Intrinsic value of Vasco Data Security International - VDSI

Previous Close

$12.25

  Intrinsic Value

$52.66

stock screener

  Rating & Target

str. buy

+330%

Previous close

$12.25

 
Intrinsic value

$52.66

 
Up/down potential

+330%

 
Rating

str. buy

We calculate the intrinsic value of VDSI 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -20.33
  15.90
  14.81
  13.83
  12.95
  12.15
  11.44
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
Revenue, $m
  192
  223
  255
  291
  328
  368
  411
  455
  501
  550
  601
  653
  708
  766
  825
  887
  951
  1,018
  1,087
  1,160
  1,235
  1,313
  1,394
  1,479
  1,567
  1,659
  1,755
  1,855
  1,959
  2,069
  2,183
Variable operating expenses, $m
 
  35
  39
  44
  49
  54
  60
  66
  72
  78
  85
  87
  94
  102
  110
  118
  126
  135
  144
  154
  164
  174
  185
  196
  208
  220
  233
  246
  260
  275
  290
Fixed operating expenses, $m
 
  160
  164
  168
  172
  176
  181
  185
  190
  195
  200
  205
  210
  215
  220
  226
  232
  237
  243
  249
  256
  262
  269
  275
  282
  289
  296
  304
  311
  319
  327
Total operating expenses, $m
  183
  195
  203
  212
  221
  230
  241
  251
  262
  273
  285
  292
  304
  317
  330
  344
  358
  372
  387
  403
  420
  436
  454
  471
  490
  509
  529
  550
  571
  594
  617
Operating income, $m
  10
  28
  52
  79
  107
  138
  170
  204
  239
  277
  316
  362
  404
  449
  495
  543
  593
  645
  700
  756
  815
  876
  940
  1,007
  1,077
  1,149
  1,225
  1,305
  1,388
  1,474
  1,565
EBITDA, $m
  21
  38
  64
  91
  120
  152
  185
  220
  256
  295
  335
  377
  421
  467
  514
  564
  615
  669
  725
  783
  844
  907
  973
  1,041
  1,113
  1,188
  1,266
  1,348
  1,433
  1,523
  1,616
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
Earnings before tax, $m
  11
  28
  52
  78
  106
  136
  167
  201
  236
  273
  311
  357
  399
  442
  488
  535
  584
  636
  689
  745
  803
  863
  926
  992
  1,060
  1,132
  1,206
  1,285
  1,366
  1,452
  1,541
Tax expense, $m
  0
  7
  14
  21
  29
  37
  45
  54
  64
  74
  84
  96
  108
  119
  132
  144
  158
  172
  186
  201
  217
  233
  250
  268
  286
  306
  326
  347
  369
  392
  416
Net income, $m
  11
  20
  38
  57
  77
  99
  122
  147
  172
  199
  227
  260
  291
  323
  356
  391
  427
  464
  503
  544
  586
  630
  676
  724
  774
  826
  881
  938
  997
  1,060
  1,125

