Intrinsic value of Model N, Inc. - MODN

Previous Close

$16.89

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$16.89

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of MODN 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 0.5

 

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
  158
  162
  166
  171
  176
  181
  188
  194
  201
  209
  217
  226
  236
  246
  256
  268
  279
  292
  305
  319
  334
  350
  366
  383
  402
  421
  441
  462
  485
  508
Variable operating expenses, $m
  41
  41
  42
  43
  44
  46
  47
  48
  50
  51
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  74
  77
  81
  84
  89
  93
  97
  102
  107
Fixed operating expenses, $m
  142
  145
  148
  152
  155
  158
  162
  165
  169
  173
  177
  180
  184
  189
  193
  197
  201
  206
  210
  215
  220
  224
  229
  234
  239
  245
  250
  256
  261
  267
Total operating expenses, $m
  183
  186
  190
  195
  199
  204
  209
  213
  219
  224
  223
  228
  234
  241
  247
  253
  260
  267
  274
  282
  290
  298
  306
  315
  323
  334
  343
  353
  363
  374
Operating income, $m
  -25
  -25
  -25
  -24
  -24
  -23
  -21
  -19
  -17
  -15
  -5
  -2
  2
  6
  10
  14
  19
  25
  31
  37
  44
  52
  60
  69
  78
  88
  98
  110
  122
  135
EBITDA, $m
  -13
  -13
  -13
  -12
  -11
  -10
  -8
  -7
  -4
  -2
  1
  5
  8
  12
  17
  22
  27
  33
  39
  46
  54
  62
  70
  79
  89
  99
  111
  123
  135
  149
Interest expense (income), $m
  3
  8
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  40
  42
  45
  47
Earnings before tax, $m
  -32
  -33
  -33
  -34
  -33
  -33
  -32
  -31
  -30
  -28
  -19
  -17
  -15
  -12
  -9
  -6
  -2
  2
  7
  11
  17
  23
  29
  35
  43
  50
  59
  67
  77
  87
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  5
  6
  8
  10
  11
  14
  16
  18
  21
  24
Net income, $m
  -32
  -33
  -33
  -34
  -33
  -33
  -32
  -31
  -30
  -28
  -19
  -17
  -15
  -12
  -9
  -6
  -2
  2
  5
  8
  12
  16
  21
  26
  31
  37
  43
  49
  56
  64

