Intrinsic value of Command Security - MOC

Previous Close

$3.03

  Intrinsic Value

$4.13

stock screener

  Rating & Target

buy

+36%

Previous close

$3.03

 
Intrinsic value

$4.13

 
Up/down potential

+36%

 
Rating

buy

We calculate the intrinsic value of MOC 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 0.0

 

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, %
  21.80
  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
  162
  198
  239
  284
  333
  388
  446
  510
  577
  649
  724
  804
  887
  975
  1,066
  1,162
  1,261
  1,364
  1,471
  1,583
  1,699
  1,819
  1,944
  2,075
  2,210
  2,351
  2,497
  2,650
  2,809
  2,975
  3,148
Variable operating expenses, $m
 
  185
  222
  264
  311
  361
  416
  475
  538
  604
  675
  749
  827
  909
  994
  1,083
  1,175
  1,271
  1,371
  1,475
  1,583
  1,696
  1,812
  1,934
  2,060
  2,191
  2,328
  2,470
  2,618
  2,772
  2,934
Fixed operating expenses, $m
 
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  24
  25
  25
  26
  27
  27
Total operating expenses, $m
  164
  198
  236
  278
  325
  376
  431
  490
  554
  620
  692
  766
  844
  927
  1,012
  1,102
  1,194
  1,291
  1,391
  1,496
  1,604
  1,718
  1,834
  1,957
  2,084
  2,215
  2,353
  2,495
  2,644
  2,799
  2,961
Operating income, $m
  -2
  0
  3
  5
  8
  12
  15
  19
  23
  28
  33
  38
  43
  48
  54
  60
  66
  73
  80
  87
  94
  102
  110
  118
  127
  136
  145
  155
  165
  176
  187
EBITDA, $m
  -2
  0
  3
  5
  9
  12
  16
  20
  24
  28
  33
  38
  43
  49
  55
  61
  67
  74
  81
  88
  95
  103
  111
  119
  128
  137
  147
  156
  167
  177
  189
Interest expense (income), $m
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
Earnings before tax, $m
  -2
  0
  2
  4
  7
  10
  14
  17
  21
  25
  30
  34
  39
  44
  49
  55
  61
  67
  73
  79
  86
  93
  100
  108
  116
  124
  133
  142
  151
  161
  171
Tax expense, $m
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  16
  18
  20
  21
  23
  25
  27
  29
  31
  34
  36
  38
  41
  43
  46
Net income, $m
  -2
  0
  1
  3
  5
  8
  10
  13
  15
  18
  22
  25
  28
  32
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  104
  110
  117
  125

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
  42
  50
  60
  72
  84
  98
  113
  129
  146
  164
  183
  203
  225
  247
  270
  294
  319
  345
  372
  401
  430
  460
  492
  525
  559
  595
  632
  671
  711
  753
  797
Adjusted assets (=assets-cash), $m
  41
  50
  60
  72
  84
  98
  113
  129
  146
  164
  183
  203
  225
  247
  270
  294
  319
  345
  372
  401
  430
  460
  492
  525
  559
  595
  632
  671
  711
  753
  797
Revenue / Adjusted assets
  3.951
  3.960
  3.983
  3.944
  3.964
  3.959
  3.947
  3.953
  3.952
  3.957
  3.956
  3.961
  3.942
  3.947
  3.948
  3.952
  3.953
  3.954
  3.954
  3.948
  3.951
  3.954
  3.951
  3.952
  3.953
  3.951
  3.951
  3.949
  3.951
  3.951
  3.950
Average production assets, $m
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
Working capital, $m
  9
  26
  31
  37
  43
  50
  58
  66
  75
  84
  94
  105
  115
  127
  139
  151
  164
  177
  191
  206
  221
  237
  253
  270
  287
  306
  325
  345
  365
  387
  409
Total debt, $m
  13
  18
  24
  31
  38
  47
  56
  66
  76
  87
  99
  111
  124
  138
  152
  166
  182
  198
  214
  231
  249
  268
  287
  307
  328
  350
  373
  396
  421
  446
  473
Total liabilities, $m
  26
  31
  37
  44
  51
  60
  69
  79
  89
  100
  112
  124
  137
  151
  165
  179
  195
  211
  227
  244
  262
  281
  300
  320
  341
  363
  386
  409
  434
  459
  486
Total equity, $m
  16
  20
  24
  28
  33
  38
  44
  50
  57
  64
  71
  79
  88
  96
  105
  115
  124
  135
  145
  156
  168
  180
  192
  205
  218
  232
  247
  262
  277
  294
  311
Total liabilities and equity, $m
  42
  51
  61
  72
  84
  98
  113
  129
  146
  164
  183
  203
  225
  247
  270
  294
  319
  346
  372
  400
  430
  461
  492
  525
  559
  595
  633
  671
  711
  753
  797
Debt-to-equity ratio
  0.813
  0.900
  1.010
  1.100
  1.170
  1.220
  1.270
  1.310
  1.340
  1.360
  1.380
  1.400
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.470
  1.480
  1.490
  1.490
  1.500
  1.500
  1.500
  1.510
  1.510
  1.510
  1.520
  1.520
  1.520
Adjusted equity ratio
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  0
  1
  3
  5
  8
  10
  13
  15
  18
  22
  25
  28
  32
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  104
  110
  117
  125
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
Funds from operations, $m
  -12
  0
  2
  3
  5
  8
  10
  13
  16
  19
  22
  25
  29
  33
  37
  41
  45
  49
  54
  59
  64
  69
  75
  80
  86
  92
  98
  105
  112
  119
  127
Change in working capital, $m
  -6
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
Cash from operations, $m
  -6
  -5
  -4
  -2
  -1
  1
  3
  5
  7
  9
  12
  15
  18
  21
  25
  28
  32
  36
  40
  44
  49
  53
  58
  63
  68
  74
  79
  85
  91
  98
  104
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
Free cash flow, $m
  -6
  -5
  -4
  -3
  -1
  0
  2
  4
  6
  9
  11
  14
  17
  20
  24
  27
  31
  35
  39
  43
  47
  52
  56
  61
  66
  72
  77
  83
  89
  95
  102
Issuance/(repayment) of debt, $m
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
Issuance/(repurchase) of shares, $m
  0
  4
  3
  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
Cash from financing (excl. dividends), $m  
  5
  10
  9
  8
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
Total cash flow (excl. dividends), $m
  0
  4
  5
  5
  6
  9
  11
  14
  17
  20
  23
  26
  30
  34
  38
  42
  46
  51
  55
  60
  65
  70
  76
  81
  87
  93
  100
  106
  113
  121
  128
Retained Cash Flow (-), $m
  2
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
Prev. year cash balance distribution, $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 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
 
