Intrinsic value of Synchronoss Technologies - SNCR

Previous Close

$7.00

  Intrinsic Value

$5.20

stock screener

  Rating & Target

sell

-26%

Previous close

$7.00

 
Intrinsic value

$5.20

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of SNCR 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 2016), $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
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.40
  10.76
  10.18
  9.67
  9.20
  8.78
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
Revenue, $m
  531
  589
  648
  711
  777
  845
  916
  990
  1,066
  1,146
  1,229
  1,315
  1,405
  1,498
  1,594
  1,695
  1,800
  1,909
  2,023
  2,142
  2,265
  2,395
  2,529
  2,670
  2,817
  2,971
  3,132
  3,300
  3,476
  3,661
Variable operating expenses, $m
  507
  557
  609
  663
  720
  779
  840
  904
  970
  1,039
  1,064
  1,138
  1,216
  1,296
  1,380
  1,467
  1,558
  1,653
  1,751
  1,854
  1,961
  2,073
  2,190
  2,311
  2,439
  2,572
  2,711
  2,857
  3,009
  3,169
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
  507
  557
  609
  663
  720
  779
  840
  904
  970
  1,039
  1,064
  1,138
  1,216
  1,296
  1,380
  1,467
  1,558
  1,653
  1,751
  1,854
  1,961
  2,073
  2,190
  2,311
  2,439
  2,572
  2,711
  2,857
  3,009
  3,169
Operating income, $m
  24
  32
  40
  48
  57
  66
  76
  86
  96
  107
  165
  177
  189
  201
  214
  228
  242
  257
  272
  288
  304
  322
  340
  359
  379
  399
  421
  443
  467
  492
EBITDA, $m
  136
  150
  166
  182
  198
  216
  234
  253
  272
  293
  314
  336
  359
  382
  407
  433
  460
  488
  517
  547
  579
  612
  646
  682
  719
  759
  800
  843
  888
  935
Interest expense (income), $m
  7
  13
  16
  19
  22
  26
  29
  33
  37
  41
  45
  49
  54
  58
  63
  68
  74
  79
  85
  91
  97
  103
  110
  117
  124
  132
  140
  148
  157
  166
  176
Earnings before tax, $m
  11
  16
  21
  26
  31
  37
  43
  49
  55
  62
  116
  123
  130
  138
  146
  154
  163
  172
  181
  191
  201
  212
  223
  235
  247
  259
  273
  287
  301
  316
Tax expense, $m
  3
  4
  6
  7
  8
  10
  12
  13
  15
  17
  31
  33
  35
  37
  39
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
  70
  74
  77
  81
  85
Net income, $m
  8
  12
  15
  19
  23
  27
  31
  36
  40
  45
  85
  90
  95
  101
  107
  113
  119
  125
  132
  139
  147
  155
  163
  171
  180
  189
  199
  209
  220
  231

