Intrinsic value of LogMein, Inc. - LOGM

Previous Close

$82.04

  Intrinsic Value

$110.90

stock screener

  Rating & Target

buy

+35%

Previous close

$82.04

 
Intrinsic value

$110.90

 
Up/down potential

+35%

 
Rating

buy

We calculate the intrinsic value of LOGM 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 4.2

 

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, %
  12.40
  11.66
  10.99
  10.39
  9.86
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
Revenue, $m
  1,353
  1,511
  1,677
  1,852
  2,034
  2,225
  2,423
  2,630
  2,846
  3,069
  3,302
  3,544
  3,795
  4,056
  4,328
  4,610
  4,904
  5,210
  5,528
  5,860
  6,205
  6,566
  6,942
  7,334
  7,744
  8,173
  8,621
  9,089
  9,578
  10,091
Variable operating expenses, $m
  692
  732
  775
  819
  866
  915
  965
  1,018
  1,073
  1,131
  844
  906
  970
  1,037
  1,106
  1,178
  1,254
  1,332
  1,413
  1,498
  1,586
  1,678
  1,775
  1,875
  1,980
  2,089
  2,204
  2,323
  2,448
  2,579
Fixed operating expenses, $m
  484
  495
  506
  517
  528
  540
  552
  564
  577
  589
  602
  615
  629
  643
  657
  671
  686
  701
  717
  732
  749
  765
  782
  799
  817
  835
  853
  872
  891
  911
Total operating expenses, $m
  1,176
  1,227
  1,281
  1,336
  1,394
  1,455
  1,517
  1,582
  1,650
  1,720
  1,446
  1,521
  1,599
  1,680
  1,763
  1,849
  1,940
  2,033
  2,130
  2,230
  2,335
  2,443
  2,557
  2,674
  2,797
  2,924
  3,057
  3,195
  3,339
  3,490
Operating income, $m
  177
  284
  397
  515
  640
  770
  906
  1,048
  1,196
  1,350
  1,856
  2,023
  2,196
  2,377
  2,565
  2,760
  2,964
  3,177
  3,398
  3,629
  3,870
  4,122
  4,385
  4,660
  4,948
  5,249
  5,564
  5,894
  6,239
  6,601
EBITDA, $m
  697
  824
  959
  1,100
  1,248
  1,403
  1,564
  1,733
  1,908
  2,091
  2,281
  2,479
  2,685
  2,899
  3,122
  3,354
  3,596
  3,848
  4,111
  4,384
  4,670
  4,968
  5,280
  5,606
  5,946
  6,302
  6,675
  7,065
  7,473
  7,901
Interest expense (income), $m
  1
  13
  20
  28
  36
  45
  54
  64
  74
  84
  95
  106
  118
  130
  143
  156
  169
  184
  198
  214
  230
  246
  264
  282
  301
  320
  341
  363
  385
  409
  433
Earnings before tax, $m
  164
  264
  369
  479
  595
  716
  842
  974
  1,111
  1,255
  1,750
  1,905
  2,066
  2,234
  2,409
  2,591
  2,780
  2,978
  3,184
  3,399
  3,624
  3,859
  4,104
  4,360
  4,628
  4,908
  5,201
  5,509
  5,830
  6,167
Tax expense, $m
  44
  71
  100
  129
  161
  193
  227
  263
  300
  339
  472
  514
  558
  603
  650
  700
  751
  804
  860
  918
  978
  1,042
  1,108
  1,177
  1,249
  1,325
  1,404
  1,487
  1,574
  1,665
Net income, $m
  120
  193
  269
  350
  434
  522
  615
  711
  811
  916
  1,277
  1,390
  1,508
  1,631
  1,758
  1,891
  2,030
  2,174
  2,325
  2,482
  2,646
  2,817
  2,996
  3,183
  3,378
  3,583
  3,797
  4,021
  4,256
  4,502

