Intrinsic value of Rimini Street - RMNI

Previous Close

$5.39

  Intrinsic Value

$7.89

stock screener

  Rating & Target

buy

+46%

Previous close

$5.39

 
Intrinsic value

$7.89

 
Up/down potential

+46%

 
Rating

buy

We calculate the intrinsic value of RMNI 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 0.3

 

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, %
  21.90
  20.21
  18.69
  17.32
  16.09
  14.98
  13.98
  13.08
  12.27
  11.55
  10.89
  10.30
  9.77
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
Revenue, $m
  259
  312
  370
  434
  504
  579
  660
  746
  838
  935
  1,037
  1,143
  1,255
  1,372
  1,494
  1,620
  1,752
  1,889
  2,031
  2,179
  2,333
  2,493
  2,659
  2,832
  3,011
  3,199
  3,393
  3,596
  3,808
  4,029
Variable operating expenses, $m
  218
  262
  311
  364
  423
  486
  554
  627
  704
  785
  871
  961
  1,054
  1,152
  1,255
  1,361
  1,472
  1,587
  1,706
  1,831
  1,960
  2,094
  2,233
  2,379
  2,530
  2,687
  2,850
  3,021
  3,199
  3,384
Fixed operating expenses, $m
  11
  11
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
Total operating expenses, $m
  229
  273
  323
  376
  435
  499
  567
  640
  717
  799
  885
  975
  1,069
  1,167
  1,270
  1,377
  1,488
  1,603
  1,723
  1,848
  1,977
  2,112
  2,251
  2,398
  2,549
  2,706
  2,870
  3,041
  3,220
  3,405
Operating income, $m
  30
  38
  47
  57
  68
  80
  93
  106
  121
  136
  152
  169
  186
  205
  224
  244
  264
  286
  308
  332
  356
  381
  407
  435
  463
  492
  523
  555
  589
  623
EBITDA, $m
  31
  40
  49
  59
  70
  83
  96
  109
  124
  140
  156
  173
  192
  210
  230
  250
  272
  294
  317
  341
  366
  392
  418
  446
  476
  506
  537
  570
  605
  640
Interest expense (income), $m
  0
  42
  -59
  -46
  -30
  -13
  5
  25
  46
  69
  93
  118
  145
  173
  203
  234
  266
  299
  334
  370
  407
  446
  487
  529
  573
  618
  665
  715
  766
  819
  875
Earnings before tax, $m
  -12
  98
  93
  88
  82
  75
  68
  60
  52
  43
  33
  23
  13
  2
  -10
  -22
  -35
  -48
  -61
  -76
  -90
  -106
  -121
  -138
  -155
  -173
  -191
  -211
  -231
  -252
Tax expense, $m
  0
  26
  25
  24
  22
  20
  18
  16
  14
  12
  9
  6
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -12
  71
  68
  64
  60
  55
  50
  44
  38
  31
  24
  17
  9
  1
  -10
  -22
  -35
  -48
  -61
  -76
  -90
  -106
  -121
  -138
  -155
  -173
  -191
  -211
  -231
  -252

