New Relic (NEWR:NYS) Fundamental Valuation Report


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New Relic $77.12 (USD) Close Price as of 08/05/2018

Based on the analysis conducted in this report, New Relic, (NEWR:NYS) is found to be  Overvalued.

Company New Relic
Symbol:Exchange NEWR:NYS
Industry Technology:Software-Infrastructure
Close Price/Date $77.12 (USD) 08/05/2018
Weighted Average Valuation $64.35 (USD)
Summary NEWR:NYS is found to be  Overvalued by 16.6% using the 2 valuation models shown below.
Valuation Models Used Analyst Consensus: $75.33 (USD)
(in order of importance) Comparables: $47.88 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Overvalued on a Cash Flow Valuation basis
Comparable Company Basis: Overvalued on a Comparable Valuation basis
Asset Basis: Overvalued on an Asset Valuation basis

Valuation Details

New Relic 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 NEWR:NYS

Using a discounted cash flow model we generated an intrinsic value of $17.58 (USD) for NEWR:NYS

Sensitivity Analysis

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

NEWR:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $17.58 1% 5% 1% 5%
WACC (or Ke) 7.68 $22.20 $14.51
Terminal Growth Rate 2.70 $14.81 $21.74
Tax Rate 0.19 $18.38 $16.79
Cash Flow 59,463,300 $16.82 $18.35
Capital Expenditures -12,503,000 $17.43 $17.74
Long Term Debt 0 $17.58 $17.58

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $44.92 (USD) for NEWR:NYS. We also generated a valuation of $47.88 (USD) using other metrics and comparables.
The comparable companies were Fair Isaac (FICO:NYS), Hortonworks (HDP:NAS), j2 Global (JCOM:NAS), Q2 Holdings (QTWO:NYS) and Varonis Systems (VRNS:NAS)

Company NEWR:NYS End Date Value
Cash/Share $0.00 (USD)
Book Value/Share $3.64 (USD)
MarketCap 4,180,277,036
1 Year Return 0.898
NetPPE 0
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0
$38.53 (USD) 0
$45.79 (USD) 0
$59.32 (USD) 0
$0.00 (USD) 0
Ratios Used Average Values FICO:NYS HDP:NAS JCOM:NAS QTWO:NYS VRNS:NAS
Cash / Share 2.99 3.31 0.95 7.21 1.40 2.05
Book Value / Share 7.74 13.70 -0.59 19.98 2.47 3.15
Market Cap 2,527,257,069 4,611,034,410 1,184,579,349 3,809,351,222 1,720,812,412 1,310,507,951
1 Year Return 0.46 0.29 0.56 -0.01 0.45 1.03
Net PPE 36,659,800 40,703,000 16,383,000 79,773,000 34,544,000 11,896,000

Multiples

Using a multiples approach we generated a valuation of  $56.69 (USD) for NEWR:NYS

Company NEWR:NYS End Date Value
Earnings/Share ($0.98) (USD)
Book Value/Share $3.64 (USD)
Sales/Share $6.09 (USD)
Cash Flow/Share $0.62 (USD)
EBITDA/Share ($0.77) (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$35.88 (USD) 0
$51.48 (USD) 0
$82.72 (USD) 0
$0.00 (USD) 0
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 9.85
PS Ratio 8.45
PCF Ratio 132.97
EV to EBITDA 0.00

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  NEWR:NYS for the last 4 years was  9.85

We ran the Adjusted Book Value for  NEWR:NYS and generated a book value of  $3.79 (USD)
By multiplying these we get an adjusted valuation of  $37.34 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for NEWR:NYS. The 3 analysts have a concensus valuation for NEWR:NYS for 2019 of $75.33 (USD).

NEWR:NYS New Relic

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 2 0 3.6667 Outperform 2018-5-4

Current Price: not available

Analyst Consensus
USD Millions 2018 2019 2020
Mean EPS -0.05 0.22 0.47
# EPS Analysts 3 3 2
Mean Revenue 385.00 482.70 550.30
# Revenue Analysts 3 3 2
Mean Target Price 75.33
Mean Cash Flow 0.53 0.77 1.01
Mean EBITDA 20.00 34.60 57.90
Mean Net Income -2.50 13.60 29.50
Mean Debt Outstanding 231.20 266.10 321.10
Mean Tax Rate 7.00
Mean Growth Rate
Mean Capital Expenditure 27.40 33.70 43.90

Company Overview (NEWR:NYS USD)

Price 77.12
Range 75.52 – 77.35
52 week 40.93 – 78.52
Open 75.57
Vol / Avg. 517653/402634
Mkt cap 4.27B
P/E 0.00
Div/yield 0.00/0.00
EPS -1.18
Shares 55.4M
Beta 0.43
Summary chart

Detailed Company Description

New Relic Inc is a software-as-a-service provider of software analytics products which allow users to monitor software performance with .NET, Java, JavaScript, Node.js, PHP, Python, and Ruby applications deployed in a cloud or in a data center.

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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