Intrinsic value of Synchronoss Technologies, Inc. - SNCR

Previous Close

$5.44

  Intrinsic Value

$0.56

stock screener

  Rating & Target

str. sell

-90%

Previous close

$5.44

 
Intrinsic value

$0.56

 
Up/down potential

-90%

 
Rating

str. 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 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 0.2

 

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
  410
  419
  430
  442
  456
  470
  487
  504
  523
  543
  564
  587
  611
  637
  665
  694
  725
  757
  792
  828
  866
  907
  950
  995
  1,042
  1,092
  1,144
  1,199
  1,258
  1,319
Variable operating expenses, $m
  285
  291
  297
  305
  313
  322
  331
  342
  353
  365
  341
  355
  370
  386
  402
  420
  439
  458
  479
  501
  524
  549
  575
  602
  631
  661
  693
  726
  761
  798
Fixed operating expenses, $m
  264
  269
  275
  281
  288
  294
  300
  307
  314
  321
  328
  335
  342
  350
  358
  365
  373
  382
  390
  399
  407
  416
  426
  435
  445
  454
  464
  475
  485
  496
Total operating expenses, $m
  549
  560
  572
  586
  601
  616
  631
  649
  667
  686
  669
  690
  712
  736
  760
  785
  812
  840
  869
  900
  931
  965
  1,001
  1,037
  1,076
  1,115
  1,157
  1,201
  1,246
  1,294
Operating income, $m
  -139
  -141
  -142
  -144
  -145
  -145
  -145
  -145
  -144
  -143
  -105
  -103
  -101
  -98
  -95
  -92
  -87
  -83
  -78
  -72
  -65
  -58
  -51
  -42
  -33
  -23
  -13
  -1
  12
  25
EBITDA, $m
  -42
  -42
  -42
  -42
  -41
  -39
  -37
  -34
  -31
  -27
  -22
  -17
  -11
  -5
  2
  10
  19
  28
  39
  50
  62
  75
  89
  104
  120
  137
  155
  175
  196
  218
Interest expense (income), $m
  7
  53
  55
  57
  60
  64
  67
  71
  76
  81
  86
  91
  97
  103
  110
  117
  125
  133
  141
  150
  160
  170
  180
  191
  203
  215
  228
  242
  257
  272
  288
Earnings before tax, $m
  -191
  -196
  -200
  -204
  -208
  -213
  -217
  -221
  -225
  -229
  -196
  -200
  -204
  -208
  -212
  -216
  -220
  -224
  -228
  -231
  -235
  -239
  -242
  -245
  -249
  -252
  -255
  -258
  -260
  -263
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
  -191
  -196
  -200
  -204
  -208
  -213
  -217
  -221
  -225
  -229
  -196
  -200
  -204
  -208
  -212
  -216
  -220
  -224
  -228
  -231
  -235
  -239
  -242
  -245
  -249
  -252
  -255
  -258
  -260
  -263

