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Verint Systems $39.30 (USD) Close Price as of 06/04/2018

Based on the analysis conducted in this report, Verint Systems, (VRNT:NAS) is found to be  Undervalued.

Company Verint Systems
Symbol:Exchange VRNT:NAS
Industry Technology:Software-Application
Close Price/Date $39.30 (USD) 06/04/2018
Weighted Average Valuation $47.71 (USD)
Summary VRNT:NAS is found to be  Undervalued by 21.4% using the 3 valuation models shown below.
Valuation Models Used Analyst Consensus: $49.50 (USD)
(in order of importance) Comparables: $46.79 (USD)
Multiples: $44.20 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Overvalued on a Cash Flow Valuation basis
Comparable Company Basis: Undervalued on a Comparable Valuation basis
Asset Basis: Undervalued on an Asset Valuation basis

Valuation Details

Verint Systems Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for VRNT:NAS

Using a discounted cash flow model we generated an intrinsic value of $25.38 (USD) for VRNT:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

VRNT:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $25.38 1% 5% 1% 5%
WACC (or Ke) 9.10 $32.85 $20.02
Terminal Growth Rate 3.00 $20.62 $32.02
Tax Rate 0.40 $28.53 $22.24
Cash Flow 291,511,512 $23.36 $27.40
Capital Expenditures -26,772,400 $25.19 $25.57
Long Term Debt 739,914,000 $25.96 $24.80

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $42.63 (USD) for VRNT:NAS. We also generated a valuation of $46.79 (USD) using other metrics and comparables.
The comparable companies were CommVault Systems (CVLT:NAS), Mantech International (MANT:NAS), Allscripts Healthcare (MDRX:NAS), NetScout Systems (NTCT:NAS) and Qualys (QLYS:NAS)

Company VRNT:NAS End Date Value
Cash/Share $5.34 (USD)
Book Value/Share $17.55 (USD)
MarketCap 2,508,759,083
1 Year Return -0.038
NetPPE 89,089,000
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0
$49.63 (USD) 0
$36.55 (USD) 0
$54.33 (USD) 0
$46.65 (USD) 0
Ratios Used Average Values CVLT:NAS MANT:NAS MDRX:NAS NTCT:NAS QLYS:NAS
Cash / Share 0.65 0.00 0.24 0.86 0.00 2.17
Book Value / Share 16.68 10.20 32.62 6.26 26.15 8.18
Market Cap 2,314,019,922 2,556,010,768 1,764,591,845 2,404,318,425 2,832,760,913 2,012,417,661
1 Year Return 0.33 0.31 0.66 -0.03 -0.30 1.01
Net PPE 90,080,667 0 46,082,000 165,603,000 0 58,557,000

Multiples

Using a multiples approach we generated a valuation of  $44.20 (USD) for VRNT:NAS

Company VRNT:NAS End Date Value
Earnings/Share ($0.10) (USD)
Book Value/Share $17.55 (USD)
Sales/Share $17.93 (USD)
Cash Flow/Share $2.79 (USD)
EBITDA/Share $2.54 (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$43.77 (USD) 0
$41.61 (USD) 0
$41.28 (USD) 0
$50.13 (USD) 0
Ratios Ratio Average
PE Ratio 287.57
PB Ratio 2.49
PS Ratio 2.32
PCF Ratio 14.82
EV to EBITDA 19.76

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  VRNT:NAS for the last 10 years was  2.69

We ran the Adjusted Book Value for  VRNT:NAS and generated a book value of  $40.43 (USD)
By multiplying these we get an adjusted valuation of  $108.80 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for VRNT:NAS. The 2 analysts have a concensus valuation for VRNT:NAS for 2019 of $49.50 (USD).

VRNT:NAS Verint Systems

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 1 0 4.3333 Outperform 2018-4-5

Current Price: not available

Analyst Consensus
USD Millions 2019 2020
Mean EPS 3.13 3.50
# EPS Analysts 3 3
Mean Revenue 1,224.30 1,301.70
# Revenue Analysts 3 3
Mean Target Price 49.50
Mean Cash Flow 4.01 4.02
Mean EBITDA 209.00 243.00
Mean Net Income 203.90 230.60
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate 11.89
Mean Capital Expenditure 24.50 25.80

Company Overview (VRNT:NAS USD)

Price 39.30
Range 38.95 – 40.35
52 week 37.15 – 44.50
Open 40.00
Vol / Avg. 347056/229231
Mkt cap 2.51B
P/E 0.00
Div/yield 0.00/0.00
EPS -0.10
Shares 63.78M
Beta 1.74
Summary chart

Detailed Company Description

Verint Systems Inc is a provider of actionable intelligence solutions and services for customer engagement optimization, security intelligence, and fraud, risk and compliance.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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