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Nutanix (NAS:NTNX) Earnings Power Value (EPV)

: $-18.79 (As of Oct22)
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As of Oct22, Nutanix's earnings power value is $-18.79. *

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

Margin of Safety is N/A.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future. Assumption: Current profitability is sustainable.


Nutanix Earnings Power Value (EPV) Historical Data

The historical data trend for Nutanix's Earnings Power Value (EPV) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Nutanix Annual Data
Trend Jul13 Jul14 Jul15 Jul16 Jul17 Jul18 Jul19 Jul20 Jul21 Jul22
Earnings Power Value (EPV)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - -8.58 -15.59 -19.31 -19.02

Nutanix Quarterly Data
Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22
Earnings Power Value (EPV) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -19.44 -19.10 -18.60 -19.02 -18.79

Competitive Comparison

For the Software - Infrastructure subindustry, Nutanix's Earnings Power Value (EPV), along with its competitors' market caps and Earnings Power Value (EPV) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Nutanix Earnings Power Value (EPV) Distribution

For the Software industry and Technology sector, Nutanix's Earnings Power Value (EPV) distribution charts can be found below:

* The bar in red indicates where Nutanix's Earnings Power Value (EPV) falls in comparison to its industry or sector. The grey bar indicates the Earnings Power Value (EPV)'s extreme value range as defined by GuruFocus.



Nutanix Earnings Power Value (EPV) Calculation

Earnings Power Value also known as just Earnings Power is a valuation technique popularised by Bruce Greenwald, an authority on value investing at Columbia University. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored.

Nutanix's "Earning Power" Calculation:

Average of Last 20 Quarters Last Quarter
Revenue 1,366
DDA 83
Operating Margin % -42.69
SGA * 25% 277
Tax Rate % -2.32
Maintenance Capex 67
Cash and Cash Equivalents 1,388
Short-Term Debt 182
Long-Term Debt 1,258
Shares Outstanding (Diluted) 229

1. Start with "Earnings" not including accounting adjustments (one-time charges not excluded unless policy has changed). "Earnings" are "Operating Income.

2. Look at average margins over a business/Industry cycle: Average Operating Margin = -42.69%

To normalize margins and eliminate the effects on profitability of valuing the firm at different points in the business cycle, it is usually best to take a long-term average of operating margins. Ideally this would be as long as 10 years and include at least one economic downturn. However, since most of companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year margin.

3. Multiply average margins by sustainable revenues and then adjust for maintenance SGA. This yields "normalized" EBIT:

To be conservative, GuruFocus uses an average of the 5 year revenues as the sustainable revenue.
EPV analysis recognises that part of SG&A expenditure is made to maintain and replace the existing assets, while part is made to grow sales. Since EPV is only interested in what it costs a going concern to maintain its existing asset base, it adds back a percentage of SG&A (between 15% and 50% - this is a matter of judgment and industry knowledge) to make up for the fact that some of this expenditure went to fund growth and shouldn't be accounted for. To start off, we assume 25% for the sake of prudence.
Sustainable Revenue = $1,366 Mil, Average Operating Margin = -42.69%, Average Adjusted SGA = 277,
therefore "Normalized" EBIT = Sustainable Revenue * Average Operating Margin + Average Adjusted SGA = 1,366 * -42.69% +277 = $-306.624172129 Mil.

4. Multiply by one minus Average Tax Rate (NOPAT):

Same as average operating margin calculation, GuruFocus takes an average of the 5 years tax rates.
Average Tax Rate = -2.32%, and "Normalized" EBIT = $-306.624172129 Mil,
therefore After-tax "Normalized" EBIT = "Normalized" EBIT * ( 1 - Average Tax Rate ) = -306.624172129 * ( 1 - -2.32% ) = $-313.72865419723 Mil.

5. Add back Excess Depreciation (after tax at 1/2 average tax rate). This yields "normalized" Earnings:

Excess Depreciation = Average DDA * % of Excess Depreciation (after tax at 1/2 average tax rate) = 83 * 0.5 * -2.32% = $-0.955804206 Mil.
"Normalized" Earnings = After-tax "Normalized" EBIT + Excess Depreciation = -313.72865419723 + -0.955804206 = $-314.68445840323 Mil.

