Intrinsic value of ACI Worldwide - ACIW

Previous Close

$29.23

  Intrinsic Value

$20.12

stock screener

  Rating & Target

sell

-31%

Previous close

$29.23

 
Intrinsic value

$20.12

 
Up/down potential

-31%

 
Rating

sell

We calculate the intrinsic value of ACIW 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 0001), $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 3.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  1,045
  1,069
  1,096
  1,127
  1,161
  1,199
  1,239
  1,284
  1,331
  1,382
  1,437
  1,495
  1,557
  1,623
  1,693
  1,768
  1,846
  1,929
  2,017
  2,110
  2,208
  2,311
  2,419
  2,534
  2,655
  2,782
  2,915
  3,056
  3,204
  3,360
Variable operating expenses, $m
  812
  828
  846
  866
  889
  914
  940
  969
  1,001
  1,034
  945
  983
  1,024
  1,067
  1,113
  1,162
  1,214
  1,268
  1,326
  1,387
  1,451
  1,519
  1,590
  1,666
  1,745
  1,828
  1,916
  2,009
  2,106
  2,208
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
  812
  828
  846
  866
  889
  914
  940
  969
  1,001
  1,034
  945
  983
  1,024
  1,067
  1,113
  1,162
  1,214
  1,268
  1,326
  1,387
  1,451
  1,519
  1,590
  1,666
  1,745
  1,828
  1,916
  2,009
  2,106
  2,208
Operating income, $m
  232
  241
  250
  261
  272
  285
  299
  314
  331
  348
  492
  512
  534
  556
  580
  606
  633
  661
  691
  723
  756
  792
  829
  868
  910
  953
  999
  1,047
  1,098
  1,151
EBITDA, $m
  413
  423
  433
  446
  459
  474
  490
  508
  526
  547
  568
  591
  616
  642
  670
  699
  730
  763
  798
  834
  873
  914
  957
  1,002
  1,050
  1,100
  1,153
  1,208
  1,267
  1,329
Interest expense (income), $m
  35
  38
  39
  40
  42
  44
  46
  48
  50
  53
  56
  59
  62
  65
  69
  73
  77
  81
  86
  91
  96
  102
  107
  113
  120
  127
  134
  141
  149
  157
  166
Earnings before tax, $m
  195
  202
  210
  219
  229
  239
  251
  264
  278
  292
  434
  450
  468
  487
  507
  529
  551
  575
  600
  627
  655
  684
  716
  748
  783
  819
  858
  898
  941
  985
Tax expense, $m
  53
  54
  57
  59
  62
  65
  68
  71
  75
  79
  117
  122
  126
  132
  137
  143
  149
  155
  162
  169
  177
  185
  193
  202
  211
  221
  232
  242
  254
  266
Net income, $m
  142
  147
  153
  160
  167
  175
  183
  193
  203
  213
  317
  329
  342
  356
  370
  386
  402
  420
  438
  458
  478
  500
  522
  546
  572
  598
  626
  656
  687
  719

