Intrinsic value of Juniper Networks, Inc. - JNPR

Previous Close

$28.01

  Intrinsic Value

$33.96

stock screener

  Rating & Target

buy

+21%

Previous close

$28.01

 
Intrinsic value

$33.96

 
Up/down potential

+21%

 
Rating

buy

We calculate the intrinsic value of JNPR 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 9.7

 

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
  4,741
  4,850
  4,975
  5,115
  5,270
  5,440
  5,625
  5,826
  6,042
  6,273
  6,522
  6,786
  7,068
  7,368
  7,685
  8,022
  8,379
  8,756
  9,154
  9,575
  10,018
  10,486
  10,980
  11,500
  12,047
  12,623
  13,230
  13,869
  14,540
  15,247
Variable operating expenses, $m
  1,293
  1,315
  1,340
  1,369
  1,401
  1,436
  1,473
  1,514
  1,559
  1,606
  1,334
  1,388
  1,446
  1,507
  1,572
  1,641
  1,714
  1,791
  1,873
  1,959
  2,049
  2,145
  2,246
  2,353
  2,464
  2,582
  2,707
  2,837
  2,975
  3,119
Fixed operating expenses, $m
  2,928
  2,992
  3,058
  3,126
  3,194
  3,265
  3,336
  3,410
  3,485
  3,562
  3,640
  3,720
  3,802
  3,885
  3,971
  4,058
  4,148
  4,239
  4,332
  4,427
  4,525
  4,624
  4,726
  4,830
  4,936
  5,045
  5,156
  5,269
  5,385
  5,504
Total operating expenses, $m
  4,221
  4,307
  4,398
  4,495
  4,595
  4,701
  4,809
  4,924
  5,044
  5,168
  4,974
  5,108
  5,248
  5,392
  5,543
  5,699
  5,862
  6,030
  6,205
  6,386
  6,574
  6,769
  6,972
  7,183
  7,400
  7,627
  7,863
  8,106
  8,360
  8,623
Operating income, $m
  520
  543
  576
  620
  675
  740
  815
  901
  998
  1,106
  1,548
  1,678
  1,820
  1,975
  2,142
  2,323
  2,517
  2,726
  2,949
  3,189
  3,444
  3,717
  4,008
  4,317
  4,646
  4,996
  5,368
  5,762
  6,181
  6,624
EBITDA, $m
  976
  1,001
  1,038
  1,086
  1,145
  1,214
  1,295
  1,387
  1,490
  1,604
  1,730
  1,868
  2,018
  2,181
  2,357
  2,547
  2,751
  2,970
  3,205
  3,456
  3,724
  4,010
  4,315
  4,639
  4,983
  5,349
  5,738
  6,150
  6,587
  7,050
Interest expense (income), $m
  93
  116
  120
  125
  131
  138
  146
  154
  163
  173
  183
  194
  207
  219
  233
  248
  263
  280
  297
  315
  335
  355
  377
  400
  424
  449
  475
  503
  533
  564
  597
Earnings before tax, $m
  405
  423
  451
  489
  536
  594
  661
  738
  825
  923
  1,353
  1,471
  1,601
  1,742
  1,895
  2,060
  2,237
  2,429
  2,634
  2,854
  3,089
  3,340
  3,608
  3,894
  4,198
  4,521
  4,864
  5,229
  5,616
  6,027
Tax expense, $m
  109
  114
  122
  132
  145
  160
  179
  199
  223
  249
  365
  397
  432
  470
  512
  556
  604
  656
  711
  771
  834
  902
  974
  1,051
  1,133
  1,221
  1,313
  1,412
  1,516
  1,627
Net income, $m
  296
  309
  329
  357
  392
  434
  483
  539
  603
  674
  988
  1,074
  1,169
  1,271
  1,383
  1,503
  1,633
  1,773
  1,923
  2,083
  2,255
  2,438
  2,634
  2,842
  3,064
  3,300
  3,551
  3,817
  4,100
  4,400

