Intrinsic value of Vicon Industries - VII

Previous Close

$0.57

  Intrinsic Value

$0.24

stock screener

  Rating & Target

str. sell

-58%

Previous close

$0.57

 
Intrinsic value

$0.24

 
Up/down potential

-58%

 
Rating

str. sell

We calculate the intrinsic value of VII 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 0.0

 

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, %
  -20.00
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  36
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113
  118
Variable operating expenses, $m
 
  8
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Fixed operating expenses, $m
 
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
  54
  55
  57
  58
  59
  61
  62
  64
  66
  67
  69
  71
  72
  74
  76
  78
  80
  82
  84
  86
Total operating expenses, $m
  49
  50
  51
  53
  54
  55
  57
  59
  60
  61
  63
  65
  67
  69
  71
  72
  75
  76
  79
  82
  83
  86
  89
  91
  94
  97
  100
  103
  106
  109
  112
Operating income, $m
  -13
  -13
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -14
  -14
  -13
  -13
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -5
  -3
  -2
  0
  2
  4
  6
EBITDA, $m
  -12
  -13
  -13
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -13
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -5
  -4
  -2
  0
  1
  3
  5
  8
Interest expense (income), $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
  1
  1
  1
  1
  1
  1
Earnings before tax, $m
  -13
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -5
  -4
  -2
  -1
  1
  3
  5
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
  1
  1
Net income, $m
  -13
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -5
  -4
  -2
  -1
  1
  2
  4

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  18
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  34
  36
  38
  40
  41
  43
  46
  48
  50
  52
Adjusted assets (=assets-cash), $m
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  34
  36
  38
  40
  41
  43
  46
  48
  50
  52
Revenue / Adjusted assets
  2.250
  2.313
  2.235
  2.294
  2.222
  2.278
  2.211
  2.316
  2.250
  2.238
  2.227
  2.318
  2.304
  2.292
  2.280
  2.308
  2.214
  2.241
  2.267
  2.219
  2.242
  2.294
  2.250
  2.237
  2.225
  2.268
  2.279
  2.217
  2.229
  2.260
  2.269
Average production assets, $m
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
Working capital, $m
  10
  8
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Total debt, $m
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
Total liabilities, $m
  10
  9
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
Total equity, $m
  9
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
Total liabilities and equity, $m
  19
  16
  16
  18
  18
  18
  19
  19
  20
  21
  21
  23
  23
  25
  25
  27
  28
  29
  30
  32
  33
  34
  36
  38
  39
  41
  43
  46
  48
  50
  52
Debt-to-equity ratio
  0.222
  0.300
  0.330
  0.350
  0.380
  0.400
  0.430
  0.460
  0.490
  0.510
  0.540
  0.570
  0.600
  0.630
  0.650
  0.680
  0.700
  0.730
  0.750
  0.780
  0.800
  0.820
  0.840
  0.860
  0.880
  0.900
  0.920
  0.930
  0.950
  0.960
  0.980
Adjusted equity ratio
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -5
  -4
  -2
  -1
  1
  2
  4
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
Funds from operations, $m
  -3
  -13
  -13
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -10
  -10
  -9
  -8
  -7
  -5
  -4
  -3
  -1
  1
  2
  4
  6
Change in working capital, $m
  1
  0
  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
  1
  1
  1
Cash from operations, $m
  -4
  -13
  -14
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -9
  -7
  -6
  -5
  -4
  -2
  0
  1
  3
  4
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
New CAPEX, $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
  -1
  -1
Cash from investing activities, $m
  1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -3
  -3
Free cash flow, $m
  -3
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -14
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -5
  -4
  -2
  -1
  1
  2
Issuance/(repayment) of debt, $m
  2
  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
  1
  1
  1
  1
  1
Issuance/(repurchase) of shares, $m
  0
  14
  14
  14
  15
  15
  15
  15
  15
  15
  15
  15
  15
  15
  14
  14
  13
  13
  12
  11
  10
  10
  9
  7
  6
  5
  3
  2
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2
  14
  14
  14
  15
  15
  15
  15
  15
  15
  15
  15
  16
  16
  15
  15
  14
  14
  13
  12
  11
  11
  10
  8
  7
  6
  4
  3
  1
  1
  1
Total cash flow (excl. dividends), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  3
Retained Cash Flow (-), $m
  12
  -14
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -13
  -13
  -12
  -11
  -10
  -10
  -9
  -7
  -6
  -5
  -3
  -2
  -1
  -1
  -1
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
 
