Intrinsic value of I.D. Systems - IDSY

Previous Close

$6.79

  Intrinsic Value

$0.20

stock screener

  Rating & Target

str. sell

-97%

Previous close

$6.79

 
Intrinsic value

$0.20

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of IDSY 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, %
  -11.90
  22.20
  20.48
  18.93
  17.54
  16.28
  15.16
  14.14
  13.23
  12.40
  11.66
  11.00
  10.40
  9.86
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
Revenue, $m
  37
  45
  54
  65
  76
  89
  102
  116
  132
  148
  165
  184
  203
  223
  244
  265
  288
  312
  336
  362
  388
  416
  444
  474
  505
  537
  570
  605
  642
  679
  719
Variable operating expenses, $m
 
  56
  68
  80
  94
  110
  126
  144
  163
  184
  205
  227
  251
  276
  301
  328
  356
  386
  416
  447
  480
  514
  550
  586
  625
  664
  706
  749
  794
  841
  890
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
  43
  56
  68
  80
  94
  110
  126
  144
  163
  184
  205
  227
  251
  276
  301
  328
  356
  386
  416
  447
  480
  514
  550
  586
  625
  664
  706
  749
  794
  841
  890
Operating income, $m
  -6
  -11
  -13
  -16
  -18
  -21
  -24
  -28
  -32
  -35
  -40
  -44
  -48
  -53
  -58
  -63
  -68
  -74
  -80
  -86
  -92
  -99
  -106
  -113
  -120
  -128
  -136
  -144
  -152
  -161
  -171
EBITDA, $m
  -5
  -10
  -12
  -14
  -17
  -19
  -22
  -26
  -29
  -33
  -36
  -40
  -45
  -49
  -53
  -58
  -63
  -68
  -74
  -79
  -85
  -91
  -98
  -104
  -111
  -118
  -125
  -133
  -141
  -149
  -158
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
Earnings before tax, $m
  -6
  -11
  -13
  -16
  -19
  -22
  -26
  -29
  -33
  -38
  -42
  -47
  -52
  -57
  -62
  -68
  -74
  -80
  -86
  -93
  -100
  -107
  -114
  -122
  -130
  -139
  -147
  -156
  -166
  -176
  -186
Tax expense, $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
Net income, $m
  -6
  -11
  -13
  -16
  -19
  -22
  -26
  -29
  -33
  -38
  -42
  -47
  -52
  -57
  -62
  -68
  -74
  -80
  -86
  -93
  -100
  -107
  -114
  -122
  -130
  -139
  -147
  -156
  -166
  -176
  -186

