Intrinsic value of Altisource Portfolio Solutions - ASPS

Previous Close

$26.22

  Intrinsic Value

$16.06

stock screener

  Rating & Target

sell

-39%

Previous close

$26.22

 
Intrinsic value

$16.06

 
Up/down potential

-39%

 
Rating

sell

Our model is not good at valuating stocks of financial companies, such as ASPS.

We calculate the intrinsic value of ASPS 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 0.5

 

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, %
  -5.14
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  997
  1,017
  1,040
  1,067
  1,097
  1,130
  1,167
  1,207
  1,250
  1,296
  1,346
  1,399
  1,456
  1,516
  1,580
  1,649
  1,721
  1,797
  1,878
  1,964
  2,054
  2,149
  2,249
  2,355
  2,467
  2,584
  2,708
  2,838
  2,975
  3,119
  3,270
Variable operating expenses, $m
 
  790
  808
  829
  852
  877
  905
  936
  969
  1,004
  1,043
  1,075
  1,118
  1,165
  1,214
  1,267
  1,322
  1,381
  1,443
  1,509
  1,578
  1,651
  1,728
  1,810
  1,895
  1,986
  2,081
  2,181
  2,286
  2,396
  2,513
Fixed operating expenses, $m
 
  160
  164
  168
  172
  176
  181
  185
  190
  195
  200
  205
  210
  215
  220
  226
  232
  237
  243
  249
  256
  262
  269
  275
  282
  289
  296
  304
  311
  319
  327
Total operating expenses, $m
  927
  950
  972
  997
  1,024
  1,053
  1,086
  1,121
  1,159
  1,199
  1,243
  1,280
  1,328
  1,380
  1,434
  1,493
  1,554
  1,618
  1,686
  1,758
  1,834
  1,913
  1,997
  2,085
  2,177
  2,275
  2,377
  2,485
  2,597
  2,715
  2,840
Operating income, $m
  71
  67
  68
  71
  73
  77
  81
  85
  91
  97
  103
  119
  127
  136
  146
  156
  167
  179
  192
  205
  220
  236
  252
  270
  289
  309
  331
  353
  378
  403
  430
EBITDA, $m
  156
  134
  137
  141
  145
  150
  157
  164
  171
  180
  190
  200
  211
  223
  237
  251
  266
  282
  300
  319
  338
  360
  382
  406
  431
  458
  487
  517
  549
  583
  619
Interest expense (income), $m
  23
  22
  13
  14
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  52
  55
Earnings before tax, $m
  44
  46
  55
  57
  59
  62
  65
  69
  74
  79
  85
  100
  107
  114
  122
  131
  141
  152
  163
  175
  188
  202
  217
  232
  249
  267
  286
  306
  328
  351
  375
Tax expense, $m
  13
  12
  15
  15
  16
  17
  18
  19
  20
  21
  23
  27
  29
  31
  33
  35
  38
  41
  44
  47
  51
  54
  58
  63
  67
  72
  77
  83
  89
  95
  101
Net income, $m
  29
  33
  40
  42
  43
  45
  48
  51
  54
  58
  62
  73
  78
  83
  89
  96
  103
  111
  119
  128
  137
  147
  158
  170
  182
  195
  209
  224
  239
  256
  274

