Korn Ferry (KFY:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Korn Ferry(KFY:NYS)

Industrials:Staffing & Outsourcing Services

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

Close Price/Date
$42.64 (USD) 08/01/2019

Weighted Valuation
$39.74 (USD)

Overall Rating
Overvalued by 6.8%

Valuation Models Analyst Consensus: $40.00 (USD)
(in order of importance) Discounted Cash Flow: $39.38 (USD)
Adjusted Book Value: $39.66 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (KFY:NYS USD)

Price 42.64
Range 41.67 – 42.80
52 week 37.72 – 67.95
Open 41.67
Vol / Avg. 397579/584676
Mkt cap 2.42B
P/E 40.46
Div/yield 0.40/0.01
EPS 2.35
Shares 56.68M
Beta 1.30

Company Description

Korn Ferry, formerly Korn/Ferry International is a management recruitment firm that helps clients fill mid-to high-level management positions. In fiscal 2010, the firm had about 9,600 new placement engagements worldwide and boasted a portfolio of more than 5,000 clients. Korn/Ferry was founded in 1969 in Los Angeles and still has its headquarters there.

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 KFY:NYS

Using a discounted cash flow model we generated an intrinsic value of $39.38 (USD) for KFY:NYS

Sensitivity Analysis

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

KFY:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $39.38 1% 5% 1% 5%
WACC (or Ke) 9.87 $47.00 $33.69
Terminal Growth Rate 3.00 $34.37 $46.09
Tax Rate 0.34 $43.03 $35.72
Cash Flow 334,053,700 $36.79 $41.96
Capital Expenditures -33,730,200 $39.12 $39.63
Long Term Debt 270,792,000 $39.61 $39.14

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $25.40 (USD) for KFY:NYS. We also generated a valuation of $47.83 (USD) using other metrics and comparables.
The comparable companies were ASGN (ASGN:NYS), Kelly Services (KELYB:NAS), Kforce (KFRC:NAS), Robert Half International (RHI:NYS) and TrueBlue (TBI:NYS).

Company KFY:NYS End Date Value
Earnings/Share $1.33 (USD)
Book Value/Share $20.70 (USD)
Sales/Share $34.37 (USD)
Cash Flow/Share $4.32 (USD)
EBITDA/Share $4.49 (USD)
Price Based on Comps Adjustment Factor (%)
$20.84 (USD) -26.3
$65.90 (USD) -42.1
$22.18 (USD) 2.4
$43.35 (USD) -43.7
$43.37 (USD) -38.7
KFY:NYS Ratios Used Average Values ASGN:NYS KELYB:NAS KFRC:NAS RHI:NYS TBI:NYS
29.73 PE Ratio 15.67 16.09 13.50 16.36 19.00 13.40
1.91 PB Ratio 3.18 2.53 0.72 4.92 6.21 1.54
1.15 PS Ratio 0.65 0.92 0.16 0.56 1.24 0.36
9.15 PCF Ratio 11.01 10.24 12.01 8.87 13.65 10.28
12.04 EV to EBITDA 9.66 11.94 8.07 10.28 10.49 7.55

Multiples

Using a multiples approach we generated a valuation of  $48.79 (USD) for KFY:NYS

Company KFY:NYS End Date Value
Earnings/Share $1.33 (USD)
Book Value/Share $20.70 (USD)
Sales/Share $34.37 (USD)
Cash Flow/Share $4.32 (USD)
EBITDA/Share $4.49 (USD)
Price Based on Comps Adjustment Factor
$32.58 (USD) 0
$39.80 (USD) 0
$46.70 (USD) 0
$73.79 (USD) 0
$51.09 (USD) 0
Ratios Ratio Average
PE Ratio 24.50
PB Ratio 1.92
PS Ratio 1.36
PCF Ratio 17.08
EV to EBITDA 11.39

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  KFY:NYS for the last 10 years was  1.91

We ran the Adjusted Book Value for  KFY:NYS and generated a book value of  $20.76 (USD)
By multiplying these we get an adjusted valuation of  $39.66 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for KFY:NYS. The 1 analysts have a concensus valuation for KFY:NYS for 2020 of $40.00 (USD).

KFY:NYS Korn Ferry

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 0 1 1.0000 Sell 2019-1-7

Current Price: 42.64 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 3.15 3.20
# EPS Analysts 1 1
Mean Revenue 1,983.40 2,050.00
# Revenue Analysts 1 1
Mean Target Price 40.00
Mean Cash Flow 4.55 4.04
Mean EBITDA 308.60 303.40
Mean Net Income 186.90 188.30
Mean Debt Outstanding -447.50 -591.30
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure 49.90 50.00

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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