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5
  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
  44
  48
  57
  68
  80
  93
  107
  123
  139
  156
  174
  193
  214
  235
  257
  280
  303
  328
  354
  381
  409
  438
  468
  499
  532
  566
  601
  638
  676
  716
  758
Adjusted assets (=assets-cash), $m
  39
  48
  57
  68
  80
  93
  107
  123
  139
  156
  174
  193
  214
  235
  257
  280
  303
  328
  354
  381
  409
  438
  468
  499
  532
  566
  601
  638
  676
  716
  758
Revenue / Adjusted assets
  0.949
  0.938
  0.947
  0.956
  0.950
  0.957
  0.953
  0.943
  0.950
  0.949
  0.948
  0.953
  0.949
  0.949
  0.949
  0.946
  0.950
  0.951
  0.949
  0.950
  0.949
  0.950
  0.949
  0.950
  0.949
  0.949
  0.948
  0.948
  0.950
  0.948
  0.949
Average production assets, $m
  4
  5
  6
  7
  8
  10
  11
  13
  14
  16
  18
  20
  22
  24
  26
  29
  31
  34
  36
  39
  42
  45
  48
  51
  55
  58
  62
  65
  69
  73
  78
Working capital, $m
  10
  10
  12
  14
  16
  19
  22
  25
  28
  32
  36
  40
  44
  48
  53
  57
  62
  67
  73
  78
  84
  90
  96
  102
  109
  116
  123
  131
  139
  147
  155
Total debt, $m
  3
  6
  12
  19
  26
  35
  44
  54
  64
  75
  87
  99
  112
  125
  139
  154
  170
  185
  202
  219
  237
  256
  275
  295
  316
  338
  360
  384
  408
  434
  461
Total liabilities, $m
  28
  31
  37
  44
  51
  60
  69
  79
  89
  100
  112
  124
  137
  150
  164
  179
  195
  210
  227
  244
  262
  281
  300
  320
  341
  363
  385
  409
  433
  459
  486
Total equity, $m
  16
  17
  21
  25
  29
  33
  39
  44
  50
  56
  63
  69
  77
  84
  92
  100
  109
  118
  127
  137
  147
  157
  168
  179
  191
  203
  216
  229
  243
  257
  272
Total liabilities and equity, $m
  44
  48
  58
  69
  80
  93
  108
  123
  139
  156
  175
  193
  214
  234
  256
  279
  304
  328
  354
  381
  409
  438
  468
  499
  532
  566
  601
  638
  676
  716
  758
Debt-to-equity ratio
  0.188
  0.320
  0.570
  0.770
  0.920
  1.040
  1.140
  1.220
  1.280
  1.340
  1.390
  1.430
  1.460
  1.490
  1.510
  1.540
  1.560
  1.570
  1.590
  1.600
  1.620
  1.630
  1.640
  1.650
  1.650
  1.660
  1.670
  1.680
  1.680
  1.690
  1.690
Adjusted equity ratio
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -11
  -13
  -16
  -19
  -22
  -26
  -29
  -33
  -38
  -42
  -47
  -52
  -57
  -62
  -68
  -74
  -80
  -86
  -93
  -100
  -107
  -114
  -122
  -130
  -139
  -147
  -156
  -166
  -176
  -186
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
Funds from operations, $m
  -1
  -10
  -12
  -15
  -17
  -20
  -24
  -27
  -31
  -35
  -39
  -43
  -48
  -53
  -58
  -63
  -69
  -74
  -80
  -86
  -93
  -100
  -106
  -114
  -121
  -129
  -137
  -146
  -154
  -163
  -173
Change in working capital, $m
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Cash from operations, $m
  -2
  -12
  -14
  -17
  -20
  -23
  -27
  -30
  -34
  -38
  -43
  -47
  -52
  -57
  -62
  -68
  -74
  -79
  -86
  -92
  -99
  -105
  -113
  -120
  -128
  -136
  -144
  -153
  -162
  -172
  -182
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
Cash from investing activities, $m
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -12
  -12
  -14
  -14
  -15
  -16
  -16
Free cash flow, $m
  -3
  -13
  -16
  -19
  -22
  -26
  -30
  -34
  -38
  -42
  -47
  -52
  -57
  -63
  -69
  -75
  -81
  -87
  -94
  -101
  -108
  -115
  -123
  -131
  -140
  -148
  -158
  -167
  -177
  -187
  -198
Issuance/(repayment) of debt, $m
  3
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
Issuance/(repurchase) of shares, $m
  0
  14
  17
  20
  23
  27
  31
  35
  39
  44
  49
  54
  59
  64
  70
  76
  82
  89
  96
  103
  110
  117
  125
  133
  142
  151
  160
  170
  180
  190
  201
Cash from financing (excl. dividends), $m  
  3
  20
  23
  27
  31
  35
  40
  45
  49
  55
  61
  66
  72
  77
  84
  91
  97
  105
  113
  120
  128
  136
  144
  153
  163
  173
  183
  194
  205
  216
  228
Total cash flow (excl. dividends), $m
  0
  6
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  30
Retained Cash Flow (-), $m
  5
  -14
  -17
  -20
  -23
  -27
  -31
  -35
  -39
  -44
  -49
  -54
  -59
  -64
  -70
  -76
  -82
  -89
  -96
  -103
  -110
  -117
  -125
  -133
  -142
  -151
  -160
  -170
  -180
  -190
  -201
Prev. year cash balance distribution, $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
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
 
  -6
  -10
  -12
  -15
  -17
  -20
  -24
  -28
  -31
  -36
  -40
  -45
  -49
  -55
  -60
  -65
  -71
  -77
  -84
  -90
  -97
  -104
  -111
  -119
  -127
  -135
  -144
  -152
  -162
  -171
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
 
