Intrinsic value of Tech Data Corporation - TECD

Previous Close

$100.13

  Intrinsic Value

$306.88

stock screener

  Rating & Target

str. buy

+206%

Previous close

$100.13

 
Intrinsic value

$306.88

 
Up/down potential

+206%

 
Rating

str. buy

We calculate the intrinsic value of TECD 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 3.7

 

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, %
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  40,673
  44,757
  49,025
  53,477
  58,116
  62,944
  67,964
  73,183
  78,606
  84,242
  90,099
  96,187
  102,518
  109,103
  115,956
  123,090
  130,522
  138,267
  146,343
  154,767
  163,559
  172,739
  182,329
  192,350
  202,827
  213,783
  225,246
  237,242
  249,799
  262,948
Variable operating expenses, $m
  40,204
  44,220
  48,417
  52,796
  57,357
  62,105
  67,042
  72,174
  77,507
  83,050
  88,604
  94,591
  100,817
  107,293
  114,032
  121,048
  128,357
  135,973
  143,915
  152,199
  160,845
  169,873
  179,304
  189,159
  199,462
  210,237
  221,509
  233,306
  245,655
  258,586
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  40,206
  44,222
  48,419
  52,798
  57,359
  62,107
  67,044
  72,176
  77,509
  83,052
  88,607
  94,594
  100,820
  107,296
  114,035
  121,051
  128,360
  135,976
  143,918
  152,202
  160,848
  169,876
  179,307
  189,162
  199,465
  210,241
  221,513
  233,310
  245,659
  258,590
Operating income, $m
  467
  535
  606
  679
  756
  836
  920
  1,006
  1,096
  1,190
  1,492
  1,593
  1,698
  1,807
  1,921
  2,039
  2,163
  2,291
  2,425
  2,565
  2,710
  2,863
  3,022
  3,188
  3,362
  3,543
  3,733
  3,932
  4,141
  4,359
EBITDA, $m
  767
  844
  924
  1,008
  1,096
  1,187
  1,282
  1,381
  1,483
  1,590
  1,700
  1,815
  1,935
  2,059
  2,189
  2,323
  2,464
  2,610
  2,763
  2,922
  3,088
  3,261
  3,442
  3,632
  3,830
  4,037
  4,253
  4,480
  4,717
  4,965
Interest expense (income), $m
  -22
  123
  203
  286
  373
  464
  558
  657
  759
  866
  976
  1,091
  1,211
  1,335
  1,464
  1,598
  1,738
  1,884
  2,035
  2,193
  2,358
  2,530
  2,709
  2,896
  3,092
  3,296
  3,510
  3,733
  3,967
  4,212
  4,468
Earnings before tax, $m
  344
  332
  320
  307
  293
  278
  263
  247
  230
  213
  401
  383
  363
  343
  323
  301
  279
  256
  232
  207
  181
  154
  125
  96
  65
  33
  0
  -35
  -71
  -109
Tax expense, $m
  93
  90
  86
  83
  79
  75
  71
  67
  62
  58
  108
  103
  98
  93
  87
  81
  75
  69
  63
  56
  49
  41
  34
  26
  18
  9
  0
  0
  0
  0
Net income, $m
  251
  243
  233
  224
  214
  203
  192
  180
  168
  156
  293
  279
  265
  251
  236
  220
  204
  187
  169
  151
  132
  112
  92
  70
  48
  24
  0
  -35
  -71
  -109

