Intrinsic value of Quantum - QTM

Previous Close

$2.49

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.49

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of QTM 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 0.1

 

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, %
  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
  515
  527
  541
  556
  573
  591
  612
  633
  657
  682
  709
  738
  768
  801
  836
  872
  911
  952
  995
  1,041
  1,089
  1,140
  1,194
  1,250
  1,310
  1,372
  1,438
  1,508
  1,581
  1,658
Variable operating expenses, $m
  589
  603
  618
  636
  655
  676
  699
  724
  751
  780
  810
  843
  878
  916
  955
  997
  1,041
  1,088
  1,138
  1,190
  1,245
  1,303
  1,364
  1,429
  1,497
  1,569
  1,644
  1,723
  1,807
  1,895
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
  589
  603
  618
  636
  655
  676
  699
  724
  751
  780
  810
  843
  878
  916
  955
  997
  1,041
  1,088
  1,138
  1,190
  1,245
  1,303
  1,364
  1,429
  1,497
  1,569
  1,644
  1,723
  1,807
  1,895
Operating income, $m
  -74
  -75
  -77
  -80
  -82
  -85
  -87
  -91
  -94
  -98
  -101
  -106
  -110
  -115
  -119
  -125
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -179
  -187
  -196
  -206
  -216
  -226
  -237
EBITDA, $m
  -71
  -73
  -75
  -77
  -79
  -82
  -85
  -88
  -91
  -94
  -98
  -102
  -106
  -111
  -115
  -121
  -126
  -132
  -138
  -144
  -151
  -158
  -165
  -173
  -181
  -190
  -199
  -208
  -218
  -229
Interest expense (income), $m
  6
  8
  0
  0
  0
  1
  1
  1
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
Earnings before tax, $m
  -81
  -75
  -77
  -80
  -83
  -86
  -89
  -92
  -96
  -101
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -195
  -205
  -215
  -226
  -237
  -250
  -262
Tax expense, $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
Net income, $m
  -81
  -75
  -77
  -80
  -83
  -86
  -89
  -92
  -96
  -101
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -195
  -205
  -215
  -226
  -237
  -250
  -262

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
  230
  235
  241
  248
  255
  264
  273
  282
  293
  304
  316
  329
  342
  357
  372
  389
  406
  424
  444
  464
  485
  508
  532
  557
  584
  612
  641
  672
  704
  739
Adjusted assets (=assets-cash), $m
  230
  235
  241
  248
  255
  264
  273
  282
  293
  304
  316
  329
  342
  357
  372
  389
  406
  424
  444
  464
  485
  508
  532
  557
  584
  612
  641
  672
  704
  739
Revenue / Adjusted assets
  2.239
  2.243
  2.245
  2.242
  2.247
  2.239
  2.242
  2.245
  2.242
  2.243
  2.244
  2.243
  2.246
  2.244
  2.247
  2.242
  2.244
  2.245
  2.241
  2.244
  2.245
  2.244
  2.244
  2.244
  2.243
  2.242
  2.243
  2.244
  2.246
  2.244
Average production assets, $m
  12
  13
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
Working capital, $m
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Total debt, $m
  -6
  -2
  4
  10
  17
  24
  32
  41
  50
  60
  71
  83
  95
  108
  122
  137
  152
  169
  186
  204
  224
  244
  266
  288
  312
  337
  364
  392
  421
  452
Total liabilities, $m
  207
  211
  217
  223
  230
  237
  245
  254
  263
  274
  284
  296
  308
  321
  335
  350
  365
  382
  399
  418
  437
  457
  479
  501
  525
  550
  577
  605
  634
  665
Total equity, $m
  23
  23
  24
  25
  26
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
Total liabilities and equity, $m
  230
  234
  241
  248
  256
  263
  272
  282
  292
  304
  316
  329
  342
  357
  372
  389
  406
  424
  443
  464
  486
  508
  532
  557
  583
  611
  641
  672
  704
  739
Debt-to-equity ratio
  -0.280
  -0.070
  0.160
  0.400
  0.650
  0.910
  1.180
  1.450
  1.720
  1.990
  2.250
  2.520
  2.780
  3.030
  3.280
  3.520
  3.750
  3.970
  4.190
  4.400
  4.610
  4.800
  4.990
  5.170
  5.350
  5.510
  5.670
  5.830
  5.970
  6.110
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -81
  -75
  -77
  -80
  -83
  -86
  -89
  -92
  -96
  -101
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -195
  -205
  -215
  -226
  -237
  -250
  -262
Depreciation, amort., depletion, $m
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
Funds from operations, $m
  -79
  -72
  -75
  -77
  -80
  -83
  -86
  -89
  -93
  -97
  -102
  -106
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -163
  -171
  -180
  -189
  -198
  -208
  -219
  -230
  -242
  -254
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  -79
  -73
  -75
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -102
  -107
  -112
  -117
  -122
  -128
  -135
  -141
  -148
  -156
  -163
  -172
  -180
  -189
  -199
  -209
  -220
  -231
  -243
  -255
Maintenance CAPEX, $m
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -9
  -10
Free cash flow, $m
  -82
  -75
  -78
  -80
  -83
  -86
  -90
  -93
  -97
  -101
  -106
  -111
  -116
  -121
  -127
  -133
  -140
  -147
  -154
  -161
  -170
  -178
  -187
  -196
  -206
  -217
  -228
  -240
  -252
  -265
Issuance/(repayment) of debt, $m
  -134
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
Issuance/(repurchase) of shares, $m
  220
  76
  78
  80
  83
  86
  90
  93
  97
  102
  106
  111
  116
  122
  128
  134
  140
  147
  154
  162
  170
  179
  188
  197
  207
  218
  229
  241
  253
  266
Cash from financing (excl. dividends), $m  
  86
  81
  83
  86
  90
  93
  98
  102
  106
  112
  117
  123
  128
  135
  142
  149
  156
  163
  171
  180
  189
  199
  210
  220
  231
  243
  255
  269
  282
  297
Total cash flow (excl. dividends), $m
  4
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
Retained Cash Flow (-), $m
  -220
  -76
  -78
  -80
  -83
  -86
  -90
  -93
  -97
  -102
  -106
  -111
  -116
  -122
  -128
  -134
  -140
  -147
  -154
  -162
  -170
  -179
  -188
  -197
  -207
  -218
  -229
  -241
  -253
  -266
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
  -216
  -71
  -72
  -74
  -76
  -79
  -81
  -84
  -88
  -91
  -95
  -99
  -104
  -108
  -113
  -118
  -124
  -130
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
  -212
  -223
  -234
Discount rate, %
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.68
  21.72
  22.80
  23.94
  25.14
  26.40
  27.72
  29.10
  30.56
  32.09
  33.69
  35.38
  37.15
  39.00
  40.95
  43.00
  45.15
  47.41
  49.78
  52.27
  54.88
  57.63
  60.51
PV of cash for distribution, $m
  -188
  -53
  -46
  -40
  -34
  -28
  -23
  -19
  -15
  -12
  -9
  -7
  -5
  -4
  -2
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  11.7
  2.7
  0.6
  0.1
  0.0
  0.0
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Quantum Corporation focuses on scale-out storage, archive and data protection, providing solutions for capturing, sharing, managing and preserving digital assets over the entire data lifecycle. The Company's end-to-end tiered storage solutions enable users to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. It works with a network of distributors, value-added resellers (VARs), direct marketing resellers (DMRs), original equipment manufacturers (OEMs) and other suppliers to meet customers' evolving needs. Its scale-out storage portfolio includes StorNext software, appliances and full systems called StorNext Pro Solutions, as well as Xcellis workflow storage, QXS disk storage, Lattus extended online storage and Q-Cloud Archive and Vault services. Its StorNext offerings enable customers to manage large unstructured data sets in an information workflow.

