Intrinsic value of Volt Information Sciences - VISI

Previous Close

$3.80

  Intrinsic Value

$0.52

stock screener

  Rating & Target

str. sell

-86%

Previous close

$3.80

 
Intrinsic value

$0.52

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of VISI 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 0.1

 

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, %
  -10.82
  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
  1,335
  1,362
  1,393
  1,429
  1,469
  1,514
  1,562
  1,616
  1,673
  1,735
  1,802
  1,873
  1,949
  2,030
  2,116
  2,207
  2,304
  2,407
  2,515
  2,629
  2,750
  2,877
  3,012
  3,154
  3,303
  3,460
  3,626
  3,800
  3,983
  4,176
  4,379
Variable operating expenses, $m
 
  1,374
  1,406
  1,442
  1,482
  1,527
  1,576
  1,630
  1,688
  1,751
  1,818
  1,889
  1,966
  2,048
  2,134
  2,226
  2,324
  2,427
  2,536
  2,652
  2,774
  2,902
  3,038
  3,181
  3,331
  3,490
  3,657
  3,833
  4,018
  4,212
  4,417
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
  1,341
  1,374
  1,406
  1,442
  1,482
  1,527
  1,576
  1,630
  1,688
  1,751
  1,818
  1,889
  1,966
  2,048
  2,134
  2,226
  2,324
  2,427
  2,536
  2,652
  2,774
  2,902
  3,038
  3,181
  3,331
  3,490
  3,657
  3,833
  4,018
  4,212
  4,417
Operating income, $m
  -6
  -12
  -13
  -13
  -13
  -14
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
EBITDA, $m
  0
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Interest expense (income), $m
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
Earnings before tax, $m
  -12
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
Tax expense, $m
  3
  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
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  316
  312
  319
  327
  337
  347
  358
  370
  384
  398
  413
  429
  447
  465
  485
  506
  528
  552
  576
  603
  630
  660
  690
  723
  757
  793
  831
  871
  913
  957
  1,004
Adjusted assets (=assets-cash), $m
  306
  312
  319
  327
  337
  347
  358
  370
  384
  398
  413
  429
  447
  465
  485
  506
  528
  552
  576
  603
  630
  660
  690
  723
  757
  793
  831
  871
  913
  957
  1,004
Revenue / Adjusted assets
  4.363
  4.365
  4.367
  4.370
  4.359
  4.363
  4.363
  4.368
  4.357
  4.359
  4.363
  4.366
  4.360
  4.366
  4.363
  4.362
  4.364
  4.361
  4.366
  4.360
  4.365
  4.359
  4.365
  4.362
  4.363
  4.363
  4.363
  4.363
  4.363
  4.364
  4.362
Average production assets, $m
  27
  27
  28
  29
  29
  30
  31
  32
  33
  35
  36
  37
  39
  41
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
Working capital, $m
  135
  129
  132
  136
  140
  144
  148
  153
  159
  165
  171
  178
  185
  193
  201
  210
  219
  229
  239
  250
  261
  273
  286
  300
  314
  329
  344
  361
  378
  397
  416
Total debt, $m
  97
  100
  106
  114
  122
  130
  140
  151
  162
  174
  188
  202
  217
  233
  250
  268
  287
  308
  329
  352
  376
  401
  428
  456
  486
  517
  550
  584
  621
  659
  699
Total liabilities, $m
  268
  270
  276
  284
  292
  300
  310
  321
  332
  344
  358
  372
  387
  403
  420
  438
  457
  478
  499
  522
  546
  571
  598
  626
  656
  687
  720
  754
  791
  829
  869
Total equity, $m
  49
  42
  43
  44
  45
  46
  48
  50
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  93
  97
  101
  106
  111
  117
  122
  128
  134
Total liabilities and equity, $m
  317
  312
  319
  328
  337
  346
  358
  371
  383
  397
  413
  430
  447
  465
  485
  506
  528
  552
  576
  603
  630
  659
  691
  723
  757
  793
  831
  871
  913
  957
  1,003
Debt-to-equity ratio
  1.980
  2.400
  2.490
  2.590
  2.690
  2.810
  2.920
  3.040
  3.150
  3.270
  3.390
  3.510
  3.620
  3.740
  3.850
  3.960
  4.060
  4.160
  4.260
  4.360
  4.450
  4.540
  4.620
  4.710
  4.790
  4.860
  4.940
  5.010
  5.070
  5.140
  5.200
Adjusted equity ratio
  0.127
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134
  0.134

