Intrinsic value of The Joint Corp. - JYNT

Previous Close

$17.12

  Intrinsic Value

$69.58

stock screener

  Rating & Target

str. buy

+306%

Previous close

$17.12

 
Intrinsic value

$69.58

 
Up/down potential

+306%

 
Rating

str. buy

We calculate the intrinsic value of JYNT 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 0.2

 

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, %
  32.00
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
Revenue, $m
  42
  55
  69
  86
  106
  128
  153
  180
  210
  243
  278
  315
  355
  397
  442
  489
  537
  588
  642
  697
  755
  815
  877
  942
  1,010
  1,080
  1,153
  1,228
  1,307
  1,389
Variable operating expenses, $m
  20
  25
  32
  40
  49
  59
  70
  82
  96
  111
  126
  143
  161
  180
  200
  221
  244
  267
  291
  316
  342
  369
  398
  427
  458
  490
  523
  557
  593
  630
Fixed operating expenses, $m
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  29
  30
  31
Total operating expenses, $m
  36
  42
  49
  57
  67
  77
  89
  101
  115
  131
  146
  164
  182
  202
  222
  244
  267
  291
  315
  341
  367
  395
  424
  454
  486
  518
  552
  586
  623
  661
Operating income, $m
  6
  13
  20
  29
  40
  51
  65
  79
  95
  112
  132
  152
  173
  196
  219
  244
  271
  298
  327
  356
  387
  420
  453
  488
  524
  562
  601
  642
  684
  729
EBITDA, $m
  8
  15
  23
  33
  44
  56
  70
  86
  103
  121
  141
  163
  185
  209
  235
  261
  289
  319
  349
  381
  414
  448
  484
  521
  560
  600
  642
  685
  730
  777
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
Earnings before tax, $m
  6
  12
  19
  28
  38
  49
  61
  75
  90
  106
  124
  143
  163
  185
  207
  230
  255
  281
  308
  336
  365
  395
  427
  459
  493
  529
  566
  604
  644
  685
Tax expense, $m
  2
  3
  5
  8
  10
  13
  17
  20
  24
  29
  34
  39
  44
  50
  56
  62
  69
  76
  83
  91
  99
  107
  115
  124
  133
  143
  153
  163
  174
  185
Net income, $m
  5
  9
  14
  20
  28
  36
  45
  55
  66
  78
  91
  105
  119
  135
  151
  168
  186
  205
  225
  245
  266
  288
  311
  335
  360
  386
  413
  441
  470
  500

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
  29
  38
  48
  60
  74
  89
  107
  126
  147
  169
  194
  220
  248
  277
  308
  341
  375
  410
  447
  486
  526
  568
  612
  657
  704
  753
  804
  857
  911
  969
Adjusted assets (=assets-cash), $m
  29
  38
  48
  60
  74
  89
  107
  126
  147
  169
  194
  220
  248
  277
  308
  341
  375
  410
  447
  486
  526
  568
  612
  657
  704
  753
  804
  857
  911
  969
Revenue / Adjusted assets
  1.448
  1.447
  1.438
  1.433
  1.432
  1.438
  1.430
  1.429
  1.429
  1.438
  1.433
  1.432
  1.431
  1.433
  1.435
  1.434
  1.432
  1.434
  1.436
  1.434
  1.435
  1.435
  1.433
  1.434
  1.435
  1.434
  1.434
  1.433
  1.435
  1.433
Average production assets, $m
  8
  10
  13
  16
  20
  24
  29
  34
  40
  46
  53
  60
  67
  75
  84
  92
  102
  111
  121
  132
  143
  154
  166
  178
  191
  204
  218
  232
  247
  263
Working capital, $m
  -6
  -8
  -10
  -13
  -16
  -19
  -23
  -27
  -31
  -36
  -41
  -47
  -53
  -59
  -66
  -73
  -80
  -88
  -96
  -104
  -112
  -121
  -131
  -140
  -150
  -161
  -172
  -183
  -195
  -207
Total debt, $m
  8
  15
  24
  35
  48
  61
  77
  94
  113
  133
  155
  179
  204
  230
  258
  287
  318
  350
  383
  418
  454
  492
  531
  572
  614
  658
  704
  751
  800
  852
Total liabilities, $m
  26
  34
  43
  54
  66
  80
  96
  113
  132
  152
  174
  198
  223
  249
  277
  306
  337
  369
  402
  437
  473
  511
  550
  591
  633
  677
  723
  770
  819
  871
Total equity, $m
  3
  4
  5
  6
  7
  9
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  38
  41
  45
  49
  53
  57
  62
  66
  71
  76
  81
  87
  92
  98
Total liabilities and equity, $m
  29
  38
  48
  60
  73
  89
  107
  126
  147
  169
  194
  220
  248
  277
  308
  340
  375
  410
  447
  486
  526
  568
  612
  657
  704
  753
  804
  857
  911
  969
Debt-to-equity ratio
  2.530
  3.970
  5.010
  5.780
  6.360
  6.800
  7.140
  7.410
  7.620
  7.790
  7.930
  8.050
  8.140
  8.220
  8.290
  8.350
  8.400
  8.440
  8.480
  8.510
  8.540
  8.570
  8.590
  8.620
  8.630
  8.650
  8.670
  8.680
  8.690
  8.710
Adjusted equity ratio
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  9
  14
  20
  28
  36
  45
  55
  66
  78
  91
  105
  119
  135
  151
  168
  186
  205
  225
  245
  266
  288
  311
  335
  360
  386
  413
  441
  470
  500
Depreciation, amort., depletion, $m
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  17
  19
  21
  22
  24
  26
  29
  31
  33
  35
  38
  40
  43
  46
  49
Funds from operations, $m
  6
  11
  17
  24
  32
  41
  51
  62
  74
  87
  101
  116
  132
  149
  167
  185
  205
  226
  247
  269
  293
  317
  342
  368
  396
  424
  453
  484
  516
  549
Change in working capital, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
Cash from operations, $m
  8
  13
  19
  26
  35
  44
  54
  66
  78
  91
  106
  121
  138
  155
  173
  192
  212
  233
  255
  278
  301
  326
  351
  378
  406
  434
  464
  495
  527
  561
Maintenance CAPEX, $m
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -9
  -10
  -11
  -12
  -14
  -15
  -17
  -19
  -21
  -22
  -24
  -26
  -29
  -31
  -33
  -35
  -38
  -40
  -43
  -46
New CAPEX, $m
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
Cash from investing activities, $m
  -3
  -3
  -5
  -5
  -7
  -8
  -9
  -10
  -12
  -13
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -29
  -31
  -32
  -35
  -37
  -41
  -43
  -46
  -48
  -52
  -54
  -58
  -61
Free cash flow, $m
  5
  9
  15
  21
  28
  36
  45
  55
  66
  78
  91
  104
  119
  135
  151
  168
  186
  205
  224
  245
  266
  288
  311
  335
  360
  386
  413
  441
  470
  500
Issuance/(repayment) of debt, $m
  6
  8
  9
  11
  12
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  51
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  
  6
  8
  9
  11
  12
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  51
Total cash flow (excl. dividends), $m
  11
  17
  24
  32
  40
  50
  61
  72
  85
  98
  113
  128
  144
  161
  179
  197
  217
  237
  258
  280
  302
  326
  350
  376
  402
  430
  458
  488
  519
  551
Retained Cash Flow (-), $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
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
  11
  16
  23
  30
  39
  48
  59
  70
  83
  96
  110
  125
  141
  158
  176
  194
  213
  233
  254
  276
  298
  322
  346
  371
  397
  425
  453
  483
  513
  545
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
  10
  15
  20
  25
  30
  35
  40
  44
  48
  50
  52
  53
  54
  53
  52
  49
  46
  43
  39
  35
  31
  27
  23
  19
  15
  12
  10
  7
  6
  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

