Intrinsic value of SITO Mobile - SITO

Previous Close

$7.31

  Intrinsic Value

$0.13

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  Rating & Target

str. sell

-98%

Previous close

$7.31

 
Intrinsic value

$0.13

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of SITO 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, %
  314.29
  37.50
  34.25
  31.33
  28.69
  26.32
  24.19
  22.27
  20.54
  18.99
  17.59
  16.33
  15.20
  14.18
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
Revenue, $m
  29
  40
  54
  70
  90
  114
  142
  174
  209
  249
  293
  341
  392
  448
  507
  570
  637
  707
  781
  858
  939
  1,023
  1,110
  1,201
  1,296
  1,394
  1,497
  1,603
  1,713
  1,828
  1,947
Variable operating expenses, $m
 
  40
  53
  69
  89
  113
  140
  171
  205
  244
  287
  333
  384
  439
  497
  559
  624
  693
  765
  840
  919
  1,002
  1,087
  1,176
  1,269
  1,366
  1,466
  1,570
  1,678
  1,790
  1,907
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
  31
  40
  53
  69
  89
  113
  140
  171
  205
  244
  287
  333
  384
  439
  497
  559
  624
  693
  765
  840
  919
  1,002
  1,087
  1,176
  1,269
  1,366
  1,466
  1,570
  1,678
  1,790
  1,907
Operating income, $m
  -1
  0
  1
  1
  1
  2
  2
  3
  4
  5
  5
  7
  8
  9
  10
  12
  13
  15
  16
  18
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
EBITDA, $m
  0
  1
  2
  3
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  18
  21
  23
  26
  28
  31
  34
  37
  40
  44
  47
  51
  54
  58
  62
  66
  71
Interest expense (income), $m
  1
  1
  1
  2
  2
  3
  4
  5
  7
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  36
  40
  43
  47
  51
  55
  59
  64
  68
  73
  78
Earnings before tax, $m
  -3
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38
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
  -1
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9
  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
  30
  29
  39
  51
  66
  83
  103
  126
  151
  180
  212
  247
  284
  324
  367
  413
  461
  512
  566
  621
  680
  741
  804
  870
  938
  1,010
  1,084
  1,161
  1,241
  1,324
  1,410
Adjusted assets (=assets-cash), $m
  21
  29
  39
  51
  66
  83
  103
  126
  151
  180
  212
  247
  284
  324
  367
  413
  461
  512
  566
  621
  680
  741
  804
  870
  938
  1,010
  1,084
  1,161
  1,241
  1,324
  1,410
Revenue / Adjusted assets
  1.381
  1.379
  1.385
  1.373
  1.364
  1.373
  1.379
  1.381
  1.384
  1.383
  1.382
  1.381
  1.380
  1.383
  1.381
  1.380
  1.382
  1.381
  1.380
  1.382
  1.381
  1.381
  1.381
  1.380
  1.382
  1.380
  1.381
  1.381
  1.380
  1.381
  1.381
Average production assets, $m
  5
  7
  9
  12
  16
  20
  24
  30
  36
  43
  50
  59
  67
  77
  87
  98
  110
  122
  134
  148
  161
  176
  191
  207
  223
  240
  257
  276
  295
  314
  335
Working capital, $m
  10
  6
  7
  10
  12
  16
  20
  24
  29
  34
  40
  47
  54
  62
  70
  79
  88
  98
  108
  118
  130
  141
  153
  166
  179
  192
  207
  221
  236
  252
  269
Total debt, $m
  7
  8
  12
  18
  25
  33
  43
  54
  66
  80
  95
  111
  129
  148
  169
  191
  214
  238
  263
  290
  318
  347
  377
  408
  441
  475
  510
  546
  585
  624
  665
Total liabilities, $m
  13
  14
  18
  24
  31
  39
  49
  60
  72
  86
  101
  117
  135
  154
  175
  197
  220
  244
  269
  296
  324
  353
  383
  414
  447
  481
  516
  552
  591
  630
  671
Total equity, $m
  17
  15
  20
  27
  34
  43
  54
  66
  79
  94
  111
  129
  149
  170
  192
  216
  242
  268
  296
  326
  356
  388
  421
  456
  492
  529
  568
  608
  650
  694
  739
Total liabilities and equity, $m
  30
  29
  38
  51
  65
  82
  103
  126
  151
  180
  212
  246
  284
  324
  367
  413
  462
  512
  565
  622
  680
  741
  804
  870
  939
  1,010
  1,084
  1,160
  1,241
  1,324
  1,410
Debt-to-equity ratio
  0.412
  0.510
  0.610
  0.680
  0.730
  0.770
  0.800
  0.820
  0.830
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.880
  0.880
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
Adjusted equity ratio
  0.381
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  27
  29
  30
Funds from operations, $m
  -5
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
Change in working capital, $m
  -4
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
Cash from operations, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
Maintenance CAPEX, $m
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -29
New CAPEX, $m
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
Cash from investing activities, $m
  -2
  -2
  -3
  -4
  -4
  -5
  -7
  -7
  -9
  -10
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -41
  -44
  -47
  -50
Free cash flow, $m
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -35
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -73
Issuance/(repayment) of debt, $m
  -2
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  16
  18
  19
  20
  22
  23
  24
  25
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
Issuance/(repurchase) of shares, $m
  13
  4
  6
  7
  9
  10
  12
  14
  17
  19
  21
  23
  25
  28
  31
  33
  36
  39
  42
  44
  47
  50
  54
  57
  60
  64
  67
  71
  75
  79
  83
Cash from financing (excl. dividends), $m  
  9
  8
  11
  13
  16
  18
  22
  25
  29
  33
  36
  39
  43
  47
  51
  55
  59
  63
  67
  71
  75
  79
  84
  88
  93
  98
  102
  108
  113
  119
  124
Total cash flow (excl. dividends), $m
  6
  5
  6
  8
  9
  11
  12
  14
  16
  18
  19
  21
  22
  24
  26
  27
  29
  30
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  51
Retained Cash Flow (-), $m
  -12
  -4
  -6
  -7
  -9
  -10
  -12
  -14
  -17
  -19
  -21
  -23
  -25
  -28
  -31
  -33
  -36
  -39
  -42
  -44
  -47
  -50
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
Prev. year cash balance distribution, $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
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
 