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  208
  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
  689
  491
  502
  515
  529
  545
  563
  582
  603
  625
  649
  675
  702
  731
  762
  795
  830
  867
  906
  947
  991
  1,037
  1,085
  1,136
  1,190
  1,247
  1,306
  1,369
  1,435
  1,505
  1,578
Adjusted assets (=assets-cash), $m
  481
  491
  502
  515
  529
  545
  563
  582
  603
  625
  649
  675
  702
  731
  762
  795
  830
  867
  906
  947
  991
  1,037
  1,085
  1,136
  1,190
  1,247
  1,306
  1,369
  1,435
  1,505
  1,578
Revenue / Adjusted assets
  2.073
  2.071
  2.072
  2.072
  2.074
  2.073
  2.073
  2.074
  2.073
  2.074
  2.074
  2.073
  2.074
  2.074
  2.073
  2.074
  2.073
  2.073
  2.073
  2.074
  2.073
  2.072
  2.073
  2.073
  2.073
  2.072
  2.074
  2.073
  2.073
  2.072
  2.072
Average production assets, $m
  288
  293
  300
  307
  316
  326
  336
  347
  360
  373
  388
  403
  419
  437
  455
  475
  496
  518
  541
  566
  591
  619
  648
  678
  710
  744
  780
  817
  857
  898
  942
Working capital, $m
  176
  -26
  -27
  -28
  -29
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
Total debt, $m
  474
  288
  298
  309
  322
  337
  353
  370
  389
  409
  430
  453
  478
  504
  532
  562
  593
  626
  661
  698
  738
  779
  823
  869
  917
  968
  1,022
  1,078
  1,138
  1,200
  1,266
Total liabilities, $m
  628
  442
  452
  463
  476
  491
  507
  524
  543
  563
  584
  607
  632
  658
  686
  716
  747
  780
  815
  852
  892
  933
  977
  1,023
  1,071
  1,122
  1,176
  1,232
  1,292
  1,354
  1,420
Total equity, $m
  61
  49
  50
  51
  53
  55
  56
  58
  60
  63
  65
  67
  70
  73
  76
  80
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  150
  158
Total liabilities and equity, $m
  689
  491
  502
  514
  529
  546
  563
  582
  603
  626
  649
  674
  702
  731
  762
  796
  830
  867
  906
  947
  991
  1,037
  1,086
  1,137
  1,190
  1,247
  1,307
  1,369
  1,436
  1,504
  1,578
Debt-to-equity ratio
  7.770
  5.860
  5.930
  6.010
  6.090
  6.180
  6.260
  6.350
  6.450
  6.540
  6.630
  6.720
  6.810
  6.890
  6.980
  7.060
  7.140
  7.220
  7.300
  7.370
  7.450
  7.510
  7.580
  7.640
  7.710
  7.760
  7.820
  7.880
  7.930
  7.980
  8.020
Adjusted equity ratio
  -0.306
  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
  29
  33
  40
  42
  43
  45
  48
  51
  54
  58
  62
  73
  78
  83
  89
  96
  103
  111
  119
  128
  137
  147
  158
  170
  182
  195
  209
  224
  239
  256
  274
Depreciation, amort., depletion, $m
  85
  67
  69
  70
  72
  74
  76
  78
  81
  83
  86
  81
  84
  87
  91
  95
  99
  104
  108
  113
  118
  124
  130
  136
  142
  149
  156
  163
  171
  180
  188
Funds from operations, $m
  138
  100
  109
  112
  115
  119
  123
  129
  134
  141
  148
  153
  162
  171
  180
  191
  202
  214
  227
  241
  256
  271
  288
  305
  324
  344
  365
  387
  411
  436
  462
Change in working capital, $m
  11
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from operations, $m
  127
  101
  109
  112
  116
  120
  124
  130
  136
  142
  149
  155
  163
  172
  182
  193
  204
  216
  229
  243
  258
  274
  290
  308
  327
  347
  368
  391
  414
  440
  466
Maintenance CAPEX, $m
  0
  -58
  -59
  -60
  -61
  -63
  -65
  -67
  -69
  -72
  -75
  -78
  -81
  -84
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -118
  -124
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -180
New CAPEX, $m
  -23
  -5
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -44
Cash from investing activities, $m
  -80
  -63
  -66
  -68
  -70
  -73
  -76
  -78
  -81
  -85
  -89
  -93
  -97
  -101
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -145
  -153
  -160
  -168
  -176
  -185
  -193
  -202
  -212
  -224
Free cash flow, $m
  47
  38
  44
  45
  46
  47
  49
  51
  54
  57
  60
  62
  66
  71
  76
  82
  88
  95
  102
  110
  119
  128
  138
  148
  159
  171
  184
  197
  211
  227
  243
Issuance/(repayment) of debt, $m
  -51
  -180
  10
  12
  13
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  44
  46
  48
  51
  54
  57
  59
  63
  66
Issuance/(repurchase) of shares, $m
  -23
  157
  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  
  -77
  -23
  10
  12
  13
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  44
  46
  48
  51
  54
  57
  59
  63
  66
Total cash flow (excl. dividends), $m
  -30
  14
  54
  56
  59
  61
  65
  68
  72
  77
  82
  85
  91
  97
  104
  112
  120
  128
  137
  147
  158
  169
  181
  194
  208
  222
  237
  254
  271
  289
  309
Retained Cash Flow (-), $m
  -10
  -190
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
Prev. year cash balance distribution, $m
 