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
  14,291
  15,726
  17,226
  18,790
  20,420
  22,117
  23,881
  25,714
  27,620
  29,600
  31,658
  33,797
  36,022
  38,335
  40,743
  43,250
  45,862
  48,583
  51,420
  54,380
  57,470
  60,695
  64,065
  67,586
  71,267
  75,117
  79,145
  83,360
  87,772
  92,392
Adjusted assets (=assets-cash), $m
  14,291
  15,726
  17,226
  18,790
  20,420
  22,117
  23,881
  25,714
  27,620
  29,600
  31,658
  33,797
  36,022
  38,335
  40,743
  43,250
  45,862
  48,583
  51,420
  54,380
  57,470
  60,695
  64,065
  67,586
  71,267
  75,117
  79,145
  83,360
  87,772
  92,392
Revenue / Adjusted assets
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
  2.846
Average production assets, $m
  854
  940
  1,030
  1,123
  1,220
  1,322
  1,427
  1,537
  1,651
  1,769
  1,892
  2,020
  2,153
  2,291
  2,435
  2,585
  2,741
  2,904
  3,073
  3,250
  3,435
  3,628
  3,829
  4,039
  4,259
  4,489
  4,730
  4,982
  5,246
  5,522
Working capital, $m
  1,424
  1,566
  1,716
  1,872
  2,034
  2,203
  2,379
  2,561
  2,751
  2,948
  3,153
  3,367
  3,588
  3,819
  4,058
  4,308
  4,568
  4,839
  5,122
  5,417
  5,725
  6,046
  6,382
  6,732
  7,099
  7,482
  7,884
  8,303
  8,743
  9,203
Total debt, $m
  2,701
  3,811
  4,972
  6,183
  7,444
  8,757
  10,123
  11,542
  13,017
  14,549
  16,142
  17,798
  19,520
  21,311
  23,174
  25,115
  27,136
  29,242
  31,438
  33,730
  36,121
  38,617
  41,225
  43,951
  46,800
  49,780
  52,897
  56,160
  59,575
  63,151
Total liabilities, $m
  11,061
  12,172
  13,333
  14,544
  15,805
  17,118
  18,484
  19,903
  21,378
  22,910
  24,503
  26,159
  27,881
  29,672
  31,535
  33,476
  35,497
  37,603
  39,799
  42,090
  44,482
  46,978
  49,586
  52,312
  55,161
  58,141
  61,258
  64,520
  67,936
  71,512
Total equity, $m
  3,230
  3,554
  3,893
  4,247
  4,615
  4,998
  5,397
  5,811
  6,242
  6,690
  7,155
  7,638
  8,141
  8,664
  9,208
  9,775
  10,365
  10,980
  11,621
  12,290
  12,988
  13,717
  14,479
  15,274
  16,106
  16,976
  17,887
  18,839
  19,836
  20,881
Total liabilities and equity, $m
  14,291
  15,726
  17,226
  18,791
  20,420
  22,116
  23,881
  25,714
  27,620
  29,600
  31,658
  33,797
  36,022
  38,336
  40,743
  43,251
  45,862
  48,583
  51,420
  54,380
  57,470
  60,695
  64,065
  67,586
  71,267
  75,117
  79,145
  83,359
  87,772
  92,393
Debt-to-equity ratio
  0.840
  1.070
  1.280
  1.460
  1.610
  1.750
  1.880
  1.990
  2.090
  2.170
  2.260
  2.330
  2.400
  2.460
  2.520
  2.570
  2.620
  2.660
  2.710
  2.740
  2.780
  2.820
  2.850
  2.880
  2.910
  2.930
  2.960
  2.980
  3.000
  3.020
Adjusted equity ratio
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  251
  243
  233
  224
  214
  203
  192
  180
  168
  156
  293
  279
  265
  251
  236
  220
  204
  187
  169
  151
  132
  112
  92
  70
  48
  24
  0
  -35
  -71
  -109
Depreciation, amort., depletion, $m
  299
  309
  319
  329
  340
  351
  362
  374
  387
  400
  208
  222
  237
  252
  268
  284
  301
  319
  338
  357
  377
  399
  421
  444
  468
  493
  520
  547
  576
  607
Funds from operations, $m
  551
  551
  552
  553
  553
  554
  554
  555
  555
  556
  501
  501
  502
  502
  503
  504
  505
  506
  507
  508
  509
  511
  512
  514
  516
  518
  520
  513
  505
  497
Change in working capital, $m
  136
  143
  149
  156
  162
  169
  176
  183
  190
  197
  205
  213
  222
  230
  240
  250
  260
  271
  283
  295
  308
  321
  336
  351
  367
  383
  401
  420
  440
  460
Cash from operations, $m
  414
  409
  403
  397
  391
  385
  379
  372
  365
  358
  296
  288
  280
  272
  263
  254
  245
  235
  224
  213
  202
  189
  177
  163
  149
  134
  119
  93
  66
  37
Maintenance CAPEX, $m
  -85
  -94
  -103
  -113
  -123
  -134
  -145
  -157
  -169
  -181
  -194
  -208
  -222
  -237
  -252
  -268
  -284
  -301
  -319
  -338
  -357
  -377
  -399
  -421
  -444
  -468
  -493
  -520
  -547
  -576
New CAPEX, $m
  -81
  -86
  -90
  -94
  -97
  -101
  -105
  -110
  -114
  -118
  -123
  -128
  -133
  -138
  -144
  -150
  -156
  -163
  -170
  -177
  -185
  -193
  -201
  -210
  -220
  -230
  -241
  -252
  -264
  -276
Cash from investing activities, $m
  -166
  -180
  -193
  -207
  -220
  -235
  -250
  -267
  -283
  -299
  -317
  -336
  -355
  -375
  -396
  -418
  -440
  -464
  -489
  -515
  -542
  -570
  -600
  -631
  -664
  -698
  -734
  -772
  -811
  -852
Free cash flow, $m
  248
  229
  210
  190
  170
  149
  128
  106
  83
  59
  -22
  -48
  -75
  -103
  -132
  -163
  -195
  -229
  -264
  -301
  -340
  -381
  -423
  -468
  -515
  -564
  -616
  -679
  -746
  -815
Issuance/(repayment) of debt, $m
  1,063
  1,111
  1,161
  1,211
  1,262
  1,313
  1,365
  1,419
  1,475
  1,533
  1,593
  1,656
  1,722
  1,791
  1,864
  1,940
  2,021
  2,106
  2,196
  2,291
  2,391
  2,497
  2,608
  2,725
  2,849
  2,980
  3,117
  3,262
  3,415
  3,576
Issuance/(repurchase) of shares, $m
  57
  82
  105
  130
  155
  180
  207
  234
  262
  292
  172
  204
  237
  272
  309
  347
  387
  428
  472
  518
  566
  617
  670
  726
  784
  846
  910
  988
  1,069
  1,154
Cash from financing (excl. dividends), $m  
  1,120
  1,193
  1,266
  1,341
  1,417
  1,493
  1,572
  1,653
  1,737
  1,825
  1,765
  1,860
  1,959
  2,063
  2,173
  2,287
  2,408
  2,534
  2,668
  2,809
  2,957
  3,114
  3,278
  3,451
  3,633
  3,826
  4,027
  4,250
  4,484
  4,730
Total cash flow (excl. dividends), $m
  1,368
  1,421
  1,476
  1,531
  1,586
  1,643
  1,700
  1,759
  1,820
  1,883
  1,743
  1,812
  1,884
  1,960
  2,040
  2,124
  2,212
  2,306
  2,404
  2,508
  2,617
  2,733
  2,855
  2,983
  3,119
  3,262
  3,412
  3,571
  3,738
  3,914
Retained Cash Flow (-), $m
  -308
  -324
  -339
  -354
  -368
  -383
  -399
  -414
  -431
  -448
  -465
  -483
  -503
  -523
  -544
  -567
  -590
  -615
  -641
  -669
  -698
  -729
  -762
  -796
  -832
  -870
  -910
  -988
  -1,069
  -1,154
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
  1,060
  1,097
  1,137
  1,177
  1,218
  1,259
  1,301
  1,345
  1,389
  1,436
  1,278
  1,329
  1,382
  1,437
  1,496
  1,557
  1,622
  1,691
  1,763
  1,839
  1,919
  2,004
  2,093
  2,187
  2,287
  2,392
  2,502
  2,583
  2,670
  2,761
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
  1,016
  1,004
  990
  970
  944
  914
  879
  840
  798
  753
  607
  567
  525
  483
  439
  396
  353
  311
  271
  234
  198
  166
  137
  111
  89
  70
  54
  40
  29
  21
Current shareholders' claim on cash, %
  98.5
  96.6
  94.3
  91.9
  89.4
  86.7
  83.9
  81.2
  78.4
  75.6
  74.1
  72.4
  70.7
  68.9
  67.0
  65.1
  63.1
  61.1
  59.1
  57.1
  55.1
  53.1
  51.1
  49.2
  47.2
  45.4
  43.5
  41.7
  39.9
  38.2

