Intrinsic value of Agilysys - AGYS

Previous Close

$10.62

  Intrinsic Value

$0.99

stock screener

  Rating & Target

str. sell

-91%

  Value-price divergence*

-89%

Previous close

$10.62

 
Intrinsic value

$0.99

 
Up/down potential

-91%

 
Rating

str. sell

 
Value-price divergence*

-89%

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

We calculate the intrinsic value of AGYS 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 2017), $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 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.67
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  128
  140
  153
  167
  181
  196
  211
  227
  243
  260
  278
  296
  315
  335
  356
  378
  400
  424
  448
  474
  501
  529
  558
  588
  620
  653
  688
  725
  763
  803
  845
Variable operating expenses, $m
 
  146
  159
  173
  187
  202
  218
  234
  251
  268
  286
  303
  323
  343
  364
  387
  410
  434
  459
  485
  512
  541
  571
  602
  635
  669
  704
  742
  781
  822
  865
Fixed operating expenses, $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
Total operating expenses, $m
  139
  146
  159
  173
  187
  202
  218
  234
  251
  268
  286
  303
  323
  343
  364
  387
  410
  434
  459
  485
  512
  541
  571
  602
  635
  669
  704
  742
  781
  822
  865
Operating income, $m
  -11
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
EBITDA, $m
  0
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  16
  17
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
Earnings before tax, $m
  -11
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -30
Tax expense, $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
Net income, $m
  -12
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -30

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  49
  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
  167
  129
  141
  154
  167
  180
  194
  209
  224
  240
  256
  273
  291
  309
  328
  348
  369
  391
  413
  437
  461
  487
  514
  542
  571
  602
  634
  668
  703
  740
  779
Adjusted assets (=assets-cash), $m
  118
  129
  141
  154
  167
  180
  194
  209
  224
  240
  256
  273
  291
  309
  328
  348
  369
  391
  413
  437
  461
  487
  514
  542
  571
  602
  634
  668
  703
  740
  779
Revenue / Adjusted assets
  1.085
  1.085
  1.085
  1.084
  1.084
  1.089
  1.088
  1.086
  1.085
  1.083
  1.086
  1.084
  1.082
  1.084
  1.085
  1.086
  1.084
  1.084
  1.085
  1.085
  1.087
  1.086
  1.086
  1.085
  1.086
  1.085
  1.085
  1.085
  1.085
  1.085
  1.085
Average production assets, $m
  70
  76
  83
  91
  98
  106
  114
  123
  132
  141
  151
  161
  171
  182
  193
  205
  217
  230
  243
  257
  272
  287
  303
  319
  337
  355
  374
  394
  414
  436
  459
Working capital, $m
  28
  -23
  -25
  -27
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -58
  -62
  -66
  -70
  -74
  -78
  -82
  -87
  -91
  -96
  -102
  -107
  -113
  -119
  -125
  -132
  -139
Total debt, $m
  0
  5
  10
  16
  22
  28
  34
  41
  48
  55
  62
  70
  78
  86
  94
  103
  113
  122
  133
  143
  154
  166
  178
  190
  204
  217
  232
  247
  263
  279
  297
Total liabilities, $m
  54
  58
  63
  69
  75
  81
  87
  94
  101
  108
  115
  123
  131
  139
  147
  156
  166
  175
  186
  196
  207
  219
  231
  243
  257
  270
  285
  300
  316
  332
  350
Total equity, $m
  114
  71
  78
  85
  92
  99
  107
  115
  123
  132
  141
  150
  160
  170
  181
  192
  203
  215
  228
  241
  254
  268
  283
  299
  315
  332
  350
  368
  387
  408
  429
Total liabilities and equity, $m
  168
  129
  141
  154
  167
  180
  194
  209
  224
  240
  256
  273
  291
  309
  328
  348
  369
  390
  414
  437
  461
  487
  514
  542
  572
  602
  635
  668
  703
  740
  779
Debt-to-equity ratio
  0.000
  0.070
  0.130
  0.190
  0.240
  0.280
  0.320
  0.350
  0.390
  0.410
  0.440
  0.460
  0.480
  0.500
  0.520
  0.540
  0.550
  0.570
  0.580
  0.590
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.660
  0.670
  0.680
  0.680
  0.690
Adjusted equity ratio
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -12
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -30
Depreciation, amort., depletion, $m
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
Funds from operations, $m
  4
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  24
  25
  26
  27
Change in working capital, $m
  1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
Cash from operations, $m
  3
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  32
  34
Maintenance CAPEX, $m
  0
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -51
  -54
New CAPEX, $m
  -16
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Cash from investing activities, $m
  -14
  -16
  -16
  -17
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -29
  -30
  -32
  -33
  -36
  -37
  -40
  -41
  -44
  -47
  -49
  -51
  -54
  -56
  -60
  -63
  -66
  -70
  -73
  -77
Free cash flow, $m
  -11
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -43
Issuance/(repayment) of debt, $m
  0
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
Issuance/(repurchase) of shares, $m
  -1
  12
  12
  13
  14
  15
  16
  17
  17
  18
  19
  18
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  44
  46
  48
  51
Cash from financing (excl. dividends), $m  
  -1
  17
  17
  19
  20
  21
  22
  24
  24
  25
  26
  26
  28
  29
  31
  32
  33
  36
  37
  40
  41
  44
  46
  48
  50
  53
  55
  59
  62
  65
  68
Total cash flow (excl. dividends), $m
  -11
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
Retained Cash Flow (-), $m
  9
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -18
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
Prev. year cash balance distribution, $m
 
