HealthEquity (HQY:NAS) Fundamental Valuation Report

HealthEquity (HQY:NAS) Fundamental Valuation Report

Fundamental Valuation Report

HealthEquity(HQY:NAS)

Healthcare:Health Information Services

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

Close Price/Date
$68.11 (USD) 04/01/2021

Weighted Valuation
$84.67 (USD)

Overall Rating
Undervalued by 24.3%

Valuation Models Comparables: $100.21 (USD)
Multiples: $95.66 (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
According to Analyst consensus at $84.67 this stock is Undervalued

Company Overview (HQY:NAS USD)

Price 68.11
Range 67.91 – 69.69
52 week 45.00 – 91.01
Open 68.36
Vol / Avg. 656384/858462
Mkt cap 5.65B
P/E 567.58
Div/yield 0.00/0.00
EPS 0.12
Shares 82.92M
Beta 1.45

Company Description

HealthEquity Inc provides solutions that allow consumers to make healthcare saving and spending decisions. Its technology allows customers to see their tax-advantaged healthcare savings, compare treatment options and pricing, pay healthcare bills, receive benefit information, and earn wellness incentives. The firm primarily partners with health plans and employers and serves as the custodian of its customers’ health savings accounts (HSAs). HealthEquity also engages in reimbursement arrangements and offers healthcare incentives to its members. In addition, the company provides investment advisory services to customers whose account balances exceed a certain threshold. HealthEquity generates its revenue in the United States.

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 HQY:NAS

Using a discounted cash flow model we generated an intrinsic value of $36.68 (USD) for HQY:NAS

Sensitivity Analysis

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

HQY:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $36.68 1% 5% 1% 5%
WACC (or Ke) 8.18 $45.50 $30.71
Terminal Growth Rate 3.00 $31.26 $44.69
Tax Rate 0.08 $38.72 $34.63
Cash Flow 196,149,202 $34.77 $38.59
Capital Expenditures -4,526,800 $36.64 $36.72
Long Term Debt 0 $36.68 $36.68

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $92.06 (USD) for HQY:NAS. We also generated a valuation of $100.21 (USD) using other metrics and comparables.
The comparable companies were Tabula Rasa HealthCare (TRHC:NAS), Inovalon Holdings (INOV:NAS), Premier (PINC:NAS), R1 RCM (RCM:NAS) and OptimizeRx (OPRX:NAS).

Company HQY:NAS End Date Value
Earnings/Share $0.12 (USD)
Book Value/Share $16.63 (USD)
Sales/Share $9.69 (USD)
Cash Flow/Share $2.40 (USD)
EBITDA/Share $0.00 (USD)
Price Based on Comps Adjustment Factor (%)
$11.48 (USD) 43.5
$137.91 (USD) 39.8
$66.90 (USD) 0.0
$198.19 (USD) 81.6
$0.00 (USD) 0.0
HQY:NAS Ratios Used Average Values TRHC:NAS INOV:NAS PINC:NAS RCM:NAS OPRX:NAS
567.58 PE Ratio 95.66 0.00 197.80 13.47 75.70 0.00
4.10 PB Ratio 21.47 6.87 6.50 1.96 74.19 17.85
7.03 PS Ratio 6.90 3.44 6.66 2.81 3.43 18.17
28.38 PCF Ratio 82.58 212.36 30.36 17.04 70.56 0.00
41.27 EV to EBITDA 24.58 0.00 29.21 10.35 34.17 0.00

Multiples

Using a multiples approach we generated a valuation of  $95.66 (USD) for HQY:NAS

Company HQY:NAS End Date Value
Earnings/Share $0.12 (USD)
Book Value/Share $16.63 (USD)
Sales/Share $9.69 (USD)
Cash Flow/Share $2.40 (USD)
EBITDA/Share $1.63 (USD)
Price Based on Comps Adjustment Factor
$9.71 (USD) 0
$147.44 (USD) 0
$137.08 (USD) 0
$111.30 (USD) 0
$72.74 (USD) 0
Ratios Ratio Average
PE Ratio 80.92
PB Ratio 8.87
PS Ratio 14.14
PCF Ratio 46.38
EV to EBITDA 44.66

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  HQY:NAS for the last 7 years was  8.26

We ran the Adjusted Book Value for  HQY:NAS and generated a book value of  $19.07 (USD)
By multiplying these we get an adjusted valuation of  $157.51 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for HQY:NAS. The 3 analysts have a concensus valuation for HQY:NAS for 2022 of $84.67 (USD).

HQY:NAS HealthEquity

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 0 0 5.0000 Buy 2021-4-1

Current Price: 68.11 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 1.60 1.41 1.68
# EPS Analysts 3 2 2
Mean Revenue 733.60 755.00 821.80
# Revenue Analysts 2 2 2
Mean Target Price 84.67
Mean Cash Flow
Mean EBITDA
Mean Net Income 126.20 118.60 143.80
Mean Debt Outstanding
Mean Tax Rate 24.95 36.00 24.50
Mean Growth Rate 20.50
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.

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