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,899
  1,943
  1,993
  2,049
  2,111
  2,179
  2,254
  2,334
  2,421
  2,513
  2,613
  2,719
  2,832
  2,952
  3,079
  3,214
  3,357
  3,508
  3,667
  3,836
  4,014
  4,201
  4,399
  4,607
  4,827
  5,057
  5,301
  5,556
  5,825
  6,108
Adjusted assets (=assets-cash), $m
  1,899
  1,943
  1,993
  2,049
  2,111
  2,179
  2,254
  2,334
  2,421
  2,513
  2,613
  2,719
  2,832
  2,952
  3,079
  3,214
  3,357
  3,508
  3,667
  3,836
  4,014
  4,201
  4,399
  4,607
  4,827
  5,057
  5,301
  5,556
  5,825
  6,108
Revenue / Adjusted assets
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
Average production assets, $m
  733
  750
  770
  791
  815
  841
  870
  901
  935
  970
  1,009
  1,050
  1,093
  1,140
  1,189
  1,241
  1,296
  1,354
  1,416
  1,481
  1,550
  1,622
  1,698
  1,779
  1,864
  1,953
  2,047
  2,145
  2,249
  2,358
Working capital, $m
  49
  50
  52
  53
  55
  56
  58
  60
  63
  65
  68
  70
  73
  76
  80
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  151
  158
Total debt, $m
  707
  733
  763
  796
  832
  872
  916
  963
  1,014
  1,069
  1,128
  1,190
  1,257
  1,327
  1,402
  1,482
  1,566
  1,655
  1,749
  1,848
  1,953
  2,063
  2,180
  2,302
  2,432
  2,568
  2,711
  2,861
  3,020
  3,187
Total liabilities, $m
  1,119
  1,144
  1,174
  1,207
  1,244
  1,284
  1,327
  1,375
  1,426
  1,480
  1,539
  1,601
  1,668
  1,739
  1,814
  1,893
  1,977
  2,066
  2,160
  2,259
  2,364
  2,475
  2,591
  2,714
  2,843
  2,979
  3,122
  3,273
  3,431
  3,598
Total equity, $m
  781
  799
  819
  842
  868
  896
  926
  959
  995
  1,033
  1,074
  1,117
  1,164
  1,213
  1,265
  1,321
  1,380
  1,442
  1,507
  1,577
  1,650
  1,727
  1,808
  1,894
  1,984
  2,079
  2,179
  2,284
  2,394
  2,511
Total liabilities and equity, $m
  1,900
  1,943
  1,993
  2,049
  2,112
  2,180
  2,253
  2,334
  2,421
  2,513
  2,613
  2,718
  2,832
  2,952
  3,079
  3,214
  3,357
  3,508
  3,667
  3,836
  4,014
  4,202
  4,399
  4,608
  4,827
  5,058
  5,301
  5,557
  5,825
  6,109
Debt-to-equity ratio
  0.910
  0.920
  0.930
  0.940
  0.960
  0.970
  0.990
  1.000
  1.020
  1.030
  1.050
  1.070
  1.080
  1.090
  1.110
  1.120
  1.130
  1.150
  1.160
  1.170
  1.180
  1.190
  1.210
  1.220
  1.230
  1.240
  1.240
  1.250
  1.260
  1.270
Adjusted equity ratio
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  142
  147
  153
  160
  167
  175
  183
  193
  203
  213
  317
  329
  342
  356
  370
  386
  402
  420
  438
  458
  478
  500
  522
  546
  572
  598
  626
  656
  687
  719
Depreciation, amort., depletion, $m
  181
  182
  183
  185
  187
  189
  191
  193
  196
  199
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
Funds from operations, $m
  323
  329
  337
  345
  354
  364
  374
  386
  399
  412
  392
  408
  424
  441
  460
  479
  500
  522
  545
  569
  595
  622
  650
  680
  712
  745
  780
  817
  856
  896
Change in working capital, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
Cash from operations, $m
  322
  328
  335
  343
  352
  362
  372
  384
  396
  410
  390
  405
  421
  438
  456
  476
  496
  518
  540
  565
  590
  617
  645
  675
  706
  739
  774
  810
  849
  889
Maintenance CAPEX, $m
  -54
  -55
  -56
  -58
  -59
  -61
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -102
  -106
  -111
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -161
  -169
New CAPEX, $m
  -15
  -17
  -19
  -22
  -24
  -26
  -29
  -31
  -33
  -36
  -38
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -72
  -76
  -80
  -85
  -89
  -94
  -99
  -104
  -109
Cash from investing activities, $m
  -69
  -72
  -75
  -80
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -117
  -123
  -128
  -135
  -141
  -148
  -155
  -164
  -171
  -180
  -189
  -198
  -208
  -219
  -229
  -241
  -253
  -265
  -278
Free cash flow, $m
  253
  256
  260
  264
  269
  274
  281
  287
  295
  303
  278
  288
  299
  310
  322
  334
  348
  362
  377
  393
  410
  428
  447
  467
  488
  510
  533
  558
  584
  611
Issuance/(repayment) of debt, $m
  22
  26
  29
  33
  37
  40
  44
  47
  51
  55
  59
  62
  67
  71
  75
  79
  84
  89
  94
  99
  105
  110
  116
  123
  129
  136
  143
  151
  158
  167
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
Cash from financing (excl. dividends), $m  
  22
  26
  29
  33
  37
  40
  44
  47
  51
  55
  59
  62
  67
  71
  75
  79
  84
  89
  94
  99
  105
  110
  116
  123
  129
  136
  143
  151
  158
  167
Total cash flow (excl. dividends), $m
  275
  282
  289
  297
  305
  314
  324
  335
  346
  358
  337
  351
  365
  380
  397
  414
  432
  451
  471
  492
  515
  538
  563
  589
  617
  646
  676
  708
  742
  777
Retained Cash Flow (-), $m
  -16
  -18
  -21
  -23
  -26
  -28
  -31
  -33
  -36
  -38
  -41
  -44
  -46
  -49
  -52
  -55
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -105
  -111
  -116
Prev. year cash balance distribution, $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 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
  259
  264
  268
  274
  280
  286
  294
  302
  311
  320
  296
  307
  319
  331
  344
  358
  373
  389
  405
  423
  442
  461
  482
  504
  527
  551
  576
  603
  631
  661
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  242
  230
  216
  202
  188
  174
  160
  145
  131
  117
  93
  82
  71
  61
  52
  43
  35
  29
  23
  18
  14
  10
  7
  5
  4
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  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

