Intrinsic value of Insight Enterprises, Inc. - NSIT

Previous Close

$55.35

  Intrinsic Value

$71.11

stock screener

  Rating & Target

buy

+28%

Previous close

$55.35

 
Intrinsic value

$71.11

 
Up/down potential

+28%

 
Rating

buy

We calculate the intrinsic value of NSIT 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 2.0

 

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
  7,222
  7,388
  7,578
  7,791
  8,027
  8,286
  8,568
  8,874
  9,203
  9,556
  9,934
  10,337
  10,766
  11,222
  11,707
  12,220
  12,763
  13,337
  13,944
  14,584
  15,260
  15,973
  16,725
  17,517
  18,351
  19,229
  20,153
  21,125
  22,148
  23,224
Variable operating expenses, $m
  6,254
  6,397
  6,562
  6,746
  6,950
  7,174
  7,419
  7,683
  7,967
  8,273
  8,592
  8,941
  9,312
  9,707
  10,126
  10,570
  11,039
  11,536
  12,061
  12,615
  13,200
  13,816
  14,466
  15,151
  15,873
  16,632
  17,431
  18,273
  19,158
  20,088
Fixed operating expenses, $m
  748
  765
  781
  799
  816
  834
  852
  871
  890
  910
  930
  950
  971
  993
  1,015
  1,037
  1,060
  1,083
  1,107
  1,131
  1,156
  1,181
  1,207
  1,234
  1,261
  1,289
  1,317
  1,346
  1,376
  1,406
Total operating expenses, $m
  7,002
  7,162
  7,343
  7,545
  7,766
  8,008
  8,271
  8,554
  8,857
  9,183
  9,522
  9,891
  10,283
  10,700
  11,141
  11,607
  12,099
  12,619
  13,168
  13,746
  14,356
  14,997
  15,673
  16,385
  17,134
  17,921
  18,748
  19,619
  20,534
  21,494
Operating income, $m
  220
  226
  235
  246
  260
  277
  297
  320
  345
  373
  411
  445
  482
  523
  566
  613
  664
  718
  776
  838
  905
  975
  1,051
  1,131
  1,217
  1,308
  1,404
  1,506
  1,615
  1,730
EBITDA, $m
  251
  257
  267
  279
  294
  312
  333
  356
  383
  412
  444
  479
  518
  560
  605
  653
  706
  762
  822
  886
  955
  1,028
  1,106
  1,189
  1,277
  1,371
  1,470
  1,576
  1,688
  1,806
Interest expense (income), $m
  4
  18
  21
  24
  29
  33
  39
  45
  51
  58
  65
  73
  82
  91
  100
  111
  121
  133
  145
  158
  172
  186
  201
  217
  234
  252
  271
  291
  311
  333
  356
Earnings before tax, $m
  202
  205
  210
  217
  227
  239
  253
  269
  287
  308
  338
  364
  392
  422
  456
  492
  531
  573
  618
  666
  718
  774
  834
  897
  965
  1,037
  1,113
  1,195
  1,282
  1,374
Tax expense, $m
  55
  55
  57
  59
  61
  64
  68
  73
  78
  83
  91
  98
  106
  114
  123
  133
  143
  155
  167
  180
  194
  209
  225
  242
  260
  280
  301
  323
  346
  371
Net income, $m
  148
  150
  153
  159
  166
  174
  184
  196
  210
  225
  247
  266
  286
  308
  333
  359
  387
  418
  451
  487
  524
  565
  608
  655
  704
  757
  813
  872
  936
  1,003

