Intrinsic value of TTEC Holdings - TTEC

Previous Close

$29.57

  Intrinsic Value

$23.06

stock screener

  Rating & Target

sell

-22%

Previous close

$29.57

 
Intrinsic value

$23.06

 
Up/down potential

-22%

 
Rating

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 1.4

 

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
  1,507
  1,542
  1,581
  1,626
  1,675
  1,729
  1,788
  1,852
  1,920
  1,994
  2,073
  2,157
  2,247
  2,342
  2,443
  2,550
  2,663
  2,783
  2,910
  3,043
  3,184
  3,333
  3,490
  3,655
  3,829
  4,012
  4,205
  4,408
  4,622
  4,846
Variable operating expenses, $m
  1,152
  1,178
  1,208
  1,241
  1,277
  1,318
  1,361
  1,409
  1,460
  1,515
  1,544
  1,606
  1,673
  1,744
  1,819
  1,899
  1,983
  2,073
  2,167
  2,267
  2,372
  2,482
  2,599
  2,722
  2,852
  2,988
  3,132
  3,283
  3,442
  3,609
Fixed operating expenses, $m
  258
  263
  269
  275
  281
  287
  293
  300
  307
  313
  320
  327
  334
  342
  349
  357
  365
  373
  381
  389
  398
  407
  416
  425
  434
  444
  453
  463
  474
  484
Total operating expenses, $m
  1,410
  1,441
  1,477
  1,516
  1,558
  1,605
  1,654
  1,709
  1,767
  1,828
  1,864
  1,933
  2,007
  2,086
  2,168
  2,256
  2,348
  2,446
  2,548
  2,656
  2,770
  2,889
  3,015
  3,147
  3,286
  3,432
  3,585
  3,746
  3,916
  4,093
Operating income, $m
  97
  100
  105
  110
  117
  124
  133
  143
  154
  166
  209
  223
  239
  256
  274
  294
  315
  337
  362
  387
  415
  444
  475
  508
  543
  580
  620
  662
  706
  753
EBITDA, $m
  173
  178
  183
  190
  198
  207
  218
  229
  242
  257
  272
  289
  308
  328
  349
  372
  397
  423
  451
  481
  512
  546
  582
  620
  661
  703
  749
  797
  848
  901
Interest expense (income), $m
  7
  19
  19
  20
  21
  23
  24
  25
  27
  28
  30
  32
  34
  37
  39
  41
  44
  47
  50
  53
  56
  60
  64
  68
  72
  76
  81
  86
  91
  96
  102
Earnings before tax, $m
  79
  81
  84
  89
  94
  100
  108
  116
  125
  135
  177
  189
  202
  217
  233
  250
  268
  288
  308
  331
  355
  380
  407
  436
  467
  500
  534
  571
  610
  651
Tax expense, $m
  21
  22
  23
  24
  25
  27
  29
  31
  34
  37
  48
  51
  55
  59
  63
  67
  72
  78
  83
  89
  96
  103
  110
  118
  126
  135
  144
  154
  165
  176
Net income, $m
  57
  59
  62
  65
  69
  73
  79
  85
  91
  99
  129
  138
  148
  158
  170
  182
  196
  210
  225
  242
  259
  278
  297
  318
  341
  365
  390
  417
  445
  475

