Intrinsic value of Rimini Street, Inc. - RMNI

Previous Close

$5.26

  Intrinsic Value

$10.62

stock screener

  Rating & Target

str. buy

+102%

Previous close

$5.26

 
Intrinsic value

$10.62

 
Up/down potential

+102%

 
Rating

str. 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, %
  16.90
  15.71
  14.64
  13.68
  12.81
  12.03
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.21
  6.98
  6.79
  6.61
  6.45
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
Revenue, $m
  296
  342
  392
  446
  503
  564
  627
  694
  765
  838
  915
  995
  1,078
  1,165
  1,255
  1,348
  1,445
  1,546
  1,651
  1,760
  1,874
  1,992
  2,115
  2,243
  2,376
  2,515
  2,660
  2,812
  2,970
  3,135
Variable operating expenses, $m
  265
  307
  352
  400
  451
  506
  563
  623
  686
  752
  821
  892
  967
  1,045
  1,125
  1,209
  1,296
  1,387
  1,481
  1,579
  1,681
  1,786
  1,897
  2,012
  2,131
  2,256
  2,386
  2,522
  2,664
  2,812
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
  265
  307
  352
  400
  451
  506
  563
  623
  686
  752
  821
  892
  967
  1,045
  1,125
  1,209
  1,296
  1,387
  1,481
  1,579
  1,681
  1,786
  1,897
  2,012
  2,131
  2,256
  2,386
  2,522
  2,664
  2,812
Operating income, $m
  30
  35
  40
  46
  52
  58
  65
  72
  79
  86
  94
  102
  111
  120
  129
  139
  149
  159
  170
  181
  193
  205
  218
  231
  245
  259
  274
  290
  306
  323
EBITDA, $m
  31
  36
  42
  47
  53
  60
  67
  74
  81
  89
  97
  106
  114
  124
  133
  143
  153
  164
  175
  187
  199
  212
  225
  238
  252
  267
  283
  299
  315
  333
Interest expense (income), $m
  0
  2
  -198
  -183
  -166
  -149
  -130
  -111
  -90
  -68
  -45
  -21
  4
  30
  57
  85
  114
  145
  176
  209
  243
  279
  316
  354
  394
  436
  480
  525
  572
  621
  673
Earnings before tax, $m
  29
  233
  223
  212
  201
  188
  175
  161
  147
  131
  115
  99
  81
  63
  44
  25
  4
  -17
  -39
  -62
  -86
  -111
  -137
  -163
  -191
  -220
  -251
  -282
  -316
  -350
Tax expense, $m
  8
  63
  60
  57
  54
  51
  47
  44
  40
  36
  31
  27
  22
  17
  12
  7
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  21
  170
  163
  155
  147
  138
  128
  118
  107
  96
  84
  72
  59
  46
  32
  18
  3
  -17
  -39
  -62
  -86
  -111
  -137
  -163
  -191
  -220
  -251
  -282
  -316
  -350

