Intrinsic value of Quotient Technology - QUOT

Previous Close

$14.30

  Intrinsic Value

$4.25

stock screener

  Rating & Target

str. sell

-70%

  Value-price divergence*

+10%

Previous close

$14.30

 
Intrinsic value

$4.25

 
Up/down potential

-70%

 
Rating

str. sell

 
Value-price divergence*

+10%

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

We calculate the intrinsic value of QUOT 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 1.2

 

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, %
  16.03
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  275
  304
  335
  367
  400
  435
  471
  508
  547
  588
  630
  674
  719
  767
  816
  867
  920
  976
  1,034
  1,094
  1,157
  1,223
  1,292
  1,363
  1,438
  1,517
  1,599
  1,684
  1,774
  1,868
  1,966
Variable operating expenses, $m
 
  208
  228
  249
  272
  295
  319
  344
  370
  397
  425
  450
  480
  512
  545
  579
  615
  652
  691
  731
  773
  817
  863
  911
  961
  1,013
  1,068
  1,125
  1,185
  1,248
  1,313
Fixed operating expenses, $m
 
  113
  116
  118
  121
  124
  128
  131
  134
  137
  141
  144
  148
  152
  155
  159
  163
  167
  172
  176
  180
  185
  189
  194
  199
  204
  209
  214
  220
  225
  231
Total operating expenses, $m
  295
  321
  344
  367
  393
  419
  447
  475
  504
  534
  566
  594
  628
  664
  700
  738
  778
  819
  863
  907
  953
  1,002
  1,052
  1,105
  1,160
  1,217
  1,277
  1,339
  1,405
  1,473
  1,544
Operating income, $m
  -20
  -16
  -9
  -1
  7
  15
  24
  34
  43
  53
  64
  79
  91
  103
  115
  129
  142
  157
  172
  187
  204
  221
  239
  259
  279
  300
  322
  345
  369
  395
  422
EBITDA, $m
  3
  -6
  2
  10
  19
  28
  38
  48
  58
  69
  80
  92
  105
  118
  131
  145
  160
  175
  191
  208
  226
  245
  264
  285
  306
  329
  352
  377
  403
  431
  460
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
Earnings before tax, $m
  -19
  -16
  -9
  -2
  6
  15
  23
  32
  42
  52
  62
  77
  88
  100
  112
  125
  138
  152
  167
  183
  199
  216
  233
  252
  272
  292
  314
  336
  360
  385
  412
Tax expense, $m
  0
  0
  0
  0
  2
  4
  6
  9
  11
  14
  17
  21
  24
  27
  30
  34
  37
  41
  45
  49
  54
  58
  63
  68
  73
  79
  85
  91
  97
  104
  111
Net income, $m
  -19
  -16
  -9
  -2
  5
  11
  17
  24
  30
  38
  45
  56
  64
  73
  82
  91
  101
  111
  122
  133
  145
  157
  170
  184
  198
  213
  229
  246
  263
  281
  301

