Intrinsic value of SP Plus - SP

Previous Close

$39.60

  Intrinsic Value

$33.85

stock screener

  Rating & Target

hold

-15%

Previous close

$39.60

 
Intrinsic value

$33.85

 
Up/down potential

-15%

 
Rating

hold

We calculate the intrinsic value of SP 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 0.9

 

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, %
  0.00
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  1,616
  1,664
  1,718
  1,776
  1,839
  1,907
  1,979
  2,057
  2,140
  2,229
  2,323
  2,423
  2,529
  2,641
  2,760
  2,885
  3,018
  3,157
  3,305
  3,460
  3,624
  3,796
  3,978
  4,169
  4,370
  4,581
  4,804
  5,038
  5,284
  5,542
  5,814
Variable operating expenses, $m
 
  1,623
  1,674
  1,729
  1,789
  1,853
  1,922
  1,996
  2,075
  2,159
  2,249
  2,300
  2,401
  2,507
  2,620
  2,739
  2,865
  2,997
  3,137
  3,285
  3,440
  3,604
  3,776
  3,957
  4,148
  4,349
  4,560
  4,782
  5,016
  5,261
  5,520
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
  1,563
  1,623
  1,674
  1,729
  1,789
  1,853
  1,922
  1,996
  2,075
  2,159
  2,249
  2,300
  2,401
  2,507
  2,620
  2,739
  2,865
  2,997
  3,137
  3,285
  3,440
  3,604
  3,776
  3,957
  4,148
  4,349
  4,560
  4,782
  5,016
  5,261
  5,520
Operating income, $m
  53
  41
  44
  47
  50
  54
  57
  61
  65
  70
  75
  123
  128
  134
  140
  146
  153
  160
  167
  175
  184
  192
  202
  211
  221
  232
  243
  255
  268
  281
  295
EBITDA, $m
  87
  93
  96
  99
  102
  106
  110
  115
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  212
  222
  232
  244
  255
  268
  281
  294
  309
  324
Interest expense (income), $m
  9
  8
  8
  9
  10
  10
  11
  12
  13
  14
  16
  17
  18
  19
  21
  22
  24
  26
  28
  30
  32
  34
  36
  38
  41
  44
  46
  49
  52
  55
  59
Earnings before tax, $m
  42
  34
  36
  38
  40
  43
  46
  49
  52
  55
  59
  106
  110
  114
  119
  124
  129
  134
  140
  146
  152
  159
  166
  173
  181
  189
  197
  206
  215
  225
  236
Tax expense, $m
  16
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
Net income, $m
  23
  25
  26
  28
  30
  31
  33
  36
  38
  40
  43
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  150
  157
  165
  172

