Intrinsic value of Navigant Consulting, Inc. - NCI

Previous Close

$18.96

  Intrinsic Value

$9.37

stock screener

  Rating & Target

str. sell

-51%

Previous close

$18.96

 
Intrinsic value

$9.37

 
Up/down potential

-51%

 
Rating

str. sell

We calculate the intrinsic value of NCI 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 0.8

 

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, %
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  812
  882
  956
  1,032
  1,111
  1,194
  1,280
  1,369
  1,461
  1,557
  1,658
  1,762
  1,870
  1,983
  2,101
  2,224
  2,352
  2,486
  2,625
  2,771
  2,923
  3,083
  3,249
  3,424
  3,606
  3,797
  3,997
  4,206
  4,425
  4,655
Variable operating expenses, $m
  744
  804
  868
  934
  1,002
  1,073
  1,147
  1,224
  1,304
  1,387
  1,429
  1,519
  1,613
  1,710
  1,812
  1,918
  2,028
  2,143
  2,264
  2,389
  2,521
  2,658
  2,802
  2,952
  3,109
  3,274
  3,446
  3,627
  3,816
  4,014
Fixed operating expenses, $m
  36
  37
  37
  38
  39
  40
  41
  42
  43
  44
  44
  45
  46
  47
  49
  50
  51
  52
  53
  54
  55
  56
  58
  59
  60
  62
  63
  64
  66
  67
Total operating expenses, $m
  780
  841
  905
  972
  1,041
  1,113
  1,188
  1,266
  1,347
  1,431
  1,473
  1,564
  1,659
  1,757
  1,861
  1,968
  2,079
  2,195
  2,317
  2,443
  2,576
  2,714
  2,860
  3,011
  3,169
  3,336
  3,509
  3,691
  3,882
  4,081
Operating income, $m
  32
  41
  51
  60
  70
  81
  92
  103
  115
  127
  184
  197
  211
  226
  241
  257
  273
  291
  309
  328
  347
  368
  390
  413
  436
  461
  488
  515
  544
  574
EBITDA, $m
  95
  105
  116
  128
  140
  152
  165
  179
  193
  207
  222
  238
  255
  272
  290
  308
  328
  348
  370
  392
  415
  440
  465
  492
  520
  550
  580
  613
  647
  682
Interest expense (income), $m
  4
  0
  1
  2
  3
  4
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  22
  24
  26
  29
  31
  33
  35
  38
  41
  43
  46
  49
  52
  56
Earnings before tax, $m
  32
  40
  48
  57
  66
  75
  85
  95
  106
  116
  172
  183
  196
  209
  222
  236
  251
  266
  282
  299
  317
  335
  354
  375
  396
  418
  441
  466
  491
  518
Tax expense, $m
  9
  11
  13
  15
  18
  20
  23
  26
  28
  31
  46
  50
  53
  56
  60
  64
  68
  72
  76
  81
  85
  90
  96
  101
  107
  113
  119
  126
  133
  140
Net income, $m
  24
  29
  35
  42
  48
  55
  62
  69
  77
  85
  125
  134
  143
  152
  162
  172
  183
  194
  206
  218
  231
  245
  259
  273
  289
  305
  322
  340
  359
  378