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
Depreciation, amort., depletion, $m
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
Funds from operations, $m
  -7
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
Change in working capital, $m
  1
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
Cash from operations, $m
  -8
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -52
  -54
  -57
  -61
  -64
Maintenance CAPEX, $m
  0
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
New CAPEX, $m
  -18
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from investing activities, $m
  19
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -18
  -19
  -19
Free cash flow, $m
  11
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
Issuance/(repayment) of debt, $m
  -10
  5
  6
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
Issuance/(repurchase) of shares, $m
  0
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  64
  67
Cash from financing (excl. dividends), $m  
  -11
  21
  23
  25
  26
  28
  30
  32
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  61
  64
  67
  71
  75
  79
  83
  87
  92
  96
  102
  107
Total cash flow (excl. dividends), $m
  -4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
Retained Cash Flow (-), $m
  15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -64
  -67
Prev. year cash balance distribution, $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
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
 
  -5
  -13
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
Discount rate, %
 
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
 
  -4
  -10
  -9
  -8
  -7
  -6
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  80.3
  64.3
  51.3
  40.8
  32.4
  25.6
  20.2
  15.9
  12.4
  9.7
  7.6
  6.0
  4.6
  3.6
  2.8
  2.2
  1.7
  1.3
  1.0
  0.8
  0.6
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1

Volt Information Sciences, Inc. is a provider of staffing services and information technology infrastructure services. The Company operates through North American Staffing; International Staffing; Technology Outsourcing Services and Solutions, and Corporate and Other segments. Its staffing services consist of workforce solutions, including providing contingent workers, personnel recruitment services and managed staffing services programs supporting light industrial, information technology and engineering positions. Its technology outsourcing services provide pre- and post-production development support, testing and customer support to companies in the mobile, gaming and technology devices industries. Its managed service programs comprise managing the procurement and on-boarding of contingent workers. Its information technology infrastructure services offer server, network and desktop information technology hardware maintenance, data center and network monitoring and operations.

FINANCIAL RATIOS  of  Volt Information Sciences (VISI)

Valuation Ratios
P/E Ratio -5.3
Price to Sales 0.1
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow -9.9
Price to Free Cash Flow -3.1
Growth Rates
Sales Growth Rate -10.8%
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 5
Current Ratio 0.3
LT Debt to Equity 193.9%
Total Debt to Equity 198%
Interest Coverage -3
Management Effectiveness
Return On Assets -3.5%
Ret/ On Assets - 3 Yr. Avg. -4.8%
Return On Total Capital -9.5%
Ret/ On T. Cap. - 3 Yr. Avg. -9.8%
Return On Equity -26.5%
Return On Equity - 3 Yr. Avg. -25.9%
Asset Turnover 4.2
Profitability Ratios
Gross Margin 15.1%
Gross Margin - 3 Yr. Avg. 15.2%
EBITDA Margin -0.2%
EBITDA Margin - 3 Yr. Avg. 0.1%
Operating Margin -0.4%
Oper. Margin - 3 Yr. Avg. -0.3%
Pre-Tax Margin -0.9%
Pre-Tax Margin - 3 Yr. Avg. -0.6%
Net Profit Margin -1.1%
Net Profit Margin - 3 Yr. Avg. -1.3%
Effective Tax Rate -25%
Eff/ Tax Rate - 3 Yr. Avg. 63.9%
Payout Ratio 0%

VISI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VISI stock intrinsic value calculation we used $1335 million for the last fiscal year's total revenue generated by Volt Information Sciences. The default revenue input number comes from 2016 income statement of Volt Information Sciences. 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 VISI 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 10.8%, whose default value for VISI is calculated based on our internal credit rating of Volt Information Sciences, 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 Volt Information Sciences.
    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 VISI stock the variable cost ratio is equal to 100.9%.

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 VISI 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 Volt Information Sciences.

Corporate tax rate of 27% is the nominal tax rate for Volt Information Sciences. 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 VISI 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 VISI are equal to 2%.

Life of production assets of 5.4 years is the average useful life of capital assets used in Volt Information Sciences 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 VISI is equal to 9.5%. 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 - $49 million for Volt Information Sciences - 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 21.009 million for Volt Information Sciences 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 Volt Information Sciences at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Volt Information reports 3Q loss   [Sep-07-17 09:15PM  Associated Press]
▶ Is It Too Late To Buy Volt Information Sciences Inc (VISI)?   [Sep-06-17 07:02AM  Simply Wall St.]
▶ Volt Information reports 2Q loss   [Jun-09-17 09:12AM  Associated Press]
▶ Volt Information reports 1Q loss   [04:09PM  Associated Press]
▶ [$$] Small Staffing Company Can Deliver Big Gains   [Jan-26-17 05:00AM  Barrons.com]
Financial statements of VISI
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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