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  144
  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
  327
  212
  244
  277
  313
  351
  391
  434
  478
  524
  573
  623
  675
  730
  787
  846
  907
  970
  1,037
  1,105
  1,177
  1,251
  1,329
  1,410
  1,494
  1,581
  1,673
  1,768
  1,868
  1,972
  2,081
Adjusted assets (=assets-cash), $m
  183
  212
  244
  277
  313
  351
  391
  434
  478
  524
  573
  623
  675
  730
  787
  846
  907
  970
  1,037
  1,105
  1,177
  1,251
  1,329
  1,410
  1,494
  1,581
  1,673
  1,768
  1,868
  1,972
  2,081
Revenue / Adjusted assets
  1.049
  1.052
  1.045
  1.051
  1.048
  1.048
  1.051
  1.048
  1.048
  1.050
  1.049
  1.048
  1.049
  1.049
  1.048
  1.048
  1.049
  1.049
  1.048
  1.050
  1.049
  1.050
  1.049
  1.049
  1.049
  1.049
  1.049
  1.049
  1.049
  1.049
  1.049
Average production assets, $m
  46
  53
  61
  70
  79
  88
  99
  109
  120
  132
  144
  157
  170
  184
  198
  213
  228
  244
  261
  278
  296
  315
  335
  355
  376
  398
  421
  445
  470
  496
  524
Working capital, $m
  139
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
Total debt, $m
  0
  11
  23
  36
  50
  64
  80
  96
  113
  131
  149
  169
  189
  210
  231
  254
  277
  302
  327
  353
  381
  409
  439
  470
  502
  536
  571
  607
  645
  685
  727
Total liabilities, $m
  71
  81
  93
  106
  120
  134
  150
  166
  183
  201
  219
  239
  259
  280
  301
  324
  347
  372
  397
  423
  451
  479
  509
  540
  572
  606
  641
  677
  715
  755
  797
Total equity, $m
  257
  131
  150
  171
  193
  217
  241
  268
  295
  323
  353
  384
  417
  450
  485
  522
  560
  599
  640
  682
  726
  772
  820
  870
  922
  976
  1,032
  1,091
  1,152
  1,217
  1,284
Total liabilities and equity, $m
  328
  212
  243
  277
  313
  351
  391
  434
  478
  524
  572
  623
  676
  730
  786
  846
  907
  971
  1,037
  1,105
  1,177
  1,251
  1,329
  1,410
  1,494
  1,582
  1,673
  1,768
  1,867
  1,972
  2,081
Debt-to-equity ratio
  0.000
  0.090
  0.150
  0.210
  0.260
  0.300
  0.330
  0.360
  0.380
  0.400
  0.420
  0.440
  0.450
  0.470
  0.480
  0.490
  0.500
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.540
  0.550
  0.550
  0.560
  0.560
  0.560
  0.570
Adjusted equity ratio
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  20
  38
  57
  77
  99
  122
  147
  172
  199
  227
  260
  291
  323
  356
  391
  427
  464
  503
  544
  586
  630
  676
  724
  774
  826
  881
  938
  997
  1,060
  1,125
Depreciation, amort., depletion, $m
  11
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  31
  32
  34
  37
  39
  41
  43
  46
  48
  51
Funds from operations, $m
  37
  31
  49
  69
  90
  113
  137
  163
  189
  217
  246
  276
  307
  341
  375
  411
  449
  488
  528
  571
  615
  661
  708
  758
  810
  865
  922
  981
  1,043
  1,108
  1,176
Change in working capital, $m
  9
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
Cash from operations, $m
  28
  32
  50
  70
  91
  114
  138
  164
  190
  218
  248
  277
  309
  342
  377
  413
  450
  490
  530
  573
  617
  663
  711
  761
  813
  867
  924
  984
  1,046
  1,111
  1,179
Maintenance CAPEX, $m
  0
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -32
  -34
  -37
  -39
  -41
  -43
  -46
  -48
New CAPEX, $m
  -2
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Cash from investing activities, $m
  -57
  -11
  -13
  -14
  -16
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -28
  -31
  -32
  -34
  -36
  -38
  -41
  -42
  -45
  -48
  -51
  -52
  -55
  -59
  -62
  -65
  -68
  -72
  -75
Free cash flow, $m
  -29
  20
  37
  56
  76
  97
  120
  143
  169
  195
  223
  250
  280
  312
  345
  379
  414
  451
  490
  530
  572
  615
  660
  708
  757
  809
  862
  919
  978
  1,039
  1,103
Issuance/(repayment) of debt, $m
  0
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -1
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
Total cash flow (excl. dividends), $m
  -29
  31
  49
  68
  89
  111
  135
  160
  186
  213
  241
  270
  301
  333
  366
  401
  438
  476
  515
  556
  599
  644
  690
  739
  789
  842
  897
  955
  1,016
  1,079
  1,145
Retained Cash Flow (-), $m
  -9
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
Prev. year cash balance distribution, $m
 