  -12
  -14
  -14
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -15
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -4
  -3
  -1
  0
  1
  2
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
 
  -11
  -13
  -12
  -12
  -11
  -11
  -10
  -9
  -9
  -8
  -7
  -6
  -5
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  26.4
  6.9
  1.8
  0.5
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Vicon Industries, Inc. develops video management software. The Company designs, assembles and markets a range of video systems and system components, including cameras, network video servers/recorders, encoders and mass storage units, which are used in security, surveillance, safety and control applications. Its product line consists of various elements of a video system, including cameras for image capture, stand-alone network video management system software and various video recording, storage, management, and output devices and peripherals. It also sells and/or produces other video system components, such as video encoders, decoders and monitors, camera lenses, housings and mounts, matrix video switchers and controls and various video transmission devices. Its focus is on the design of network video systems that it produces and sells around the world to authorized dealers, system integrators, government entities and security products distributors.

FINANCIAL RATIOS  of  Vicon Industries (VII)

Valuation Ratios
P/E Ratio -0.4
Price to Sales 0.1
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow -1.3
Price to Free Cash Flow -1.3
Growth Rates
Sales Growth Rate -20%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 22.2%
Total Debt to Equity 22.2%
Interest Coverage 0
Management Effectiveness
Return On Assets -50%
Ret/ On Assets - 3 Yr. Avg. -29%
Return On Total Capital -81.3%
Ret/ On T. Cap. - 3 Yr. Avg. -45.3%
Return On Equity -86.7%
Return On Equity - 3 Yr. Avg. -47.1%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 36.1%
Gross Margin - 3 Yr. Avg. 36.8%
EBITDA Margin -33.3%
EBITDA Margin - 3 Yr. Avg. -21.7%
Operating Margin -36.1%
Oper. Margin - 3 Yr. Avg. -23.4%
Pre-Tax Margin -36.1%
Pre-Tax Margin - 3 Yr. Avg. -23.4%
Net Profit Margin -36.1%
Net Profit Margin - 3 Yr. Avg. -23.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

VII stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VII stock intrinsic value calculation we used $36 million for the last fiscal year's total revenue generated by Vicon Industries. The default revenue input number comes from 2016 income statement of Vicon Industries. 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 VII stock valuation model: a) initial revenue growth rate of 2% 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 VII is calculated based on our internal credit rating of Vicon Industries, 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 Vicon Industries.
    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 VII stock the variable cost ratio is equal to 22.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $41 million in the base year in the intrinsic value calculation for VII 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 Vicon Industries.

Corporate tax rate of 27% is the nominal tax rate for Vicon Industries. 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 VII 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 VII are equal to 9.7%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Vicon Industries 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 VII is equal to 22.2%. 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 - $9 million for Vicon Industries - 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 9.358 million for Vicon Industries 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 Vicon Industries at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Vicon Industries Announces Results of Rights Offering   [Nov-04-17 12:14AM  Business Wire]
▶ Vicon Industries Announces Extension of Rights Offering   [Oct-18-17 04:15PM  Business Wire]
▶ Vicon Industries Makes Announcement   [02:37PM  Business Wire]
▶ 10-Q for Vicon Industries, Inc.   [Aug-16  08:12PM  at Company Spotlight]
▶ 10-Q for Vicon Industries, Inc.   [May-18  08:12PM  at Company Spotlight]
▶ Vicon's New Channel Partnership Program   [Apr-07  09:48AM  at noodls]
▶ Vicon Introduces Its 12 MP Camera   [Apr-06  09:59AM  at noodls]
▶ HDExpress and ViconNet Integration   [Mar-31  01:31PM  at noodls]
▶ Vicon Introduces Its New Access Control System   [Mar-26  09:47AM  at noodls]
▶ Vicon's Corporate Message   [Mar-23  09:41AM  at noodls]
▶ 10-Q for Vicon Industries, Inc.   [Feb-25  07:08PM  at Company Spotlight]
▶ 10-K for Vicon Industries, Inc.   [Jan-14  07:07PM  at Company Spotlight]
▶ Vicon Reports Third Quarter Results   [04:15PM  Business Wire]
▶ Vicon Reports Second Quarter Results   [May-02  04:30PM  Business Wire]
Financial statements of VII
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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