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
  7,443
  7,614
  7,809
  8,029
  8,273
  8,540
  8,831
  9,145
  9,484
  9,848
  10,238
  10,653
  11,096
  11,566
  12,065
  12,594
  13,153
  13,745
  14,371
  15,031
  15,728
  16,462
  17,237
  18,053
  18,912
  19,817
  20,770
  21,772
  22,826
  23,935
Adjusted assets (=assets-cash), $m
  7,443
  7,614
  7,809
  8,029
  8,273
  8,540
  8,831
  9,145
  9,484
  9,848
  10,238
  10,653
  11,096
  11,566
  12,065
  12,594
  13,153
  13,745
  14,371
  15,031
  15,728
  16,462
  17,237
  18,053
  18,912
  19,817
  20,770
  21,772
  22,826
  23,935
Revenue / Adjusted assets
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
Average production assets, $m
  2,650
  2,711
  2,781
  2,859
  2,946
  3,041
  3,144
  3,256
  3,377
  3,507
  3,646
  3,793
  3,951
  4,118
  4,296
  4,484
  4,684
  4,894
  5,117
  5,352
  5,600
  5,862
  6,138
  6,428
  6,734
  7,057
  7,396
  7,753
  8,128
  8,523
Working capital, $m
  -479
  -490
  -502
  -517
  -532
  -549
  -568
  -588
  -610
  -634
  -659
  -685
  -714
  -744
  -776
  -810
  -846
  -884
  -925
  -967
  -1,012
  -1,059
  -1,109
  -1,161
  -1,217
  -1,275
  -1,336
  -1,401
  -1,469
  -1,540
Total debt, $m
  2,221
  2,319
  2,431
  2,558
  2,697
  2,851
  3,018
  3,198
  3,393
  3,602
  3,825
  4,064
  4,318
  4,588
  4,874
  5,178
  5,499
  5,839
  6,197
  6,576
  6,976
  7,398
  7,843
  8,311
  8,804
  9,324
  9,871
  10,446
  11,051
  11,688
Total liabilities, $m
  4,272
  4,370
  4,483
  4,609
  4,748
  4,902
  5,069
  5,249
  5,444
  5,653
  5,877
  6,115
  6,369
  6,639
  6,925
  7,229
  7,550
  7,890
  8,249
  8,628
  9,028
  9,449
  9,894
  10,362
  10,856
  11,375
  11,922
  12,497
  13,102
  13,739
Total equity, $m
  3,171
  3,243
  3,327
  3,420
  3,524
  3,638
  3,762
  3,896
  4,040
  4,195
  4,361
  4,538
  4,727
  4,927
  5,140
  5,365
  5,603
  5,855
  6,122
  6,403
  6,700
  7,013
  7,343
  7,690
  8,057
  8,442
  8,848
  9,275
  9,724
  10,196
Total liabilities and equity, $m
  7,443
  7,613
  7,810
  8,029
  8,272
  8,540
  8,831
  9,145
  9,484
  9,848
  10,238
  10,653
  11,096
  11,566
  12,065
  12,594
  13,153
  13,745
  14,371
  15,031
  15,728
  16,462
  17,237
  18,052
  18,913
  19,817
  20,770
  21,772
  22,826
  23,935
Debt-to-equity ratio
  0.700
  0.720
  0.730
  0.750
  0.770
  0.780
  0.800
  0.820
  0.840
  0.860
  0.880
  0.900
  0.910
  0.930
  0.950
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.050
  1.070
  1.080
  1.090
  1.100
  1.120
  1.130
  1.140
  1.150
Adjusted equity ratio
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  296
  309
  329
  357
  392
  434
  483
  539
  603
  674
  988
  1,074
  1,169
  1,271
  1,383
  1,503
  1,633
  1,773
  1,923
  2,083
  2,255
  2,438
  2,634
  2,842
  3,064
  3,300
  3,551
  3,817
  4,100
  4,400
Depreciation, amort., depletion, $m
  455
  458
  462
  466
  470
  475
  480
  486
  492
  498
  182
  190
  198
  206
  215
  224
  234
  245
  256
  268
  280
  293
  307
  321
  337
  353
  370
  388
  406
  426
Funds from operations, $m
  751
  767
  791
  822
  862
  908
  963
  1,025
  1,094
  1,172
  1,170
  1,264
  1,366
  1,477
  1,598
  1,728
  1,868
  2,018
  2,179
  2,351
  2,535
  2,731
  2,941
  3,164
  3,401
  3,653
  3,921
  4,205
  4,506
  4,826
Change in working capital, $m
  -9
  -11
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
Cash from operations, $m
  760
  778
  803
  837
  877
  926
  981
  1,045
  1,116
  1,195
  1,195
  1,291
  1,395
  1,508
  1,630
  1,762
  1,904
  2,056
  2,219
  2,393
  2,580
  2,779
  2,991
  3,216
  3,456
  3,711
  3,982
  4,269
  4,574
  4,897
Maintenance CAPEX, $m
  -130
  -133
  -136
  -139
  -143
  -147
  -152
  -157
  -163
  -169
  -175
  -182
  -190
  -198
  -206
  -215
  -224
  -234
  -245
  -256
  -268
  -280
  -293
  -307
  -321
  -337
  -353
  -370
  -388
  -406
New CAPEX, $m
  -51
  -61
  -70
  -78
  -87
  -95
  -104
  -112
  -121
  -130
  -139
  -148
  -158
  -167
  -178
  -188
  -199
  -211
  -223
  -235
  -248
  -262
  -276
  -291
  -306
  -322
  -339
  -357
  -375
  -395
Cash from investing activities, $m
  -181
  -194
  -206
  -217
  -230
  -242
  -256
  -269
  -284
  -299
  -314
  -330
  -348
  -365
  -384
  -403
  -423
  -445
  -468
  -491
  -516
  -542
  -569
  -598
  -627
  -659
  -692
  -727
  -763
  -801
Free cash flow, $m
  579
  584
  598
  619
  648
  683
  726
  775
  832
  897
  881
  960
  1,047
  1,143
  1,246
  1,359
  1,480
  1,611
  1,752
  1,902
  2,064
  2,237
  2,422
  2,619
  2,829
  3,052
  3,290
  3,543
  3,811
  4,096
Issuance/(repayment) of debt, $m
  82
  98
  112
  126
  140
  153
  167
  181
  195
  209
  224
  239
  254
  270
  286
  303
  321
  340
  359
  379
  400
  422
  445
  468
  493
  519
  547
  575
  605
  637
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  
  82
  98
  112
  126
  140
  153
  167
  181
  195
  209
  224
  239
  254
  270
  286
  303
  321
  340
  359
  379
  400
  422
  445
  468
  493
  519
  547
  575
  605
  637
Total cash flow (excl. dividends), $m
  661
  683
  710
  745
  787
  836
  893
  956
  1,027
  1,105
  1,105
  1,199
  1,301
  1,413
  1,533
  1,662
  1,801
  1,951
  2,111
  2,281
  2,464
  2,659
  2,866
  3,087
  3,322
  3,572
  3,837
  4,118
  4,416
  4,733
Retained Cash Flow (-), $m
  -64
  -73
  -83
  -94
  -104
  -114
  -124
  -134
  -144
  -155
  -166
  -177
  -188
  -200
  -213
  -225
  -238
  -252
  -266
  -281
  -297
  -313
  -330
  -348
  -366
  -385
  -406
  -427
  -449
  -472
Prev. year cash balance distribution, $m
  1,717
  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
  2,314
  610
  627
  652
  684
  723
  769
  822
  883
  950
  939
  1,022
  1,113
  1,212
  1,320
  1,437
  1,563
  1,698
  1,844
  2,000
  2,167
  2,346
  2,536
  2,740
  2,956
  3,186
  3,431
  3,691
  3,967
  4,260
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
  2,218
  558
  546
  537
  530
  524
  519
  514
  507
  498
  446
  436
  423
  407
  388
  365
  340
  313
  284
  254
  224
  195
  166
  140
  115
  93
  74
  57
  43
  32
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