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
  149
  179
  212
  249
  289
  332
  379
  428
  481
  536
  595
  656
  720
  787
  857
  930
  1,005
  1,084
  1,165
  1,250
  1,338
  1,430
  1,525
  1,625
  1,728
  1,835
  1,947
  2,063
  2,185
  2,311
Adjusted assets (=assets-cash), $m
  149
  179
  212
  249
  289
  332
  379
  428
  481
  536
  595
  656
  720
  787
  857
  930
  1,005
  1,084
  1,165
  1,250
  1,338
  1,430
  1,525
  1,625
  1,728
  1,835
  1,947
  2,063
  2,185
  2,311
Revenue / Adjusted assets
  1.738
  1.743
  1.745
  1.743
  1.744
  1.744
  1.741
  1.743
  1.742
  1.744
  1.743
  1.742
  1.743
  1.743
  1.743
  1.742
  1.743
  1.743
  1.743
  1.743
  1.744
  1.743
  1.744
  1.743
  1.742
  1.743
  1.743
  1.743
  1.743
  1.743
Average production assets, $m
  5
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  26
  29
  31
  34
  37
  40
  43
  46
  49
  52
  56
  59
  63
  67
  71
  76
  80
  85
Working capital, $m
  -172
  -207
  -245
  -288
  -334
  -384
  -438
  -495
  -556
  -620
  -687
  -758
  -832
  -910
  -990
  -1,074
  -1,162
  -1,252
  -1,347
  -1,445
  -1,547
  -1,653
  -1,763
  -1,877
  -1,997
  -2,121
  -2,250
  -2,384
  -2,525
  -2,671
Total debt, $m
  -117
  -89
  -59
  -26
  10
  49
  90
  135
  182
  232
  285
  340
  398
  458
  521
  586
  654
  725
  799
  875
  954
  1,037
  1,123
  1,212
  1,305
  1,401
  1,502
  1,607
  1,716
  1,830
Total liabilities, $m
  134
  161
  191
  224
  260
  299
  341
  385
  433
  483
  535
  590
  648
  708
  771
  837
  905
  975
  1,049
  1,125
  1,205
  1,287
  1,373
  1,462
  1,555
  1,652
  1,752
  1,857
  1,966
  2,080
Total equity, $m
  15
  18
  21
  25
  29
  33
  38
  43
  48
  54
  59
  66
  72
  79
  86
  93
  101
  108
  117
  125
  134
  143
  153
  162
  173
  184
  195
  206
  218
  231
Total liabilities and equity, $m
  149
  179
  212
  249
  289
  332
  379
  428
  481
  537
  594
  656
  720
  787
  857
  930
  1,006
  1,083
  1,166
  1,250
  1,339
  1,430
  1,526
  1,624
  1,728
  1,836
  1,947
  2,063
  2,184
  2,311
Debt-to-equity ratio
  -7.840
  -5.010
  -2.800
  -1.060
  0.340
  1.460
  2.390
  3.150
  3.790
  4.330
  4.790
  5.180
  5.520
  5.820
  6.080
  6.310
  6.510
  6.690
  6.850
  7.000
  7.130
  7.250
  7.360
  7.460
  7.550
  7.640
  7.710
  7.790
  7.850
  7.920
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
  -12
  71
  68
  64
  60
  55
  50
  44
  38
  31
  24
  17
  9
  1
  -10
  -22
  -35
  -48
  -61
  -76
  -90
  -106
  -121
  -138
  -155
  -173
  -191
  -211
  -231
  -252
Depreciation, amort., depletion, $m
  1
  1
  2
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
Funds from operations, $m
  -11
  73
  69
  66
  62
  57
  52
  47
  41
  35
  29
  22
  15
  7
  -4
  -15
  -27
  -40
  -53
  -66
  -80
  -95
  -110
  -126
  -142
  -160
  -177
  -196
  -215
  -235
Change in working capital, $m
  -31
  -35
  -39
  -42
  -46
  -50
  -54
  -57
  -61
  -64
  -68
  -71
  -74
  -77
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -135
  -140
  -146
Cash from operations, $m
  20
  107
  108
  108
  108
  107
  106
  104
  102
  99
  96
  93
  89
  84
  77
  69
  60
  51
  42
  32
  21
  11
  0
  -12
  -23
  -35
  -48
  -61
  -74
  -88
Maintenance CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
Cash from investing activities, $m
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -15
  -16
  -17
  -17
  -18
  -19
  -21
Free cash flow, $m
  18
  105
  106
  105
  105
  104
  102
  100
  97
  94
  90
  86
  82
  77
  69
  60
  51
  41
  31
  20
  9
  -2
  -14
  -26
  -39
  -52
  -66
  -80
  -94
  -109
Issuance/(repayment) of debt, $m
  -199
  27
  30
  33
  36
  39
  42
  45
  47
  50
  53
  55
  58
  60
  63
  65
  68
  71
  74
  76
  79
  83
  86
  89
  93
  97
  101
  105
  109
  114
Issuance/(repurchase) of shares, $m
  237
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  5
  17
  29
  42
  56
  70
  84
  99
  115
  131
  148
  165
  184
  203
  222
  243
  264
Cash from financing (excl. dividends), $m  
  38
  27
  30
  33
  36
  39
  42
  45
  47
  50
  53
  55
  58
  65
  80
  94
  110
  127
  144
  160
  178
  198
  217
  237
  258
  281
  304
  327
  352
  378
Total cash flow (excl. dividends), $m
  57
  132
  136
  138
  141
  143
  144
  144
  144
  144
  143
  141
  139
  142
  148
  155
  161
  167
  174
  180
  188
  195
  203
  211
  219
  228
  238
  248
  258
  269
Retained Cash Flow (-), $m
  -237
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -17
  -29
  -42
  -56
  -70
  -84
  -99
  -115
  -131
  -148
  -165
  -184
  -203
  -222
  -243
  -264
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
  -180
  129
  132
  135
  137
  138
  139
  139
  139
  138
  137
  135
  133
  136
  132
  125
  119
  112
  104
  96
  88
  80
  72
  63
  54
  45
  35
  25
  15
  5
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
  -173
  118
  115
  111
  106
  100
  94
  87
  80
  72
  65
  58
  51
  46
  39
  32
  26
  21
  16
  12
  9
  7
  5
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  46.5
  38.3
  28.5
  19.6
  12.6
  7.7
  4.5
  2.5
  1.3
  0.7
  0.4
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0

FINANCIAL RATIOS  of  Rimini Street (RMNI)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

RMNI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RMNI stock intrinsic value calculation we used $212.633 million for the last fiscal year's total revenue generated by Rimini Street. The default revenue input number comes from 0001 income statement of Rimini Street. 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 RMNI stock valuation model: a) initial revenue growth rate of 21.9% 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 RMNI is calculated based on our internal credit rating of Rimini Street, 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 Rimini Street.
    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 RMNI stock the variable cost ratio is equal to 84%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11 million in the base year in the intrinsic value calculation for RMNI 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 51% for Rimini Street.

Corporate tax rate of 27% is the nominal tax rate for Rimini Street. 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 RMNI 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 RMNI are equal to 2.1%.

Life of production assets of 2.2 years is the average useful life of capital assets used in Rimini Street 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 RMNI is equal to -66.3%. 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 - $-210.301 million for Rimini Street - 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 63.008 million for Rimini Street 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 Rimini Street at the current share price and the inputted number of shares is $0.3 billion.