417
  435
Retained Cash Flow (-), $m
  -74
  -81
  -89
  -97
  -106
  -115
  -124
  -134
  -143
  -153
  -162
  -172
  -183
  -194
  -205
  -217
  -229
  -241
  -254
  -267
  -281
  -295
  -310
  -325
  -341
  -357
  -374
  -392
  -411
  -430
Prev. year cash balance distribution, $m
  21
  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
  25
  9
  13
  18
  21
  25
  28
  30
  32
  34
  35
  35
  35
  35
  34
  33
  31
  30
  28
  26
  24
  22
  20
  17
  15
  13
  11
  9
  7
  5
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
  24
  8
  12
  14
  17
  18
  19
  19
  19
  18
  16
  15
  13
  12
  10
  8
  7
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  93.6
  88.3
  83.8
  80.0
  76.7
  73.8
  71.2
  68.8
  66.7
  64.8
  63.0
  61.4
  59.9
  58.5
  57.2
  56.0
  54.8
  53.7
  52.6
  51.6
  50.6
  49.7
  48.8
  48.0
  47.1
  46.3
  45.5
  44.8
  44.1
  43.4

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, Inc. (INST)

Valuation Ratios
P/E Ratio -20.8
Price to Sales 10.1
Price to Book 112.2
Price to Tangible Book
Price to Cash Flow -51
Price to Free Cash Flow -37.4
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 $210 million for the last fiscal year's total revenue generated by Instructure, Inc.. The default revenue input number comes from 0001 income statement of Instructure, 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 INST stock valuation model: a) initial revenue growth rate of 25.7% 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 INST is calculated based on our internal credit rating of Instructure, 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 Instructure, 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 INST stock the variable cost ratio is equal to 101%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $43 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Instructure, 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 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 17%.

Life of production assets of 4 years is the average useful life of capital assets used in Instructure, 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 INST is equal to -34.4%. 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 - $128.438 million for Instructure, 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 35.868 million for Instructure, 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 Instructure, Inc. at the current share price and the inputted number of shares is $1.4 billion.

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