Intrinsic value of Vocera Communications - VCRA

Previous Close

$35.39

  Intrinsic Value

$1.57

stock screener

  Rating & Target

str. sell

-96%

Previous close

$35.39

 
Intrinsic value

$1.57

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of VCRA 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 1.1

 

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, %
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.54
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
Revenue, $m
  175
  188
  201
  215
  229
  244
  260
  276
  293
  311
  329
  348
  368
  389
  411
  433
  457
  482
  508
  535
  564
  593
  625
  657
  692
  727
  765
  804
  846
  889
Variable operating expenses, $m
  157
  168
  180
  192
  204
  217
  231
  245
  259
  275
  284
  301
  318
  336
  355
  374
  395
  416
  439
  462
  487
  512
  539
  568
  597
  628
  661
  695
  730
  768
Fixed operating expenses, $m
  32
  32
  33
  34
  35
  35
  36
  37
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
Total operating expenses, $m
  189
  200
  213
  226
  239
  252
  267
  282
  297
  314
  323
  341
  359
  378
  398
  418
  440
  462
  486
  510
  536
  562
  590
  620
  650
  683
  717
  752
  788
  828
Operating income, $m
  -14
  -13
  -12
  -11
  -10
  -8
  -7
  -5
  -4
  -2
  6
  7
  9
  11
  13
  15
  18
  20
  23
  25
  28
  31
  34
  38
  41
  45
  49
  53
  57
  62
EBITDA, $m
  -3
  -2
  -1
  1
  3
  4
  6
  8
  10
  12
  14
  16
  19
  21
  24
  26
  29
  32
  35
  39
  42
  46
  50
  54
  59
  63
  68
  73
  79
  85
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
Earnings before tax, $m
  -14
  -13
  -13
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  2
  3
  4
  6
  7
  9
  11
  13
  14
  16
  19
  21
  23
  26
  28
  31
  34
  38
  41
  45
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
Net income, $m
  -14
  -13
  -13
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  1
  2
  3
  4
  5
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  30
  33

