Intrinsic value of QuinStreet, Inc. - QNST

Previous Close

$11.55

  Intrinsic Value

$37.00

stock screener

  Rating & Target

str. buy

+220%

Previous close

$11.55

 
Intrinsic value

$37.00

 
Up/down potential

+220%

 
Rating

str. buy

We calculate the intrinsic value of QNST 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 0.6

 

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, %
  19.00
  17.60
  16.34
  15.21
  14.19
  13.27
  12.44
  11.70
  11.03
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.90
  5.81
  5.73
  5.66
Revenue, $m
  481
  565
  658
  758
  865
  980
  1,102
  1,231
  1,367
  1,509
  1,658
  1,814
  1,976
  2,145
  2,321
  2,504
  2,695
  2,892
  3,098
  3,311
  3,533
  3,764
  4,004
  4,254
  4,514
  4,785
  5,068
  5,362
  5,670
  5,991
Variable operating expenses, $m
  345
  404
  469
  539
  615
  696
  781
  872
  967
  1,067
  1,165
  1,274
  1,388
  1,507
  1,631
  1,759
  1,893
  2,032
  2,176
  2,326
  2,482
  2,644
  2,812
  2,988
  3,171
  3,361
  3,560
  3,767
  3,983
  4,208
Fixed operating expenses, $m
  101
  103
  106
  108
  110
  113
  115
  118
  120
  123
  126
  129
  131
  134
  137
  140
  143
  146
  150
  153
  156
  160
  163
  167
  171
  174
  178
  182
  186
  190
Total operating expenses, $m
  446
  507
  575
  647
  725
  809
  896
  990
  1,087
  1,190
  1,291
  1,403
  1,519
  1,641
  1,768
  1,899
  2,036
  2,178
  2,326
  2,479
  2,638
  2,804
  2,975
  3,155
  3,342
  3,535
  3,738
  3,949
  4,169
  4,398
Operating income, $m
  35
  58
  83
  110
  140
  172
  206
  241
  279
  319
  368
  411
  457
  504
  554
  605
  659
  714
  772
  832
  895
  960
  1,028
  1,099
  1,173
  1,250
  1,330
  1,414
  1,501
  1,592
EBITDA, $m
  47
  71
  97
  125
  156
  189
  224
  261
  300
  341
  385
  430
  477
  526
  577
  631
  686
  744
  804
  866
  931
  999
  1,069
  1,142
  1,219
  1,298
  1,382
  1,468
  1,559
  1,654
Interest expense (income), $m
  0
  0
  1
  2
  2
  3
  4
  6
  7
  8
  9
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
Earnings before tax, $m
  35
  57
  81
  108
  137
  167
  200
  235
  271
  310
  357
  399
  443
  489
  537
  587
  638
  692
  748
  806
  867
  930
  996
  1,064
  1,136
  1,210
  1,288
  1,369
  1,453
  1,542
Tax expense, $m
  9
  15
  22
  29
  37
  45
  54
  63
  73
  84
  96
  108
  120
  132
  145
  158
  172
  187
  202
  218
  234
  251
  269
  287
  307
  327
  348
  370
  392
  416
Net income, $m
  25
  42
  59
  79
  100
  122
  146
  171
  198
  226
  261
  291
  324
  357
  392
  428
  466
  505
  546
  589
  633
  679
  727
  777
  829
  883
  940
  999
  1,061
  1,125