ACI Worldwide, Inc. develops, markets, installs and supports a line of software products and services primarily focused on facilitating electronic payments. The Company also distributes or acts as a sales agent for software developed by third parties. Its products and services are used principally by financial institutions, retailers, billers and electronic payment processors, both in domestic and international markets. The Company's products are sold and supported through distribution networks covering three geographic regions, including the Americas, Europe/Middle East/Africa (EMEA) and Asia/Pacific. The Company's products and services are used by a range of transaction-generating endpoints, including automated teller machines (ATM), retail merchant point-of-sale (POS) terminals, bank branches, corporations and Internet commerce sites. The Company provides payment solutions to financial institutions globally for both retail banking and transaction banking services.

FINANCIAL RATIOS  of  ACI Worldwide (ACIW)

Valuation Ratios
P/E Ratio 26.4
Price to Sales 3.4
Price to Book 4.5
Price to Tangible Book
Price to Cash Flow 34.3
Price to Free Cash Flow 92.7
Growth Rates
Sales Growth Rate -3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 28.6%
Cap. Spend. - 3 Yr. Gr. Rate 13.8%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 86.6%
Total Debt to Equity 98.5%
Interest Coverage 6
Management Effectiveness
Return On Assets 8%
Ret/ On Assets - 3 Yr. Avg. 6.3%
Return On Total Capital 8.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 18.5%
Return On Equity - 3 Yr. Avg. 14.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 55.8%
Gross Margin - 3 Yr. Avg. 55.3%
EBITDA Margin 32.3%
EBITDA Margin - 3 Yr. Avg. 25.8%
Operating Margin 22%
Oper. Margin - 3 Yr. Avg. 15.9%
Pre-Tax Margin 18.5%
Pre-Tax Margin - 3 Yr. Avg. 13%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 9.2%
Effective Tax Rate 30.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.7%
Payout Ratio 0%

ACIW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACIW stock intrinsic value calculation we used $1024.191 million for the last fiscal year's total revenue generated by ACI Worldwide. The default revenue input number comes from 0001 income statement of ACI Worldwide. 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 ACIW 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 6.8%, whose default value for ACIW is calculated based on our internal credit rating of ACI Worldwide, 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 ACI Worldwide.
    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 ACIW stock the variable cost ratio is equal to 78%.

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 ACIW 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 5.5% for ACI Worldwide.

Corporate tax rate of 27% is the nominal tax rate for ACI Worldwide. 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 ACIW 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 ACIW are equal to 70.2%.

Life of production assets of 13.3 years is the average useful life of capital assets used in ACI Worldwide 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 ACIW is equal to 4.7%. 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 - $764.597 million for ACI Worldwide - 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 117.289 million for ACI Worldwide 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 ACI Worldwide at the current share price and the inputted number of shares is $3.4 billion.

RELATED COMPANIES Price Int.Val. Rating
FISV Fiserv 79.71 41.85  sell
IBM International 121.44 191.80  buy
FIS Fidelity Natio 106.82 71.41  sell
MA Mastercard 200.71 227.59  hold
ORCL Oracle 50.63 34.20  sell
NCR NCR 26.08 59.94  str.buy
JKHY Jack Henry&Ass 138.65 78.69  sell
INTU Intuit 214.54 144.44  sell
V VISA Cl A 141.84 142.64  hold

COMPANY NEWS

▶ ACI Worldwide to Attend Upcoming Investor Conferences   [Nov-20-18 08:00AM  Business Wire]
▶ ACI Worldwide: 3Q Earnings Snapshot   [06:25AM  Associated Press]
▶ How Financially Strong Is ACI Worldwide Inc (NASDAQ:ACIW)?   [Nov-06-18 02:19PM  Simply Wall St.]
▶ ACI Worldwide Powers Pan-European Real-Time Payments   [Oct-02-18 03:00AM  Business Wire]
▶ ACI Worldwide Announces Upsize and Pricing of Senior Notes   [Aug-07-18 07:00PM  Business Wire]
▶ ACI Worldwide: 2Q Earnings Snapshot   [06:23AM  Associated Press]
▶ ACI Worldwide Launches Coding for Girls Camp in the UK   [May-22-18 03:00AM  Business Wire]
▶ ACI Worldwide: 1Q Earnings Snapshot   [06:19AM  Associated Press]
▶ ACI Worldwide to Lower Debit Card Costs for Avid Acceptance   [Mar-20-18 08:00AM  Business Wire]
▶ Why ACI Worldwide Inc (NASDAQ:ACIW) Could Be A Buy   [Feb-22-18 01:03PM  Simply Wall St.]
▶ ACI Worldwide beats Street 4Q forecasts   [06:23AM  Associated Press]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.