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
  1,101
  1,126
  1,155
  1,187
  1,223
  1,263
  1,306
  1,353
  1,403
  1,457
  1,514
  1,576
  1,641
  1,711
  1,784
  1,863
  1,945
  2,033
  2,125
  2,223
  2,326
  2,435
  2,549
  2,670
  2,797
  2,931
  3,072
  3,220
  3,376
  3,540
Adjusted assets (=assets-cash), $m
  1,101
  1,126
  1,155
  1,187
  1,223
  1,263
  1,306
  1,353
  1,403
  1,457
  1,514
  1,576
  1,641
  1,711
  1,784
  1,863
  1,945
  2,033
  2,125
  2,223
  2,326
  2,435
  2,549
  2,670
  2,797
  2,931
  3,072
  3,220
  3,376
  3,540
Revenue / Adjusted assets
  1.369
  1.369
  1.369
  1.370
  1.370
  1.369
  1.369
  1.369
  1.368
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
  1.369
Average production assets, $m
  277
  284
  291
  299
  308
  318
  329
  341
  353
  367
  381
  397
  413
  431
  449
  469
  490
  512
  535
  560
  586
  613
  642
  673
  705
  738
  774
  811
  850
  892
Working capital, $m
  271
  277
  285
  293
  301
  311
  322
  333
  346
  359
  373
  388
  404
  422
  440
  459
  479
  501
  524
  548
  573
  600
  628
  658
  689
  722
  757
  793
  832
  872
Total debt, $m
  359
  376
  395
  417
  441
  467
  496
  527
  561
  597
  636
  677
  721
  767
  817
  869
  924
  983
  1,045
  1,111
  1,180
  1,252
  1,329
  1,410
  1,495
  1,585
  1,679
  1,779
  1,883
  1,993
Total liabilities, $m
  737
  754
  774
  796
  820
  846
  875
  906
  940
  976
  1,014
  1,056
  1,099
  1,146
  1,196
  1,248
  1,303
  1,362
  1,424
  1,489
  1,558
  1,631
  1,708
  1,789
  1,874
  1,964
  2,058
  2,157
  2,262
  2,372
Total equity, $m
  363
  372
  381
  392
  404
  417
  431
  446
  463
  481
  500
  520
  542
  564
  589
  615
  642
  671
  701
  734
  768
  803
  841
  881
  923
  967
  1,014
  1,063
  1,114
  1,168
Total liabilities and equity, $m
  1,100
  1,126
  1,155
  1,188
  1,224
  1,263
  1,306
  1,352
  1,403
  1,457
  1,514
  1,576
  1,641
  1,710
  1,785
  1,863
  1,945
  2,033
  2,125
  2,223
  2,326
  2,434
  2,549
  2,670
  2,797
  2,931
  3,072
  3,220
  3,376
  3,540
Debt-to-equity ratio
  0.990
  1.010
  1.040
  1.060
  1.090
  1.120
  1.150
  1.180
  1.210
  1.240
  1.270
  1.300
  1.330
  1.360
  1.390
  1.410
  1.440
  1.470
  1.490
  1.510
  1.540
  1.560
  1.580
  1.600
  1.620
  1.640
  1.660
  1.670
  1.690
  1.710
Adjusted equity ratio
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  57
  59
  62
  65
  69
  73
  79
  85
  91
  99
  129
  138
  148
  158
  170
  182
  196
  210
  225
  242
  259
  278
  297
  318
  341
  365
  390
  417
  445
  475
Depreciation, amort., depletion, $m
  76
  77
  78
  80
  81
  83
  85
  87
  89
  91
  64
  66
  69
  72
  75
  78
  82
  85
  89
  93
  98
  102
  107
  112
  117
  123
  129
  135
  142
  149
Funds from operations, $m
  133
  136
  140
  145
  150
  156
  163
  171
  180
  190
  193
  204
  217
  230
  245
  260
  277
  295
  314
  335
  357
  380
  404
  431
  458
  488
  519
  552
  587
  624
Change in working capital, $m
  5
  6
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  38
  40
Cash from operations, $m
  128
  130
  133
  137
  141
  147
  153
  160
  168
  177
  178
  189
  201
  213
  227
  241
  257
  274
  292
  311
  331
  353
  376
  401
  427
  455
  484
  515
  548
  583
Maintenance CAPEX, $m
  -45
  -46
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -98
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -142
New CAPEX, $m
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
Cash from investing activities, $m
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -87
  -91
  -95
  -99
  -104
  -108
  -114
  -119
  -125
  -131
  -137
  -144
  -151
  -158
  -166
  -174
  -183
Free cash flow, $m
  78
  77
  78
  80
  82
  85
  89
  93
  98
  104
  103
  110
  118
  127
  136
  147
  158
  170
  183
  197
  212
  228
  245
  263
  283
  304
  326
  349
  374
  400
Issuance/(repayment) of debt, $m
  15
  17
  19
  22
  24
  26
  29
  31
  34
  36
  39
  41
  44
  47
  49
  52
  55
  59
  62
  65
  69
  73
  77
  81
  85
  90
  94
  99
  104
  110
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
  22
  24
  26
  29
  31
  34
  36
  39
  41
  44
  47
  49
  52
  55
  59
  62
  65
  69
  73
  77
  81
  85
  90
  94
  99
  104
  110
Total cash flow (excl. dividends), $m
  92
  94
  98
  102
  106
  112
  118
  125
  132
  140
  141
  151
  162
  173
  186
  199
  213
  229
  245
  262
  281
  301
  322
  344
  368
  393
  420
  448
  479
  510
Retained Cash Flow (-), $m
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
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
  86
  88
  91
  94
  99
  104
  109
  115
  123
  122
  131
  140
  150
  161
  173
  186
  200
  214
  230
  247
  265
  284
  304
  326
  349
  374
  400
  427
  456
Discount rate, %
  5.40
  5.67
  5.95
  6.25
  6.56
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.04
  15.80
  16.59
  17.42
  18.29
  19.20
  20.16
  21.17
  22.23
PV of cash for distribution, $m
  80
  77
  74
  71
  69
  66
  63
  61
  58
  55
  48
  45
  42
  39
  35
  32
  28
  24
  21
  18
  15
  12
  10
  8
  6
  4
  3
  2
  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 (TTEC)