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
  262
  308
  359
  413
  472
  534
  601
  671
  745
  823
  904
  989
  1,078
  1,170
  1,266
  1,366
  1,469
  1,577
  1,689
  1,805
  1,926
  2,052
  2,183
  2,319
  2,461
  2,609
  2,763
  2,924
  3,091
  3,266
Adjusted assets (=assets-cash), $m
  262
  308
  359
  413
  472
  534
  601
  671
  745
  823
  904
  989
  1,078
  1,170
  1,266
  1,366
  1,469
  1,577
  1,689
  1,805
  1,926
  2,052
  2,183
  2,319
  2,461
  2,609
  2,763
  2,924
  3,091
  3,266
Revenue / Adjusted assets
  1.836
  1.834
  1.833
  1.835
  1.833
  1.835
  1.834
  1.835
  1.835
  1.834
  1.834
  1.834
  1.833
  1.833
  1.833
  1.833
  1.835
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
  1.834
Average production assets, $m
  45
  53
  61
  70
  80
  91
  102
  114
  127
  140
  154
  169
  184
  200
  216
  233
  251
  269
  288
  308
  329
  350
  372
  396
  420
  445
  471
  499
  527
  557
Working capital, $m
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
Total debt, $m
  14
  29
  45
  63
  82
  103
  125
  147
  172
  197
  224
  251
  280
  311
  342
  375
  408
  444
  480
  518
  558
  599
  642
  686
  733
  781
  832
  884
  939
  996
Total liabilities, $m
  86
  101
  117
  135
  154
  175
  196
  219
  244
  269
  296
  323
  352
  383
  414
  447
  480
  516
  552
  590
  630
  671
  714
  758
  805
  853
  904
  956
  1,011
  1,068
Total equity, $m
  176
  207
  241
  278
  318
  360
  404
  452
  501
  554
  608
  666
  725
  787
  852
  919
  989
  1,061
  1,137
  1,215
  1,296
  1,381
  1,469
  1,561
  1,656
  1,756
  1,860
  1,968
  2,081
  2,198
Total liabilities and equity, $m
  262
  308
  358
  413
  472
  535
  600
  671
  745
  823
  904
  989
  1,077
  1,170
  1,266
  1,366
  1,469
  1,577
  1,689
  1,805
  1,926
  2,052
  2,183
  2,319
  2,461
  2,609
  2,764
  2,924
  3,092
  3,266
Debt-to-equity ratio
  0.080
  0.140
  0.190
  0.230
  0.260
  0.290
  0.310
  0.330
  0.340
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.430
  0.440
  0.440
  0.440
  0.440
  0.450
  0.450
  0.450
  0.450
Adjusted equity ratio
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  42
  59
  79
  100
  122
  146
  171
  198
  226
  261
  291
  324
  357
  392
  428
  466
  505
  546
  589
  633
  679
  727
  777
  829
  883
  940
  999
  1,061
  1,125
Depreciation, amort., depletion, $m
  12
  13
  14
  15
  16
  17
  18
  20
  21
  23
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
Funds from operations, $m
  37
  54
  73
  94
  116
  139
  164
  191
  219
  249
  278
  310
  344
  379
  416
  454
  494
  535
  578
  623
  669
  717
  768
  820
  875
  932
  992
  1,054
  1,119
  1,187
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
Cash from operations, $m
  36
  53
  72
  92
  114
  138
  163
  189
  217
  247
  276
  308
  342
  377
  413
  452
  491
  532
  575
  620
  666
  715
  765
  817
  872
  929
  988
  1,050
  1,115
  1,183
Maintenance CAPEX, $m
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
New CAPEX, $m
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
Cash from investing activities, $m
  -11
  -13
  -15
  -16
  -18
  -20
  -21
  -23
  -26
  -27
  -29
  -31
  -34
  -36
  -38
  -41
  -44
  -46
  -49
  -52
  -55
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -84
  -88
Free cash flow, $m
  25
  41
  58
  76
  97
  118
  142
  166
  192
  220
  246
  277
  308
  341
  375
  411
  448
  487
  527
  568
  612
  657
  704
  753
  804
  858
  913
  971
  1,032
  1,095
Issuance/(repayment) of debt, $m
  14
  15
  16
  18
  19
  20
  22
  23
  24
  25
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  53
  55
  57
Issuance/(repurchase) of shares, $m
  3
  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  
  17
  15
  16
  18
  19
  20
  22
  23
  24
  25
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  53
  55
  57
Total cash flow (excl. dividends), $m
  42
  56
  74
  94
  116
  139
  163
  189
  216
  245
  273
  304
  337
  371
  407
  443
  482
  522
  563
  606
  651
  698
  747
  798
  851
  906
  964
  1,024
  1,087
  1,152
Retained Cash Flow (-), $m
  -28
  -31
  -34
  -37
  -39
  -42
  -45
  -47
  -50
  -52
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -73
  -75
  -78
  -81
  -85
  -88
  -92
  -95
  -99
  -104
  -108
  -113
  -118
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
  14
  25
  40
  58
  76
  97
  119
  142
  167
  193
  218
  247
  277
  309
  342
  376
  412
  449
  488
  528
  570
  614
  659
  706
  755
  806
  860
  916
  974
  1,035
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
  13
  23
  35
  47
  59
  70
  80
  89
  96
  101
  104
  106
  105
  104
  100
  96
  90
  83
  75
  67
  59
  51
  43
  36
  29
  24
  18
  14
  11
  8
Current shareholders' claim on cash, %
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
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  99.5
  99.5

