New Relic (NEWR:NYS) Fundamental Valuation Report

Fundamental Valuation Report

New Relic(NEWR:NYS)


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Close Price/Date
$100.97 (USD) 16/05/2019

Weighted Valuation
$114.76 (USD)

Overall Rating
Undervalued by 13.7%

Valuation Models Analyst Consensus: $122.50 (USD)
(in order of importance) Multiples: $103.16 (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 (NEWR:NYS USD)

Price 100.97
Range 100.18 – 102.99
52 week 73.50 – 113.44
Open 101.02
Vol / Avg. 1.18M/952928
Mkt cap 5.87B
P/E 0.00
Div/yield 0.00/0.00
EPS -0.72
Shares 58.12M
Beta 0.00

Company Description

New Relic Inc is a provider of software analytics solutions for organizations to collect, store, and analyze massive amounts of software data in real time. The firm’s flagship New Relic Software Analytics Cloud is made up of a suite of products, a Big Data database, and an open platform. Its solutions include diagnostics, reporting and alerting, transaction monitoring, and performance monitoring capabilities. The firm generates revenue from subscription-based arrangements for software offerings, typically for a year. A majority of the firm’s revenue is generated in the United States, and the rest from Europe, the Middle East, and Africa; the Asia-Pacific; and other regions.

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 NEWR:NYS

Using a discounted cash flow model we generated an intrinsic value of $31.40 (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: $31.40 1% 5% 1% 5%
WACC (or Ke) 8.89 $38.02 $26.71
Terminal Growth Rate 3.00 $27.19 $37.34
Tax Rate 0.02 $32.87 $29.98
Cash Flow 125,454,000 $29.81 $33.00
Capital Expenditures -21,604,200 $31.16 $31.65
Long Term Debt 0 $31.40 $31.40

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $89.07 (USD) for NEWR:NYS. We also generated a valuation of $69.27 (USD) using other metrics and comparables.
The comparable companies were LivePerson (LPSN:NAS), Varonis Systems (VRNS:NAS), Nutanix (NTNX:NAS), j2 Global (JCOM:NAS) and F5 Networks (FFIV:NAS).

Company NEWR:NYS End Date Value
Earnings/Share ($0.72) (USD)
Book Value/Share $5.61 (USD)
Sales/Share $7.90 (USD)
Cash Flow/Share $1.39 (USD)
EBITDA/Share $0.00 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0.0
$69.09 (USD) 0.0
$45.09 (USD) 0.0
$153.04 (USD) 0.0
$0.00 (USD) 0.0
0.00 PE Ratio 26.45 0.00 0.00 0.00 33.83 19.06
18.53 PB Ratio 12.32 11.14 19.57 20.40 4.12 6.38
13.32 PS Ratio 5.71 6.95 7.66 6.02 3.55 4.36
75.67 PCF Ratio 110.04 363.35 103.74 60.15 10.68 12.31
207.37 EV to EBITDA 11.67 0.00 0.00 0.00 11.54 11.80


Using a multiples approach we generated a valuation of  $103.16 (USD) for NEWR:NYS

Company NEWR:NYS End Date Value
Earnings/Share ($0.72) (USD)
Book Value/Share $5.61 (USD)
Sales/Share $7.90 (USD)
Cash Flow/Share $1.39 (USD)
EBITDA/Share ($0.37) (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$65.23 (USD) 0
$79.31 (USD) 0
$164.93 (USD) 0
$0.00 (USD) 0
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 11.63
PS Ratio 10.04
PCF Ratio 118.60
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  11.75

We ran the Adjusted Book Value for  NEWR:NYS and generated a book value of  $5.82 (USD)
By multiplying these we get an adjusted valuation of  $68.39 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for NEWR:NYS. The 4 analysts have a concensus valuation for NEWR:NYS for 2020 of $122.50 (USD).

NEWR:NYS New Relic

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 2 0 4.2000 Outperform 2019-5-16

Current Price: 100.97 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 0.48 0.62 1.06
# EPS Analysts 5 5 4
Mean Revenue 478.20 604.90 754.30
# Revenue Analysts 4 4 4
Mean Target Price 122.50
Mean Cash Flow 1.81 1.88 2.46
Mean EBITDA 79.80 88.30 121.80
Mean Net Income 38.60 35.40 66.50
Mean Debt Outstanding -324.90 -402.20 -500.30
Mean Tax Rate 2.00 5.00 13.00
Mean Growth Rate 14.00
Mean Capital Expenditure 45.20 54.80 56.70

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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