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
  4,423
  4,938
  5,481
  6,051
  6,647
  7,270
  7,919
  8,596
  9,299
  10,031
  10,791
  11,581
  12,402
  13,256
  14,143
  15,066
  16,026
  17,025
  18,065
  19,149
  20,278
  21,457
  22,686
  23,969
  25,309
  26,709
  28,172
  29,702
  31,302
  32,976
Adjusted assets (=assets-cash), $m
  4,423
  4,938
  5,481
  6,051
  6,647
  7,270
  7,919
  8,596
  9,299
  10,031
  10,791
  11,581
  12,402
  13,256
  14,143
  15,066
  16,026
  17,025
  18,065
  19,149
  20,278
  21,457
  22,686
  23,969
  25,309
  26,709
  28,172
  29,702
  31,302
  32,976
Revenue / Adjusted assets
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
Average production assets, $m
  2,023
  2,259
  2,507
  2,768
  3,041
  3,326
  3,623
  3,932
  4,254
  4,589
  4,937
  5,298
  5,674
  6,064
  6,470
  6,892
  7,331
  7,788
  8,264
  8,760
  9,277
  9,816
  10,378
  10,965
  11,578
  12,218
  12,888
  13,588
  14,320
  15,085
Working capital, $m
  -388
  -434
  -481
  -531
  -584
  -638
  -695
  -755
  -817
  -881
  -948
  -1,017
  -1,089
  -1,164
  -1,242
  -1,323
  -1,407
  -1,495
  -1,586
  -1,682
  -1,781
  -1,884
  -1,992
  -2,105
  -2,223
  -2,346
  -2,474
  -2,608
  -2,749
  -2,896
Total debt, $m
  318
  444
  576
  715
  861
  1,013
  1,171
  1,336
  1,508
  1,686
  1,872
  2,065
  2,265
  2,473
  2,690
  2,915
  3,149
  3,393
  3,647
  3,911
  4,187
  4,474
  4,774
  5,087
  5,414
  5,756
  6,113
  6,486
  6,876
  7,285
Total liabilities, $m
  1,079
  1,205
  1,337
  1,476
  1,622
  1,774
  1,932
  2,097
  2,269
  2,448
  2,633
  2,826
  3,026
  3,234
  3,451
  3,676
  3,910
  4,154
  4,408
  4,672
  4,948
  5,235
  5,535
  5,848
  6,175
  6,517
  6,874
  7,247
  7,638
  8,046
Total equity, $m
  3,343
  3,733
  4,144
  4,574
  5,025
  5,496
  5,987
  6,498
  7,030
  7,583
  8,158
  8,755
  9,376
  10,021
  10,692
  11,390
  12,115
  12,871
  13,657
  14,476
  15,331
  16,221
  17,150
  18,120
  19,133
  20,192
  21,298
  22,454
  23,664
  24,930
Total liabilities and equity, $m
  4,422
  4,938
  5,481
  6,050
  6,647
  7,270
  7,919
  8,595
  9,299
  10,031
  10,791
  11,581
  12,402
  13,255
  14,143
  15,066
  16,025
  17,025
  18,065
  19,148
  20,279
  21,456
  22,685
  23,968
  25,308
  26,709
  28,172
  29,701
  31,302
  32,976
Debt-to-equity ratio
  0.100
  0.120
  0.140
  0.160
  0.170
  0.180
  0.200
  0.210
  0.210
  0.220
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
  0.260
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.290
  0.290
  0.290
  0.290
  0.290
Adjusted equity ratio
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  120
  193
  269
  350
  434
  522
  615
  711
  811
  916
  1,277
  1,390
  1,508
  1,631
  1,758
  1,891
  2,030
  2,174
  2,325
  2,482
  2,646
  2,817
  2,996
  3,183
  3,378
  3,583
  3,797
  4,021
  4,256
  4,502
Depreciation, amort., depletion, $m
  520
  541
  562
  585
  608
  633
  658
  685
  713
  742
  426
  457
  489
  523
  558
  594
  632
  671
  712
  755
  800
  846
  895
  945
  998
  1,053
  1,111
  1,171
  1,234
  1,300
Funds from operations, $m
  640
  733
  831
  934
  1,042
  1,155
  1,273
  1,396
  1,524
  1,657
  1,703
  1,847
  1,997
  2,154
  2,316
  2,485
  2,662
  2,845
  3,037
  3,237
  3,445
  3,663
  3,890
  4,128
  4,376
  4,636
  4,908
  5,193
  5,491
  5,803
Change in working capital, $m
  -43
  -45
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -108
  -113
  -118
  -123
  -128
  -134
  -141
  -147
Cash from operations, $m
  683
  779
  879
  984
  1,095
  1,210
  1,330
  1,455
  1,586
  1,722
  1,770
  1,916
  2,069
  2,228
  2,394
  2,566
  2,746
  2,933
  3,128
  3,332
  3,544
  3,766
  3,998
  4,241
  4,494
  4,759
  5,036
  5,327
  5,631
  5,950
Maintenance CAPEX, $m
  -155
  -174
  -195
  -216
  -239
  -262
  -287
  -312
  -339
  -367
  -396
  -426
  -457
  -489
  -523
  -558
  -594
  -632
  -671
  -712
  -755
  -800
  -846
  -895
  -945
  -998
  -1,053
  -1,111
  -1,171
  -1,234
New CAPEX, $m
  -223
  -236
  -248
  -261
  -273
  -285
  -297
  -309
  -322
  -335
  -348
  -361
  -376
  -390
  -406
  -422
  -439
  -457
  -476
  -496
  -517
  -539
  -562
  -587
  -613
  -640
  -669
  -700
  -732
  -766
Cash from investing activities, $m
  -378
  -410
  -443
  -477
  -512
  -547
  -584
  -621
  -661
  -702
  -744
  -787
  -833
  -879
  -929
  -980
  -1,033
  -1,089
  -1,147
  -1,208
  -1,272
  -1,339
  -1,408
  -1,482
  -1,558
  -1,638
  -1,722
  -1,811
  -1,903
  -2,000
Free cash flow, $m
  305
  368
  436
  507
  583
  663
  746
  834
  925
  1,020
  1,026
  1,129
  1,237
  1,349
  1,465
  1,587
  1,713
  1,844
  1,981
  2,124
  2,272
  2,428
  2,590
  2,759
  2,936
  3,121
  3,314
  3,516
  3,728
  3,949
Issuance/(repayment) of debt, $m
  118
  126
  132
  139
  146
  152
  158
  165
  172
  179
  186
  193
  200
  208
  216
  225
  234
  244
  254
  264
  276
  287
  300
  313
  327
  342
  357
  373
  390
  409
Issuance/(repurchase) of shares, $m
  249
  197
  141
  81
  17
  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  
  367
  323
  273
  220
  163
  152
  158
  165
  172
  179
  186
  193
  200
  208
  216
  225
  234
  244
  254
  264
  276
  287
  300
  313
  327
  342
  357
  373
  390
  409
Total cash flow (excl. dividends), $m
  671
  691
  710
  728
  745
  815
  905
  999
  1,097
  1,199
  1,212
  1,322
  1,437
  1,557
  1,682
  1,812
  1,947
  2,088
  2,235
  2,388
  2,548
  2,715
  2,890
  3,072
  3,263
  3,462
  3,671
  3,889
  4,118
  4,358
Retained Cash Flow (-), $m
  -369
  -390
  -410
  -431
  -451
  -471
  -491
  -511
  -532
  -553
  -575
  -597
  -621
  -645
  -671
  -698
  -726
  -755
  -786
  -819
  -854
  -891
  -929
  -970
  -1,013
  -1,058
  -1,106
  -1,157
  -1,210
  -1,266
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
  303
  302
  299
  297
  295
  344
  414
  487
  565
  646
  637
  725
  817
  912
  1,011
  1,114
  1,221
  1,333
  1,448
  1,569
  1,694
  1,825
  1,960
  2,102
  2,250
  2,404
  2,565
  2,733
  2,908
  3,092
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
  290
  276
  260
  244
  228
  250
  280
  305
  324
  339
  302
  309
  310
  306
  297
  283
  266
  245
  223
  199
  175
  151
  128
  107
  88
  70
  55
  42
  32
  23
Current shareholders' claim on cash, %
  94.4
  90.6
  88.2
  87.0
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7

