Intrinsic value of Allied Motion Technologies - AMOT

Previous Close

$26.85

  Intrinsic Value

$16.28

stock screener

  Rating & Target

sell

-39%

  Value-price divergence*

-24%

Previous close

$26.85

 
Intrinsic value

$16.28

 
Up/down potential

-39%

 
Rating

sell

 
Value-price divergence*

-24%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AMOT 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 0.3

 

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, %
  6.03
  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
  246
  251
  257
  263
  271
  279
  288
  298
  308
  320
  332
  345
  359
  374
  390
  407
  425
  443
  463
  484
  507
  530
  555
  581
  609
  638
  668
  700
  734
  770
  807
Variable operating expenses, $m
 
  230
  235
  241
  247
  255
  263
  272
  281
  292
  303
  312
  325
  338
  352
  368
  384
  401
  419
  438
  458
  479
  502
  525
  550
  576
  604
  633
  663
  695
  729
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
  227
  230
  235
  241
  247
  255
  263
  272
  281
  292
  303
  312
  325
  338
  352
  368
  384
  401
  419
  438
  458
  479
  502
  525
  550
  576
  604
  633
  663
  695
  729
Operating income, $m
  19
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  71
  74
  78
EBITDA, $m
  29
  32
  33
  33
  34
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  52
  54
  56
  59
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
  102
Interest expense (income), $m
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
Earnings before tax, $m
  13
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  26
  26
  27
  29
  30
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
Tax expense, $m
  4
  4
  5
  5
  5
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
Net income, $m
  9
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  19
  19
  20
  21
  22
  23
  23
  24
  25
  27
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  15
  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
  180
  168
  172
  177
  182
  187
  193
  200
  207
  214
  223
  231
  241
  251
  262
  273
  285
  297
  311
  325
  340
  356
  372
  390
  408
  428
  448
  470
  492
  516
  541
Adjusted assets (=assets-cash), $m
  165
  168
  172
  177
  182
  187
  193
  200
  207
  214
  223
  231
  241
  251
  262
  273
  285
  297
  311
  325
  340
  356
  372
  390
  408
  428
  448
  470
  492
  516
  541
Revenue / Adjusted assets
  1.491
  1.494
  1.494
  1.486
  1.489
  1.492
  1.492
  1.490
  1.488
  1.495
  1.489
  1.494
  1.490
  1.490
  1.489
  1.491
  1.491
  1.492
  1.489
  1.489
  1.491
  1.489
  1.492
  1.490
  1.493
  1.491
  1.491
  1.489
  1.492
  1.492
  1.492
Average production assets, $m
  68
  69
  71
  73
  75
  77
  79
  82
  85
  88
  92
  95
  99
  103
  108
  112
  117
  122
  128
  134
  140
  146
  153
  160
  168
  176
  184
  193
  203
  212
  223
Working capital, $m
  51
  38
  39
  39
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  115
  121
Total debt, $m
  71
  72
  75
  77
  81
  84
  88
  92
  97
  102
  107
  113
  119
  126
  132
  140
  148
  156
  164
  174
  183
  193
  204
  216
  228
  240
  253
  267
  282
  297
  314
Total liabilities, $m
  108
  109
  112
  114
  118
  121
  125
  129
  134
  139
  144
  150
  156
  163
  169
  177
  185
  193
  201
  211
  220
  230
  241
  253
  265
  277
  290
  304
  319
  334
  351
Total equity, $m
  72
  59
  61
  62
  64
  66
  68
  70
  73
  75
  78
  81
  85
  88
  92
  96
  100
  105
  109
  114
  120
  125
  131
  137
  144
  151
  158
  165
  173
  182
  191
Total liabilities and equity, $m
  180
  168
  173
  176
  182
  187
  193
  199
  207
  214
  222
  231
  241
  251
  261
  273
  285
  298
  310
  325
  340
  355
  372
  390
  409
  428
  448
  469
  492
  516
  542
Debt-to-equity ratio
  0.986
  1.220
  1.230
  1.250
  1.260
  1.280
  1.300
  1.310
  1.330
  1.350
  1.370
  1.390
  1.400
  1.420
  1.440
  1.460
  1.470
  1.490
  1.500
  1.520
  1.530
  1.550
  1.560
  1.570
  1.580
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
Adjusted equity ratio
  0.345
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  19
  19
  20
  21
  22
  23
  23
  24
  25
  27
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
Depreciation, amort., depletion, $m
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
Funds from operations, $m
  5
  22
  23
  23
  24
  25
  25
  26
  27
  28
  29
  29
  30
  31
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
Change in working capital, $m
  -9
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
Cash from operations, $m
  14
  22
  22
  22
  23
  23
  24
  25
  25
  26
  27
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
Maintenance CAPEX, $m
  0
  -7
  -8
  -8
  -8
  -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
New CAPEX, $m
  -5
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
Cash from investing activities, $m
  -21
  -8
  -10
  -10
  -10
  -10
  -10
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -23
  -24
  -26
  -26
  -27
  -29
  -30
  -32
  -33
Free cash flow, $m
  -7
  13
  13
  13
  13
  13
  13
  13
  13
  14
  14
  13
  14
  14
  15
  15
  15
  16
  17
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
Issuance/(repayment) of debt, $m
  3
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
Issuance/(repurchase) of shares, $m
  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
Cash from financing (excl. dividends), $m  
  3
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
Total cash flow (excl. dividends), $m
  -5
  15
  15
  16
  16
  16
  17
  17
  18
  19
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
Retained Cash Flow (-), $m
  -7
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
Prev. year cash balance distribution, $m
 
