Intrinsic value of Pioneering Technology Corp - PTE

Previous Close

$0.96

  Intrinsic Value

$12.11

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

0%

Previous close

$0.96

 
Intrinsic value

$12.11

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PTE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  75.00
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  7
  11
  17
  26
  38
  53
  73
  98
  128
  165
  209
  259
  317
  382
  454
  534
  621
  716
  817
  925
  1,040
  1,162
  1,290
  1,424
  1,565
  1,712
  1,865
  2,025
  2,191
  2,363
  2,543
Variable operating expenses, $m
 
  8
  12
  18
  27
  38
  52
  70
  92
  118
  149
  185
  226
  273
  324
  381
  444
  511
  583
  661
  743
  830
  921
  1,017
  1,117
  1,222
  1,332
  1,446
  1,564
  1,687
  1,815
Fixed operating expenses, $m
 
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Total operating expenses, $m
  6
  9
  13
  19
  28
  39
  53
  71
  93
  119
  150
  186
  227
  274
  325
  382
  445
  513
  585
  663
  745
  832
  923
  1,019
  1,119
  1,224
  1,334
  1,448
  1,566
  1,689
  1,817
Operating income, $m
  1
  2
  4
  6
  10
  14
  20
  27
  35
  46
  58
  73
  89
  108
  128
  151
  176
  203
  232
  263
  296
  331
  367
  406
  446
  488
  532
  577
  625
  674
  725
EBITDA, $m
  1
  2
  4
  6
  10
  14
  20
  27
  35
  46
  58
  73
  89
  108
  128
  151
  176
  203
  232
  263
  296
  331
  367
  406
  446
  488
  532
  577
  625
  674
  725
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  10
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  36
  39
  42
Earnings before tax, $m
  1
  2
  4
  6
  9
  13
  19
  26
  34
  44
  55
  69
  85
  102
  122
  143
  167
  192
  219
  248
  279
  312
  346
  382
  420
  460
  501
  544
  588
  634
  683
Tax expense, $m
  0
  1
  1
  2
  2
  4
  5
  7
  9
  12
  15
  19
  23
  28
  33
  39
  45
  52
  59
  67
  75
  84
  94
  103
  113
  124
  135
  147
  159
  171
  184
Net income, $m
  1
  2
  3
  4
  7
  10
  14
  19
  25
  32
  41
  50
  62
  75
  89
  105
  122
  140
  160
  181
  204
  228
  253
  279
  307
  336
  366
  397
  429
  463
  498

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5
  6
  10
  15
  21
  30
  42
  56
  73
  94
  119
  148
  181
  218
  260
  305
  355
  409
  467
  529
  595
  664
  737
  814
  894
  978
  1,066
  1,157
  1,252
  1,350
  1,453
Adjusted assets (=assets-cash), $m
  4
  6
  10
  15
  21
  30
  42
  56
  73
  94
  119
  148
  181
  218
  260
  305
  355
  409
  467
  529
  595
  664
  737
  814
  894
  978
  1,066
  1,157
  1,252
  1,350
  1,453
Revenue / Adjusted assets
  1.750
  1.833
  1.700
  1.733
  1.810
  1.767
  1.738
  1.750
  1.753
  1.755
  1.756
  1.750
  1.751
  1.752
  1.746
  1.751
  1.749
  1.751
  1.749
  1.749
  1.748
  1.750
  1.750
  1.749
  1.751
  1.751
  1.750
  1.750
  1.750
  1.750
  1.750
Average production assets, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Working capital, $m
  2
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  45
  55
  65
  76
  89
  102
  117
  132
  149
  166
  184
  204
  224
  245
  267
  290
  313
  338
  364
Total debt, $m
  2
  4
  7
  11
  17
  25
  35
  48
  64
  83
  105
  131
  161
  194
  232
  273
  318
  366
  418
  474
  533
  596
  661
  731
  803
  878
  957
  1,039
  1,125
  1,213
  1,306
Total liabilities, $m
  4
  6
  9
  13
  19
  27
  37
  50
  66
  85
  107
  133
  163
  196
  234
  275
  320
  368
  420
  476
  535
  598
  663
  733
  805
  880
  959
  1,041
  1,127
  1,215
  1,308
Total equity, $m
  1
  1
  1
  1
  2
  3
  4
  6
  7
  9
  12
  15
  18
  22
  26
  31
  36
  41
  47
  53
  59
  66
  74
  81
  89
  98
  107
  116
  125
  135
  145
Total liabilities and equity, $m
  5
  7
  10
  14
  21
  30
  41
  56
  73
  94
  119
  148
  181
  218
  260
  306
  356
  409
  467
  529
  594
  664
  737
  814
  894
  978
  1,066
  1,157
  1,252
  1,350
  1,453
Debt-to-equity ratio
  2.000
  5.880
  6.980
  7.650
  8.070
  8.340
  8.520
  8.640
  8.730
  8.790
  8.830
  8.860
  8.890
  8.910
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
Adjusted equity ratio
  0.000
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  2
  3
  4
  7
  10
  14
  19
  25
  32
  41
  50
  62
  75
  89
  105
  122
  140
  160
  181
  204
  228
  253
  279
  307
  336
  366
  397
  429
  463
  498
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  -3
  2
  3
  4
  7
  10
  14
  19
  25
  32
  41
  50
  62
  75
  89
  105
  122
  140
  160
  181
  204
  228
  253
  279
  307
  336
  366
  397
  429
  463
  498
Change in working capital, $m
  -2
  1
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Cash from operations, $m
  -1
  1
  2
  3
  5
  8
  11
  15
  20
  27
  34
  43
  54
  65
  78
  93
  109
  127
  146
  166
  187
  210
  235
  260
  287
  315
  344
  374
  406
  438
  473
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Free cash flow, $m
  -1
  1
  2
  3
  5
  8
  11
  15
  20
  27
  34
  43
  54
  65
  78
  93
  109
  127
  146
  166
  187
  210
  235
  260
  287
  315
  344
  374
  406
  438
  473
Issuance/(repayment) of debt, $m
  1
  2
  3
  4
  6
  8
  10
  13
  16
  19
  22
  26
  30
  33
  37
  41
  45
  49
  52
  56
  59
  63
  66
  69
  72
  76
  79
  82
  85
  89
  92
Issuance/(repurchase) of shares, $m
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2
  2
  3
  4
  6
  8
  10
  13
  16
  19
  22
  26
  30
  33
  37
  41
  45
  49
  52
  56
  59
  63
  66
  69
  72
  76
  79
  82
  85
  89
  92
Total cash flow (excl. dividends), $m
  1
  3
  5
  8
  11
  16
  21
  28
  36
  46
  57
  69
  83
  99
  116
  134
  154
  175
  198
  222
  247
  273
  300
  329
  359
  390
  422
  456
  491
  527
  565
Retained Cash Flow (-), $m
  -2
  -1
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
Prev. year cash balance distribution, $m
 
