Intrinsic value of Asure Software - ASUR

Previous Close

$14.20

  Intrinsic Value

$43.20

stock screener

  Rating & Target

str. buy

+204%

Previous close

$14.20

 
Intrinsic value

$43.20

 
Up/down potential

+204%

 
Rating

str. buy

We calculate the intrinsic value of ASUR 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 0.2

 

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, %
  33.33
  33.30
  30.47
  27.92
  25.63
  23.57
  21.71
  20.04
  18.54
  17.18
  15.96
  14.87
  13.88
  12.99
  12.19
  11.47
  10.83
  10.24
  9.72
  9.25
  8.82
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
Revenue, $m
  36
  48
  63
  80
  101
  124
  151
  182
  215
  252
  293
  336
  383
  432
  485
  541
  599
  661
  725
  792
  862
  935
  1,011
  1,089
  1,171
  1,256
  1,344
  1,436
  1,532
  1,631
  1,734
Variable operating expenses, $m
 
  36
  47
  59
  74
  90
  109
  131
  155
  181
  209
  237
  270
  305
  342
  382
  423
  466
  512
  559
  608
  660
  713
  769
  826
  886
  949
  1,014
  1,081
  1,151
  1,224
Fixed operating expenses, $m
 
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
Total operating expenses, $m
  34
  42
  53
  65
  81
  97
  116
  138
  162
  188
  217
  245
  278
  313
  350
  391
  432
  475
  521
  569
  618
  670
  723
  780
  837
  897
  960
  1,026
  1,093
  1,163
  1,237
Operating income, $m
  1
  5
  10
  15
  20
  27
  35
  44
  53
  64
  76
  91
  105
  119
  134
  150
  167
  185
  204
  223
  244
  265
  287
  310
  334
  358
  384
  411
  439
  468
  498
EBITDA, $m
  5
  10
  15
  20
  27
  35
  43
  53
  64
  76
  90
  104
  119
  136
  153
  171
  191
  211
  232
  254
  277
  301
  326
  352
  379
  407
  436
  466
  497
  530
  564
Interest expense (income), $m
  1
  1
  2
  3
  5
  6
  8
  11
  13
  16
  19
  22
  26
  30
  34
  38
  43
  48
  53
  58
  63
  69
  75
  81
  88
  95
  102
  109
  116
  124
  132
Earnings before tax, $m
  -1
  4
  7
  11
  16
  21
  27
  33
  40
  48
  57
  69
  79
  89
  100
  112
  125
  138
  151
  166
  180
  196
  212
  229
  246
  264
  283
  302
  322
  343
  365
Tax expense, $m
  0
  1
  2
  3
  4
  6
  7
  9
  11
  13
  15
  19
  21
  24
  27
  30
  34
  37
  41
  45
  49
  53
  57
  62
  66
  71
  76
  82
  87
  93
  99
Net income, $m
  -1
  3
  5
  8
  11
  15
  19
  24
  29
  35
  41
  50
  57
  65
  73
  82
  91
  101
  111
  121
  132
  143
  155
  167
  179
  193
  206
  220
  235
  251
  267

