Intrinsic value of Pointer Telocation - PNTR

Previous Close

$17.45

  Intrinsic Value

$26.88

stock screener

  Rating & Target

str. buy

+54%

  Value-price divergence*

+254%

Previous close

$17.45

 
Intrinsic value

$26.88

 
Up/down potential

+54%

 
Rating

str. buy

 
Value-price divergence*

+254%

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

We calculate the intrinsic value of PNTR 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, %
  4.92
  25.00
  23.00
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
Revenue, $m
  64
  80
  98
  119
  143
  168
  197
  228
  261
  296
  334
  374
  416
  460
  507
  555
  606
  659
  714
  771
  830
  892
  956
  1,022
  1,092
  1,164
  1,239
  1,316
  1,398
  1,482
  1,570
Variable operating expenses, $m
 
  72
  87
  105
  125
  146
  170
  196
  224
  255
  286
  317
  352
  390
  429
  470
  513
  558
  604
  652
  703
  755
  809
  866
  924
  985
  1,049
  1,115
  1,183
  1,255
  1,329
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
  58
  72
  87
  105
  125
  146
  170
  196
  224
  255
  286
  317
  352
  390
  429
  470
  513
  558
  604
  652
  703
  755
  809
  866
  924
  985
  1,049
  1,115
  1,183
  1,255
  1,329
Operating income, $m
  6
  8
  11
  14
  18
  22
  26
  31
  36
  42
  47
  57
  64
  71
  78
  85
  93
  101
  109
  118
  127
  137
  147
  157
  167
  178
  190
  202
  214
  227
  241
EBITDA, $m
  9
  12
  15
  18
  22
  26
  30
  35
  40
  46
  52
  58
  64
  71
  78
  86
  94
  102
  110
  119
  128
  138
  148
  158
  169
  180
  192
  204
  216
  229
  243
Interest expense (income), $m
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  23
  25
  27
  29
  32
  34
  36
  38
  41
  44
  46
Earnings before tax, $m
  5
  8
  10
  13
  16
  19
  22
  26
  30
  35
  39
  48
  53
  59
  64
  70
  76
  83
  90
  97
  104
  111
  119
  127
  136
  145
  154
  163
  173
  184
  195
Tax expense, $m
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  13
  14
  16
  17
  19
  21
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
Net income, $m
  3
  6
  7
  9
  11
  14
  16
  19
  22
  25
  29
  35
  39
  43
  47
  51
  56
  61
  65
  71
  76
  81
  87
  93
  99
  106
  112
  119
  127
  134
  142

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6
  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
  77
  89
  109
  132
  158
  187
  218
  253
  289
  329
  371
  415
  462
  511
  562
  616
  672
  731
  792
  855
  921
  990
  1,061
  1,135
  1,212
  1,292
  1,375
  1,461
  1,551
  1,645
  1,743
Adjusted assets (=assets-cash), $m
  71
  89
  109
  132
  158
  187
  218
  253
  289
  329
  371
  415
  462
  511
  562
  616
  672
  731
  792
  855
  921
  990
  1,061
  1,135
  1,212
  1,292
  1,375
  1,461
  1,551
  1,645
  1,743
Revenue / Adjusted assets
  0.901
  0.899
  0.899
  0.902
  0.905
  0.898
  0.904
  0.901
  0.903
  0.900
  0.900
  0.901
  0.900
  0.900
  0.902
  0.901
  0.902
  0.902
  0.902
  0.902
  0.901
  0.901
  0.901
  0.900
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
  0.901
Average production assets, $m
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
Working capital, $m
  5
  5
  6
  8
  9
  11
  12
  14
  16
  19
  21
  24
  26
  29
  32
  35
  38
  41
  45
  49
  52
  56
  60
  64
  69
  73
  78
  83
  88
  93
  99
Total debt, $m
  15
  17
  26
  35
  46
  57
  70
  84
  99
  115
  132
  150
  169
  189
  210
  232
  255
  279
  304
  330
  357
  385
  414
  444
  475
  508
  542
  577
  614
  652
  692
Total liabilities, $m
  34
  36
  45
  54
  65
  76
  89
  103
  118
  134
  151
  169
  188
  208
  229
  251
  274
  298
  323
  349
  376
  404
  433
  463
  494
  527
  561
  596
  633
  671
  711
Total equity, $m
  43
  53
  65
  78
  94
  111
  129
  149
  171
  195
  219
  246
  273
  302
  333
  365
  398
  433
  469
  506
  545
  586
  628
  672
  717
  765
  814
  865
  918
  974
  1,032
Total liabilities and equity, $m
  77
  89
  110
  132
  159
  187
  218
  252
  289
  329
  370
  415
  461
  510
  562
  616
  672
  731
  792
  855
  921
  990
  1,061
  1,135
  1,211
  1,292
  1,375
  1,461
  1,551
  1,645
  1,743
Debt-to-equity ratio
  0.349
  0.330
  0.400
  0.450
  0.490
  0.520
  0.540
  0.560
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.630
  0.640
  0.640
  0.650
  0.650
  0.650
  0.650
  0.660
  0.660
  0.660
  0.660
  0.660
  0.670
  0.670
  0.670
  0.670
  0.670
Adjusted equity ratio
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  6
  7
  9
  11
  14
  16
  19
  22
  25
  29
  35
  39
  43
  47
  51
  56
  61
  65
  71
  76
  81
  87
  93
  99
  106
  112
  119
  127
  134
  142
Depreciation, amort., depletion, $m
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
Funds from operations, $m
  9
  10
  11
  13
  15
  18
  20
  23
  26
  29
  33
  36
  39
  43
  48
  52
  57
  61
  66
  72
  77
  83
  88
  94
  101
  107
  114
  121
  128
  136
  144
Change in working capital, $m
  0
  1
  1
  1
  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
Cash from operations, $m
  9
  9
  10
  12
  14
  16
  19
  21
  24
  27
  31
  33
  37
  41
  45
  49
  53
  58
  63
  68
  73
  79
  84
  90
  96
  103
  109
  116
  123
  131
  139
Maintenance 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
  -2
  -2
  -2
  -2
  -2
New CAPEX, $m
  -4
  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
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  -12
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
Free cash flow, $m
  -3
  8
  10
  11
  13
  16
  18
  20
  23
  26
  30
  32
  36
  39
  43
  47
  52
  56
  61
  66
  71
  77
  82
  88
  94
  100
  107
  113
  120
  128
  135
Issuance/(repayment) of debt, $m
  2
  7
  8
  9
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
Issuance/(repurchase) of shares, $m
  0
  5
  5
  4
  4
  3
  2
  1
  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  
  0
  12
  13
  13
  15
  15
  15
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
Total cash flow (excl. dividends), $m
  -3
  20
  23
  25
  28
  30
  33
  36
  38
  42
  47
  50
  55
  59
  64
  69
  75
  80
  86
  92
  98
  104
  111
  118
  125
  133
  140
  149
  157
  166
  175
Retained Cash Flow (-), $m
  13
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -56
  -58
Prev. year cash balance distribution, $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
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
 