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
  1,222
  1,353
  1,491
  1,635
  1,785
  1,942
  2,105
  2,275
  2,451
  2,635
  2,825
  3,023
  3,229
  3,443
  3,665
  3,897
  4,138
  4,389
  4,651
  4,924
  5,208
  5,505
  5,815
  6,139
  6,477
  6,830
  7,200
  7,587
  7,992
  8,415
Adjusted assets (=assets-cash), $m
  1,222
  1,353
  1,491
  1,635
  1,785
  1,942
  2,105
  2,275
  2,451
  2,635
  2,825
  3,023
  3,229
  3,443
  3,665
  3,897
  4,138
  4,389
  4,651
  4,924
  5,208
  5,505
  5,815
  6,139
  6,477
  6,830
  7,200
  7,587
  7,992
  8,415
Revenue / Adjusted assets
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
Average production assets, $m
  643
  712
  785
  861
  940
  1,022
  1,108
  1,197
  1,290
  1,387
  1,487
  1,591
  1,700
  1,812
  1,929
  2,051
  2,178
  2,310
  2,448
  2,592
  2,741
  2,898
  3,061
  3,231
  3,409
  3,595
  3,790
  3,993
  4,206
  4,429
Working capital, $m
  -18
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -35
  -38
  -41
  -43
  -46
  -49
  -53
  -56
  -59
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -93
  -98
  -103
  -109
  -115
  -121
Total debt, $m
  294
  351
  411
  474
  540
  608
  680
  754
  831
  911
  994
  1,081
  1,171
  1,264
  1,361
  1,463
  1,568
  1,678
  1,792
  1,911
  2,036
  2,165
  2,301
  2,442
  2,590
  2,745
  2,906
  3,075
  3,252
  3,437
Total liabilities, $m
  534
  591
  651
  714
  780
  849
  920
  994
  1,071
  1,151
  1,235
  1,321
  1,411
  1,505
  1,602
  1,703
  1,808
  1,918
  2,032
  2,152
  2,276
  2,406
  2,541
  2,683
  2,830
  2,985
  3,146
  3,316
  3,492
  3,678
Total equity, $m
  688
  762
  839
  920
  1,005
  1,093
  1,185
  1,281
  1,380
  1,483
  1,591
  1,702
  1,818
  1,938
  2,064
  2,194
  2,330
  2,471
  2,618
  2,772
  2,932
  3,099
  3,274
  3,456
  3,646
  3,846
  4,054
  4,271
  4,499
  4,738
Total liabilities and equity, $m
  1,222
  1,353
  1,490
  1,634
  1,785
  1,942
  2,105
  2,275
  2,451
  2,634
  2,826
  3,023
  3,229
  3,443
  3,666
  3,897
  4,138
  4,389
  4,650
  4,924
  5,208
  5,505
  5,815
  6,139
  6,476
  6,831
  7,200
  7,587
  7,991
  8,416
Debt-to-equity ratio
  0.430
  0.460
  0.490
  0.520
  0.540
  0.560
  0.570
  0.590
  0.600
  0.610
  0.630
  0.640
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.710
  0.720
  0.720
  0.720
  0.730
Adjusted equity ratio
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  12
  15
  19
  23
  27
  31
  36
  40
  45
  85
  90
  95
  101
  107
  113
  119
  125
  132
  139
  147
  155
  163
  171
  180
  189
  199
  209
  220
  231
Depreciation, amort., depletion, $m
  112
  119
  126
  133
  141
  150
  158
  167
  176
  186
  149
  159
  170
  181
  193
  205
  218
  231
  245
  259
  274
  290
  306
  323
  341
  360
  379
  399
  421
  443
Funds from operations, $m
  120
  130
  141
  152
  164
  177
  189
  203
  217
  231
  233
  249
  265
  282
  299
  318
  337
  356
  377
  399
  421
  444
  469
  494
  521
  549
  578
  609
  640
  674
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from operations, $m
  122
  132
  143
  154
  166
  179
  192
  205
  219
  234
  236
  252
  268
  285
  303
  321
  340
  360
  381
  403
  425
  449
  473
  499
  526
  554
  583
  614
  646
  680
Maintenance CAPEX, $m
  -58
  -64
  -71
  -78
  -86
  -94
  -102
  -111
  -120
  -129
  -139
  -149
  -159
  -170
  -181
  -193
  -205
  -218
  -231
  -245
  -259
  -274
  -290
  -306
  -323
  -341
  -360
  -379
  -399
  -421
New CAPEX, $m
  -66
  -69
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -100
  -104
  -108
  -113
  -117
  -122
  -127
  -132
  -138
  -144
  -150
  -156
  -163
  -170
  -178
  -186
  -195
  -204
  -213
  -223
Cash from investing activities, $m
  -124
  -133
  -144
  -154
  -165
  -176
  -188
  -200
  -213
  -226
  -239
  -253
  -267
  -283
  -298
  -315
  -332
  -350
  -369
  -389
  -409
  -430
  -453
  -476
  -501
  -527
  -555
  -583
  -612
  -644
Free cash flow, $m
  -2
  -1
  -1
  0
  1
  2
  4
  5
  7
  8
  -3
  -1
  1
  2
  4
  6
  8
  10
  12
  14
  16
  18
  20
  23
  25
  27
  29
  31
  34
  36
Issuance/(repayment) of debt, $m
  55
  57
  60
  63
  66
  68
  71
  74
  77
  80
  83
  87
  90
  94
  97
  101
  105
  110
  114
  119
  124
  130
  135
  141
  148
  155
  162
  169
  177
  185
Issuance/(repurchase) of shares, $m
  64
  62
  62
  62
  62
  61
  61
  60
  59
  58
  23
  22
  21
  20
  19
  18
  17
  16
  15
  14
  13
  12
  12
  11
  10
  10
  9
  9
  8
  8
Cash from financing (excl. dividends), $m  
  119
  119
  122
  125
  128
  129
  132
  134
  136
  138
  106
  109
  111
  114
  116
  119
  122
  126
  129
  133
  137
  142
  147
  152
  158
  165
  171
  178
  185
  193
Total cash flow (excl. dividends), $m
  116
  118
  122
  125
  129
  132
  136
  139
  143
  147
  103
  107
  111
  116
  120
  125
  130
  136
  141
  147
  154
  161
  168
  175
  183
  191
  200
  209
  219
  229
Retained Cash Flow (-), $m
  -72
  -74
  -78
  -81
  -85
  -88
  -92
  -96
  -99
  -103
  -107
  -111
  -116
  -120
  -125
  -130
  -136
  -141
  -147
  -154
  -160
  -167
  -174
  -182
  -190
  -199
  -208
  -218
  -228
  -239
Prev. year cash balance distribution, $m
  41
  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
  34
  38
  42
  46
  50
  55
  60
  65
  70
  76
  81
  87
  93
  100
  106
  113
  120
  128
  136
  144
  152
  161
  170
  180
  190
  200
  211
  222
  234
  247
Cash available for distribution, $m
  86
  44
  44
  44
  44
  44
  44
  44
  43
  43
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
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
  82
  41
  39
  36
  34
  32
  30
  27
  25
  23
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  87.2
  77.2
  69.1
  62.5
  57.0
  52.4
  48.6
  45.3
  42.5
  40.1
  39.2
  38.5
  37.8
  37.3
  36.8
  36.3
  35.9
  35.6
  35.3
  35.0
  34.8
  34.5
  34.4
  34.2
  34.0
  33.9
  33.8
  33.7
  33.6
  33.5