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  22
  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
  779
  780
  805
  832
  861
  893
  927
  964
  1,003
  1,044
  1,088
  1,135
  1,185
  1,237
  1,293
  1,351
  1,413
  1,479
  1,548
  1,621
  1,697
  1,778
  1,863
  1,953
  2,047
  2,146
  2,250
  2,360
  2,475
  2,596
  2,723
Adjusted assets (=assets-cash), $m
  757
  780
  805
  832
  861
  893
  927
  964
  1,003
  1,044
  1,088
  1,135
  1,185
  1,237
  1,293
  1,351
  1,413
  1,479
  1,548
  1,621
  1,697
  1,778
  1,863
  1,953
  2,047
  2,146
  2,250
  2,360
  2,475
  2,596
  2,723
Revenue / Adjusted assets
  2.135
  2.133
  2.134
  2.135
  2.136
  2.135
  2.135
  2.134
  2.134
  2.135
  2.135
  2.135
  2.134
  2.135
  2.135
  2.135
  2.136
  2.135
  2.135
  2.134
  2.136
  2.135
  2.135
  2.135
  2.135
  2.135
  2.135
  2.135
  2.135
  2.135
  2.135
Average production assets, $m
  135
  140
  144
  149
  154
  160
  166
  173
  180
  187
  195
  204
  212
  222
  232
  242
  253
  265
  278
  291
  304
  319
  334
  350
  367
  385
  404
  423
  444
  466
  488
Working capital, $m
  -72
  -77
  -79
  -82
  -85
  -88
  -91
  -95
  -98
  -103
  -107
  -111
  -116
  -121
  -127
  -133
  -139
  -145
  -152
  -159
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -232
  -243
  -255
  -267
Total debt, $m
  195
  190
  206
  224
  243
  264
  286
  309
  335
  362
  390
  421
  453
  487
  523
  561
  601
  644
  689
  736
  786
  838
  893
  951
  1,012
  1,077
  1,144
  1,215
  1,290
  1,369
  1,451
Total liabilities, $m
  510
  506
  522
  540
  559
  580
  602
  625
  651
  678
  706
  737
  769
  803
  839
  877
  917
  960
  1,005
  1,052
  1,102
  1,154
  1,209
  1,267
  1,328
  1,393
  1,460
  1,531
  1,606
  1,685
  1,767
Total equity, $m
  268
  274
  282
  292
  302
  313
  325
  338
  352
  366
  382
  398
  416
  434
  454
  474
  496
  519
  543
  569
  596
  624
  654
  685
  718
  753
  790
  828
  869
  911
  956
Total liabilities and equity, $m
  778
  780
  804
  832
  861
  893
  927
  963
  1,003
  1,044
  1,088
  1,135
  1,185
  1,237
  1,293
  1,351
  1,413
  1,479
  1,548
  1,621
  1,698
  1,778
  1,863
  1,952
  2,046
  2,146
  2,250
  2,359
  2,475
  2,596
  2,723
Debt-to-equity ratio
  0.728
  0.690
  0.730
  0.770
  0.800
  0.840
  0.880
  0.910
  0.950
  0.990
  1.020
  1.060
  1.090
  1.120
  1.150
  1.180
  1.210
  1.240
  1.270
  1.290
  1.320
  1.340
  1.370
  1.390
  1.410
  1.430
  1.450
  1.470
  1.490
  1.500
  1.520
Adjusted equity ratio
  0.325
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  23
  25
  26
  28
  30
  31
  33
  36
  38
  40
  43
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  150
  157
  165
  172
Depreciation, amort., depletion, $m
  34
  52
  52
  52
  52
  53
  53
  54
  54
  54
  55
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
Funds from operations, $m
  59
  76
  78
  80
  82
  84
  87
  89
  92
  95
  98
  90
  93
  97
  101
  105
  109
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
Change in working capital, $m
  -1
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
Cash from operations, $m
  60
  78
  80
  83
  85
  87
  90
  93
  96
  99
  102
  94
  98
  102
  106
  111
  115
  120
  126
  131
  137
  143
  149
  156
  163
  171
  178
  187
  195
  204
  214
Maintenance CAPEX, $m
  0
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
New CAPEX, $m
  -17
  -5
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Cash from investing activities, $m
  -14
  -13
  -12
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -32
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
Free cash flow, $m
  46
  65
  67
  69
  71
  72
  74
  76
  78
  81
  83
  74
  77
  80
  83
  86
  90
  93
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
  149
  156
  163
Issuance/(repayment) of debt, $m
  -31
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
Issuance/(repurchase) of shares, $m
  -8
  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 from financing (excl. dividends), $m  
  -42
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
Total cash flow (excl. dividends), $m
  4
  80
  84
  87
  90
  93
  96
  100
  104
  108
  112
  104
  109
  114
  119
  124
  130
  136
  142
  148
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  246
Retained Cash Flow (-), $m
  -18
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -38
  -40
  -43
  -45
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
 
  75
  75
  77
  79
  82
  84
  87
  90
  93
  96
  88
  92
  95
  99
  104
  108
  113
  118
  123
  128
  134
  140
  147
  153
  160
  168
  175
  184
  192
  201
Discount rate, %
 
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
 
  71
  66
  64
  61
  58
  54
  51
  47
  43
  40
  32
  28
  25
  22
  19
  16
  14
  12
  9
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