  0
  1
  1
  1
  3
  5
  8
  10
  13
  16
  19
  22
  25
  29
  32
  36
  40
  45
  49
  54
  58
  63
  69
  74
  79
  85
  91
  98
  104
  111
Discount rate, %
 
  9.00
  9.45
  9.92
  10.42
  10.94
  11.49
  12.06
  12.66
  13.30
  13.96
  14.66
  15.39
  16.16
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.74
  23.88
  25.07
  26.33
  27.64
  29.03
  30.48
  32.00
  33.60
  35.28
  37.05
PV of cash for distribution, $m
 
  0
  1
  1
  1
  2
  3
  3
  4
  4
  4
  4
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  88.6
  82.7
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5

Command Security Corporation is a security services company. The Company provides uniformed security officers and aviation security services to commercial, financial, industrial, aviation and Governmental customers throughout the United States. The Company provides security services to its customers through Command Security, its security division, and aviation security services through its Aviation Safeguards division. The Company's security services division provides security services to Governmental, quasi-Governmental and financial institutions, healthcare facilities, colleges and universities, residential communities, commercial real estate, industrial, distribution, logistics and retail customers. The Company's Aviation Safeguards provides aviation security services and passenger assistance services to over 50 domestic and international airlines, airports, airport authorities and the general aviation community at approximately nine international airports.

FINANCIAL RATIOS  of  Command Security (MOC)

Valuation Ratios
P/E Ratio -14.9
Price to Sales 0.2
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow -5
Price to Free Cash Flow -5
Growth Rates
Sales Growth Rate 21.8%
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 0
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 81.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -5.1%
Ret/ On Assets - 3 Yr. Avg. -3.6%
Return On Total Capital -7.4%
Ret/ On T. Cap. - 3 Yr. Avg. -5.1%
Return On Equity -11.8%
Return On Equity - 3 Yr. Avg. -7.4%
Asset Turnover 4.2
Profitability Ratios
Gross Margin 11.1%
Gross Margin - 3 Yr. Avg. 12%
EBITDA Margin -1.2%
EBITDA Margin - 3 Yr. Avg. -0.4%
Operating Margin -1.2%
Oper. Margin - 3 Yr. Avg. -0.9%
Pre-Tax Margin -1.2%
Pre-Tax Margin - 3 Yr. Avg. -0.9%
Net Profit Margin -1.2%
Net Profit Margin - 3 Yr. Avg. -0.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 25%
Payout Ratio 0%

MOC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MOC stock intrinsic value calculation we used $162 million for the last fiscal year's total revenue generated by Command Security. The default revenue input number comes from 2017 income statement of Command Security. 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 MOC 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 9%, whose default value for MOC is calculated based on our internal credit rating of Command Security, 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 Command Security.
    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 MOC stock the variable cost ratio is equal to 93.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13 million in the base year in the intrinsic value calculation for MOC 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 Command Security.

Corporate tax rate of 27% is the nominal tax rate for Command Security. 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 MOC 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 MOC are equal to 0.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Command Security 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 MOC is equal to 13%. 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 Command Security - 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 9.794 million for Command Security 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 Command Security at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
ABM ABM Industries 37.36 26.93  sell

COMPANY NEWS

▶ Command Security Corporation Announces $50M Contract Award   [May-16-17 08:00AM  GlobeNewswire]
▶ Command Security Corporation Announces $80M Contract Award   [May-02-17 08:00AM  GlobeNewswire]
▶ Here's Why Command Security (MOC) Stock Gained 29% Today   [Jun-06-16 04:51PM  TheStreet.com]
▶ Heres Why These Five Stocks Are Surging Today   [11:21AM  Insider Monkey]
▶ Heres Why These Five Stocks Are Surging Today   [11:21AM  at Insider Monkey]
▶ 10-Q for Command Security Corp.   [Aug-09  08:13PM  at Company Spotlight]
▶ JFK, La Guardia Airport Workers Call Off Job Action   [01:39PM  at The Wall Street Journal]
▶ Airport Workers to go on Strike at LGA and JFK   [10:22AM  at Fox Business]
▶ 10-K for Command Security Corp.   [Jun-28  08:09PM  at Company Spotlight]
▶ 10-Q for Command Security Corp.   [Feb-19  07:07PM  Company Spotlight]
▶ 10-Q for Command Security Corp.   [Nov-14  07:09PM  Company Spotlight]
▶ COMMAND SECURITY CORP Files SEC form 10-K, Annual Report   [Jun-16  04:32PM  EDGAR Online]
▶ TASER Gets $5.8M Foreign Orders   [Dec-11  04:20PM  Zacks]
▶ Command Security Announces Contract Award   [Oct-21  04:55PM  Business Wire]
Financial statements of MOC
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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