  7
  1
  1
  1
  0
  0
  0
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -11
  -13
  -14
  -16
  -18
  -19
  -21
  -23
  -25
  -27
  -29
  -32
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
 
  7
  1
  1
  1
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  95.9
  92.3
  89.0
  86.0
  83.3
  80.9
  78.7
  76.6
  74.7
  73.0
  71.4
  70.0
  68.6
  67.3
  66.1
  65.0
  63.9
  62.8
  61.9
  60.9
  60.0
  59.2
  58.3
  57.5
  56.7
  56.0
  55.2
  54.5
  53.8
  53.2

SITO Mobile, Ltd. operates a mobile location-based advertising platform serving businesses, advertisers and brands. The Company's offerings include SITO Location-Based Advertising and SITO Mobile Messaging. SITO Location-Based Advertising delivers display advertisements and videos on behalf of advertisers, including various features, such as Geo-fencing, Verified walk-in, Behavioral Targeting, and Analytics and Optimization. Geo-fencing targets customers within a certain radius of location and uses technology to push coupons, advertisements and promotions to mobile applications. Verified Walk-in tracks foot-traffic to locations and which advertisements drive action. Behavioral Targeting tracks past behaviors over 30 to 90 day increments allowing for real-time campaign management. Analytics and Optimization is a culling and building measurement system. SITO Mobile Messaging is a platform for building and controlling programs, including messaging and customer incentive programs.

FINANCIAL RATIOS  of  SITO Mobile (SITO)

Valuation Ratios
P/E Ratio -151.2
Price to Sales 5.2
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow -151.2
Price to Free Cash Flow -75.6
Growth Rates
Sales Growth Rate 314.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 23.5%
Total Debt to Equity 41.2%
Interest Coverage -2
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. -9.2%
Return On Total Capital -5.3%
Ret/ On T. Cap. - 3 Yr. Avg. -17.6%
Return On Equity -9.1%
Return On Equity - 3 Yr. Avg. -44.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 55.2%
Gross Margin - 3 Yr. Avg. 56.2%
EBITDA Margin -3.4%
EBITDA Margin - 3 Yr. Avg. -7.4%
Operating Margin -6.9%
Oper. Margin - 3 Yr. Avg. -8.5%
Pre-Tax Margin -10.3%
Pre-Tax Margin - 3 Yr. Avg. -13.9%
Net Profit Margin -3.4%
Net Profit Margin - 3 Yr. Avg. -11.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SITO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SITO stock intrinsic value calculation we used $29 million for the last fiscal year's total revenue generated by SITO Mobile. The default revenue input number comes from 2016 income statement of SITO Mobile. 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 SITO stock valuation model: a) initial revenue growth rate of 37.5% 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 SITO is calculated based on our internal credit rating of SITO Mobile, 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 SITO Mobile.
    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 SITO stock the variable cost ratio is equal to 100%.

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 SITO 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 12.5% for SITO Mobile.

Corporate tax rate of 27% is the nominal tax rate for SITO Mobile. 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 SITO 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 SITO are equal to 17.2%.

Life of production assets of 11 years is the average useful life of capital assets used in SITO Mobile 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 SITO is equal to 13.8%. 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 - $17 million for SITO Mobile - 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 21.907 million for SITO Mobile 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 SITO Mobile at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ SITO Mobile Names Chet Petrow Chief Revenue Officer   [Aug-07-17 04:05PM  GlobeNewswire]
▶ SITO Mobile Issues Letter to Shareholders   [Jul-26-17 09:23AM  GlobeNewswire]
▶ SITO Announces $6.0 Million Registered Direct Offering   [Jul-24-17 09:05AM  GlobeNewswire]
▶ ETFs with exposure to SITO Mobile Ltd. : July 7, 2017   [Jul-07-17 03:30PM  Capital Cube]
▶ ETFs with exposure to SITO Mobile Ltd. : June 26, 2017   [Jun-26-17 04:55PM  Capital Cube]
▶ ETFs with exposure to SITO Mobile Ltd. : June 16, 2017   [Jun-16-17 04:19PM  Capital Cube]
▶ SITO Mobile Announces Changes to Board and Management Team   [Jun-05-17 09:15AM  GlobeNewswire]
▶ SITO Mobile Issues Open Letter to Stockholders   [May-17-17 08:30AM  GlobeNewswire]
▶ SITO Mobile Sends Letter to Stockholders   [May-12-17 08:30AM  GlobeNewswire]
▶ SITO Mobile Issues Letter To Stockholders   [May-04-17 02:14PM  GlobeNewswire]
▶ ETFs with exposure to SITO Mobile Ltd. : April 28, 2017   [Apr-28-17 04:15PM  Capital Cube]
▶ SITO Mobile Announces More Senior Leadership Promotions   [Apr-26-17 08:30AM  GlobeNewswire]
▶ SITO Mobile Adds Lowell W. Robinson to Board of Directors   [Apr-19-17 04:05PM  Business Wire]
▶ SITO Mobile Announces Departure of CEO   [Feb-21-17 08:30AM  GlobeNewswire]
Financial statements of SITO
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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