Intrinsic value of TTEC Holdings, Inc. - TTEC

Previous Close

$46.24

  Intrinsic Value

$22.18

stock screener

  Rating & Target

str. sell

-52%

Previous close

$46.24

 
Intrinsic value

$22.18

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of TTEC 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 2.1

 

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
  1,539
  1,575
  1,615
  1,660
  1,711
  1,766
  1,826
  1,891
  1,961
  2,037
  2,117
  2,203
  2,295
  2,392
  2,495
  2,604
  2,720
  2,843
  2,972
  3,108
  3,253
  3,404
  3,565
  3,733
  3,911
  4,098
  4,295
  4,503
  4,721
  4,950
Variable operating expenses, $m
  1,434
  1,466
  1,503
  1,545
  1,591
  1,641
  1,696
  1,755
  1,819
  1,888
  1,933
  2,012
  2,095
  2,184
  2,278
  2,378
  2,484
  2,595
  2,713
  2,838
  2,970
  3,108
  3,255
  3,409
  3,571
  3,742
  3,922
  4,111
  4,310
  4,520
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
  1,434
  1,466
  1,503
  1,545
  1,591
  1,641
  1,696
  1,755
  1,819
  1,888
  1,933
  2,012
  2,095
  2,184
  2,278
  2,378
  2,484
  2,595
  2,713
  2,838
  2,970
  3,108
  3,255
  3,409
  3,571
  3,742
  3,922
  4,111
  4,310
  4,520
Operating income, $m
  105
  108
  112
  116
  120
  125
  130
  136
  142
  148
  184
  192
  200
  208
  217
  226
  237
  247
  258
  270
  283
  296
  310
  325
  340
  356
  373
  392
  410
  430
EBITDA, $m
  182
  186
  191
  196
  202
  208
  216
  223
  231
  240
  250
  260
  271
  282
  294
  307
  321
  335
  351
  367
  384
  402
  421
  441
  462
  484
  507
  531
  557
  584
Interest expense (income), $m
  7
  26
  27
  29
  31
  33
  35
  37
  40
  43
  46
  49
  52
  56
  60
  64
  69
  73
  78
  84
  89
  95
  101
  108
  115
  122
  130
  138
  147
  155
  165
Earnings before tax, $m
  79
  81
  83
  85
  88
  90
  93
  96
  99
  103
  135
  139
  144
  148
  153
  158
  163
  169
  175
  181
  188
  195
  202
  210
  218
  226
  235
  245
  255
  265
Tax expense, $m
  21
  22
  22
  23
  24
  24
  25
  26
  27
  28
  37
  38
  39
  40
  41
  43
  44
  46
  47
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
Net income, $m
  58
  59
  61
  62
  64
  66
  68
  70
  73
  75
  99
  102
  105
  108
  112
  115
  119
  123
  128
  132
  137
  142
  147
  153
  159
  165
  172
  179
  186
  194