  49
  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
 
  47
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
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
 
  45
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  92.5
  85.8
  79.7
  74.2
  69.1
  64.5
  60.3
  56.5
  52.9
  49.6
  46.8
  44.2
  41.8
  39.5
  37.3
  35.3
  33.3
  31.5
  29.8
  28.2
  26.7
  25.3
  23.9
  22.6
  21.4
  20.3
  19.2
  18.2
  17.2
  16.3

Agilysys, Inc. is a technology company. The Company provides software for point-of-sale (POS), property management, inventory and procurement, workforce management, analytics, document management, and mobile and wireless solutions and services to the hospitality industry. The Company serves four market sectors: gaming, both corporate and tribal; hotels, resorts and cruise; foodservice management, and restaurants, universities, stadia and healthcare. The Company is a developer and marketer of software enabled solutions and services to the hospitality industry, including hardware and software products; support, maintenance and subscription services, and professional services. The rGuest platform is designed to run as a Software-as-a-Service (SaaS)-based platform on the public cloud, private cloud, on-premise or in a hybrid configuration. The rGuest platform includes various in-market solutions, such as rGuest Stay, rGuest Buy, rGuest Seat, rGuest Pay and rGuest Analyze.

FINANCIAL RATIOS  of  Agilysys (AGYS)

Valuation Ratios
P/E Ratio -20.5
Price to Sales 1.9
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 82.2
Price to Free Cash Flow -19
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.8%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -6.8%
Ret/ On Assets - 3 Yr. Avg. -5.1%
Return On Total Capital -10.1%
Ret/ On T. Cap. - 3 Yr. Avg. -7.6%
Return On Equity -10.1%
Return On Equity - 3 Yr. Avg. -7.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 54.8%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -1.9%
Operating Margin -8.6%
Oper. Margin - 3 Yr. Avg. -8.1%
Pre-Tax Margin -8.6%
Pre-Tax Margin - 3 Yr. Avg. -8.1%
Net Profit Margin -9.4%
Net Profit Margin - 3 Yr. Avg. -8.1%
Effective Tax Rate -9.1%
Eff/ Tax Rate - 3 Yr. Avg. -0.5%
Payout Ratio 0%

AGYS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGYS stock intrinsic value calculation we used $128 million for the last fiscal year's total revenue generated by Agilysys. The default revenue input number comes from 2017 income statement of Agilysys. 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 AGYS stock valuation model: a) initial revenue growth rate of 9.7% 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 AGYS is calculated based on our internal credit rating of Agilysys, 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 Agilysys.
    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 AGYS stock the variable cost ratio is equal to 103.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AGYS 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 Agilysys.

Corporate tax rate of 27% is the nominal tax rate for Agilysys. 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 AGYS 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 AGYS are equal to 54.3%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Agilysys 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 AGYS is equal to -16.4%. 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 - $114 million for Agilysys - 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 23.692 million for Agilysys 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 Agilysys at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Agilysys reports 1Q loss   [Aug-04-17 12:54AM  Associated Press]
▶ ETFs with exposure to Agilysys, Inc. : June 26, 2017   [Jun-26-17 03:16PM  Capital Cube]
▶ Agilysys Appoints Tony Pritchett Chief Financial Officer   [Jun-19-17 04:15PM  Business Wire]
▶ ETFs with exposure to Agilysys, Inc. : June 9, 2017   [Jun-09-17 01:14PM  Capital Cube]
▶ Agilysys reports 4Q loss   [Jun-01-17 04:28PM  Associated Press]
▶ ETFs with exposure to Agilysys, Inc. : April 11, 2017   [Apr-11-17 02:11PM  Capital Cube]
▶ Agilysys reports 3Q loss   [Feb-09-17 05:21PM  Associated Press]
▶ Is Agilysys, Inc. (AGYS) a Good Stock to Buy?   [Dec-13-16 03:45AM  at Insider Monkey]
▶ Agilysys Recognized for Groundbreaking Mobile POS Solution   [Dec-01-16 07:45AM  Business Wire]
▶ Agilysys to Exhibit at U.K.s HOSPACE 2016   [Nov-10-16 05:00AM  Business Wire]
▶ Agilysys Announces Senior Management Changes   [08:30AM  Business Wire]
▶ Agilysys Sponsors Research on Next-Generation POS Systems   [Sep-15-16 07:45AM  Business Wire]
▶ Agilysys to Webcast Investor Day Presentations on August 31   [Aug-25-16 10:45AM  Business Wire]
▶ Agilysys reports 1Q loss   [07:08AM  AP]
Financial statements of AGYS
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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