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3
  5
  7
  10
  15
  20
  26
  34
  43
  54
  66
  80
  95
  112
  130
  149
  170
  192
  215
  240
  266
  293
  321
  351
  382
  414
  447
  482
  517
  555
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  3
  4
  6
  9
  11
  14
  18
  21
  25
  28
  31
  34
  36
  37
  38
  38
  37
  35
  33
  31
  28
  24
  21
  18
  15
  12
  10
  7
  6
  4
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Pioneering Technology Corporation is an energy smart technology and consumer goods company. The Company is engaged in the development, manufacture and sale of products, which offer consumer convenience and safety. The Company's core business is focused on cooking fire prevention but the Company's solutions also enable end-users manage energy consumption. It offers a range of products that provide cooking fire prevention solutions for both the residential and commercial market. Its cooking fire prevention products include Safe-T-element (STE), SmartBurner (SB), RangeMinder (RM) and Safe-T-sensor (STS). Safe T Sensor prevents microwave fires and nuisance/false alarms by interrupting power to the microwave at the first sign of smoke. RM is an electronic product for gas and electric smooth top ranges, which prevents unattended cooking. The STS technology is sold to university, seniors, healthcare and office channels.

FINANCIAL RATIOS  of  Pioneering Technology Corp (PTE)

Valuation Ratios
P/E Ratio 40.2
Price to Sales 5.7
Price to Book 40.2
Price to Tangible Book
Price to Cash Flow -40.2
Price to Free Cash Flow -40.2
Growth Rates
Sales Growth Rate 75%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 200%
Total Debt to Equity 200%
Interest Coverage 0
Management Effectiveness
Return On Assets 28.6%
Ret/ On Assets - 3 Yr. Avg. -23.8%
Return On Total Capital 66.7%
Ret/ On T. Cap. - 3 Yr. Avg. 88.9%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 33.3%
Asset Turnover 2
Profitability Ratios
Gross Margin 57.1%
Gross Margin - 3 Yr. Avg. 66.3%
EBITDA Margin 14.3%
EBITDA Margin - 3 Yr. Avg. -6.3%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. -6.3%
Pre-Tax Margin 14.3%
Pre-Tax Margin - 3 Yr. Avg. -6.3%
Net Profit Margin 14.3%
Net Profit Margin - 3 Yr. Avg. -6.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PTE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTE stock intrinsic value calculation we used $7 million for the last fiscal year's total revenue generated by Pioneering Technology Corp. The default revenue input number comes from 2016 income statement of Pioneering Technology Corp. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PTE stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PTE is calculated based on our internal credit rating of Pioneering Technology Corp, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Pioneering Technology Corp.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PTE stock the variable cost ratio is equal to 71.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1 million in the base year in the intrinsic value calculation for PTE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Pioneering Technology Corp.

Corporate tax rate of 27% is the nominal tax rate for Pioneering Technology Corp. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PTE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PTE are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Pioneering Technology Corp operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PTE is equal to 14.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1 million for Pioneering Technology Corp - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 53.296 million for Pioneering Technology Corp is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Pioneering Technology Corp at the current share price and the inputted number of shares is $0.1 billion.

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Financial statements of PTE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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