Intrinsic value of RealPage, Inc. - RP

Previous Close

$60.69

  Intrinsic Value

$53.67

stock screener

  Rating & Target

hold

-12%

Previous close

$60.69

 
Intrinsic value

$53.67

 
Up/down potential

-12%

 
Rating

hold

We calculate the intrinsic value of RP 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 5.7

 

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, %
  20.90
  19.31
  17.88
  16.59
  15.43
  14.39
  13.45
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.95
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
Revenue, $m
  1,051
  1,253
  1,478
  1,723
  1,989
  2,275
  2,581
  2,906
  3,250
  3,613
  3,994
  4,393
  4,810
  5,245
  5,698
  6,169
  6,659
  7,169
  7,698
  8,249
  8,820
  9,415
  10,033
  10,676
  11,345
  12,042
  12,768
  13,524
  14,313
  15,136
Variable operating expenses, $m
  834
  969
  1,118
  1,281
  1,458
  1,649
  1,852
  2,069
  2,298
  2,539
  2,659
  2,925
  3,202
  3,492
  3,793
  4,107
  4,434
  4,773
  5,126
  5,492
  5,873
  6,268
  6,680
  7,108
  7,554
  8,018
  8,501
  9,005
  9,530
  10,078
Fixed operating expenses, $m
  95
  97
  99
  101
  104
  106
  108
  111
  113
  116
  118
  121
  123
  126
  129
  132
  135
  138
  141
  144
  147
  150
  153
  157
  160
  164
  167
  171
  175
  179
Total operating expenses, $m
  929
  1,066
  1,217
  1,382
  1,562
  1,755
  1,960
  2,180
  2,411
  2,655
  2,777
  3,046
  3,325
  3,618
  3,922
  4,239
  4,569
  4,911
  5,267
  5,636
  6,020
  6,418
  6,833
  7,265
  7,714
  8,182
  8,668
  9,176
  9,705
  10,257
Operating income, $m
  122
  188
  261
  340
  427
  520
  620
  727
  839
  958
  1,217
  1,347
  1,484
  1,627
  1,775
  1,930
  2,091
  2,258
  2,432
  2,613
  2,801
  2,996
  3,200
  3,411
  3,631
  3,861
  4,100
  4,349
  4,609
  4,880
EBITDA, $m
  324
  402
  489
  585
  689
  800
  920
  1,047
  1,182
  1,324
  1,473
  1,630
  1,793
  1,964
  2,141
  2,326
  2,519
  2,719
  2,927
  3,143
  3,368
  3,601
  3,844
  4,097
  4,360
  4,634
  4,920
  5,218
  5,528
  5,852
Interest expense (income), $m
  3
  32
  44
  57
  71
  87
  104
  123
  142
  163
  185
  209
  233
  259
  286
  314
  343
  373
  405
  437
  471
  507
  544
  582
  622
  663
  706
  751
  797
  846
  897
Earnings before tax, $m
  90
  144
  204
  269
  340
  416
  498
  584
  676
  772
  1,008
  1,114
  1,225
  1,341
  1,462
  1,587
  1,718
  1,854
  1,995
  2,142
  2,294
  2,453
  2,618
  2,790
  2,969
  3,155
  3,349
  3,551
  3,763
  3,983
Tax expense, $m
  24
  39
  55
  73
  92
  112
  134
  158
  182
  209
  272
  301
  331
  362
  395
  429
  464
  500
  539
  578
  619
  662
  707
  753
  802
  852
  904
  959
  1,016
  1,075
Net income, $m
  66
  105
  149
  196
  248
  304
  363
  426
  493
  564
  736
  813
  894
  979
  1,067
  1,159
  1,254
  1,353
  1,456
  1,563
  1,675
  1,791
  1,911
  2,036
  2,167
  2,303
  2,445
  2,593
  2,747
  2,908

