Stock Analysis on Net
Stock Analysis on Net

CrowdStrike Holdings Inc. (NASDAQ:CRWD)

Present Value of Free Cash Flow to Equity (FCFE)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

CrowdStrike Holdings Inc., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 14.64%
01 FCFE0 929,095
1 FCFE1 795,211 = 929,095 × (1 + -14.41%) 693,664
2 FCFE2 734,918 = 795,211 × (1 + -7.58%) 559,206
3 FCFE3 729,377 = 734,918 × (1 + -0.75%) 484,119
4 FCFE4 773,682 = 729,377 × (1 + 6.07%) 447,950
5 FCFE5 873,505 = 773,682 × (1 + 12.90%) 441,163
5 Terminal value (TV5) 56,783,049 = 873,505 × (1 + 12.90%) ÷ (14.64% – 12.90%) 28,678,220
Intrinsic value of CrowdStrike Holdings Inc. common stock 31,304,321
 
Intrinsic value of CrowdStrike Holdings Inc. common stock (per share) $127.71
Current share price $246.39

Based on: 10-K (reporting date: 2024-01-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.07%
Expected rate of return on market portfolio2 E(RM) 13.86%
Systematic risk of CrowdStrike Holdings Inc. common stock βCRWD 1.08
 
Required rate of return on CrowdStrike Holdings Inc. common stock3 rCRWD 14.64%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rCRWD = RF + βCRWD [E(RM) – RF]
= 4.07% + 1.08 [13.86% – 4.07%]
= 14.64%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

CrowdStrike Holdings Inc., PRAT model

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Average Jan 31, 2024 Jan 31, 2023 Jan 31, 2022 Jan 31, 2021 Jan 31, 2020
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to CrowdStrike 89,327 (183,245) (234,802) (92,629) (141,779)
Revenue 3,055,555 2,241,236 1,451,594 874,438 481,413
Total assets 6,646,520 5,026,540 3,618,381 2,732,533 1,404,906
Total CrowdStrike Holdings, Inc. stockholders’ equity 2,303,950 1,463,641 1,025,764 870,574 742,107
Financial Ratios
Retention rate1 1.00 1.00 1.00 1.00 1.00
Profit margin2 2.92% -8.18% -16.18% -10.59% -29.45%
Asset turnover3 0.46 0.45 0.40 0.32 0.34
Financial leverage4 2.88 3.43 3.53 3.14 1.89
Averages
Retention rate 1.00
Profit margin -12.29%
Asset turnover 0.39
Financial leverage 2.98
 
FCFE growth rate (g)5 -14.41%

Based on: 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).

2024 Calculations

1 Company does not pay dividends

2 Profit margin = 100 × Net income (loss) attributable to CrowdStrike ÷ Revenue
= 100 × 89,327 ÷ 3,055,555
= 2.92%

3 Asset turnover = Revenue ÷ Total assets
= 3,055,555 ÷ 6,646,520
= 0.46

4 Financial leverage = Total assets ÷ Total CrowdStrike Holdings, Inc. stockholders’ equity
= 6,646,520 ÷ 2,303,950
= 2.88

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 1.00 × -12.29% × 0.39 × 2.98
= -14.41%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (60,396,699 × 14.64% – 929,095) ÷ (60,396,699 + 929,095)
= 12.90%

where:
Equity market value0 = current market value of CrowdStrike Holdings Inc. common stock (US$ in thousands)
FCFE0 = the last year CrowdStrike Holdings Inc. free cash flow to equity (US$ in thousands)
r = required rate of return on CrowdStrike Holdings Inc. common stock

FCFE growth rate (g) forecast

CrowdStrike Holdings Inc., H-model

Microsoft Excel
Year Value gt
1 g1 -14.41%
2 g2 -7.58%
3 g3 -0.75%
4 g4 6.07%
5 and thereafter g5 12.90%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= -14.41% + (12.90% – -14.41%) × (2 – 1) ÷ (5 – 1)
= -7.58%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= -14.41% + (12.90% – -14.41%) × (3 – 1) ÷ (5 – 1)
= -0.75%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= -14.41% + (12.90% – -14.41%) × (4 – 1) ÷ (5 – 1)
= 6.07%