Intrinsic value of Navigant Consulting - NCI

Previous Close

$23.71

  Intrinsic Value

$21.01

stock screener

  Rating & Target

hold

-11%

Previous close

$23.71

 
Intrinsic value

$21.01

 
Up/down potential

-11%

 
Rating

hold

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 1.1

 

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, %
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
Revenue, $m
  1,074
  1,118
  1,164
  1,214
  1,267
  1,323
  1,382
  1,444
  1,510
  1,580
  1,654
  1,731
  1,813
  1,899
  1,989
  2,085
  2,185
  2,291
  2,402
  2,519
  2,642
  2,771
  2,907
  3,049
  3,199
  3,357
  3,523
  3,697
  3,880
  4,072
Variable operating expenses, $m
  970
  1,008
  1,048
  1,091
  1,137
  1,185
  1,236
  1,290
  1,346
  1,406
  1,426
  1,492
  1,563
  1,637
  1,715
  1,797
  1,884
  1,975
  2,071
  2,171
  2,277
  2,389
  2,506
  2,629
  2,758
  2,894
  3,037
  3,187
  3,345
  3,510
Fixed operating expenses, $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 operating expenses, $m
  970
  1,008
  1,048
  1,091
  1,137
  1,185
  1,236
  1,290
  1,346
  1,406
  1,426
  1,492
  1,563
  1,637
  1,715
  1,797
  1,884
  1,975
  2,071
  2,171
  2,277
  2,389
  2,506
  2,629
  2,758
  2,894
  3,037
  3,187
  3,345
  3,510
Operating income, $m
  104
  110
  116
  123
  130
  138
  146
  155
  164
  174
  228
  239
  250
  262
  274
  288
  301
  316
  331
  347
  364
  382
  401
  421
  441
  463
  486
  510
  535
  562
EBITDA, $m
  170
  177
  185
  192
  201
  210
  219
  229
  239
  250
  262
  274
  287
  301
  315
  330
  346
  363
  381
  399
  419
  439
  461
  483
  507
  532
  558
  586
  615
  645
Interest expense (income), $m
  4
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  58
  62
  66
Earnings before tax, $m
  97
  102
  107
  113
  119
  126
  133
  141
  148
  157
  210
  219
  228
  239
  249
  261
  273
  285
  298
  312
  327
  342
  358
  375
  393
  411
  431
  451
  473
  496
Tax expense, $m
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  57
  59
  62
  64
  67
  70
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  122
  128
  134
Net income, $m
  71
  74
  78
  83
  87
  92
  97
  103
  108
  114
  153
  160
  167
  174
  182
  190
  199
  208
  218
  228
  238
  250
  261
  274
  287
  300
  314
  330
  345
  362

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
  1,124
  1,170
  1,219
  1,271
  1,327
  1,385
  1,447
  1,512
  1,582
  1,655
  1,731
  1,813
  1,898
  1,988
  2,083
  2,183
  2,288
  2,399
  2,515
  2,637
  2,766
  2,901
  3,043
  3,193
  3,350
  3,515
  3,689
  3,871
  4,062
  4,264
Adjusted assets (=assets-cash), $m
  1,124
  1,170
  1,219
  1,271
  1,327
  1,385
  1,447
  1,512
  1,582
  1,655
  1,731
  1,813
  1,898
  1,988
  2,083
  2,183
  2,288
  2,399
  2,515
  2,637
  2,766
  2,901
  3,043
  3,193
  3,350
  3,515
  3,689
  3,871
  4,062
  4,264
Revenue / Adjusted assets
  0.956
  0.956
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.954
  0.955
  0.956
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
Average production assets, $m
  366
  381
  397
  414
  432
  451
  471
  493
  515
  539
  564
  590
  618
  647
  678
  711
  745
  781
  819
  859
  901
  945
  991
  1,040
  1,091
  1,145
  1,201
  1,261
  1,323
  1,388
Working capital, $m
  365
  380
  396
  413
  431
  450
  470
  491
  514
  537
  562
  589
  616
  646
  676
  709
  743
  779
  817
  856
  898
  942
  988
  1,037
  1,088
  1,141
  1,198
  1,257
  1,319
  1,384
Total debt, $m
  149
  166
  184
  203
  223
  244
  267
  291
  316
  342
  370
  400
  431
  464
  498
  535
  573
  613
  655
  700
  747
  796
  848
  902
  959
  1,020
  1,083
  1,149
  1,219
  1,292
Total liabilities, $m
  409
  426
  444
  463
  483
  504
  527
  551
  576
  602
  630
  660
  691
  724
  758
  795
  833
  873
  915
  960
  1,007
  1,056
  1,108
  1,162
  1,219
  1,280
  1,343
  1,409
  1,479
  1,552
Total equity, $m
  715
  744
  775
  809
  844
  881
  920
  962
  1,006
  1,052
  1,101
  1,153
  1,207
  1,265
  1,325
  1,388
  1,455
  1,526
  1,600
  1,677
  1,759
  1,845
  1,936
  2,031
  2,131
  2,236
  2,346
  2,462
  2,584
  2,712
Total liabilities and equity, $m
  1,124
  1,170
  1,219
  1,272
  1,327
  1,385
  1,447
  1,513
  1,582
  1,654
  1,731
  1,813
  1,898
  1,989
  2,083
  2,183
  2,288
  2,399
  2,515
  2,637
  2,766
  2,901
  3,044
  3,193
  3,350
  3,516
  3,689
  3,871
  4,063
  4,264
Debt-to-equity ratio
  0.210
  0.220
  0.240
  0.250
  0.260
  0.280
  0.290
  0.300
  0.310
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.420
  0.420
  0.430
  0.440
  0.440
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
Adjusted equity ratio
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  71
  74
  78
  83
  87
  92
  97
  103
  108
  114
  153
  160
  167
  174
  182
  190
  199
  208
  218
  228
  238
  250
  261
  274
  287
  300
  314
  330
  345
  362
Depreciation, amort., depletion, $m
  66
  67
  68
  69
  70
  71
  73
  74
  75
  77
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  84
Funds from operations, $m
  137
  142
  147
  152
  158
  164
  170
  177
  184
  191
  187
  195
  204
  213
  223
  233
  244
  255
  267
  279
  293
  306
  321
  336
  352
  369
  387
  405
  425
  446
Change in working capital, $m
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62
  65
Cash from operations, $m
  123
  127
  131
  135
  140
  145
  150
  155
  161
  167
  162
  169
  176
  184
  192
  201
  210
  219
  229
  240
  251
  263
  275
  288
  301
  316
  331
  346
  363
  380
Maintenance CAPEX, $m
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
New CAPEX, $m
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -66
Cash from investing activities, $m
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -53
  -55
  -57
  -60
  -64
  -66
  -70
  -74
  -77
  -81
  -85
  -89
  -94
  -98
  -103
  -109
  -114
  -120
  -125
  -131
  -138
  -146
Free cash flow, $m
  87
  90
  92
  94
  97
  99
  102
  106
  109
  113
  104
  109
  113
  117
  122
  127
  133
  138
  144
  151
  157
  164
  172
  179
  187
  196
  205
  215
  225
  235
Issuance/(repayment) of debt, $m
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  45
  47
  49
  52
  54
  57
  60
  63
  66
  70
  73
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  
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  45
  47
  49
  52
  54
  57
  60
  63
  66
  70
  73
Total cash flow (excl. dividends), $m
  103
  106
  110
  113
  117
  121
  125
  129
  134
  139
  132
  138
  144
  150
  157
  164
  171
  179
  187
  195
  204
  213
  223
  234
  245
  256
  268
  281
  294
  308
Retained Cash Flow (-), $m
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -52
  -54
  -57
  -60
  -64
  -67
  -70
  -74
  -78
  -82
  -86
  -90
  -95
  -100
  -105
  -110
  -116
  -122
  -128
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
  76
  77
  78
  80
  82
  84
  86
  88
  90
  93
  84
  86
  90
  93
  96
  100
  104
  108
  113
  117
  122
  127
  133
  139
  145
  151
  158
  165
  172
  180
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
  72
  70
  68
  66
  63
  61
  58
  55
  52
  49
  40
  37
  34
  31
  28
  25
  23
  20
  17
  15
  13
  11
  9
  7
  6
  4
  3
  3
  2
  1
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