  -5
  -9
  -10
  -12
  -13
  -15
  -16
  -17
  -18
  -19
  -19
  -19
  -19
  -18
  -18
  -17
  -16
  -14
  -13
  -11
  -10
  -9
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
Current shareholders' claim on cash, %
  100
  88.0
  77.7
  68.7
  60.8
  54.0
  48.0
  42.8
  38.2
  34.1
  30.5
  27.3
  24.5
  22.0
  19.8
  17.8
  16.0
  14.4
  13.0
  11.7
  10.5
  9.5
  8.6
  7.8
  7.0
  6.3
  5.7
  5.2
  4.7
  4.2
  3.8

I.D. Systems, Inc. (I.D. Systems) develops, markets and sells wireless machine-to-machine solutions for managing and securing enterprise assets, which include industrial vehicles, such as forklifts and airport ground support equipment, rental vehicles, and transportation assets, such as dry van trailers, refrigerated trailers, railcars and containers. Its systems utilize radio frequency identification (RFID), wireless fidelity (Wi-Fi), satellite or cellular communications, and sensor technology and software to control, track, monitor and analyze assets. It provides data reporting and analysis software tool platform, I.D. Systems Analytics PowerFleet IQ (for fleets of forklifts and other industrial trucks) and VeriWise IQ (for fleets of containers, trailers and other transportation assets). Its solutions include industrial and rental fleet asset management, industrial fleet asset management, transportation asset management and rental fleet asset management solutions.

FINANCIAL RATIOS  of  I.D. Systems (IDSY)

Valuation Ratios
P/E Ratio -15.6
Price to Sales 2.5
Price to Book 5.8
Price to Tangible Book
Price to Cash Flow -46.7
Price to Free Cash Flow -31.2
Growth Rates
Sales Growth Rate -11.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 18.8%
Interest Coverage 0
Management Effectiveness
Return On Assets -13.6%
Ret/ On Assets - 3 Yr. Avg. -18.9%
Return On Total Capital -30%
Ret/ On T. Cap. - 3 Yr. Avg. -36.4%
Return On Equity -32.4%
Return On Equity - 3 Yr. Avg. -37.2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 48.6%
Gross Margin - 3 Yr. Avg. 44.2%
EBITDA Margin -13.5%
EBITDA Margin - 3 Yr. Avg. -18.9%
Operating Margin -16.2%
Oper. Margin - 3 Yr. Avg. -22%
Pre-Tax Margin -16.2%
Pre-Tax Margin - 3 Yr. Avg. -22%
Net Profit Margin -16.2%
Net Profit Margin - 3 Yr. Avg. -22%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IDSY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IDSY stock intrinsic value calculation we used $37 million for the last fiscal year's total revenue generated by I.D. Systems. The default revenue input number comes from 2016 income statement of I.D. Systems. 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 IDSY stock valuation model: a) initial revenue growth rate of 22.2% 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 4.3%, whose default value for IDSY is calculated based on our internal credit rating of I.D. Systems, 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 I.D. Systems.
    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 IDSY stock the variable cost ratio is equal to 124.3%.

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 IDSY 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 I.D. Systems.

Corporate tax rate of 27% is the nominal tax rate for I.D. Systems. 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 IDSY 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 IDSY are equal to 10.8%.

Life of production assets of 6 years is the average useful life of capital assets used in I.D. Systems 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 IDSY is equal to 21.6%. 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 - $16 million for I.D. Systems - 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 17.372 million for I.D. Systems 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 I.D. Systems at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ I.D. Systems reports 3Q loss   [Nov-09-17 04:41PM  Associated Press]
▶ I.D. Systems reports 2Q loss   [Aug-03-17 11:32PM  Associated Press]
▶ ETFs with exposure to I.D. Systems, Inc. : June 9, 2017   [Jun-09-17 01:38PM  Capital Cube]
▶ I.D. Systems reports 1Q loss   [May-04-17 05:24PM  Associated Press]
▶ ETFs with exposure to I.D. Systems, Inc. : April 7, 2017   [Apr-07-17 04:51PM  Capital Cube]
▶ I.D. Systems reports 4Q loss   [04:14PM  Associated Press]
▶ I.D. Systems Signs New Intermodal Chassis Customer   [Sep-13-16 09:00AM  GlobeNewswire]
▶ I.D. Systems reports 2Q loss   [Aug-04-16 05:17PM  AP]
▶ I.D. Systems Acquires New Intermodal Chassis Customer   [Apr-07-16 09:00AM  GlobeNewswire]
Financial statements of IDSY
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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