  144
  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
 
  157
  30
  48
  67
  88
  110
  134
  158
  184
  212
  239
  268
  299
  331
  365
  400
  436
  474
  514
  555
  598
  642
  689
  737
  788
  841
  896
  954
  1,015
  1,078
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
 
  151
  27
  42
  55
  68
  80
  90
  99
  106
  111
  113
  114
  114
  111
  107
  102
  95
  87
  79
  71
  62
  53
  45
  38
  31
  25
  19
  15
  11
  8
Current shareholders' claim on cash, %
  100
  100.0
  100.0
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VASCO Data Security International, Inc. designs, develops and markets digital solutions for identity, security and business productivity that protect and facilitate transactions online, via mobile devices, and in-person. The Company provides anti-fraud and digital transaction management solutions to financial institutions and other businesses. Its solutions secure access to data, assets, and applications for global enterprises; provide tools for application developers to easily integrate security functions into their Web-based and mobile applications, and facilitate digital transactions involving the signing, sending, and managing of documents. It also provides tools for application developers to integrate security functions into their Web-based and mobile applications. It facilitates digital transactions involving the signing, sending and managing of documents. Its security solutions include both open standards-based and solutions.

FINANCIAL RATIOS  of  Vasco Data Security International (VDSI)

Valuation Ratios
P/E Ratio 44.7
Price to Sales 2.6
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 17.5
Price to Free Cash Flow 18.9
Growth Rates
Sales Growth Rate -20.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 13.4%
Return On Equity 4.4%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 68.2%
Gross Margin - 3 Yr. Avg. 63.5%
EBITDA Margin 11.5%
EBITDA Margin - 3 Yr. Avg. 19%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 14.9%
Pre-Tax Margin 5.7%
Pre-Tax Margin - 3 Yr. Avg. 15.2%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 13.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 10.3%
Payout Ratio 0%

VDSI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VDSI stock intrinsic value calculation we used $192 million for the last fiscal year's total revenue generated by Vasco Data Security International. The default revenue input number comes from 2016 income statement of Vasco Data Security International. 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 VDSI stock valuation model: a) initial revenue growth rate of 15.9% 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 VDSI is calculated based on our internal credit rating of Vasco Data Security International, 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 Vasco Data Security International.
    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 VDSI stock the variable cost ratio is equal to 16.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $156 million in the base year in the intrinsic value calculation for VDSI 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 Vasco Data Security International.

Corporate tax rate of 27% is the nominal tax rate for Vasco Data Security International. 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 VDSI 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 VDSI are equal to 24%.

Life of production assets of 10.3 years is the average useful life of capital assets used in Vasco Data Security International 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 VDSI is equal to -2.6%. 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 - $257 million for Vasco Data Security International - 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 40.748 million for Vasco Data Security International 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 Vasco Data Security International at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Vasco reports 4Q loss   [Feb-21-18 05:00PM  Associated Press]
▶ VASCO Joins Cloud Security Alliance   [Dec-21-17 09:00AM  GlobeNewswire]
▶ VASCO Appoints Art Gilliland to Board of Directors   [Dec-14-17 11:00AM  GlobeNewswire]
▶ Correction: Earns-Vasco Data Security story   [Nov-02-17 09:43AM  Associated Press]
▶ Vasco posts 2Q profit   [Jul-28-17 03:04PM  Associated Press]
▶ VASCO Names Scott Clements Chief Executive Officer   [Jul-27-17 04:07PM  GlobeNewswire]
▶ Vasco posts 1Q profit   [Apr-27-17 06:08PM  Associated Press]
▶ VASCO Reports Results for First Quarter 2017   [04:05PM  GlobeNewswire]
▶ Pass On Wal-Mart After Earnings   [Feb-21-17 10:02AM  at Investopedia]
▶ Why VASCO Data Security International Shares Plunged Today   [Feb-15-17 01:35PM  at Motley Fool]
▶ Vasco posts 4Q profit   [Feb-14-17 05:07PM  AP]
▶ VASCO Announces Participation in Upcoming Conferences   [Jan-04-17 08:00AM  GlobeNewswire]
Financial statements of VDSI
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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