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 (NCI)

Valuation Ratios
P/E Ratio 19.2
Price to Sales 1.1
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow 13.8
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 $1032.327 million for the last fiscal year's total revenue generated by Navigant Consulting. The default revenue input number comes from 0001 income statement of Navigant Consulting. 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 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 NCI is calculated based on our internal credit rating of Navigant Consulting, 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.
    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 90.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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.

Corporate tax rate of 27% is the nominal tax rate for Navigant Consulting. 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 34.1%.

Life of production assets of 16.6 years is the average useful life of capital assets used in Navigant Consulting 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 34%. 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 - $687.334 million for Navigant Consulting - 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 45.005 million for Navigant Consulting 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 at the current share price and the inputted number of shares is $1.1 billion.

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COMPANY NEWS

▶ Navigant: 3Q Earnings Snapshot   [07:51AM  Associated Press]
▶ Ellen Zimiles Named Global Leader by Consulting Magazine   [Nov-05-18 12:52PM  Business Wire]
▶ What Navigant Consulting Incs (NYSE:NCI) ROE Can Tell Us   [Oct-22-18 09:43AM  Simply Wall St.]
▶ Navigant: 2Q Earnings Snapshot   [10:24AM  Associated Press]
▶ [$$] Navigant to Sell Units to Madison Dearborn's Ankura for $470 Million   [Jun-25-18 01:33PM  The Wall Street Journal]
▶ [$$] Navigant to Sell Units to Ankura for $470 Million   [10:44AM  The Wall Street Journal]
▶ Top Cheap Stocks in June   [10:02AM  Simply Wall St.]
▶ Navigant Announces Agreement with Engine Capital   [May-10-18 07:14AM  Business Wire]
▶ Navigant: 1Q Earnings Snapshot   [May-02-18 07:19AM  Associated Press]
▶ Top Cheap Stocks This Week   [Apr-25-18 10:02AM  Simply Wall St.]
▶ Baptist Health signs joint venture with publicly-traded company   [Apr-11-18 06:22AM  American City Business Journals]
▶ Top NasdaqGS Cheap Stocks To Buy   [Mar-19-18 10:02AM  Simply Wall St.]
▶ Navigant Expands into Australia   [Mar-12-18 03:00PM  Business Wire]
▶ Valuation Expert Andrew Caldwell Joins Navigant   [Mar-05-18 07:00AM  Business Wire]
▶ Navigant misses Street 4Q forecasts   [07:50AM  Associated Press]
▶ Navigant Elects Jeffrey Yingling to Board of Directors   [Feb-12-18 04:32PM  Business Wire]
▶ Navigant Appoints Managing Directors to Healthcare Segment   [Feb-01-18 07:30AM  Business Wire]
▶ Navigant Expands Presence in Berlin   [Jan-29-18 07:30AM  Business Wire]

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