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  175
  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
  363
  208
  229
  251
  273
  297
  322
  347
  374
  402
  431
  461
  492
  524
  558
  593
  629
  667
  707
  748
  791
  836
  883
  932
  983
  1,037
  1,093
  1,151
  1,213
  1,277
  1,344
Adjusted assets (=assets-cash), $m
  188
  208
  229
  251
  273
  297
  322
  347
  374
  402
  431
  461
  492
  524
  558
  593
  629
  667
  707
  748
  791
  836
  883
  932
  983
  1,037
  1,093
  1,151
  1,213
  1,277
  1,344
Revenue / Adjusted assets
  1.463
  1.462
  1.463
  1.462
  1.465
  1.465
  1.463
  1.464
  1.463
  1.463
  1.462
  1.462
  1.461
  1.464
  1.462
  1.462
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.462
  1.463
  1.463
  1.463
  1.463
  1.462
  1.463
  1.463
Average production assets, $m
  53
  58
  64
  70
  76
  83
  90
  97
  105
  112
  120
  129
  137
  146
  156
  166
  176
  186
  197
  209
  221
  234
  247
  260
  275
  290
  305
  322
  339
  357
  376
Working capital, $m
  208
  36
  40
  44
  48
  52
  56
  61
  66
  71
  76
  81
  86
  92
  98
  104
  110
  117
  124
  131
  139
  147
  155
  164
  173
  182
  192
  202
  213
  224
  236
Total debt, $m
  0
  5
  11
  17
  23
  30
  36
  43
  50
  58
  66
  74
  82
  91
  100
  110
  120
  130
  141
  152
  163
  176
  188
  202
  215
  230
  245
  261
  278
  295
  313
Total liabilities, $m
  51
  56
  62
  68
  74
  81
  87
  94
  101
  109
  117
  125
  133
  142
  151
  161
  171
  181
  192
  203
  214
  227
  239
  253
  266
  281
  296
  312
  329
  346
  364
Total equity, $m
  312
  152
  167
  183
  199
  217
  235
  253
  273
  293
  314
  336
  358
  382
  407
  432
  459
  486
  515
  545
  577
  609
  644
  679
  717
  756
  797
  839
  884
  931
  980
Total liabilities and equity, $m
  363
  208
  229
  251
  273
  298
  322
  347
  374
  402
  431
  461
  491
  524
  558
  593
  630
  667
  707
  748
  791
  836
  883
  932
  983
  1,037
  1,093
  1,151
  1,213
  1,277
  1,344
Debt-to-equity ratio
  0.000
  0.040
  0.070
  0.090
  0.120
  0.140
  0.150
  0.170
  0.180
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
Adjusted equity ratio
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -19
  -16
  -9
  -2
  5
  11
  17
  24
  30
  38
  45
  56
  64
  73
  82
  91
  101
  111
  122
  133
  145
  157
  170
  184
  198
  213
  229
  246
  263
  281
  301
Depreciation, amort., depletion, $m
  23
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
Funds from operations, $m
  10
  -6
  2
  10
  17
  23
  30
  38
  45
  53
  62
  69
  78
  88
  98
  108
  119
  130
  142
  154
  167
  181
  195
  210
  226
  242
  260
  278
  297
  317
  338
Change in working capital, $m
  -12
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
Cash from operations, $m
  22
  -9
  -2
  6
  13
  19
  26
  33
  41
  48
  57
  64
  73
  82
  92
  102
  112
  123
  135
  147
  160
  173
  187
  201
  217
  233
  250
  267
  286
  306
  326
Maintenance CAPEX, $m
  0
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -31
  -32
  -34
  -36
New CAPEX, $m
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -51
  -11
  -12
  -12
  -13
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -39
  -40
  -42
  -45
  -47
  -49
  -52
  -55
Free cash flow, $m
  -29
  -20
  -14
  -6
  -1
  5
  11
  17
  23
  30
  37
  43
  51
  59
  68
  76
  86
  95
  105
  116
  127
  138
  150
  163
  176
  190
  205
  221
  237
  254
  272
Issuance/(repayment) of debt, $m
  0
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
Issuance/(repurchase) of shares, $m
  0
  31
  24
  17
  12
  7
  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
Cash from financing (excl. dividends), $m  
  0
  36
  30
  23
  18
  13
  8
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
Total cash flow (excl. dividends), $m
  -29
  16
  16
  17
  17
  18
  19
  24
  31
  38
  45
  52
  60
  68
  77
  86
  95
  105
  116
  127
  138
  150
  163
  176
  190
  205
  220
  236
  253
  271
  290
Retained Cash Flow (-), $m
  -47
  -31
  -24
  -17
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
Prev. year cash balance distribution, $m
 
  175
  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
 
  160
  -8
  -1
  1
  1
  1
  5
  11
  18
  24
  30
  37
  44
  52
  60
  69
  78
  87
  97
  107
  118
  129
  141
  153
  166
  179
  194
  209
  224
  241
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
 
  153
  -7
  0
  1
  1
  0
  4
  7
  10
  13
  14
  16
  17
  18
  18
  17
  17
  16
  15
  14
  12
  11
  9
  8
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  100
  94.6
  90.9
  88.6
  87.1
  86.4
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3

Quotient Technology Inc. provides digital platform that enables consumer packaged goods (CPGs) brands and retailers in the United States. The company offers digital coupons through its platform, which includes mobile, Web, and social channels, as well as CPGs, retailers, and publishers. Its CPGs customers comprise food, beverage, drug, personal, and household product manufacturers; and grocery, drug, dollar, club, and mass merchandise channel retailers, as well as clothing, electronics, home improvement, and other stores. The company was formerly known as Coupons.com Incorporated and changed its name to Quotient Technology Inc. in October 2015. Quotient Technology Inc. was founded in 1998 and is headquartered in Mountain View, California.