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
  1,076
  1,100
  1,129
  1,160
  1,196
  1,234
  1,276
  1,322
  1,371
  1,423
  1,480
  1,540
  1,604
  1,671
  1,744
  1,820
  1,901
  1,986
  2,077
  2,172
  2,273
  2,379
  2,491
  2,609
  2,733
  2,864
  3,002
  3,146
  3,299
  3,459
Adjusted assets (=assets-cash), $m
  1,076
  1,100
  1,129
  1,160
  1,196
  1,234
  1,276
  1,322
  1,371
  1,423
  1,480
  1,540
  1,604
  1,671
  1,744
  1,820
  1,901
  1,986
  2,077
  2,172
  2,273
  2,379
  2,491
  2,609
  2,733
  2,864
  3,002
  3,146
  3,299
  3,459
Revenue / Adjusted assets
  1.430
  1.432
  1.430
  1.431
  1.431
  1.431
  1.431
  1.430
  1.430
  1.431
  1.430
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.432
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
Average production assets, $m
  316
  323
  331
  340
  351
  362
  374
  388
  402
  418
  434
  452
  470
  490
  511
  534
  558
  583
  609
  637
  667
  698
  731
  765
  802
  840
  881
  923
  968
  1,015
Working capital, $m
  217
  222
  228
  234
  241
  249
  257
  267
  277
  287
  299
  311
  324
  337
  352
  367
  384
  401
  419
  438
  459
  480
  503
  526
  551
  578
  606
  635
  666
  698
Total debt, $m
  297
  313
  332
  354
  377
  403
  432
  462
  495
  531
  568
  609
  652
  698
  746
  798
  852
  910
  970
  1,035
  1,102
  1,174
  1,249
  1,328
  1,412
  1,500
  1,593
  1,690
  1,793
  1,901
Total liabilities, $m
  724
  741
  760
  781
  805
  831
  859
  889
  922
  958
  996
  1,036
  1,079
  1,125
  1,173
  1,225
  1,279
  1,337
  1,398
  1,462
  1,530
  1,601
  1,676
  1,756
  1,839
  1,927
  2,020
  2,118
  2,220
  2,328
Total equity, $m
  352
  360
  369
  379
  391
  404
  417
  432
  448
  465
  484
  503
  524
  547
  570
  595
  622
  650
  679
  710
  743
  778
  815
  853
  894
  937
  982
  1,029
  1,079
  1,131
Total liabilities and equity, $m
  1,076
  1,101
  1,129
  1,160
  1,196
  1,235
  1,276
  1,321
  1,370
  1,423
  1,480
  1,539
  1,603
  1,672
  1,743
  1,820
  1,901
  1,987
  2,077
  2,172
  2,273
  2,379
  2,491
  2,609
  2,733
  2,864
  3,002
  3,147
  3,299
  3,459
Debt-to-equity ratio
  0.840
  0.870
  0.900
  0.930
  0.970
  1.000
  1.030
  1.070
  1.100
  1.140
  1.170
  1.210
  1.240
  1.280
  1.310
  1.340
  1.370
  1.400
  1.430
  1.460
  1.480
  1.510
  1.530
  1.560
  1.580
  1.600
  1.620
  1.640
  1.660
  1.680
Adjusted equity ratio
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  59
  61
  62
  64
  66
  68
  70
  73
  75
  99
  102
  105
  108
  112
  115
  119
  123
  128
  132
  137
  142
  147
  153
  159
  165
  172
  179
  186
  194
Depreciation, amort., depletion, $m
  76
  78
  79
  80
  82
  83
  85
  87
  90
  92
  66
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  121
  127
  133
  140
  147
  154
Funds from operations, $m
  134
  137
  139
  142
  146
  149
  153
  158
  162
  167
  165
  170
  176
  182
  189
  196
  204
  212
  220
  229
  238
  248
  258
  269
  281
  293
  305
  319
  333
  348
Change in working capital, $m
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  32
Cash from operations, $m
  130
  132
  134
  136
  139
  142
  145
  148
  152
  156
  153
  158
  163
  169
  174
  181
  187
  194
  202
  209
  218
  226
  236
  245
  255
  266
  278
  289
  302
  315
Maintenance CAPEX, $m
  -47
  -48
  -49
  -50
  -52
  -53
  -55
  -57
  -59
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -97
  -101
  -106
  -111
  -116
  -121
  -127
  -133
  -140
  -147
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -45
  -47
Cash from investing activities, $m
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -87
  -91
  -95
  -99
  -105
  -109
  -115
  -120
  -127
  -132
  -139
  -146
  -152
  -159
  -167
  -175
  -185
  -194
Free cash flow, $m
  77
  77
  76
  77
  77
  77
  78
  78
  79
  80
  73
  75
  76
  77
  79
  81
  83
  85
  87
  89
  92
  94
  97
  100
  103
  106
  110
  114
  117
  122
Issuance/(repayment) of debt, $m
  15
  17
  19
  21
  24
  26
  28
  31
  33
  35
  38
  40
  43
  46
  49
  51
  54
  58
  61
  64
  68
  71
  75
  79
  84
  88
  93
  97
  103
  108
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  15
  17
  19
  21
  24
  26
  28
  31
  33
  35
  38
  40
  43
  46
  49
  51
  54
  58
  61
  64
  68
  71
  75
  79
  84
  88
  93
  97
  103
  108
Total cash flow (excl. dividends), $m
  92
  93
  95
  98
  100
  103
  106
  109
  112
  115
  111
  115
  119
  123
  128
  132
  137
  142
  148
  153
  159
  166
  172
  179
  187
  194
  202
  211
  220
  229
Retained Cash Flow (-), $m
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
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
  85
  85
  86
  87
  89
  90
  92
  94
  96
  98
  93
  95
  98
  101
  104
  107
  111
  114
  118
  122
  126
  131
  136
  141
  146
  152
  157
  164
  170
  177
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
  78
  75
  72
  69
  66
  62
  59
  55
  52
  44
  41
  37
  34
  31
  27
  24
  21
  18
  16
  13
  11
  9
  7
  6
  4
  3
  3
  2
  1
Current shareholders' claim on cash, %
  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
  100.0