QuinStreet, Inc. is an online performance marketing company. The Company provides vertically oriented customer acquisition programs for its clients. The Company operating segments include Direct Marketing Services (DMS) business. Its DMS business derives its net revenue from fees earned through the delivery of qualified leads, clicks, calls or customers, and display advertisements, or impressions. Client verticals within its DMS business are education and financial services. The Company’s primary client verticals are the education and financial services industries. It has presence in the business-to-business technology, home services and medical industries. The Company delivers marketing results to its clients in the form of a qualified lead or inquiry, in the form of a qualified click, or call.

FINANCIAL RATIOS  of  QuinStreet, Inc. (QNST)

Valuation Ratios
P/E Ratio -43.7
Price to Sales 1.7
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 27.6
Price to Free Cash Flow 32.8
Growth Rates
Sales Growth Rate 0.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -40%
Cap. Spend. - 3 Yr. Gr. Rate -22.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -6.5%
Ret/ On Assets - 3 Yr. Avg. -7.5%
Return On Total Capital -9.3%
Ret/ On T. Cap. - 3 Yr. Avg. -11%
Return On Equity -9.9%
Return On Equity - 3 Yr. Avg. -12.9%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 10%
Gross Margin - 3 Yr. Avg. 9.9%
EBITDA Margin -0.7%
EBITDA Margin - 3 Yr. Avg. -0.3%
Operating Margin -3.3%
Oper. Margin - 3 Yr. Avg. -5.5%
Pre-Tax Margin -4.3%
Pre-Tax Margin - 3 Yr. Avg. -5.9%
Net Profit Margin -4%
Net Profit Margin - 3 Yr. Avg. -5.8%
Effective Tax Rate 7.7%
Eff/ Tax Rate - 3 Yr. Avg. 2.6%
Payout Ratio 0%

QNST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QNST stock intrinsic value calculation we used $404 million for the last fiscal year's total revenue generated by QuinStreet, Inc.. The default revenue input number comes from 0001 income statement of QuinStreet, 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 QNST stock valuation model: a) initial revenue growth rate of 19% 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 QNST is calculated based on our internal credit rating of QuinStreet, 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 QuinStreet, 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 QNST stock the variable cost ratio is equal to 72%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $99 million in the base year in the intrinsic value calculation for QNST 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 QuinStreet, Inc..

Corporate tax rate of 27% is the nominal tax rate for QuinStreet, 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 QNST 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 QNST are equal to 9.3%.

Life of production assets of 9.1 years is the average useful life of capital assets used in QuinStreet, 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 QNST is equal to 1.2%. 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 - $148.326 million for QuinStreet, 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 49.807 million for QuinStreet, 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 QuinStreet, Inc. at the current share price and the inputted number of shares is $0.6 billion.

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