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
  928
  949
  973
  1,001
  1,031
  1,064
  1,101
  1,140
  1,182
  1,228
  1,276
  1,328
  1,383
  1,442
  1,504
  1,570
  1,640
  1,713
  1,791
  1,874
  1,960
  2,052
  2,148
  2,250
  2,357
  2,470
  2,589
  2,714
  2,845
  2,983
Adjusted assets (=assets-cash), $m
  928
  949
  973
  1,001
  1,031
  1,064
  1,101
  1,140
  1,182
  1,228
  1,276
  1,328
  1,383
  1,442
  1,504
  1,570
  1,640
  1,713
  1,791
  1,874
  1,960
  2,052
  2,148
  2,250
  2,357
  2,470
  2,589
  2,714
  2,845
  2,983
Revenue / Adjusted assets
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
Average production assets, $m
  331
  339
  347
  357
  368
  380
  393
  407
  422
  438
  455
  474
  493
  514
  536
  560
  585
  611
  639
  668
  699
  732
  766
  803
  841
  881
  923
  968
  1,015
  1,064
Working capital, $m
  -72
  -74
  -76
  -78
  -80
  -83
  -86
  -89
  -92
  -95
  -99
  -103
  -108
  -112
  -117
  -122
  -128
  -133
  -139
  -146
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -232
Total debt, $m
  249
  261
  274
  290
  306
  325
  345
  366
  390
  415
  441
  470
  501
  533
  567
  604
  642
  683
  726
  771
  819
  870
  923
  979
  1,038
  1,101
  1,166
  1,235
  1,308
  1,384
Total liabilities, $m
  512
  524
  537
  552
  569
  588
  608
  629
  653
  678
  704
  733
  763
  796
  830
  866
  905
  946
  989
  1,034
  1,082
  1,133
  1,186
  1,242
  1,301
  1,364
  1,429
  1,498
  1,571
  1,647
Total equity, $m
  416
  425
  436
  448
  462
  477
  493
  511
  530
  550
  572
  595
  620
  646
  674
  703
  734
  768
  802
  839
  878
  919
  963
  1,008
  1,056
  1,107
  1,160
  1,216
  1,275
  1,337
Total liabilities and equity, $m
  928
  949
  973
  1,000
  1,031
  1,065
  1,101
  1,140
  1,183
  1,228
  1,276
  1,328
  1,383
  1,442
  1,504
  1,569
  1,639
  1,714
  1,791
  1,873
  1,960
  2,052
  2,149
  2,250
  2,357
  2,471
  2,589
  2,714
  2,846
  2,984
Debt-to-equity ratio
  0.600
  0.610
  0.630
  0.650
  0.660
  0.680
  0.700
  0.720
  0.740
  0.750
  0.770
  0.790
  0.810
  0.830
  0.840
  0.860
  0.870
  0.890
  0.900
  0.920
  0.930
  0.950
  0.960
  0.970
  0.980
  0.990
  1.010
  1.020
  1.030
  1.040
Adjusted equity ratio
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -191
  -196
  -200
  -204
  -208
  -213
  -217
  -221
  -225
  -229
  -196
  -200
  -204
  -208
  -212
  -216
  -220
  -224
  -228
  -231
  -235
  -239
  -242
  -245
  -249
  -252
  -255
  -258
  -260
  -263
Depreciation, amort., depletion, $m
  97
  98
  100
  102
  104
  106
  108
  111
  114
  117
  83
  86
  90
  93
  98
  102
  106
  111
  116
  122
  127
  133
  139
  146
  153
  160
  168
  176
  185
  193
Funds from operations, $m
  -94
  -97
  -100
  -102
  -105
  -107
  -108
  -110
  -111
  -113
  -114
  -114
  -115
  -115
  -115
  -115
  -114
  -113
  -112
  -110
  -108
  -106
  -103
  -99
  -96
  -92
  -87
  -82
  -76
  -69
Change in working capital, $m
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Cash from operations, $m
  -93
  -95
  -98
  -100
  -102
  -104
  -106
  -107
  -108
  -109
  -110
  -110
  -110
  -110
  -110
  -109
  -108
  -107
  -106
  -104
  -101
  -98
  -95
  -92
  -87
  -83
  -78
  -72
  -65
  -58
Maintenance CAPEX, $m
  -59
  -60
  -62
  -63
  -65
  -67
  -69
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -98
  -102
  -106
  -111
  -116
  -122
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -185
New CAPEX, $m
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -49
Cash from investing activities, $m
  -66
  -68
  -71
  -73
  -76
  -79
  -82
  -85
  -89
  -93
  -97
  -101
  -106
  -111
  -115
  -122
  -127
  -132
  -139
  -145
  -153
  -160
  -167
  -175
  -184
  -193
  -202
  -213
  -223
  -234
Free cash flow, $m
  -158
  -163
  -168
  -173
  -178
  -183
  -188
  -192
  -197
  -202
  -207
  -211
  -216
  -221
  -226
  -230
  -235
  -240
  -244
  -249
  -254
  -258
  -263
  -267
  -272
  -276
  -280
  -284
  -288
  -292
Issuance/(repayment) of debt, $m
  10
  12
  13
  15
  17
  18
  20
  22
  23
  25
  27
  29
  30
  32
  34
  36
  39
  41
  43
  45
  48
  51
  53
  56
  59
  62
  66
  69
  73
  76
Issuance/(repurchase) of shares, $m
  200
  205
  211
  216
  222
  227
  233
  238
  244
  249
  218
  224
  229
  235
  240
  246
  251
  257
  263
  268
  274
  280
  285
  291
  297
  302
  308
  313
  319
  325
Cash from financing (excl. dividends), $m  
  210
  217
  224
  231
  239
  245
  253
  260
  267
  274
  245
  253
  259
  267
  274
  282
  290
  298
  306
  313
  322
  331
  338
  347
  356
  364
  374
  382
  392
  401
Total cash flow (excl. dividends), $m
  52
  54
  56
  58
  61
  63
  65
  68
  70
  73
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
Retained Cash Flow (-), $m
  -200
  -205
  -211
  -216
  -222
  -227
  -233
  -238
  -244
  -249
  -218
  -224
  -229
  -235
  -240
  -246
  -251
  -257
  -263
  -268
  -274
  -280
  -285
  -291
  -297
  -302
  -308
  -313
  -319
  -325
Prev. year cash balance distribution, $m
  57
  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
  -91
  -151
  -155
  -158
  -161
  -164
  -168
  -171
  -174
  -177
  -180
  -183
  -186
  -189
  -191
  -194
  -197
  -199
  -201
  -204
  -206
  -208
  -209
  -211
  -212
  -214
  -215
  -215
  -216
  -216
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
  -88
  -139
  -135
  -130
  -125
  -119
  -113
  -107
  -100
  -93
  -85
  -78
  -71
  -63
  -56
  -49
  -43
  -37
  -31
  -26
  -21
  -17
  -14
  -11
  -8
  -6
  -5
  -3
  -2
  -2
Current shareholders' claim on cash, %
  58.7
  34.4
  20.2
  11.8
  6.9
  4.1
  2.4
  1.4
  0.8
  0.5
  0.3
  0.2
  0.1
  0.1
  0.1
  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

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, Inc. (SNCR)

Valuation Ratios
P/E Ratio 12.3
Price to Sales 0.5
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 1.7
Price to Free Cash Flow 2.9
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 $402 million for the last fiscal year's total revenue generated by Synchronoss Technologies, Inc.. The default revenue input number comes from 0001 income statement of Synchronoss Technologies, 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 SNCR 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 4.3%, whose default value for SNCR is calculated based on our internal credit rating of Synchronoss Technologies, 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 Synchronoss Technologies, 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 SNCR stock the variable cost ratio is equal to 69.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $258 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 22% for Synchronoss Technologies, Inc..

Corporate tax rate of 27% is the nominal tax rate for Synchronoss Technologies, 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 SNCR 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 SNCR are equal to 80.7%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Synchronoss Technologies, 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 SNCR is equal to -17.6%. 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 - $463.587 million for Synchronoss Technologies, 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 42.475 million for Synchronoss Technologies, 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 Synchronoss Technologies, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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