Aspen Technology (AZPN:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Aspen Technology(AZPN:NAS)

Technology:Software-Application

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$84.24 (USD) 09/11/2018

Weighted Valuation
$99.40 (USD)

Overall Rating
Undervalued by 18.0%

Valuation Models Analyst Consensus: $100.00 (USD)
(in order of importance) Comparables: $98.49 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (AZPN:NAS USD)

Price 84.24
Range 83.71 – 86.29
52 week 65.69 – 118.60
Open 86.17
Vol / Avg. 644900/713960
Mkt cap 5.96B
P/E 41.70
Div/yield 0.00/0.00
EPS 2.04
Shares 70.77M
Beta 1.52

Company Description

Aspen Technology Inc provides process optimization software for companies in the energy, chemicals, engineering, and construction industries. Its products are designed to manage process design, operational performance, and supply chain planning. The firm has two business segments: subscription/software and services. The subscription and software segment generates most of its revenue from licenses for the firm’s flagship aspenONE software. The services segment generates revenue by providing training and professional services to customers focused on implementing Aspen’s technology. The firm has clients all over the world, but over half of the firm’s revenue is generated in the United States and Europe.

Valuation Details

 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 AZPN:NAS

Using a discounted cash flow model we generated an intrinsic value of $32.43 (USD) for AZPN:NAS

Sensitivity Analysis

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

AZPN:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $32.43 1% 5% 1% 5%
WACC (or Ke) 13.14 $36.28 $29.28
Terminal Growth Rate 3.00 $29.83 $35.61
Tax Rate 0.27 $34.62 $30.25
Cash Flow 353,412,721 $30.83 $34.04
Capital Expenditures -3,638,000 $32.42 $32.45
Long Term Debt 140,000,000 $32.53 $32.34

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $98.49 (USD) for AZPN:NAS. We also generated a valuation of $66.10 (USD) using other metrics and comparables.
The comparable companies were CDK Global (CDK:NAS), Nuance Communications (NUAN:NAS), Paycom Software (PAYC:NYS), RealPage (RP:NAS) and Trade Desk (TTD:NAS).

Company AZPN:NAS End Date Value
Earnings/Share $2.02 (USD)
Book Value/Share $6.69 (USD)
Sales/Share $6.71 (USD)
Cash Flow/Share $2.76 (USD)
EBITDA/Share $2.97 (USD)
Price Based on Comps Adjustment Factor (%)
$136.05 (USD) 27.2
$79.39 (USD) 0.0
$55.22 (USD) 97.1
$111.75 (USD) -46.7
$134.14 (USD) -46.6
AZPN:NAS Ratios Used Average Values CDK:NAS NUAN:NAS PAYC:NYS RP:NAS TTD:NAS
42.02 PE Ratio 347.77 20.59 0.00 81.83 1189.01 99.64
12.70 PB Ratio 11.87 0.00 2.84 22.26 4.79 17.62
12.64 PS Ratio 8.22 3.44 2.56 14.77 5.83 14.51
30.77 PCF Ratio 41.36 16.96 17.41 41.88 31.40 99.16
30.84 EV to EBITDA 45.15 13.38 57.27 58.65 38.07 58.37

Multiples

Using a multiples approach we generated a valuation of  $110.90 (USD) for AZPN:NAS

Company AZPN:NAS End Date Value
Earnings/Share $2.02 (USD)
Book Value/Share $6.69 (USD)
Sales/Share $6.71 (USD)
Cash Flow/Share $2.76 (USD)
EBITDA/Share $2.97 (USD)
Price Based on Comps Adjustment Factor
$64.97 (USD) 0
$302.64 (USD) 0
$61.47 (USD) 0
$67.74 (USD) 0
$57.67 (USD) 0
Ratios Ratio Average
PE Ratio 32.16
PB Ratio 45.27
PS Ratio 9.16
PCF Ratio 24.56
EV to EBITDA 19.41

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  AZPN:NAS for the last 7 years was  41.56

We ran the Adjusted Book Value for  AZPN:NAS and generated a book value of  $6.65 (USD)
By multiplying these we get an adjusted valuation of  $276.20 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for AZPN:NAS. The 1 analysts have a concensus valuation for AZPN:NAS for 2019 of $100.00 (USD).

AZPN:NAS Aspen Technology

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 2 0 3.0000 Hold 2018-11-8

Current Price: 84.24 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 3.20 3.44
# EPS Analysts 2 2
Mean Revenue 560.60 599.20
# Revenue Analysts 2 2
Mean Target Price 100.00
Mean Cash Flow 3.13 3.38
Mean EBITDA 267.90 294.60
Mean Net Income 237.00 250.20
Mean Debt Outstanding
Mean Tax Rate 20.75 23.00
Mean Growth Rate
Mean Capital Expenditure

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.

Notice to User


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