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
  934
  1,015
  1,100
  1,188
  1,279
  1,374
  1,472
  1,575
  1,681
  1,792
  1,907
  2,027
  2,152
  2,282
  2,418
  2,559
  2,707
  2,860
  3,021
  3,189
  3,364
  3,547
  3,739
  3,940
  4,149
  4,369
  4,599
  4,840
  5,092
  5,357
Adjusted assets (=assets-cash), $m
  934
  1,015
  1,100
  1,188
  1,279
  1,374
  1,472
  1,575
  1,681
  1,792
  1,907
  2,027
  2,152
  2,282
  2,418
  2,559
  2,707
  2,860
  3,021
  3,189
  3,364
  3,547
  3,739
  3,940
  4,149
  4,369
  4,599
  4,840
  5,092
  5,357
Revenue / Adjusted assets
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.870
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
Average production assets, $m
  313
  341
  369
  398
  429
  461
  494
  528
  564
  601
  640
  680
  722
  766
  811
  858
  908
  959
  1,013
  1,070
  1,128
  1,190
  1,254
  1,321
  1,392
  1,466
  1,543
  1,624
  1,708
  1,797
Working capital, $m
  62
  67
  73
  78
  84
  91
  97
  104
  111
  118
  126
  134
  142
  151
  160
  169
  179
  189
  200
  211
  222
  234
  247
  260
  274
  289
  304
  320
  336
  354
Total debt, $m
  19
  39
  59
  81
  103
  126
  150
  175
  201
  228
  256
  286
  316
  348
  381
  415
  451
  489
  528
  569
  612
  657
  703
  752
  803
  857
  913
  972
  1,034
  1,098
Total liabilities, $m
  228
  248
  268
  290
  312
  335
  359
  384
  410
  437
  465
  495
  525
  557
  590
  624
  660
  698
  737
  778
  821
  866
  912
  961
  1,012
  1,066
  1,122
  1,181
  1,243
  1,307
Total equity, $m
  706
  768
  831
  898
  967
  1,039
  1,113
  1,191
  1,271
  1,355
  1,442
  1,533
  1,627
  1,725
  1,828
  1,935
  2,046
  2,162
  2,284
  2,411
  2,543
  2,682
  2,827
  2,978
  3,137
  3,303
  3,477
  3,659
  3,850
  4,050
Total liabilities and equity, $m
  934
  1,016
  1,099
  1,188
  1,279
  1,374
  1,472
  1,575
  1,681
  1,792
  1,907
  2,028
  2,152
  2,282
  2,418
  2,559
  2,706
  2,860
  3,021
  3,189
  3,364
  3,548
  3,739
  3,939
  4,149
  4,369
  4,599
  4,840
  5,093
  5,357
Debt-to-equity ratio
  0.030
  0.050
  0.070
  0.090
  0.110
  0.120
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.190
  0.200
  0.210
  0.210
  0.220
  0.230
  0.230
  0.240
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
  0.260
  0.270
  0.270
  0.270
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
  24
  29
  35
  42
  48
  55
  62
  69
  77
  85
  125
  134
  143
  152
  162
  172
  183
  194
  206
  218
  231
  245
  259
  273
  289
  305
  322
  340
  359
  378
Depreciation, amort., depletion, $m
  63
  64
  66
  68
  70
  71
  73
  76
  78
  80
  39
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
Funds from operations, $m
  86
  94
  101
  109
  118
  126
  135
  145
  155
  165
  164
  175
  186
  198
  211
  224
  238
  252
  267
  283
  299
  316
  334
  353
  373
  393
  415
  438
  462
  486
Change in working capital, $m
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
Cash from operations, $m
  81
  88
  96
  104
  112
  120
  129
  138
  148
  158
  156
  167
  178
  190
  202
  215
  228
  242
  256
  272
  288
  304
  322
  340
  359
  379
  400
  422
  445
  469
Maintenance CAPEX, $m
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
New CAPEX, $m
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
Cash from investing activities, $m
  -43
  -46
  -49
  -51
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -107
  -112
  -117
  -123
  -129
  -136
  -143
  -150
  -158
  -165
  -174
  -183
  -192
Free cash flow, $m
  38
  42
  47
  52
  57
  62
  68
  74
  80
  86
  81
  88
  95
  103
  110
  119
  127
  136
  145
  154
  164
  175
  186
  197
  209
  221
  234
  248
  262
  277
Issuance/(repayment) of debt, $m
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
Issuance/(repurchase) of shares, $m
  35
  32
  28
  25
  21
  17
  13
  8
  4
  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  
  54
  52
  49
  46
  43
  40
  37
  33
  30
  27
  28
  29
  30
  32
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
Total cash flow (excl. dividends), $m
  92
  94
  96
  98
  100
  102
  105
  107
  110
  113
  109
  117
  126
  134
  144
  153
  163
  173
  184
  195
  207
  219
  232
  246
  260
  275
  291
  307
  324
  342
Retained Cash Flow (-), $m
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -77
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -107
  -111
  -116
  -121
  -127
  -133
  -139
  -145
  -152
  -159
  -166
  -174
  -182
  -191
  -200
Prev. year cash balance distribution, $m
  61
  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
  94
  33
  32
  32
  31
  31
  30
  30
  29
  30
  22
  27
  31
  36
  41
  46
  51
  57
  63
  68
  75
  81
  87
  94
  101
  109
  117
  125
  133
  142
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
  90
  30
  28
  26
  24
  22
  20
  19
  17
  16
  11
  11
  12
  12
  12
  12
  11
  10
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  1
  1
Current shareholders' claim on cash, %
  95.2
  91.4
  88.4
  86.0
  84.2
  82.9
  82.0
  81.4
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2
  81.2

Navigant Consulting, Inc. is a global professional services company. The Company serves clients in the healthcare, energy and financial services industries. It operates through four segments. The Healthcare segment provides consulting services and business process management services. The Energy segment provides advisory solutions in business strategy and planning, distributed energy resources and renewables, energy efficiency and demand response and grid modernization The Financial Services Advisory and Compliance segment provides strategic, operational, valuation, risk management, investigative and compliance advisory services to clients primarily in the financial services industry. The Disputes, Forensics & Legal Technology segment offers professional services, including valuation and economic analysis, as well as accounting, regulatory, construction and computer forensic expertise.

FINANCIAL RATIOS  of  Navigant Consulting, Inc. (NCI)

Valuation Ratios
P/E Ratio 15.4
Price to Sales 0.9
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 8.1
Price to Free Cash Flow 11
Growth Rates
Sales Growth Rate 12.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -27.5%
Cap. Spend. - 3 Yr. Gr. Rate 10%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 21.3%
Total Debt to Equity 21.3%
Interest Coverage 24
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 2.9%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 9.4%
Return On Equity - 3 Yr. Avg. 4.6%
Asset Turnover 1
Profitability Ratios
Gross Margin 29.7%
Gross Margin - 3 Yr. Avg. 29%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 8.6%
Operating Margin 9.3%
Oper. Margin - 3 Yr. Avg. 5.2%
Pre-Tax Margin 9%
Pre-Tax Margin - 3 Yr. Avg. 4.7%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 2.7%
Effective Tax Rate 37.6%
Eff/ Tax Rate - 3 Yr. Avg. 24%
Payout Ratio 0%

NCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NCI stock intrinsic value calculation we used $744 million for the last fiscal year's total revenue generated by Navigant Consulting, Inc.. The default revenue input number comes from 0001 income statement of Navigant Consulting, 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 NCI stock valuation model: a) initial revenue growth rate of 9.1% 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 NCI is calculated based on our internal credit rating of Navigant Consulting, 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 Navigant Consulting, 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 NCI stock the variable cost ratio is equal to 92.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $35 million in the base year in the intrinsic value calculation for NCI 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 Navigant Consulting, Inc..

Corporate tax rate of 27% is the nominal tax rate for Navigant Consulting, 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 NCI 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 NCI are equal to 38.6%.

Life of production assets of 16.6 years is the average useful life of capital assets used in Navigant Consulting, 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 NCI is equal to 7.6%. 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 - $708.564 million for Navigant Consulting, 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 40.520 million for Navigant Consulting, 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 Navigant Consulting, Inc. at the current share price and the inputted number of shares is $0.8 billion.

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