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
  195
  210
  224
  240
  256
  273
  290
  308
  327
  347
  367
  389
  411
  434
  458
  484
  510
  538
  567
  597
  629
  662
  697
  734
  772
  812
  854
  898
  944
  992
Adjusted assets (=assets-cash), $m
  195
  210
  224
  240
  256
  273
  290
  308
  327
  347
  367
  389
  411
  434
  458
  484
  510
  538
  567
  597
  629
  662
  697
  734
  772
  812
  854
  898
  944
  992
Revenue / Adjusted assets
  0.897
  0.895
  0.897
  0.896
  0.895
  0.894
  0.897
  0.896
  0.896
  0.896
  0.896
  0.895
  0.895
  0.896
  0.897
  0.895
  0.896
  0.896
  0.896
  0.896
  0.897
  0.896
  0.897
  0.895
  0.896
  0.895
  0.896
  0.895
  0.896
  0.896
Average production assets, $m
  41
  44
  47
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  92
  97
  102
  108
  114
  120
  126
  133
  140
  147
  155
  163
  172
  181
  190
  200
  210
Working capital, $m
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
Total debt, $m
  6
  12
  18
  25
  31
  38
  46
  53
  61
  70
  78
  87
  97
  107
  117
  128
  139
  151
  163
  176
  189
  203
  218
  233
  250
  266
  284
  303
  322
  343
Total liabilities, $m
  83
  89
  95
  101
  108
  115
  123
  130
  138
  147
  155
  164
  174
  184
  194
  205
  216
  228
  240
  253
  266
  280
  295
  310
  326
  343
  361
  380
  399
  420
Total equity, $m
  113
  121
  129
  138
  148
  157
  167
  178
  189
  200
  212
  224
  237
  250
  264
  279
  294
  310
  327
  345
  363
  382
  402
  423
  445
  468
  493
  518
  545
  573
Total liabilities and equity, $m
  196
  210
  224
  239
  256
  272
  290
  308
  327
  347
  367
  388
  411
  434
  458
  484
  510
  538
  567
  598
  629
  662
  697
  733
  771
  811
  854
  898
  944
  993
Debt-to-equity ratio
  0.050
  0.100
  0.140
  0.180
  0.210
  0.240
  0.270
  0.300
  0.330
  0.350
  0.370
  0.390
  0.410
  0.430
  0.440
  0.460
  0.470
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.580
  0.590
  0.600
Adjusted equity ratio
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -14
  -13
  -13
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  1
  2
  3
  4
  5
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  30
  33
Depreciation, amort., depletion, $m
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
  23
Funds from operations, $m
  -3
  -2
  -1
  0
  1
  3
  4
  5
  7
  8
  10
  11
  13
  14
  16
  18
  19
  21
  23
  26
  28
  30
  33
  36
  38
  41
  44
  48
  51
  55
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from operations, $m
  -2
  -1
  0
  1
  3
  4
  5
  7
  8
  10
  11
  13
  14
  16
  18
  20
  22
  24
  26
  28
  30
  33
  36
  38
  41
  45
  48
  51
  55
  59
Maintenance CAPEX, $m
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
New CAPEX, $m
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
Cash from investing activities, $m
  -7
  -7
  -8
  -8
  -8
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -15
  -17
  -18
  -18
  -19
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
Free cash flow, $m
  -9
  -9
  -8
  -7
  -6
  -5
  -5
  -4
  -3
  -2
  -1
  0
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  17
  19
  21
  23
  25
  27
Issuance/(repayment) of debt, $m
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  20
Issuance/(repurchase) of shares, $m
  22
  22
  21
  21
  20
  20
  19
  18
  18
  17
  10
  10
  10
  9
  9
  8
  7
  7
  6
  6
  5
  4
  3
  2
  1
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  28
  28
  27
  28
  27
  27
  26
  26
  26
  25
  19
  19
  19
  19
  19
  19
  18
  19
  18
  19
  18
  18
  18
  17
  17
  17
  18
  19
  20
  20
Total cash flow (excl. dividends), $m
  18
  19
  20
  20
  21
  21
  22
  22
  23
  24
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  41
  44
  48
Retained Cash Flow (-), $m
  -22
  -22
  -21
  -21
  -20
  -20
  -19
  -18
  -18
  -17
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
Prev. year cash balance distribution, $m
  23
  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
  19
  -3
  -2
  -1
  1
  2
  3
  4
  5
  7
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  12
  12
  13
  14
  16
  18
  20
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
  19
  -2
  -1
  0
  0
  1
  2
  3
  3
  4
  3
  3
  3
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  97.6
  95.4
  93.4
  91.7
  90.1
  88.7
  87.4
  86.3
  85.3
  84.4
  83.8
  83.4
  82.9
  82.6
  82.2
  81.9
  81.7
  81.4
  81.2
  81.1
  80.9
  80.8
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7

Vocera Communications, Inc. is a provider of communication solutions for mobile workers in healthcare, hospitality, energy, education and other industries. The Company's segments include Product and Service. The Company's solutions include the Vocera Communication System, Vocera Care Experience, Vocera Engage integration platform, smartphone applications and its Experience Innovation Network. The Company's Vocera Communication System consists of a software platform that connects communication devices, including its hands-free, wearable, voice-controlled communication badges, and third-party mobile devices that use its software applications to become part of the Vocera system. Its Vocera Collaboration Suite combines calling, texting, alerting and content distribution capabilities of Vocera into a smartphone application. Its Vocera Secure Texting is an alternative to non-secure short message service (SMS) texting.