SP Plus Corporation (SP Plus) is a provider of parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in the United States, Puerto Rico and Canada. The Company's segments include Region One (Urban), Region Two (Airport transportation), Region Three and Other. Region One (Urban) encompasses its services in healthcare facilities, municipalities, including government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as shuttle and transportation services, valet services, taxi and livery dispatch services. Region Two (Airport transportation) encompasses its services at all major airports, as well as ancillary services, which includes shuttle and transportation services and valet services. Region Three encompasses other operating segments, including USA Parking and event planning, including shuttle and transportation services.

FINANCIAL RATIOS  of  SP Plus (SP)

Valuation Ratios
P/E Ratio 38
Price to Sales 0.5
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 14.6
Price to Free Cash Flow 20.3
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30.8%
Cap. Spend. - 3 Yr. Gr. Rate 1.2%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 65.3%
Total Debt to Equity 72.8%
Interest Coverage 6
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 8.9%
Return On Equity - 3 Yr. Avg. 8.9%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 10.9%
Gross Margin - 3 Yr. Avg. 10.9%
EBITDA Margin 5.3%
EBITDA Margin - 3 Yr. Avg. 4.7%
Operating Margin 3.3%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 1.3%
Effective Tax Rate 38.1%
Eff/ Tax Rate - 3 Yr. Avg. 19.4%
Payout Ratio 0%

SP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SP stock intrinsic value calculation we used $1616 million for the last fiscal year's total revenue generated by SP Plus. The default revenue input number comes from 2016 income statement of SP Plus. 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 SP stock valuation model: a) initial revenue growth rate of 3% 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 6%, whose default value for SP is calculated based on our internal credit rating of SP Plus, 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 SP Plus.
    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 SP stock the variable cost ratio is equal to 97.6%.

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 SP 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 4.3% for SP Plus.

Corporate tax rate of 27% is the nominal tax rate for SP Plus. 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 SP 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 SP are equal to 8.4%.

Life of production assets of 16.6 years is the average useful life of capital assets used in SP Plus 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 SP is equal to -4.6%. 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 - $268 million for SP Plus - 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 22.507 million for SP Plus 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 SP Plus at the current share price and the inputted number of shares is $0.9 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ SP Plus: Not Sexy, but Plenty of Potential   [Dec-13-17 12:56PM  GuruFocus.com]
▶ ETFs with exposure to SP Plus Corp. : November 28, 2017   [Nov-28-17 01:11PM  Capital Cube]
▶ ETFs with exposure to SP Plus Corp. : November 16, 2017   [Nov-16-17 12:03PM  Capital Cube]
▶ SP Plus posts 3Q profit   [05:50AM  Associated Press]
▶ SP Plus posts 2Q profit   [Aug-01-17 06:06PM  Associated Press]
▶ SP Plus Corp. Value Analysis (NASDAQ:SP) : June 30, 2017   [Jun-30-17 04:07PM  Capital Cube]
▶ SP+ Elects Gregory A. Reid to Board of Directors   [May-11-17 09:08AM  GlobeNewswire]
▶ SP Plus posts 1Q profit   [May-02-17 07:07PM  Associated Press]
▶ Time to Buy or Sell Stocks and Real Estate?   [Apr-18-17 04:51PM  Zacks]
▶ Bet on 4 Stocks With Increasing Cash Flows   [Apr-13-17 08:40AM  Zacks]
▶ Why SP Plus (SP) Stock Might be a Great Pick   [Mar-22-17 08:43AM  Zacks]
▶ SP Plus Corporation Announces Date for 2017 Annual Meeting   [Mar-10-17 05:03PM  GlobeNewswire]
▶ SP+ Expands Hotel Parking Operations in D.C./Maryland   [Feb-15-17 05:50PM  GlobeNewswire]
▶ Is SP Plus Corp (SP) A Good Stock To Buy?   [Dec-12-16 02:33AM  at Insider Monkey]
Financial statements of SP
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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