Valuation Ratios
P/E Ratio 40.1
Price to Sales 1.1
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 12.6
Price to Free Cash Flow 23.9
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 $1477.365 million for the last fiscal year's total revenue generated by TTEC Holdings. The default revenue input number comes from 0001 income statement of TTEC Holdings. 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 5.4%, whose default value for TTEC is calculated based on our internal credit rating of TTEC Holdings, 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.
    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 76.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $252 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 5.4% for TTEC Holdings.

Corporate tax rate of 27% is the nominal tax rate for TTEC Holdings. 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 18.4%.

Life of production assets of 6 years is the average useful life of capital assets used in TTEC Holdings 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 18%. 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 - $355.867 million for TTEC Holdings - 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 46.48 million for TTEC Holdings 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 at the current share price and the inputted number of shares is $1.4 billion.

RELATED COMPANIES Price Int.Val. Rating
XRX Xerox 27.14 24.99  hold
IBM International 121.44 191.80  buy
CVG Convergys 23.93 31.56  buy
SYKE Sykes Enterpri 28.19 31.37  hold
SNX SYNNEX 78.46 409.69  str.buy
ACN Accenture Cl A 162.49 63.30  str.sell
FIVN Five9 42.77 4.81  str.sell
EDGW Edgewater Tech 4.44 0.30  str.sell
SRT Startek 6.35 1.10  str.sell
T AT&T 30.12 51.95  str.buy

COMPANY NEWS

▶ TTEC Announces Third Quarter 2018 Financial Results   [Nov-07-18 04:50PM  PR Newswire]
▶ TTEC Wins Five Awards for Cisco Partnership   [Nov-06-18 07:35AM  PR Newswire]
▶ Why merger activity is slowing in Orlando and everywhere else   [Oct-13-18 08:30AM  American City Business Journals]
▶ Is It The Right Time To Buy TTEC Holdings Inc (NASDAQ:TTEC)?   [Sep-06-18 03:56PM  Simply Wall St.]
▶ New Strong Sell Stocks for August 13th   [Aug-13-18 08:55AM  Zacks]
▶ TTEC Holdings (TTEC) Q2 Earnings Lag Estimates   [Aug-07-18 06:35PM  Zacks]
▶ TTEC Announces First Quarter 2018 Financial Results   [May-08-18 04:50PM  PR Newswire]
▶ The Price is Wrong: Why merger activity is slowing in Orlando and, well, everywhere   [Apr-13-18 12:35PM  American City Business Journals]
▶ The Price is Wrong: Why merger activity is slowing in Orlando and, well, everywhere   [Apr-11-18 02:35PM  American City Business Journals]
▶ TeleTech reports 4Q loss   [Mar-12-18 05:25PM  Associated Press]
▶ TeleTech misses 3Q profit forecasts   [Nov-08-17 07:50PM  Associated Press]
▶ TeleTech Increases its Credit Facility to $1.2 Billion   [Nov-01-17 08:05AM  PR Newswire]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.