Juniper Networks, Inc. designs, develops and sells products and services for high-performance networks to enable customers to build networks for their businesses. The Company sells its products in over 100 countries in three geographic regions: Americas; Europe, the Middle East and Africa, and Asia Pacific. The Company sells its high-performance network products and service offerings across routing, switching and security. Its products address network requirements for global service providers, cloud providers, national governments, research and public sector organizations, and other enterprises. The Company offers its customers various services, including technical support, professional services, education and training programs. The Company's Junos Platform enables its customers to expand network software into the application space, and deploy software clients to control delivery. The Junos Platform includes a range of products, such as Junos Operating System (OS) and Junos Space.

FINANCIAL RATIOS  of  Juniper Networks, Inc. (JNPR)

Valuation Ratios
P/E Ratio 18
Price to Sales 2.1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 9.7
Price to Free Cash Flow 12
Growth Rates
Sales Growth Rate 2.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.4%
Cap. Spend. - 3 Yr. Gr. Rate -2.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 43%
Total Debt to Equity 43%
Interest Coverage 10
Management Effectiveness
Return On Assets 7.2%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 8.7%
Ret/ On T. Cap. - 3 Yr. Avg. 4.7%
Return On Equity 12.4%
Return On Equity - 3 Yr. Avg. 6.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 62.2%
Gross Margin - 3 Yr. Avg. 62.5%
EBITDA Margin 22.6%
EBITDA Margin - 3 Yr. Avg. 16.2%
Operating Margin 17.8%
Oper. Margin - 3 Yr. Avg. 10.7%
Pre-Tax Margin 16.6%
Pre-Tax Margin - 3 Yr. Avg. 10.8%
Net Profit Margin 11.9%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 28.3%
Eff/ Tax Rate - 3 Yr. Avg. -78.2%
Payout Ratio 25.8%

JNPR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JNPR stock intrinsic value calculation we used $4648 million for the last fiscal year's total revenue generated by Juniper Networks, Inc.. The default revenue input number comes from 0001 income statement of Juniper Networks, 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 JNPR 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 4.3%, whose default value for JNPR is calculated based on our internal credit rating of Juniper Networks, 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 Juniper Networks, 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 JNPR stock the variable cost ratio is equal to 27.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2865 million in the base year in the intrinsic value calculation for JNPR 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 Juniper Networks, Inc..

Corporate tax rate of 27% is the nominal tax rate for Juniper Networks, 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 JNPR 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 JNPR are equal to 55.9%.

Life of production assets of 20 years is the average useful life of capital assets used in Juniper Networks, 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 JNPR is equal to -10.1%. 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 - $4823.2 million for Juniper Networks, 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 347.988 million for Juniper Networks, 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 Juniper Networks, Inc. at the current share price and the inputted number of shares is $9.7 billion.

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