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
  2,832
  2,897
  2,972
  3,055
  3,148
  3,249
  3,360
  3,480
  3,609
  3,747
  3,896
  4,054
  4,222
  4,401
  4,591
  4,792
  5,005
  5,230
  5,468
  5,719
  5,984
  6,264
  6,559
  6,869
  7,196
  7,541
  7,903
  8,284
  8,686
  9,108
Adjusted assets (=assets-cash), $m
  2,832
  2,897
  2,972
  3,055
  3,148
  3,249
  3,360
  3,480
  3,609
  3,747
  3,896
  4,054
  4,222
  4,401
  4,591
  4,792
  5,005
  5,230
  5,468
  5,719
  5,984
  6,264
  6,559
  6,869
  7,196
  7,541
  7,903
  8,284
  8,686
  9,108
Revenue / Adjusted assets
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
  2.550
Average production assets, $m
  209
  214
  220
  226
  233
  240
  248
  257
  267
  277
  288
  300
  312
  325
  339
  354
  370
  387
  404
  423
  443
  463
  485
  508
  532
  558
  584
  613
  642
  674
Working capital, $m
  672
  687
  705
  725
  747
  771
  797
  825
  856
  889
  924
  961
  1,001
  1,044
  1,089
  1,136
  1,187
  1,240
  1,297
  1,356
  1,419
  1,486
  1,555
  1,629
  1,707
  1,788
  1,874
  1,965
  2,060
  2,160
Total debt, $m
  232
  274
  322
  376
  435
  501
  572
  649
  732
  821
  917
  1,019
  1,127
  1,242
  1,364
  1,494
  1,631
  1,776
  1,929
  2,091
  2,262
  2,442
  2,632
  2,832
  3,042
  3,264
  3,498
  3,743
  4,001
  4,273
Total liabilities, $m
  1,824
  1,866
  1,914
  1,968
  2,027
  2,093
  2,164
  2,241
  2,324
  2,413
  2,509
  2,611
  2,719
  2,834
  2,956
  3,086
  3,223
  3,368
  3,521
  3,683
  3,854
  4,034
  4,224
  4,424
  4,634
  4,856
  5,090
  5,335
  5,594
  5,865
Total equity, $m
  1,008
  1,031
  1,058
  1,088
  1,121
  1,157
  1,196
  1,239
  1,285
  1,334
  1,387
  1,443
  1,503
  1,567
  1,634
  1,706
  1,782
  1,862
  1,947
  2,036
  2,130
  2,230
  2,335
  2,445
  2,562
  2,684
  2,813
  2,949
  3,092
  3,242
Total liabilities and equity, $m
  2,832
  2,897
  2,972
  3,056
  3,148
  3,250
  3,360
  3,480
  3,609
  3,747
  3,896
  4,054
  4,222
  4,401
  4,590
  4,792
  5,005
  5,230
  5,468
  5,719
  5,984
  6,264
  6,559
  6,869
  7,196
  7,540
  7,903
  8,284
  8,686
  9,107
Debt-to-equity ratio
  0.230
  0.270
  0.300
  0.350
  0.390
  0.430
  0.480
  0.520
  0.570
  0.620
  0.660
  0.710
  0.750
  0.790
  0.830
  0.880
  0.920
  0.950
  0.990
  1.030
  1.060
  1.100
  1.130
  1.160
  1.190
  1.220
  1.240
  1.270
  1.290
  1.320
Adjusted equity ratio
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  148
  150
  153
  159
  166
  174
  184
  196
  210
  225
  247
  266
  286
  308
  333
  359
  387
  418
  451
  487
  524
  565
  608
  655
  704
  757
  813
  872
  936
  1,003
Depreciation, amort., depletion, $m
  31
  32
  32
  33
  34
  35
  36
  37
  38
  39
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  70
  73
  77
Funds from operations, $m
  179
  181
  186
  192
  199
  209
  220
  233
  247
  264
  280
  300
  321
  345
  371
  399
  429
  462
  497
  535
  575
  618
  664
  713
  765
  820
  879
  942
  1,009
  1,079
Change in working capital, $m
  13
  15
  18
  20
  22
  24
  26
  28
  31
  33
  35
  37
  40
  42
  45
  48
  51
  53
  56
  60
  63
  66
  70
  74
  78
  82
  86
  90
  95
  100
Cash from operations, $m
  166
  166
  168
  172
  178
  185
  194
  204
  217
  231
  245
  262
  282
  303
  326
  352
  379
  409
  441
  475
  512
  551
  594
  639
  687
  739
  793
  852
  913
  979
Maintenance CAPEX, $m
  -23
  -24
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -63
  -66
  -70
  -73
New CAPEX, $m
  -8
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
Cash from investing activities, $m
  -31
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -40
  -42
  -45
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -85
  -90
  -94
  -100
  -104
Free cash flow, $m
  135
  137
  138
  141
  145
  151
  158
  167
  178
  190
  202
  218
  235
  254
  275
  298
  323
  350
  379
  410
  444
  480
  519
  561
  605
  653
  703
  757
  814
  875
Issuance/(repayment) of debt, $m
  35
  42
  48
  54
  60
  65
  71
  77
  83
  89
  95
  102
  108
  115
  122
  130
  137
  145
  153
  162
  171
  180
  190
  200
  211
  222
  233
  246
  258
  272
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  
  35
  42
  48
  54
  60
  65
  71
  77
  83
  89
  95
  102
  108
  115
  122
  130
  137
  145
  153
  162
  171
  180
  190
  200
  211
  222
  233
  246
  258
  272
Total cash flow (excl. dividends), $m
  170
  179
  186
  195
  205
  216
  230
  244
  261
  279
  298
  320
  343
  369
  397
  428
  460
  495
  532
  572
  615
  661
  709
  761
  816
  874
  936
  1,003
  1,073
  1,147
Retained Cash Flow (-), $m
  -21
  -23
  -27
  -30
  -33
  -36
  -39
  -43
  -46
  -49
  -53
  -56
  -60
  -64
  -68
  -72
  -76
  -80
  -85
  -89
  -94
  -100
  -105
  -111
  -116
  -123
  -129
  -136
  -143
  -150
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
  149
  156
  160
  165
  172
  180
  190
  202
  215
  230
  245
  263
  284
  306
  330
  356
  384
  415
  448
  483
  521
  561
  604
  650
  699
  752
  807
  867
  930
  997
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
  143
  143
  139
  136
  133
  131
  128
  126
  124
  121
  116
  112
  108
  103
  97
  90
  84
  76
  69
  61
  54
  47
  40
  33
  27
  22
  17
  13
  10
  8
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

