New Relic (NEWR:NYS) Fundamental Valuation Report

Fundamental Valuation Report

New Relic(NEWR:NYS)

Technology:Software – Infrastructure

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Close Price/Date
$56.10 (USD) 09/11/2020

Weighted Valuation
$55.48 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 1.1%

Valuation Models Comparables: $36.15 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation
According to Analyst consensus at $82.00 this stock is Undervalued

Company Overview (NEWR:NYS USD)

Price 56.10
Range 55.01 – 58.74
52 week 36.09 – 73.50
Open 58.74
Vol / Avg. 1.04M/910028
Mkt cap 3.38B
P/E 0.00
Div/yield 0.00/0.00
EPS -1.52
Shares 60.24M
Beta 1.03

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 $28.10 (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: $28.10 1% 5% 1% 5%
WACC (or Ke) 7.95 $35.33 $23.27
Terminal Growth Rate 2.90 $23.74 $34.62
Tax Rate 0.27 $29.80 $26.40
Cash Flow 139,120,800 $26.61 $29.59
Capital Expenditures -31,210,200 $27.77 $28.43
Long Term Debt 0 $28.10 $28.10

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $29.35 (USD) for NEWR:NYS. We also generated a valuation of $36.15 (USD) using other metrics and comparables.
The comparable companies were Bottomline Technologies (EPAY:NAS), Euronet Worldwide (EEFT:NAS), Verint Systems (VRNT:NAS), CSG Systems International (CSGS:NAS) and J2 Global (JCOM:NAS).

Company NEWR:NYS End Date Value
Earnings/Share ($1.76) (USD)
Book Value/Share $6.52 (USD)
Sales/Share $10.51 (USD)
Cash Flow/Share $1.56 (USD)
EBITDA/Share $0.15 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0.0
$22.60 (USD) 0.0
$25.72 (USD) 90.3
$8.18 (USD) 0.0
$0.00 (USD) 0.0
0.00 PE Ratio 69.23 0.00 40.60 200.33 16.54 19.45
8.60 PB Ratio 3.47 4.73 3.96 2.69 3.23 2.73
5.34 PS Ratio 2.45 3.92 1.93 2.62 1.27 2.50
36.02 PCF Ratio 10.61 17.84 7.97 11.96 7.27 7.98
0.00 EV to EBITDA 18.62 42.15 14.25 19.51 8.81 8.40


Using a multiples approach we generated a valuation of  $83.64 (USD) for NEWR:NYS

Company NEWR:NYS End Date Value
Earnings/Share ($1.76) (USD)
Book Value/Share $6.52 (USD)
Sales/Share $10.51 (USD)
Cash Flow/Share $1.56 (USD)
EBITDA/Share $0.15 (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$75.84 (USD) 0
$89.23 (USD) 0
$144.06 (USD) 0
$25.45 (USD) 0
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 11.63
PS Ratio 8.49
PCF Ratio 92.49
EV to EBITDA 173.46

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  NEWR:NYS for the last 6 years was  11.21

We ran the Adjusted Book Value for  NEWR:NYS and generated a book value of  $6.57 (USD)
By multiplying these we get an adjusted valuation of  $73.62 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for NEWR:NYS. The 2 analysts have a concensus valuation for NEWR:NYS for 2021 of $82.00 (USD).

NEWR:NYS New Relic

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 1 0 4.3333 Outperform 2020-9-10

Current Price: 56.1 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 0.14 0.34 0.92
# EPS Analysts 3 3 1
Mean Revenue 667.80 768.60 934.00
# Revenue Analysts 2 2 1
Mean Target Price 82.00
Mean Cash Flow 1.54 1.66 2.25
Mean EBITDA 85.10 94.40 135.20
Mean Net Income 13.10 24.00 59.30
Mean Debt Outstanding -420.20 -468.90 -548.70
Mean Tax Rate
Mean Growth Rate 20.00
Mean Capital Expenditure 57.30 59.60 64.80

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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