  11
  11
  12
  13
  13
  14
  15
  17
  19
  22
  24
  27
  30
  34
  38
  42
  46
  50
  54
  59
  64
  69
  74
  80
  85
  91
  97
  104
  110
  117
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
 
  10
  10
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  11
  11
  11
  10
  9
  8
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  96.6
  94.0
  92.0
  90.6
  89.7
  89.1
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9
  88.9

Pointer Telocation Ltd. is a provider of mobile resource management (MRM) products and services for the automotive, insurance industries and other mobile tracking markets, such as cargo, assets, shipping and containers. The Company offers roadside assistance (RSA) services, automobile repair and towing services, stolen vehicle recovery (SVR) and other services. The Company operates through three segments: Cellocator, MRM and RSA. The Cellocator segment designs, develops and produces MRM products that include asset tracking, fleet management and security products. Through the MRM segment, the Company acts as an operator in Israel, Brazil, Argentina, Mexico and South Africa by bundling its products together with a range of MRM services, including fleet management, asset tracking services and SVR services. Through the RSA segment, the Company provides RSA services, emergency repair services for sale to automotive and insurance companies and car sharing services.

FINANCIAL RATIOS  of  Pointer Telocation (PNTR)

Valuation Ratios
P/E Ratio 45.8
Price to Sales 2.1
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 15.3
Price to Free Cash Flow 27.5
Growth Rates
Sales Growth Rate 4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -4.4%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 23.3%
Total Debt to Equity 34.9%
Interest Coverage 6
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 9.1%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.8%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 13.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 48.2%
EBITDA Margin 14.1%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 7.8%
Pre-Tax Margin - 3 Yr. Avg. 7.9%
Net Profit Margin 4.7%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 40%
Eff/ Tax Rate - 3 Yr. Avg. -33.3%
Payout Ratio 0%

PNTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PNTR stock intrinsic value calculation we used $64 million for the last fiscal year's total revenue generated by Pointer Telocation. The default revenue input number comes from 2016 income statement of Pointer Telocation. 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 PNTR stock valuation model: a) initial revenue growth rate of 25% 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 PNTR is calculated based on our internal credit rating of Pointer Telocation, 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 Pointer Telocation.
    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 PNTR stock the variable cost ratio is equal to 90.6%.

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 PNTR 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 7.1% for Pointer Telocation.

Corporate tax rate of 27% is the nominal tax rate for Pointer Telocation. 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 PNTR 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 PNTR are equal to 1.6%.

Life of production assets of 11.8 years is the average useful life of capital assets used in Pointer Telocation 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 PNTR is equal to 6.3%. 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 - $43 million for Pointer Telocation - 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 8.063 million for Pointer Telocation 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 Pointer Telocation at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
ITRN Ituran Locatio 36.75 44.48  buy
R Ryder System 79.61 48.07  sell
HUBG Hub Group Cl A 38.60 102.43  str.buy
JBHT J.B. Hunt Tran 101.64 71.03  sell
MIXT MiX Telematics 10.00 6.88  sell
CAMP CalAmp 23.05 15.44  hold

COMPANY NEWS

▶ Pointer Telocation to Present at Upcoming Conferences   [Aug-31-17 12:20PM  PR Newswire]
▶ Pointer Telocation to Present at Upcoming Conferences   [Aug-25-16 06:36AM  PR Newswire]
▶ Pointer Completes Spin-off of Shagrir   [Jun-29-16 10:26AM  PR Newswire]
▶ Pointer Telocation Announces Death of Director   [Dec-01  06:00AM  PR Newswire]
▶ Pointer Telocation Reports Q2 2015 Financial Results   [Aug-13  08:45AM  PR Newswire]
▶ Pointer Telocation Reports Q1 2015 Financial Results   [May-12  07:10AM  PR Newswire]
Financial statements of PNTR
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.