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
  139
  161
  184
  210
  236
  265
  295
  326
  359
  394
  430
  468
  507
  547
  590
  633
  679
  727
  776
  827
  880
  936
  994
  1,054
  1,117
  1,182
  1,250
  1,321
  1,396
  1,473
Adjusted assets (=assets-cash), $m
  139
  161
  184
  210
  236
  265
  295
  326
  359
  394
  430
  468
  507
  547
  590
  633
  679
  727
  776
  827
  880
  936
  994
  1,054
  1,117
  1,182
  1,250
  1,321
  1,396
  1,473
Revenue / Adjusted assets
  2.129
  2.124
  2.130
  2.124
  2.131
  2.128
  2.125
  2.129
  2.131
  2.127
  2.128
  2.126
  2.126
  2.130
  2.127
  2.130
  2.128
  2.127
  2.128
  2.128
  2.130
  2.128
  2.128
  2.128
  2.127
  2.128
  2.128
  2.129
  2.128
  2.128
Average production assets, $m
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
Working capital, $m
  -174
  -201
  -230
  -262
  -295
  -331
  -368
  -408
  -449
  -492
  -537
  -584
  -633
  -684
  -736
  -791
  -848
  -908
  -969
  -1,033
  -1,100
  -1,169
  -1,241
  -1,316
  -1,395
  -1,476
  -1,562
  -1,650
  -1,743
  -1,840
Total debt, $m
  -257
  -237
  -216
  -193
  -169
  -144
  -117
  -88
  -59
  -28
  5
  39
  74
  110
  148
  188
  229
  272
  316
  362
  410
  460
  512
  566
  623
  682
  743
  807
  874
  944
Total liabilities, $m
  125
  145
  166
  189
  213
  238
  265
  294
  323
  355
  387
  421
  456
  493
  531
  570
  611
  654
  698
  744
  792
  842
  894
  948
  1,005
  1,064
  1,125
  1,189
  1,256
  1,326
Total equity, $m
  14
  16
  18
  21
  24
  26
  29
  33
  36
  39
  43
  47
  51
  55
  59
  63
  68
  73
  78
  83
  88
  94
  99
  105
  112
  118
  125
  132
  140
  147
Total liabilities and equity, $m
  139
  161
  184
  210
  237
  264
  294
  327
  359
  394
  430
  468
  507
  548
  590
  633
  679
  727
  776
  827
  880
  936
  993
  1,053
  1,117
  1,182
  1,250
  1,321
  1,396
  1,473
Debt-to-equity ratio
  -18.490
  -14.760
  -11.730
  -9.230
  -7.160
  -5.430
  -3.960
  -2.710
  -1.630
  -0.700
  0.110
  0.830
  1.460
  2.020
  2.520
  2.970
  3.370
  3.740
  4.080
  4.380
  4.660
  4.920
  5.150
  5.370
  5.580
  5.770
  5.940
  6.110
  6.260
  6.410
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
  21
  170
  163
  155
  147
  138
  128
  118
  107
  96
  84
  72
  59
  46
  32
  18
  3
  -17
  -39
  -62
  -86
  -111
  -137
  -163
  -191
  -220
  -251
  -282
  -316
  -350
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
Funds from operations, $m
  22
  171
  164
  156
  148
  139
  130
  120
  110
  99
  87
  75
  63
  50
  36
  22
  8
  -12
  -34
  -57
  -80
  -104
  -130
  -156
  -184
  -212
  -242
  -273
  -306
  -340
Change in working capital, $m
  -25
  -27
  -29
  -31
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -69
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -97
Cash from operations, $m
  47
  199
  194
  188
  182
  175
  167
  159
  151
  142
  132
  122
  112
  101
  89
  77
  65
  47
  28
  8
  -13
  -35
  -58
  -81
  -105
  -131
  -157
  -185
  -213
  -243
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
Cash from investing activities, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
Free cash flow, $m
  45
  197
  192
  186
  179
  172
  165
  156
  148
  138
  128
  118
  107
  96
  84
  72
  59
  41
  21
  0
  -21
  -43
  -66
  -90
  -115
  -141
  -168
  -196
  -225
  -255
Issuance/(repayment) of debt, $m
  -259
  20
  21
  23
  24
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
Issuance/(repurchase) of shares, $m
  259
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  2
  22
  44
  67
  91
  116
  142
  169
  198
  227
  258
  290
  323
  358
Cash from financing (excl. dividends), $m  
  0
  20
  21
  23
  24
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  43
  65
  88
  113
  139
  166
  194
  223
  254
  286
  319
  354
  390
  428
Total cash flow (excl. dividends), $m
  45
  217
  213
  209
  204
  198
  192
  185
  177
  169
  161
  152
  142
  132
  122
  111
  101
  105
  110
  114
  118
  123
  128
  134
  139
  145
  151
  158
  165
  172
Retained Cash Flow (-), $m
  -279
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -22
  -44
  -67
  -91
  -116
  -142
  -169
  -198
  -227
  -258
  -290
  -323
  -358
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
  -235
  214
  211
  206
  201
  195
  189
  182
  174
  166
  157
  148
  138
  128
  118
  107
  97
  83
  65
  47
  27
  7
  -14
  -36
  -58
  -82
  -106
  -132
  -158
  -185
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
  -225
  196
  183
  170
  156
  142
  127
  113
  100
  87
  75
  63
  53
  43
  35
  27
  21
  15
  10
  6
  3
  1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -1
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
  50.0
  50.0
  50.0
  48.8
  36.9
  22.9
  12.3
  5.8
  2.5
  1.0
  0.4
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0

FINANCIAL RATIOS  of  Rimini Street, Inc. (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 $253 million for the last fiscal year's total revenue generated by Rimini Street, Inc.. The default revenue input number comes from 0001 income statement of Rimini Street, 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 RMNI stock valuation model: a) initial revenue growth rate of 16.9% 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, 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 Rimini Street, 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 RMNI stock the variable cost ratio is equal to 89.7%.

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 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 77% for Rimini Street, Inc..

Corporate tax rate of 27% is the nominal tax rate for Rimini Street, 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 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 1.6%.

Life of production assets of 2.1 years is the average useful life of capital assets used in Rimini Street, 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 RMNI is equal to -58.7%. 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 - $-265.586 million for Rimini Street, 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 65.090 million for Rimini Street, 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 Rimini Street, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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