FINANCIAL RATIOS  of  Quantum (QTM)

Valuation Ratios
P/E Ratio 21.2
Price to Sales 0.2
Price to Book -0.7
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 12.1
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -19.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity -56%
Total Debt to Equity -110.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. -4.2%
Return On Total Capital 38.1%
Ret/ On T. Cap. - 3 Yr. Avg. -32%
Return On Equity -3.3%
Return On Equity - 3 Yr. Avg. 18.4%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 42.2%
Gross Margin - 3 Yr. Avg. 43%
EBITDA Margin 3.2%
EBITDA Margin - 3 Yr. Avg. -0.9%
Operating Margin 2.4%
Oper. Margin - 3 Yr. Avg. -3.2%
Pre-Tax Margin 1%
Pre-Tax Margin - 3 Yr. Avg. -3.8%
Net Profit Margin 0.8%
Net Profit Margin - 3 Yr. Avg. -4%
Effective Tax Rate 20%
Eff/ Tax Rate - 3 Yr. Avg. 8.1%
Payout Ratio 0%

QTM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QTM stock intrinsic value calculation we used $505.345 million for the last fiscal year's total revenue generated by Quantum. The default revenue input number comes from 0001 income statement of Quantum. 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 QTM 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 14.7%, whose default value for QTM is calculated based on our internal credit rating of Quantum, 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 Quantum.
    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 QTM stock the variable cost ratio is equal to 114.3%.

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 QTM 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 6% for Quantum.

Corporate tax rate of 27% is the nominal tax rate for Quantum. 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 QTM 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 QTM are equal to 2.4%.

Life of production assets of 2.2 years is the average useful life of capital assets used in Quantum 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 QTM 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 - $-115.999 million for Quantum - 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 34.674 million for Quantum 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 Quantum at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ [$$] UK scientists build worlds first quantum compass   [Nov-09-18 12:51AM  Financial Times]
▶ [$$] Fun facts about quantum computing   [06:32AM  Financial Times]
▶ Former Symantec CEO named to head Defense Departments Silicon Valley unit   [Sep-24-18 05:32PM  American City Business Journals]
▶ Global Distribution Acquires Symply Inc.   [Jul-02-18 09:07AM  PR Newswire]

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