Synchronoss Technologies, Inc. is a global software and services company, which provides technologies and services for the mobile transformation of business. The Company's portfolio in the Consumer and Enterprise markets contains offerings, such as personal cloud, secure-mobility, identity management and scalable messaging platforms, products and solutions. Its products and platforms are designed to enable multiple converged communication services to be managed across a range of distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets. The Company operates in and markets their solutions and services directly through their sales organizations in North America, Europe, the Middle East and Africa (EMEA), Latin America and the Asia-Pacific region. It delivers technologies for mobile transformation to service provider and enterprise customers in regulated verticals and use cases.

FINANCIAL RATIOS  of  Synchronoss Technologies (SNCR)

Valuation Ratios
P/E Ratio 15.9
Price to Sales 0.7
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 3.8
Growth Rates
Sales Growth Rate 11.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.3%
Cap. Spend. - 3 Yr. Gr. Rate -4.2%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 36.2%
Total Debt to Equity 40.6%
Interest Coverage -10
Management Effectiveness
Return On Assets 2.4%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 2.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 3.2%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 59.3%
Gross Margin - 3 Yr. Avg. 61%
EBITDA Margin 6.5%
EBITDA Margin - 3 Yr. Avg. 17.9%
Operating Margin -15.1%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin -15.7%
Pre-Tax Margin - 3 Yr. Avg. 0.1%
Net Profit Margin 4.2%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 10.7%
Eff/ Tax Rate - 3 Yr. Avg. 32.2%
Payout Ratio 0%

SNCR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SNCR stock intrinsic value calculation we used $477 million for the last fiscal year's total revenue generated by Synchronoss Technologies. The default revenue input number comes from 2016 income statement of Synchronoss Technologies. 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 SNCR stock valuation model: a) initial revenue growth rate of 11.4% 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 SNCR is calculated based on our internal credit rating of Synchronoss Technologies, 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 Synchronoss Technologies.
    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 SNCR stock the variable cost ratio is equal to 96.5%.

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 SNCR 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 Synchronoss Technologies.

Corporate tax rate of 27% is the nominal tax rate for Synchronoss Technologies. 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 SNCR stock is equal to 7.1%.

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 SNCR are equal to 121%.

Life of production assets of 10 years is the average useful life of capital assets used in Synchronoss Technologies 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 SNCR is equal to -3.3%. 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 - $657 million for Synchronoss Technologies - 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 44 million for Synchronoss Technologies 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 Synchronoss Technologies at the current share price and the inputted number of shares is $0.3 billion.

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