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  13
  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
  86
  97
  127
  162
  204
  252
  307
  368
  437
  512
  594
  682
  776
  877
  984
  1,097
  1,216
  1,341
  1,471
  1,607
  1,749
  1,896
  2,050
  2,209
  2,375
  2,548
  2,727
  2,913
  3,107
  3,308
  3,517
Adjusted assets (=assets-cash), $m
  73
  97
  127
  162
  204
  252
  307
  368
  437
  512
  594
  682
  776
  877
  984
  1,097
  1,216
  1,341
  1,471
  1,607
  1,749
  1,896
  2,050
  2,209
  2,375
  2,548
  2,727
  2,913
  3,107
  3,308
  3,517
Revenue / Adjusted assets
  0.493
  0.495
  0.496
  0.494
  0.495
  0.492
  0.492
  0.495
  0.492
  0.492
  0.493
  0.493
  0.494
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
Average production assets, $m
  12
  15
  20
  26
  32
  40
  48
  58
  69
  80
  93
  107
  122
  138
  155
  173
  191
  211
  231
  253
  275
  298
  322
  347
  374
  401
  429
  458
  489
  520
  553
Working capital, $m
  5
  -4
  -5
  -7
  -8
  -10
  -13
  -15
  -18
  -21
  -24
  -28
  -32
  -36
  -40
  -45
  -50
  -55
  -60
  -66
  -72
  -78
  -84
  -90
  -97
  -104
  -112
  -119
  -127
  -135
  -144
Total debt, $m
  30
  46
  72
  102
  138
  180
  227
  280
  339
  404
  474
  550
  632
  719
  811
  909
  1,011
  1,119
  1,231
  1,349
  1,471
  1,598
  1,731
  1,869
  2,012
  2,161
  2,315
  2,476
  2,643
  2,817
  2,997
Total liabilities, $m
  68
  84
  110
  140
  176
  218
  265
  318
  377
  442
  512
  588
  670
  757
  849
  947
  1,049
  1,157
  1,269
  1,387
  1,509
  1,636
  1,769
  1,907
  2,050
  2,199
  2,353
  2,514
  2,681
  2,855
  3,035
Total equity, $m
  18
  13
  17
  22
  28
  35
  42
  50
  60
  70
  81
  93
  106
  120
  135
  150
  167
  184
  202
  220
  240
  260
  281
  303
  325
  349
  374
  399
  426
  453
  482
Total liabilities and equity, $m
  86
  97
  127
  162
  204
  253
  307
  368
  437
  512
  593
  681
  776
  877
  984
  1,097
  1,216
  1,341
  1,471
  1,607
  1,749
  1,896
  2,050
  2,210
  2,375
  2,548
  2,727
  2,913
  3,107
  3,308
  3,517
Debt-to-equity ratio
  1.667
  3.450
  4.120
  4.590
  4.940
  5.200
  5.400
  5.550
  5.660
  5.760
  5.830
  5.890
  5.940
  5.980
  6.020
  6.050
  6.070
  6.090
  6.110
  6.130
  6.140
  6.150
  6.160
  6.170
  6.180
  6.190
  6.200
  6.200
  6.210
  6.220
  6.220
Adjusted equity ratio
  0.068
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  3
  5
  8
  11
  15
  19
  24
  29
  35
  41
  50
  57
  65
  73
  82
  91
  101
  111
  121
  132
  143
  155
  167
  179
  193
  206
  220
  235
  251
  267
Depreciation, amort., depletion, $m
  4
  4
  5
  6
  6
  7
  8
  10
  11
  12
  14
  13
  15
  17
  19
  21
  23
  25
  28
  30
  33
  36
  39
  42
  45
  48
  52
  55
  59
  63
  67
Funds from operations, $m
  -7
  8
  10
  14
  18
  22
  28
  34
  40
  47
  55
  63
  72
  82
  92
  103
  114
  126
  138
  151
  165
  179
  193
  209
  224
  241
  258
  276
  294
  313
  333
Change in working capital, $m
  -5
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
Cash from operations, $m
  -2
  9
  12
  15
  20
  24
  30
  36
  43
  51
  59
  67
  76
  86
  96
  107
  119
  131
  144
  157
  171
  185
  200
  215
  231
  248
  265
  283
  302
  322
  342
Maintenance CAPEX, $m
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -52
  -55
  -59
  -63
New CAPEX, $m
  0
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
Cash from investing activities, $m
  -19
  -5
  -7
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -45
  -49
  -52
  -56
  -60
  -64
  -68
  -72
  -76
  -81
  -85
  -91
  -96
Free cash flow, $m
  -21
  3
  5
  7
  10
  13
  17
  21
  25
  30
  36
  42
  48
  55
  63
  71
  80
  88
  98
  108
  118
  129
  140
  151
  163
  176
  189
  202
  216
  231
  246
Issuance/(repayment) of debt, $m
  11
  21
  26
  31
  36
  42
  47
  53
  59
  65
  71
  76
  82
  87
  92
  97
  103
  107
  112
  117
  122
  127
  132
  138
  143
  149
  155
  161
  167
  174
  181
Issuance/(repurchase) of shares, $m
  15
  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  
  32
  21
  26
  31
  36
  42
  47
  53
  59
  65
  71
  76
  82
  87
  92
  97
  103
  107
  112
  117
  122
  127
  132
  138
  143
  149
  155
  161
  167
  174
  181
Total cash flow (excl. dividends), $m
  12
  25
  31
  38
  46
  55
  64
  74
  84
  95
  107
  118
  130
  142
  155
  168
  182
  196
  210
  225
  240
  256
  272
  289
  306
  325
  343
  363
  383
  405
  427
Retained Cash Flow (-), $m
  -14
  -3
  -4
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
Prev. year cash balance distribution, $m
 