Tech Data Corporation is a wholesale distributor of technology products. The Company serves as a link in the technology supply chain by bringing products from the technology vendors to market, as well as providing its customers with logistics capabilities and services. It operates through the segment of distributing technology products, logistics management and other value-added services. It operates in two geographic segments: the Americas and Europe. It provides resellers training and technical support suite of electronic commerce tools customized shipping documents product configuration or integration services and access to financing programs. Its customers include value-added resellers, direct marketers, retailers and corporate resellers who support the diverse technology needs of end users. It sells its products to customers in approximately 100 countries throughout North America, South America, Europe, the Middle East and Africa.

FINANCIAL RATIOS  of  Tech Data Corporation (TECD)

Valuation Ratios
P/E Ratio 18.1
Price to Sales 0.1
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 5.4
Price to Free Cash Flow 5.7
Growth Rates
Sales Growth Rate -0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.7%
Cap. Spend. - 3 Yr. Gr. Rate 5.4%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 45.6%
Total Debt to Equity 62.8%
Interest Coverage -11
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 6.6%
Ret/ On T. Cap. - 3 Yr. Avg. 8.4%
Return On Equity 9.3%
Return On Equity - 3 Yr. Avg. 10.5%
Asset Turnover 3.7
Profitability Ratios
Gross Margin 5%
Gross Margin - 3 Yr. Avg. 5%
EBITDA Margin 0.9%
EBITDA Margin - 3 Yr. Avg. 1%
Operating Margin 1.1%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin 1%
Pre-Tax Margin - 3 Yr. Avg. 1.1%
Net Profit Margin 0.7%
Net Profit Margin - 3 Yr. Avg. 0.8%
Effective Tax Rate 24.1%
Eff/ Tax Rate - 3 Yr. Avg. 27.1%
Payout Ratio 0%

TECD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TECD stock intrinsic value calculation we used $36775 million for the last fiscal year's total revenue generated by Tech Data Corporation. The default revenue input number comes from 0001 income statement of Tech Data Corporation. 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 TECD stock valuation model: a) initial revenue growth rate of 10.6% 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 TECD is calculated based on our internal credit rating of Tech Data Corporation, 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 Tech Data Corporation.
    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 TECD stock the variable cost ratio is equal to 98.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for TECD 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 7.5% for Tech Data Corporation.

Corporate tax rate of 27% is the nominal tax rate for Tech Data Corporation. 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 TECD 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 TECD are equal to 2.1%.

Life of production assets of 9.1 years is the average useful life of capital assets used in Tech Data Corporation 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 TECD is equal to 3.5%. 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 - $2921.492 million for Tech Data Corporation - 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 36.943 million for Tech Data Corporation 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 Tech Data Corporation at the current share price and the inputted number of shares is $3.7 billion.

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