6. Adjusted for Maintenance Capital Expenditure:

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Third, calculate Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
Fourth, GuruFocus uses an average of the 5 year maintenance capital expenditures as maintenance CAPEX.
Nutanix's Average Maintenance CAPEX = $67 Mil *.
* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

7. Investors require a return of "WACC" for the risk they are taking: WACC = 9%

8. Nutanix's current cash and cash equivalent = $1,388 Mil.
Nutanix's current interest bearing debt = Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation = 1,258 + 182 = $1439.98 Mil.
Nutanix's current Shares Outstanding (Diluted Average) = 229 Mil.

Nutanix's Earnings Power Value (EPV) for Oct22 is calculated as:

EPV = ( ( Norm. Earnings-Maint. CAPEX *) / WACC + CashandEquiv - Int. Bearing Debt ) / Shares Outstanding (Diluted Average)
= ( ( -314.68445840323 - 67)/ 9%+1,388-1439.98 )/229
=-18.79

Margin of Safety (EPV)=( Earnings Power Value (EPV)-Current Price )/Earnings Power Value (EPV)
=( -18.786838926384-29.22 )/-18.786838926384
= N/A

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.


Nutanix  (NAS:NTNX) Earnings Power Value (EPV) Explanation

Assumption: Current profitability is sustainable.

Earnings power value (EPV) uses a very basic equation which assumes no growth, although it does rely on an assumption about the cost of capital as well as the fact that current earnings are sustainable. It also involves several adjustments to clean up the underlying Earnings figures.


Be Aware

Though using today's earnings in calculating Earnings Power Value, GuruFocus is normalizing these earnings to the business cycle. This eliminates the effects on profitability of valuing the firm at different points in the business cycle. This means that we are considering the average earnings over 5 years.


Nutanix Earnings Power Value (EPV) Related Terms

Thank you for viewing the detailed overview of Nutanix's Earnings Power Value (EPV) provided by GuruFocus.com. Please click on the following links to see related term pages.


Nutanix (NAS:NTNX) Business Description

Nutanix logo
Industry
Traded in Other Exchanges
Address
1740 Technology Drive, Suite 150, San Jose, CA, USA, 95110
Nutanix Inc provides native hybrid cloud capabilities for businesses. The company offers Enterprise Cloud Platform to businesses for various uses such as web-scale engineering and consumer-grade design, virtualization, and storage into a resilient, and software-defined solution. Geographically, it derives a majority of revenue from the United States and also has a presence in Europe, the Middle East, Asia Pacific, Africa, and other regions.
Executives
Rukmini Sivaraman officer: Chief Financial Officer 1740 TECHNOLOGY DR., SUITE 150, SAN JOSE CA 95110
Teresa Gayle Sheppard director C/O ENVISTA HOLDINGS CORPORATION, 200 S. KRAEMER BLVD., BLDG. E, BREA CA 92821
Susan L Bostrom director
Craig Conway director SALESFORCE TOWER, 415 MISSION STREET, 3RD FLOOR, SAN FRANCISCO CA 94105
Brian Mark Stevens director 25 HOOPER HILL RD., NEW BOSTON NH 03070
Virginia Gambale director C/O JETBLUE AIRWAYS CORP., 27-01 QUEENS PLAZA NORTH, LONG ISLAND CITY NY 11101
Rajiv Ramaswami director, officer: President and CEO 5300 CALIFORNIA AVENUE, IRVINE CA 92617
Kaddaras Christopher Nicholas Jr officer: Chief Revenue Officer C/O NUTANIX, INC., 1740 TECHNOLOGY DR., STE 150, SAN JOSE CA 95110
Tyler Wall officer: Chief Legal Officer CHORDIANT SOFTWARE, INC., 20400 STEVENS CREEK BLVD., STE. 400, CUPERTINO CA 94014
Aaron Boynton officer: Chief Accounting Officer C/O NUTANIX, INC., 1740 TECHNOLOGY AVE., SUITE 150, SAN JOSE CA 95110
Tarkan Maner officer: Chief Commercial Officer C/O NUTANIX, INC., 1740 TECHNOLOGY AVE., SUITE 150, SAN JOSE CA 95110
David Humphrey director C/O BAIN CAPITAL PARTNERS, LLC, JOHN HANCOCK TOWER, 200 CLARENDON STREET, BOSTON MA 02116
De Groen Max Pieter director 200 CLARENDON STREET, BOSTON MA 02116
Sohaib Abbasi director 100 EAST DAVIE STREET, RALEIGH NC 27601
Louis J Attanasio officer: Chief Revenue Officer 1740 TECHNOLOGY AVE., SUITE 150, SAN JOSE CA 95110

Nutanix (NAS:NTNX) Headlines

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