  8
  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
 
  29
  27
  33
  40
  48
  56
  65
  75
  85
  95
  106
  117
  129
  141
  153
  166
  179
  192
  206
  221
  236
  251
  267
  284
  301
  319
  338
  357
  377
  398
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  27
  23
  26
  29
  32
  34
  35
  35
  35
  34
  32
  30
  28
  25
  22
  19
  16
  13
  11
  8
  7
  5
  4
  3
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7

Asure Software, Inc. is a global provider of cloud-based software-as-a-service (SaaS) solutions that help companies to bring people, time, space and assets together. The Company serves approximately 6,000 clients in over 80 countries. The Company offers a range of solutions to help its clients optimize and manage mobile workforces and global workspaces. Its SaaS-based offerings include asset management, mobile room scheduling, mobile time tracking, scheduling software, space utilization solutions, tablet-based time clocks, time clocks, touch panels for room scheduling and workplace business intelligence (BI) analytics. It offers approximately two product lines, including AsureSpace and AsureForce. Its AsureSpace provides workplace management solutions that enable organizations to manage their office environments and manage real estate utilization. Its AsureForce time and labor management solutions help organizations to manage labor and labor administration costs and activities.

FINANCIAL RATIOS  of  Asure Software (ASUR)

Valuation Ratios
P/E Ratio -121
Price to Sales 3.4
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow -60.5
Price to Free Cash Flow -60.5
Growth Rates
Sales Growth Rate 33.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 3
Current Ratio 0.6
LT Debt to Equity 138.9%
Total Debt to Equity 166.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital -3.1%
Ret/ On T. Cap. - 3 Yr. Avg. -4.7%
Return On Equity -9.1%
Return On Equity - 3 Yr. Avg. -19.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 75%
Gross Margin - 3 Yr. Avg. 75.6%
EBITDA Margin 11.1%
EBITDA Margin - 3 Yr. Avg. 11.1%
Operating Margin 5.6%
Oper. Margin - 3 Yr. Avg. 3.1%
Pre-Tax Margin -2.8%
Pre-Tax Margin - 3 Yr. Avg. -3.4%
Net Profit Margin -2.8%
Net Profit Margin - 3 Yr. Avg. -3.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ASUR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASUR stock intrinsic value calculation we used $36 million for the last fiscal year's total revenue generated by Asure Software. The default revenue input number comes from 2016 income statement of Asure Software. 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 ASUR stock valuation model: a) initial revenue growth rate of 33.3% 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 7%, whose default value for ASUR is calculated based on our internal credit rating of Asure Software, 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 Asure Software.
    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 ASUR stock the variable cost ratio is equal to 77.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6 million in the base year in the intrinsic value calculation for ASUR 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 4.7% for Asure Software.

Corporate tax rate of 27% is the nominal tax rate for Asure Software. 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 ASUR 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 ASUR are equal to 31.9%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Asure Software 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 ASUR is equal to -8.3%. 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 - $18 million for Asure Software - 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 12.421 million for Asure Software 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 Asure Software at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ A tech office nestled in the hills of West Austin: Asure Software shows off new space   [Nov-21-17 02:27PM  American City Business Journals]
▶ Revenue surges in Q3 at Austin software maker Asure   [Nov-13-17 04:57PM  American City Business Journals]
▶ Asure Software Creates Office of the Future   [Oct-19-17 08:45AM  GlobeNewswire]
▶ Asure Software scoops up yet another tech company   [Oct-02-17 12:20PM  American City Business Journals]
▶ Asure Software to Exhibit at ILTACON 2017   [Aug-08-17 08:45AM  GlobeNewswire]
▶ Austin software company begins search for new CFO   [Jul-19-17 01:17PM  American City Business Journals]
▶ Is Asure Software (ASUR) a Great Growth Stock?   [Jun-30-17 08:48AM  Zacks]
▶ Asure Software Appoints Dan Gill to Board of Directors   [Jun-08-17 04:15PM  GlobeNewswire]
▶ [$$] Silver Oak Services Exits iSystems   [May-31-17 01:29PM  The Wall Street Journal]
▶ Asure Software Acquires Compass HRM, Inc.   [May-26-17 08:55AM  GlobeNewswire]
▶ Asure Software Acquires iSystems, LLC   [08:45AM  GlobeNewswire]
▶ Asure Software Sponsors Quora Smartworking Summit   [Mar-09-17 12:53PM  GlobeNewswire]
▶ Asure Software Appoints Director of Sales   [Mar-01-17 08:45AM  GlobeNewswire]
▶ Austin software maker starts 2017 by spending millions   [Jan-04-17 08:45AM  at bizjournals.com]
Financial statements of ASUR
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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