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
  2,538
  3,028
  3,569
  4,161
  4,803
  5,495
  6,234
  7,019
  7,851
  8,727
  9,647
  10,611
  11,618
  12,668
  13,762
  14,901
  16,085
  17,316
  18,595
  19,924
  21,305
  22,741
  24,235
  25,788
  27,404
  29,087
  30,840
  32,668
  34,573
  36,560
Adjusted assets (=assets-cash), $m
  2,538
  3,028
  3,569
  4,161
  4,803
  5,495
  6,234
  7,019
  7,851
  8,727
  9,647
  10,611
  11,618
  12,668
  13,762
  14,901
  16,085
  17,316
  18,595
  19,924
  21,305
  22,741
  24,235
  25,788
  27,404
  29,087
  30,840
  32,668
  34,573
  36,560
Revenue / Adjusted assets
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
Average production assets, $m
  891
  1,063
  1,253
  1,461
  1,686
  1,929
  2,188
  2,464
  2,756
  3,064
  3,387
  3,725
  4,079
  4,447
  4,832
  5,231
  5,647
  6,079
  6,528
  6,995
  7,480
  7,984
  8,508
  9,053
  9,621
  10,212
  10,827
  11,469
  12,138
  12,835
Working capital, $m
  -288
  -343
  -405
  -472
  -545
  -623
  -707
  -796
  -891
  -990
  -1,094
  -1,204
  -1,318
  -1,437
  -1,561
  -1,690
  -1,825
  -1,964
  -2,109
  -2,260
  -2,417
  -2,580
  -2,749
  -2,925
  -3,109
  -3,300
  -3,498
  -3,706
  -3,922
  -4,147
Total debt, $m
  813
  1,054
  1,321
  1,613
  1,930
  2,271
  2,635
  3,022
  3,432
  3,864
  4,318
  4,793
  5,289
  5,807
  6,347
  6,908
  7,492
  8,099
  8,729
  9,384
  10,065
  10,773
  11,509
  12,275
  13,072
  13,902
  14,766
  15,667
  16,606
  17,586
Total liabilities, $m
  1,251
  1,493
  1,760
  2,051
  2,368
  2,709
  3,073
  3,461
  3,870
  4,302
  4,756
  5,231
  5,728
  6,245
  6,785
  7,346
  7,930
  8,537
  9,167
  9,823
  10,504
  11,211
  11,948
  12,713
  13,510
  14,340
  15,204
  16,105
  17,044
  18,024
Total equity, $m
  1,287
  1,535
  1,810
  2,110
  2,435
  2,786
  3,160
  3,559
  3,980
  4,425
  4,891
  5,380
  5,890
  6,423
  6,978
  7,555
  8,155
  8,779
  9,428
  10,102
  10,802
  11,530
  12,287
  13,074
  13,894
  14,747
  15,636
  16,562
  17,528
  18,536
Total liabilities and equity, $m
  2,538
  3,028
  3,570
  4,161
  4,803
  5,495
  6,233
  7,020
  7,850
  8,727
  9,647
  10,611
  11,618
  12,668
  13,763
  14,901
  16,085
  17,316
  18,595
  19,925
  21,306
  22,741
  24,235
  25,787
  27,404
  29,087
  30,840
  32,667
  34,572
  36,560
Debt-to-equity ratio
  0.630
  0.690
  0.730
  0.760
  0.790
  0.820
  0.830
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
  0.930
  0.930
  0.930
  0.930
  0.940
  0.940
  0.940
  0.940
  0.940
  0.950
  0.950
  0.950
Adjusted equity ratio
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  66
  105
  149
  196
  248
  304
  363
  426
  493
  564
  736
  813
  894
  979
  1,067
  1,159
  1,254
  1,353
  1,456
  1,563
  1,675
  1,791
  1,911
  2,036
  2,167
  2,303
  2,445
  2,593
  2,747
  2,908
Depreciation, amort., depletion, $m
  201
  215
  229
  245
  262
  280
  300
  321
  343
  366
  257
  282
  309
  337
  366
  396
  428
  461
  495
  530
  567
  605
  645
  686
  729
  774
  820
  869
  920
  972
Funds from operations, $m
  267
  320
  378
  441
  510
  584
  663
  747
  836
  930
  992
  1,096
  1,203
  1,316
  1,433
  1,555
  1,682
  1,814
  1,951
  2,093
  2,241
  2,395
  2,556
  2,722
  2,896
  3,077
  3,265
  3,461
  3,666
  3,880
Change in working capital, $m
  -50
  -56
  -61
  -67
  -73
  -78
  -84
  -89
  -94
  -99
  -104
  -109
  -114
  -119
  -124
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -169
  -176
  -183
  -191
  -199
  -207
  -216
  -225
Cash from operations, $m
  317
  375
  439
  508
  583
  662
  747
  836
  931
  1,029
  1,097
  1,205
  1,318
  1,435
  1,557
  1,684
  1,816
  1,953
  2,096
  2,244
  2,398
  2,558
  2,725
  2,899
  3,079
  3,268
  3,464
  3,669
  3,882
  4,105
Maintenance CAPEX, $m
  -56
  -67
  -81
  -95
  -111
  -128
  -146
  -166
  -187
  -209
  -232
  -257
  -282
  -309
  -337
  -366
  -396
  -428
  -461
  -495
  -530
  -567
  -605
  -645
  -686
  -729
  -774
  -820
  -869
  -920
New CAPEX, $m
  -154
  -172
  -190
  -208
  -225
  -243
  -259
  -276
  -292
  -308
  -323
  -338
  -354
  -369
  -384
  -400
  -416
  -432
  -449
  -467
  -485
  -504
  -524
  -545
  -567
  -591
  -615
  -641
  -669
  -698
Cash from investing activities, $m
  -210
  -239
  -271
  -303
  -336
  -371
  -405
  -442
  -479
  -517
  -555
  -595
  -636
  -678
  -721
  -766
  -812
  -860
  -910
  -962
  -1,015
  -1,071
  -1,129
  -1,190
  -1,253
  -1,320
  -1,389
  -1,461
  -1,538
  -1,618
Free cash flow, $m
  107
  136
  168
  205
  247
  292
  341
  395
  452
  513
  542
  610
  682
  757
  836
  918
  1,004
  1,093
  1,186
  1,283
  1,383
  1,488
  1,596
  1,709
  1,826
  1,948
  2,075
  2,207
  2,345
  2,488
Issuance/(repayment) of debt, $m
  216
  242
  267
  292
  317
  341
  364
  387
  410
  432
  454
  475
  496
  518
  539
  561
  584
  607
  631
  655
  681
  708
  736
  766
  797
  830
  864
  901
  939
  980
Issuance/(repurchase) of shares, $m
  158
  143
  126
  104
  78
  47
  11
  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  
  374
  385
  393
  396
  395
  388
  375
  387
  410
  432
  454
  475
  496
  518
  539
  561
  584
  607
  631
  655
  681
  708
  736
  766
  797
  830
  864
  901
  939
  980
Total cash flow (excl. dividends), $m
  481
  521
  561
  601
  641
  679
  717
  782
  862
  945
  995
  1,085
  1,178
  1,275
  1,376
  1,480
  1,588
  1,700
  1,817
  1,938
  2,064
  2,195
  2,332
  2,474
  2,623
  2,778
  2,939
  3,108
  3,284
  3,468
Retained Cash Flow (-), $m
  -224
  -248
  -274
  -300
  -326
  -350
  -375
  -398
  -422
  -444
  -467
  -489
  -511
  -533
  -555
  -577
  -600
  -624
  -648
  -674
  -700
  -728
  -757
  -787
  -820
  -853
  -889
  -926
  -966
  -1,008
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
  258
  272
  287
  301
  315
  329
  342
  384
  440
  501
  529
  596
  668
  743
  821
  902
  988
  1,076
  1,168
  1,264
  1,364
  1,467
  1,575
  1,687
  1,803
  1,924
  2,050
  2,181
  2,318
  2,460
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
  247
  249
  249
  248
  244
  239
  231
  240
  253
  263
  251
  255
  254
  249
  241
  229
  215
  198
  180
  161
  141
  122
  103
  86
  70
  56
  44
  34
  25
  19
Current shareholders' claim on cash, %
  97.3
  95.3
  93.9
  92.9
  92.2
  91.9
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8