FINANCIAL RATIOS  of  Quotient Technology (QUOT)

Valuation Ratios
P/E Ratio -66.7
Price to Sales 4.6
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 57.6
Price to Free Cash Flow 79.2
Growth Rates
Sales Growth Rate 16%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -57.1%
Cap. Spend. - 3 Yr. Gr. Rate -15.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -5.6%
Ret/ On Assets - 3 Yr. Avg. -7.7%
Return On Total Capital -6.6%
Ret/ On T. Cap. - 3 Yr. Avg. -9.5%
Return On Equity -6.6%
Return On Equity - 3 Yr. Avg. -10%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 58.2%
Gross Margin - 3 Yr. Avg. 60.2%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. -1.8%
Operating Margin -7.3%
Oper. Margin - 3 Yr. Avg. -9.9%
Pre-Tax Margin -6.9%
Pre-Tax Margin - 3 Yr. Avg. -9.4%
Net Profit Margin -6.9%
Net Profit Margin - 3 Yr. Avg. -9.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -1.5%
Payout Ratio 0%

QUOT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QUOT stock intrinsic value calculation we used $275 million for the last fiscal year's total revenue generated by Quotient Technology. The default revenue input number comes from 2016 income statement of Quotient Technology. 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 QUOT stock valuation model: a) initial revenue growth rate of 10.6% 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 QUOT is calculated based on our internal credit rating of Quotient Technology, 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 Quotient Technology.
    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 QUOT stock the variable cost ratio is equal to 68.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $110 million in the base year in the intrinsic value calculation for QUOT 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 Quotient Technology.

Corporate tax rate of 27% is the nominal tax rate for Quotient Technology. 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 QUOT 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 QUOT are equal to 19.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Quotient Technology 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 QUOT is equal to 12%. 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 - $312 million for Quotient Technology - 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 85.837 million for Quotient Technology 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 Quotient Technology at the current share price and the inputted number of shares is $1.2 billion.

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COMPANY NEWS

▶ Quotient Tech reports 2Q loss   [Aug-01-17 11:13PM  Associated Press]
▶ Coupa Narrows Q1 Loss As Revenue Tops Estimates; Shares Rise   [Jun-05-17 04:46PM  Investor's Business Daily]
▶ Quotient Completes Acquisition of Crisp Media   [Jun-01-17 07:00AM  Business Wire]
▶ Quotient Helps Obtain Patent Win for Retailers   [May-25-17 07:00AM  Business Wire]
▶ Coupons.Com App Wins MediaPost Appy Award   [May-18-17 07:00AM  Business Wire]
▶ Quotient Tech reports 1Q loss   [May-02-17 06:45PM  Associated Press]
▶ Vetr Crowd Downgrades Coupa Following Offering   [Apr-13-17 12:08PM  Benzinga]
▶ Coupa Software Gears Up for Secondary Offering   [Apr-11-17 11:25AM  24/7 Wall St.]
▶ Coupons.com Unveils America's 25 Most Frugal Cities   [Mar-30-17 09:00AM  Business Wire]
▶ Why Coupa Software Stock Dropped 11% on Tuesday   [Mar-14-17 09:30PM  Motley Fool]
▶ Quotient Tech tops Street 4Q forecasts   [Feb-09-17 06:27PM  Associated Press]
▶ Is Quotient Technology Inc (QUOT) A Good Stock To Buy?   [Dec-14-16 01:42AM  at Insider Monkey]
▶ Quotient Launches Digital Coupons through Samsung Pay   [Sep-27-16 07:29PM  PR Newswire]
Financial statements of QUOT
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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