  202
  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
 
  26
  53
  55
  57
  60
  63
  66
  70
  75
  79
  82
  88
  94
  101
  108
  116
  125
  134
  143
  154
  165
  176
  189
  202
  216
  231
  247
  264
  282
  301
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  25
  47
  45
  43
  41
  40
  38
  36
  33
  31
  28
  26
  23
  21
  19
  16
  14
  12
  10
  8
  6
  5
  4
  3
  2
  2
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Altisource Portfolio Solutions S.A. is a marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. The Company's business processes, vendor and electronic payment management software and behavioral science-based analytics manage outcomes for marketplace participants. It operates through three segments: Mortgage Services, Financial Services and Technology Services. The Mortgage Services segment provides loan servicers, originators, rental property investors and real estate consumers with products, services and technologies. The Financial Services segment provides collection services to debt originators and servicers and customer relationship management services. The Technology Services segment provides software and data analytics solutions that support management of mortgage and real estate activities and marketplace transactions across mortgage and real estate lifecycles and information technology infrastructure management services.

FINANCIAL RATIOS  of  Altisource Portfolio Solutions (ASPS)

Valuation Ratios
P/E Ratio 11
Price to Sales 0.3
Price to Book 5.2
Price to Tangible Book
Price to Cash Flow 2.5
Price to Free Cash Flow 3.1
Growth Rates
Sales Growth Rate -5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.1%
Cap. Spend. - 3 Yr. Gr. Rate -7.5%
Financial Strength
Quick Ratio 35
Current Ratio 0.1
LT Debt to Equity 767.2%
Total Debt to Equity 777%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 11.8%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 11.6%
Return On Equity 51.8%
Return On Equity - 3 Yr. Avg. 93.4%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 30.8%
Gross Margin - 3 Yr. Avg. 33.3%
EBITDA Margin 15.2%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin 4.4%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 29.5%
Eff/ Tax Rate - 3 Yr. Avg. 17.1%
Payout Ratio 0%

ASPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASPS stock intrinsic value calculation we used $997 million for the last fiscal year's total revenue generated by Altisource Portfolio Solutions. The default revenue input number comes from 2016 income statement of Altisource Portfolio Solutions. 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 ASPS stock valuation model: a) initial revenue growth rate of 2% 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 6.3%, whose default value for ASPS is calculated based on our internal credit rating of Altisource Portfolio Solutions, 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 Altisource Portfolio Solutions.
    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 ASPS stock the variable cost ratio is equal to 77.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $156 million in the base year in the intrinsic value calculation for ASPS 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 4.6% for Altisource Portfolio Solutions.

Corporate tax rate of 27% is the nominal tax rate for Altisource Portfolio Solutions. 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 ASPS 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 ASPS are equal to 28.8%.

Life of production assets of 4.4 years is the average useful life of capital assets used in Altisource Portfolio Solutions 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 ASPS is equal to -2.6%. 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 - $61 million for Altisource Portfolio Solutions - 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 18.049 million for Altisource Portfolio Solutions 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 Altisource Portfolio Solutions at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
OCN Ocwen Financia 3.89 1.25  str.sell
WAC Walter Investm 0.510 4.14  str.buy
SNFCA Security Natio 5.45 22.57  str.buy
PFSI PennyMac Finan 18.50 20.16  hold
PHH PHH 13.74 8.39  sell
WD Walker&Dunlop 55.45 108.87  str.buy
EFC Ellington Fina 15.73 6.49  str.sell

COMPANY NEWS

▶ Is It Time To Sell Altisource Portfolio Solutions SA (ASPS)?   [Oct-04-17 09:26AM  Simply Wall St.]
▶ Top Ranked Value Stocks to Buy for August 31st   [Aug-31-17 10:43AM  Zacks]
▶ Altisource Portfolio posts 2Q profit   [Aug-09-17 10:19PM  Associated Press]
▶ Altisource Announces Organizational Changes   [08:57AM  GlobeNewswire]
▶ Altisource Portfolio posts 1Q profit   [Apr-27-17 10:48AM  Associated Press]
▶ Mortgage Lenders Maintain Positive Sentiment for 2017   [Apr-12-17 09:00AM  Marketwired]
▶ 5 Stocks Insiders Love Right Now: GNC, AXP, AVP, ASPS, SM   [Mar-01-17 02:08PM  TheStreet.com]
▶ RentRange Becomes Data Provider for Cozy   [Feb-06-17 09:00AM  Marketwired]
▶ Is Seabridge Gold, Inc. (USA) (SA) A Good Stock To Buy?   [Dec-17-16 03:45PM  at Insider Monkey]
▶ Hedge Funds Are Still Buying Novanta Inc (USA) (NOVT)   [Dec-06-16 08:06PM  at Insider Monkey]
Financial statements of ASPS
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.