The Joint Corp. develops, owns, operates, supports and manages chiropractic clinics through direct ownership, management arrangements, franchising and the sale of regional developer rights throughout the United States. The Company is franchisor and operator of chiropractic clinics. The Company offers its patients the opportunity to visit its clinics without an appointment and receive prompt attention. The Company has approximately 310 franchised, company-owned, or managed clinics in operation in over 30 states. In addition to its approximately 310 operating clinics, the Company has granted franchises either directly or through its regional developers for an additional over 170 clinics. The Company offers a range of membership and wellness packages. Each patient's records are digitally updated for ready retrieval in its data storage system by its chiropractors in compliance with various applicable medical records security and privacy regulations.

FINANCIAL RATIOS  of  The Joint Corp. (JYNT)

Valuation Ratios
P/E Ratio -14.9
Price to Sales 10.6
Price to Book 31.8
Price to Tangible Book
Price to Cash Flow -20.3
Price to Free Cash Flow -17.1
Growth Rates
Sales Growth Rate 50%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -60%
Ret/ On Assets - 3 Yr. Avg. -35.1%
Return On Total Capital -103.4%
Ret/ On T. Cap. - 3 Yr. Avg. -63.6%
Return On Equity -107.1%
Return On Equity - 3 Yr. Avg. -65.3%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 85.7%
Gross Margin - 3 Yr. Avg. 78.6%
EBITDA Margin -57.1%
EBITDA Margin - 3 Yr. Avg. -47.6%
Operating Margin -71.4%
Oper. Margin - 3 Yr. Avg. -54.8%
Pre-Tax Margin -71.4%
Pre-Tax Margin - 3 Yr. Avg. -54.8%
Net Profit Margin -71.4%
Net Profit Margin - 3 Yr. Avg. -59.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -16.7%
Payout Ratio 0%

JYNT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JYNT stock intrinsic value calculation we used $32 million for the last fiscal year's total revenue generated by The Joint Corp.. The default revenue input number comes from 0001 income statement of The Joint Corp.. 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 JYNT stock valuation model: a) initial revenue growth rate of 32% 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 JYNT is calculated based on our internal credit rating of The Joint Corp., 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 The Joint Corp..
    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 JYNT stock the variable cost ratio is equal to 46.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16 million in the base year in the intrinsic value calculation for JYNT 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 The Joint Corp..

Corporate tax rate of 27% is the nominal tax rate for The Joint Corp.. 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 JYNT 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 JYNT are equal to 18.9%.

Life of production assets of 5.4 years is the average useful life of capital assets used in The Joint Corp. 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 JYNT is equal to -14.9%. 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 - $2.361244 million for The Joint Corp. - 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 13.742 million for The Joint Corp. 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 The Joint Corp. at the current share price and the inputted number of shares is $0.2 billion.

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