RealPage, Inc. is a provider of technology to the real estate industry, helping owners, managers and investors. The Company's property management solutions are referred to as Enterprise Resource Planning systems. Its on demand platform provides a single point of access and a repository of real-time lease transaction data, including prospect, renter and property data. Its platform consists of four primary categories of solutions: Property Management, Lease Management, Resident Services and Asset Optimization. These solutions provide complementary asset performance and investment decision support; risk mitigation, billing and utility management; resident engagement, spend management, operations and facilities management, and lead generation and lease management capabilities that collectively enable its clients to manage all the stages of the renter life cycle. In addition, its open architecture allows third-party applications to access its solutions using its RealPage Exchange platform.

FINANCIAL RATIOS  of  RealPage, Inc. (RP)

Valuation Ratios
P/E Ratio 289.5
Price to Sales 8.7
Price to Book 12.8
Price to Tangible Book
Price to Cash Flow 36.2
Price to Free Cash Flow 80.7
Growth Rates
Sales Growth Rate 21.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 127.3%
Cap. Spend. - 3 Yr. Gr. Rate 17.1%
Financial Strength
Quick Ratio 21
Current Ratio 0.3
LT Debt to Equity 30.4%
Total Debt to Equity 31.7%
Interest Coverage 10
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. -0.2%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. -0.5%
Return On Equity 4.8%
Return On Equity - 3 Yr. Avg. -0.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 57.4%
Gross Margin - 3 Yr. Avg. 57.3%
EBITDA Margin 15%
EBITDA Margin - 3 Yr. Avg. 9.5%
Operating Margin 5.5%
Oper. Margin - 3 Yr. Avg. -0.2%
Pre-Tax Margin 4.8%
Pre-Tax Margin - 3 Yr. Avg. -0.7%
Net Profit Margin 3%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 37%
Eff/ Tax Rate - 3 Yr. Avg. 36.3%
Payout Ratio 0%

RP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RP stock intrinsic value calculation we used $869 million for the last fiscal year's total revenue generated by RealPage, Inc.. The default revenue input number comes from 0001 income statement of RealPage, 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 RP stock valuation model: a) initial revenue growth rate of 20.9% 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 RP is calculated based on our internal credit rating of RealPage, 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 RealPage, 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 RP stock the variable cost ratio is equal to 82%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $93 million in the base year in the intrinsic value calculation for RP 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 RealPage, Inc..

Corporate tax rate of 27% is the nominal tax rate for RealPage, 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 RP 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 RP are equal to 84.8%.

Life of production assets of 13.2 years is the average useful life of capital assets used in RealPage, 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 RP is equal to -27.4%. 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 - $1063.024 million for RealPage, 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 93.562 million for RealPage, 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 RealPage, Inc. at the current share price and the inputted number of shares is $5.7 billion.

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