Insight Enterprises, Inc. is engaged in providing information technology (IT) hardware, software, and cloud and service solutions to business, government, healthcare and educational clients. The Company operates through three segments: North America, EMEA and APAC. North America comprises the United States and Canada; EMEA comprises Europe, the Middle East and Africa, and APAC comprises Asia Pacific. The Company consults, designs, implements and manages integrated IT solutions for its customers. Its offerings in North America and select countries in Europe, the Middle East and Africa include a suite of IT hardware, software and services solutions. Its offerings in the remainder of EMEA and APAC segments are software and select software-related services. Its cloud management platform serves as a marketplace for its clients to buy and manage their cloud subscriptions with options that manage their software-as-a-service and infrastructure-as-a-service management capabilities.

FINANCIAL RATIOS  of  Insight Enterprises, Inc. (NSIT)

Valuation Ratios
P/E Ratio 23.1
Price to Sales 0.4
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 20.5
Price to Free Cash Flow 23.4
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.7%
Cap. Spend. - 3 Yr. Gr. Rate -8.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 5.8%
Total Debt to Equity 5.8%
Interest Coverage 36
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 11.1%
Ret/ On T. Cap. - 3 Yr. Avg. 10.2%
Return On Equity 12.2%
Return On Equity - 3 Yr. Avg. 11.2%
Asset Turnover 2.6
Profitability Ratios
Gross Margin 13.5%
Gross Margin - 3 Yr. Avg. 13.4%
EBITDA Margin 3.3%
EBITDA Margin - 3 Yr. Avg. 3.1%
Operating Margin 2.7%
Oper. Margin - 3 Yr. Avg. 2.5%
Pre-Tax Margin 2.5%
Pre-Tax Margin - 3 Yr. Avg. 2.4%
Net Profit Margin 1.5%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate 38.8%
Eff/ Tax Rate - 3 Yr. Avg. 37.9%
Payout Ratio 0%

NSIT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NSIT stock intrinsic value calculation we used $7080 million for the last fiscal year's total revenue generated by Insight Enterprises, Inc.. The default revenue input number comes from 0001 income statement of Insight Enterprises, 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 NSIT 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 NSIT is calculated based on our internal credit rating of Insight Enterprises, 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 Insight Enterprises, 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 NSIT stock the variable cost ratio is equal to 86.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $732 million in the base year in the intrinsic value calculation for NSIT 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 8.9% for Insight Enterprises, Inc..

Corporate tax rate of 27% is the nominal tax rate for Insight Enterprises, 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 NSIT 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 NSIT are equal to 2.9%.

Life of production assets of 8.8 years is the average useful life of capital assets used in Insight Enterprises, 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 NSIT is equal to 9.3%. 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 - $986.989 million for Insight Enterprises, 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 35.526 million for Insight Enterprises, 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 Insight Enterprises, Inc. at the current share price and the inputted number of shares is $2.0 billion.

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