TeleTech Holdings, Inc. (TeleTech) is a customer service provider that delivers consulting, technology, growth and customer care solutions on a global scale. The Company operates through four segments: Customer Management Services (CMS), Customer Growth Services (CGS), Customer Technology Services (CTS) and Customer Strategy Services (CSS). The CMS segment designs and manages clients' front-to-back office processes to deliver just-in-time, personalized, multi-channel interactions. The CGS segment offers integrated sales and marketing solutions to help its clients in the business-to-consumer or business-to-business markets. The CTS segment includes operational and system design consulting, customer experience technology product, implementation and integration consulting services, and management of clients cloud and on premise solutions. The CSS segment provides professional services in customer experience strategy, and system and operational process optimization.

FINANCIAL RATIOS  of  TTEC Holdings, Inc. (TTEC)

Valuation Ratios
P/E Ratio 62.7
Price to Sales 1.7
Price to Book 6
Price to Tangible Book
Price to Cash Flow 19.7
Price to Free Cash Flow 37.4
Growth Rates
Sales Growth Rate -0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.9%
Cap. Spend. - 3 Yr. Gr. Rate 0.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 61.1%
Total Debt to Equity 61.1%
Interest Coverage 8
Management Effectiveness
Return On Assets 4.6%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 10.1%
Return On Equity 8.6%
Return On Equity - 3 Yr. Avg. 12.7%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 26.2%
Gross Margin - 3 Yr. Avg. 27.6%
EBITDA Margin 9.9%
EBITDA Margin - 3 Yr. Avg. 11.7%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. 6.3%
Pre-Tax Margin 3.9%
Pre-Tax Margin - 3 Yr. Avg. 6.2%
Net Profit Margin 2.7%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 26%
Eff/ Tax Rate - 3 Yr. Avg. 24.1%
Payout Ratio 52.9%

TTEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TTEC stock intrinsic value calculation we used $1509 million for the last fiscal year's total revenue generated by TTEC Holdings, Inc.. The default revenue input number comes from 0001 income statement of TTEC Holdings, 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 TTEC 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 TTEC is calculated based on our internal credit rating of TTEC Holdings, 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 TTEC Holdings, 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 TTEC stock the variable cost ratio is equal to 93.2%.

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 TTEC 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 9.2% for TTEC Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for TTEC Holdings, 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 TTEC 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 TTEC are equal to 20.5%.

Life of production assets of 6.6 years is the average useful life of capital assets used in TTEC Holdings, 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 TTEC is equal to 14.1%. 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 - $345.172 million for TTEC Holdings, 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 46.141 million for TTEC Holdings, 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 TTEC Holdings, Inc. at the current share price and the inputted number of shares is $2.1 billion.

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