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
  169
  173
  178
  183
  188
  194
  201
  208
  216
  224
  233
  243
  253
  263
  275
  287
  299
  313
  327
  342
  358
  375
  392
  411
  431
  451
  473
  496
  520
  545
Adjusted assets (=assets-cash), $m
  169
  173
  178
  183
  188
  194
  201
  208
  216
  224
  233
  243
  253
  263
  275
  287
  299
  313
  327
  342
  358
  375
  392
  411
  431
  451
  473
  496
  520
  545
Revenue / Adjusted assets
  0.935
  0.936
  0.933
  0.934
  0.936
  0.933
  0.935
  0.933
  0.931
  0.933
  0.931
  0.930
  0.933
  0.935
  0.931
  0.934
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.934
  0.932
  0.933
  0.933
  0.932
  0.931
  0.933
  0.932
Average production assets, $m
  43
  44
  45
  46
  47
  49
  50
  52
  54
  56
  59
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  108
  113
  119
  124
  130
  137
Working capital, $m
  -40
  -41
  -42
  -43
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
Total debt, $m
  56
  59
  63
  66
  71
  75
  80
  86
  91
  98
  105
  112
  119
  127
  136
  145
  155
  165
  176
  187
  199
  212
  225
  240
  254
  270
  287
  304
  322
  341
Total liabilities, $m
  129
  132
  135
  139
  143
  148
  153
  158
  164
  170
  177
  184
  192
  200
  208
  218
  227
  238
  248
  260
  272
  284
  298
  312
  327
  342
  359
  376
  394
  414
Total equity, $m
  41
  42
  43
  44
  45
  47
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  114
  119
  125
  131
Total liabilities and equity, $m
  170
  174
  178
  183
  188
  195
  201
  208
  216
  224
  233
  242
  253
  263
  274
  287
  299
  313
  327
  342
  358
  374
  393
  411
  431
  451
  473
  495
  519
  545
Debt-to-equity ratio
  1.380
  1.420
  1.460
  1.510
  1.550
  1.600
  1.650
  1.710
  1.760
  1.810
  1.860
  1.910
  1.960
  2.010
  2.060
  2.100
  2.150
  2.190
  2.230
  2.270
  2.310
  2.350
  2.380
  2.420
  2.450
  2.480
  2.510
  2.540
  2.570
  2.600
Adjusted equity ratio
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -32
  -33
  -33
  -34
  -33
  -33
  -32
  -31
  -30
  -28
  -19
  -17
  -15
  -12
  -9
  -6
  -2
  2
  5
  8
  12
  16
  21
  26
  31
  37
  43
  49
  56
  64
Depreciation, amort., depletion, $m
  12
  12
  12
  12
  12
  12
  13
  13
  13
  13
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Funds from operations, $m
  -21
  -21
  -21
  -21
  -21
  -20
  -20
  -18
  -17
  -15
  -13
  -11
  -8
  -5
  -2
  2
  6
  10
  13
  17
  22
  26
  31
  37
  42
  49
  55
  62
  70
  78
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from operations, $m
  -20
  -20
  -20
  -20
  -20
  -19
  -18
  -17
  -15
  -13
  -11
  -9
  -6
  -3
  1
  5
  9
  13
  17
  21
  25
  30
  35
  41
  47
  53
  60
  68
  75
  84
Maintenance CAPEX, $m
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -10
  -10
  -10
  -10
  -11
  -12
  -13
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
Free cash flow, $m
  -25
  -26
  -26
  -26
  -26
  -25
  -25
  -24
  -22
  -21
  -19
  -17
  -15
  -12
  -9
  -6
  -2
  2
  5
  9
  12
  17
  21
  26
  31
  37
  43
  49
  56
  64
Issuance/(repayment) of debt, $m
  2
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
Issuance/(repurchase) of shares, $m
  33
  34
  35
  35
  35
  34
  34
  33
  32
  30
  21
  19
  17
  15
  12
  9
  5
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  35
  37
  38
  39
  39
  39
  39
  38
  38
  36
  28
  26
  25
  23
  21
  18
  15
  12
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
Total cash flow (excl. dividends), $m
  11
  11
  12
  12
  13
  14
  14
  15
  15
  16
  9
  10
  10
  11
  11
  12
  13
  14
  16
  20
  24
  29
  35
  40
  46
  53
  59
  67
  75
  83
Retained Cash Flow (-), $m
  -33
  -34
  -35
  -35
  -35
  -34
  -34
  -33
  -32
  -30
  -21
  -19
  -17
  -15
  -12
  -9
  -5
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -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
  -23
  -23
  -23
  -22
  -22
  -21
  -20
  -18
  -17
  -15
  -12
  -10
  -7
  -4
  0
  4
  8
  10
  12
  16
  21
  25
  30
  36
  41
  48
  54
  61
  69
  77
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
  -22
  -21
  -20
  -18
  -17
  -15
  -13
  -11
  -10
  -8
  -6
  -4
  -3
  -1
  0
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
Current shareholders' claim on cash, %
  92.3
  85.2
  78.7
  72.8
  67.5
  62.7
  58.5
  54.8
  51.5
  48.7
  46.8
  45.3
  44.0
  43.0
  42.2
  41.6
  41.3
  41.2
  41.2
  41.2
  41.2
  41.2
  41.2
  41.2
  41.2
  41.2
  41.2
  41.2
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Model N, Inc. is a provider of revenue management solutions for life science and technology companies. The Company's solutions enable its customers to maximize revenues and reduce revenue compliance risk by transforming their revenue life cycle from a series of tactical, disjointed operations into a strategic end-to-end process. The Company's solutions include Revenue Enterprise Cloud, Revenue Intelligence Cloud and Revvy Revenue Management. The Company provides solutions that span the organizational and operational boundaries of functions, such as sales, marketing and finance, and serve as a system of record for revenue management processes, including pricing, contracts, rebates, incentives and regulatory compliance. The Company's application suites are designed to work with enterprise resource planning (ERP) and customer relationship management (CRM) applications. The Company also offers implementation services, managed services, strategic services and customer support.

FINANCIAL RATIOS  of  Model N, Inc. (MODN)

Valuation Ratios
P/E Ratio -12.4
Price to Sales 3.8
Price to Book 12.1
Price to Tangible Book
Price to Cash Flow -41.3
Price to Free Cash Flow -38.1
Growth Rates
Sales Growth Rate 22.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 12
Current Ratio 0
LT Debt to Equity 126.8%
Total Debt to Equity 139%
Interest Coverage -13
Management Effectiveness
Return On Assets -26.1%
Ret/ On Assets - 3 Yr. Avg. -23.4%
Return On Total Capital -48.8%
Ret/ On T. Cap. - 3 Yr. Avg. -38.8%
Return On Equity -74.8%
Return On Equity - 3 Yr. Avg. -47.4%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 53.4%
Gross Margin - 3 Yr. Avg. 52.8%
EBITDA Margin -24.4%
EBITDA Margin - 3 Yr. Avg. -21.9%
Operating Margin -29.8%
Oper. Margin - 3 Yr. Avg. -26.9%
Pre-Tax Margin -32.8%
Pre-Tax Margin - 3 Yr. Avg. -28%
Net Profit Margin -30.5%
Net Profit Margin - 3 Yr. Avg. -27.6%
Effective Tax Rate 7%
Eff/ Tax Rate - 3 Yr. Avg. 0.6%
Payout Ratio 0%

MODN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MODN stock intrinsic value calculation we used $155 million for the last fiscal year's total revenue generated by Model N, Inc.. The default revenue input number comes from 0001 income statement of Model N, 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 MODN 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 MODN is calculated based on our internal credit rating of Model N, 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 Model N, 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 MODN stock the variable cost ratio is equal to 25.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $139 million in the base year in the intrinsic value calculation for MODN 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 14.7% for Model N, Inc..

Corporate tax rate of 27% is the nominal tax rate for Model N, 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 MODN 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 MODN are equal to 26.9%.

Life of production assets of 9.6 years is the average useful life of capital assets used in Model N, 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 MODN is equal to -25.1%. 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 - $40.034 million for Model N, 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 31.543 million for Model N, 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 Model N, Inc. at the current share price and the inputted number of shares is $0.5 billion.

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