LogMeIn, Inc. provides a portfolio of cloud-based service offerings, which helps people and businesses to connect to their workplace, colleagues and customers. The Company's core cloud-based services are categorized into four business lines: Communications and Collaboration; Engagement and Support; Identity and Access, and Additional Service Offerings. The Company's communication and collaboration services include GoToMeeting; GoToTraining; GoToWebinar; join.me, join.me pro and join.me enterprise; OpenVoice, and Grasshopper. The Company's customer engagement and support services include BoldChat; GoToAssist, GoToAssist Corporate and GoToAssist Seeit; LogMeIn Rescue, Rescue Lens and LogMeIn Rescue+Mobile, and Xively. Its identity and access management services include LogMeIn Central, GoToMyPC, LogMeIn Pro and LastPass. Its additional service offerings include LogMeIn Backup, LogMeIn Hamachi and RemotelyAnywhere.

FINANCIAL RATIOS  of  LogMein, Inc. (LOGM)

Valuation Ratios
P/E Ratio 698.7
Price to Sales 6.2
Price to Book 10.7
Price to Tangible Book
Price to Cash Flow 22.8
Price to Free Cash Flow 27.6
Growth Rates
Sales Growth Rate 23.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.9%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 15.3%
Total Debt to Equity 15.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 0.9%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital 1.2%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 1.5%
Return On Equity - 3 Yr. Avg. 4.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 86.6%
Gross Margin - 3 Yr. Avg. 86.8%
EBITDA Margin 7.7%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 1.2%
Oper. Margin - 3 Yr. Avg. 3.7%
Pre-Tax Margin 0.9%
Pre-Tax Margin - 3 Yr. Avg. 3.9%
Net Profit Margin 0.9%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 9.3%
Payout Ratio 833.3%

LOGM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LOGM stock intrinsic value calculation we used $1204 million for the last fiscal year's total revenue generated by LogMein, Inc.. The default revenue input number comes from 0001 income statement of LogMein, 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 LOGM stock valuation model: a) initial revenue growth rate of 12.4% 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 LOGM is calculated based on our internal credit rating of LogMein, 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 LogMein, 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 LOGM stock the variable cost ratio is equal to 54.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $474 million in the base year in the intrinsic value calculation for LOGM 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 6.3% for LogMein, Inc..

Corporate tax rate of 27% is the nominal tax rate for LogMein, 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 LOGM 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 LOGM are equal to 149.5%.

Life of production assets of 11.6 years is the average useful life of capital assets used in LogMein, 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 LOGM is equal to -28.7%. 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 - $2974.688 million for LogMein, 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 50.860 million for LogMein, 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 LogMein, Inc. at the current share price and the inputted number of shares is $4.2 billion.

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