FINANCIAL RATIOS  of  Vocera Communications (VCRA)

Valuation Ratios
P/E Ratio -57.4
Price to Sales 7.6
Price to Book 9.5
Price to Tangible Book
Price to Cash Flow 88.7
Price to Free Cash Flow 162.6
Growth Rates
Sales Growth Rate 23.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 400%
Cap. Spend. - 3 Yr. Gr. Rate 4.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -9.9%
Ret/ On Assets - 3 Yr. Avg. -12.4%
Return On Total Capital -16.4%
Ret/ On T. Cap. - 3 Yr. Avg. -18.7%
Return On Equity -16.4%
Return On Equity - 3 Yr. Avg. -18.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 61.7%
Gross Margin - 3 Yr. Avg. 61.8%
EBITDA Margin -10.2%
EBITDA Margin - 3 Yr. Avg. -16.6%
Operating Margin -13.3%
Oper. Margin - 3 Yr. Avg. -20.1%
Pre-Tax Margin -13.3%
Pre-Tax Margin - 3 Yr. Avg. -19.7%
Net Profit Margin -13.3%
Net Profit Margin - 3 Yr. Avg. -19.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

VCRA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VCRA stock intrinsic value calculation we used $162.548 million for the last fiscal year's total revenue generated by Vocera Communications. The default revenue input number comes from 0001 income statement of Vocera Communications. 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 VCRA stock valuation model: a) initial revenue growth rate of 7.6% 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 VCRA is calculated based on our internal credit rating of Vocera Communications, 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 Vocera Communications.
    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 VCRA stock the variable cost ratio is equal to 90.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $31 million in the base year in the intrinsic value calculation for VCRA 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 Vocera Communications.

Corporate tax rate of 27% is the nominal tax rate for Vocera Communications. 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 VCRA 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 VCRA are equal to 23.6%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Vocera Communications 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 VCRA is equal to -9.1%. 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 - $128 million for Vocera Communications - 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 30.166 million for Vocera Communications 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 Vocera Communications at the current share price and the inputted number of shares is $1.1 billion.

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COMPANY NEWS

▶ Vocera to Present at Upcoming Healthcare Conferences   [Oct-31-18 08:04AM  Business Wire]
▶ Vocera: 3Q Earnings Snapshot   [05:04PM  Associated Press]
▶ Vocera Q3 2018 Results to be Released October 25, 2018   [Oct-11-18 08:09AM  Business Wire]
▶ Vocera to Participate in Four Upcoming Investor Conferences   [Aug-23-18 08:04AM  Business Wire]
▶ IBD Stock Of The Day: Vocera Stock Aims To Break Out After Profit Growth   [Aug-17-18 04:15PM  Investor's Business Daily]
▶ Vocera Announces Second Quarter Revenue of $42.7 Million   [Jul-26-18 04:10PM  Business Wire]
▶ Vocera Q2 2018 Results to be Released July 26, 2018   [Jul-12-18 08:01AM  Business Wire]
▶ Vocera to Present at Three Upcoming Investor Conferences   [May-22-18 08:05AM  Business Wire]
▶ Vocera: 1Q Earnings Snapshot   [Apr-26-18 07:22PM  Associated Press]
▶ Vocera to Present at Upcoming Investor Conference   [Apr-25-18 08:03AM  Business Wire]
▶ Vocera Board of Directors Elects Brent D. Lang as Chairman   [Apr-17-18 08:04AM  Business Wire]
▶ Vocera Q1 2018 Results to be Released April 26, 2018   [Apr-12-18 08:03AM  Business Wire]
▶ Three Vocera Customers Selected to Speak at HIMSS18   [Feb-22-18 08:04AM  Business Wire]
▶ Vocera beats Street 4Q forecasts   [Feb-08-18 05:37PM  Associated Press]
▶ Vocera Engage is Now Available in the United Kingdom   [Feb-07-18 03:09AM  Business Wire]
▶ Vocera to Present at Upcoming Investor Conferences   [Jan-31-18 08:04AM  Business Wire]
▶ Vocera Q4 2017 Results to be Released February 8, 2018   [Jan-25-18 08:04AM  Business Wire]
▶ Vocera Earns New ATO From the Department of Defense   [Nov-09-17 08:03AM  Business Wire]
▶ Vocera reports 3Q loss   [Oct-26-17 05:34PM  Associated Press]
▶ Vocera Q3 2017 Results to be Released October 26, 2017   [Oct-12-17 08:03AM  Business Wire]
▶ Vocera to Present at Upcoming Investor Conferences   [Aug-23-17 08:04AM  Business Wire]

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