Discounted Cash Flow Calculation for NYSE:AVYA using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
NYSE:AVYA DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Avaya Holdings's share price is below the future cash flow value, and at a moderate discount (> 20%).
Avaya Holdings's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Avaya Holdings's earnings available for a low price, and how does
this compare to other companies in the same industry?
Avaya Holdings's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Avaya Holdings's revenue is expected to grow by 2.2% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Avaya Holdings's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
2/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. James M. Chirico, Jr., also known as Jim, has been Chief Executive Officer of Avaya Inc. since October 1, 2017 and serves as its President. Mr. Chirico serves as an Executive Vice President of Business Operations at Avaya India Private Limited. He is President, Chief Executive Officer and Director at Avaya Holdings Corp. since October 1, 2017. He served as Chief Operating Officer & Global Sales Leader at Avaya Inc. until October 1, 2017. He served as an Executive Vice President of Business Operations at Avaya Inc. since June 14, 2010 to August 31, 2016. He served as President of Operations and Chief Restructuring Officer at Avaya Inc. he served as Executive Vice President, Business Operations and Chief Restructuring Officer from June 14, 2010 through August 31, 2016. He served as President, Operations from January 2008 until June 14, 2010 and was appointed Chief Restructuring Officer on February 3, 2009 at Avaya Holdings Corp. He served as Senior Vice President of Avaya Inc. Mr. Chirico joined Avaya in January 2008. He served as an Executive Vice President of Global Disc Storage Operations, Development and Manufacturing of Veritas Software Technology Corporation until February 8, 2006. He served as Senior Vice President and General Manager of Asia Operations of Veritas Software Technology Corporation and Seagate Technology Public Limited Company from September 2000 to February 8, 2006. He served as a Senior Vice President and General Manager of Asia Operations of Veritas Software Technology Corporation (Formerly known as Seagate Technology Inc.) since September 2000. He joined Seagate Technology Holdings in February 1998 as Senior Vice President of Worldwide Manufacturing Quality based in Singapore. He served as Executive Vice President, Global Disc Storage Operations at Seagate Technology from February 2006 until November 2007, and served as its Senior Vice President and General Manager, Asia Operations, from September 2000 to February 2006. In April 1999, he served as Senior Vice President and General Manager of Recording Head Operations based in Minnesota. He began his career at IBM in 1980 where he spent 18 years with held a number of management positions within manufacturing operations. Since 1998, Mr. Chirico held key leadership roles in worldwide operations, manufacturing, development, engineering, logistics, product management, procurement and supply chain. He has been a Director of Avaya Inc. since October 1, 2017. Mr. Chirico served as Director of Caraustar Industries Inc. from August 20, 2009 until 2013. He served as chairman of IDEMA (International Disc Drives and Equipment Manufacturer Association) Asia Pacific Management Committee until April 2004. Mr. Chirico holds a Bachelor of Science degree in Logistics Management from Providence College in Providence Rhode Island.
Jim's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
Jim's remuneration is higher than average for companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Avaya Holdings management team is less than 2 years, this suggests a new team.
Senior Vice President of Growth Initiatives
President of Avaya Services
Senior VP & CFO
Senior Vice President of Global Business Operations
VP, Controller & Chief Accounting Officer
Senior Vice President of Solutions & Technology
Vice President of Investor Relations
Senior Vice President of Corporate Strategy & Development
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Avaya Holdings board of directors is less than 3 years, this suggests a new board.
What does Avaya Holdings Corp's (NYSE:AVYA) Balance Sheet Tell Us About Its Future?
See our latest analysis for Avaya Holdings How does AVYA’s operating cash flow stack up against its debt? … On top of this, AVYA has generated cash from operations of US$291.00M during the same period of time, leading to an operating cash to total debt ratio of 4.43%, indicating that AVYA’s debt is not appropriately covered by operating cash. … Since total debt levels have outpaced equities, AVYA is a highly leveraged company.
When Will Avaya Holdings Corp (NYSE:AVYA) Turn A Profit?
Check out our latest analysis for Avaya Holdings According to the industry analysts covering AVYA, breakeven is near. … So, AVYA is predicted to breakeven approximately a couple of months from now! … In order to meet this breakeven date, I calculated the rate at which AVYA must grow year-on-year.
Does Avaya Holdings Corp's (NYSE:AVYA) Earnings Growth Make It An Outperformer?
Check out our latest analysis for Avaya Holdings Did AVYA beat its long-term earnings growth trend and its industry? … For Avaya Holdings, its most recent trailing-twelve-month earnings is -$213.0M, which compared to the prior year's figure, has become less negative. … This means despite the fact that Avaya Holdings is presently loss-making, it may have benefited from industry tailwinds, moving earnings into a more favorable position.What does this mean?
Avaya Holdings Corp., through its subsidiaries, provides digital communications products, solutions, and services for businesses worldwide. The company operates through two segments, Products & Solutions, and Services. The Products & Solutions segment offers unified communications and contact center platforms, applications, and devices. It also provides an open development platform for customers and third parties to create custom applications and automated workflows for their needs; and contact center solutions that enable customers to build a customized portfolio of applications driving customer engagement and customer value. This segments communications solutions include voice, email, chat, social media, video, and performance management. The Services segment provides global support services, enterprise cloud and managed services, and professional services. The company also delivers cloud business communications services and solutions to connect with customers. Avaya Holdings Corp. sells directly through its sales force, as well as indirectly through its network of channel partners, including distributors, service providers, dealers, value-added resellers, system integrators, and business partners. The company is based in Santa Clara, California.
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