  14
  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
 
  28
  14
  14
  14
  15
  15
  15
  16
  16
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
Discount rate, %
 
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
 
  26
  12
  12
  11
  10
  10
  9
  8
  8
  7
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  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
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  100.0
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  100.0

Allied Motion Technologies Inc. designs, manufactures and sells precision and specialty motion control components and systems used in a range of industries. The Company serves various markets, including vehicle, medical, aerospace and defense, electronics and industrial. It focuses on motion control applications. It is engaged in developing electro-magnetic, mechanical and electronic motion technology. It operates in the design and manufacture of motion control products, marketed to original equipment manufacturers and end users segment. Its products are used in the handling, inspection, and testing of components and final products, such as printers, tunable lasers and spectrum analyzers for the fiber optic industry, and test and processing equipment for the semiconductor manufacturing industry. Its products are used in a range of medical, industrial and commercial aviation applications, such as dialysis equipment, industrial ink jet printers and cash dispensers.

FINANCIAL RATIOS  of  Allied Motion Technologies (AMOT)

Valuation Ratios
P/E Ratio 28
Price to Sales 1
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 18
Price to Free Cash Flow 28
Growth Rates
Sales Growth Rate 6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 15
Current Ratio 0
LT Debt to Equity 97.2%
Total Debt to Equity 98.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 9.2%
Return On Total Capital 6.5%
Ret/ On T. Cap. - 3 Yr. Avg. 8.5%
Return On Equity 13.1%
Return On Equity - 3 Yr. Avg. 19.4%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 29.7%
Gross Margin - 3 Yr. Avg. 29.5%
EBITDA Margin 11.4%
EBITDA Margin - 3 Yr. Avg. 12.1%
Operating Margin 7.7%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 5.3%
Pre-Tax Margin - 3 Yr. Avg. 6.5%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 4.7%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 27.9%
Payout Ratio 11.1%

AMOT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMOT stock intrinsic value calculation we used $246 million for the last fiscal year's total revenue generated by Allied Motion Technologies. The default revenue input number comes from 2016 income statement of Allied Motion Technologies. 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 AMOT 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 5.8%, whose default value for AMOT is calculated based on our internal credit rating of Allied Motion Technologies, 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 Allied Motion Technologies.
    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 AMOT stock the variable cost ratio is equal to 91.5%.

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 AMOT 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 7.2% for Allied Motion Technologies.

Corporate tax rate of 27% is the nominal tax rate for Allied Motion Technologies. 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 AMOT 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 AMOT are equal to 27.6%.

Life of production assets of 9.1 years is the average useful life of capital assets used in Allied Motion Technologies 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 AMOT is equal to 15%. 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 - $72 million for Allied Motion Technologies - 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 9.341 million for Allied Motion Technologies 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 Allied Motion Technologies at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Allied Motion to Present at Midwest IDEAS Conference   [Aug-16-17 04:15PM  Business Wire]
▶ Allied Motion posts 2Q profit   [Aug-02-17 10:55PM  Associated Press]
▶ Timothy T. Tevens Joins Allied Motion Board of Directors   [Jun-01-17 09:00AM  Business Wire]
▶ Allied Motion posts 1Q profit   [05:02AM  Associated Press]
▶ New Strong Sell Stocks for April 12th   [Apr-12-17 10:43AM  Zacks]
▶ New Strong Sell Stocks for March 29th   [Mar-29-17 09:57AM  Zacks]
▶ New Strong Sell Stocks for March 29th   [09:57AM  at Investopedia]
▶ Allied Motion posts 4Q profit   [Mar-13-17 05:54PM  Associated Press]
▶ Allied Motion Announces Quarterly Cash Dividend   [Mar-01-17 04:15PM  GlobeNewswire]
▶ Allied Motion Announces Quarterly Cash Dividend   [Nov-02-16 04:30PM  GlobeNewswire]
▶ Allied Motion Secures New $125 Million Credit Facility   [Nov-01-16 04:15PM  GlobeNewswire]
▶ Allied Motion Announces Quarterly Cash Dividend   [Aug-03-16 04:15PM  GlobeNewswire]
▶ Allied Motion Announces Quarterly Cash Dividend   [Mar-04-16 04:15PM  GlobeNewswire]
▶ Should You Avoid Allied Motion Technologies, Inc. (AMOT)?   [Dec-01  12:00PM  at Insider Monkey]
▶ Is Hill International Inc (HIL) A Good Stock To Buy?   [Nov-25  11:59AM  at Insider Monkey]
▶ Allied Motion Declares Quarterly Cash Dividend   [Nov-05  01:00PM  Business Wire]
Financial statements of AMOT
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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