Intrinsic value of Altisource Portfolio Solutions S.A. - ASPS

Previous Close

$26.60

  Intrinsic Value

$14.05

stock screener

  Rating & Target

sell

-47%

Previous close

$26.60

 
Intrinsic value

$14.05

 
Up/down potential

-47%

 
Rating

sell

Our model is not good at valuating stocks of financial companies, such as ASPS.

We calculate the intrinsic value of ASPS 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 0.4

 

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
  855
  874
  897
  922
  950
  981
  1,014
  1,050
  1,089
  1,131
  1,176
  1,224
  1,274
  1,328
  1,386
  1,446
  1,511
  1,579
  1,650
  1,726
  1,806
  1,891
  1,980
  2,073
  2,172
  2,276
  2,385
  2,500
  2,622
  2,749
Variable operating expenses, $m
  681
  697
  714
  734
  757
  781
  807
  836
  867
  900
  931
  968
  1,009
  1,051
  1,097
  1,145
  1,196
  1,249
  1,306
  1,366
  1,430
  1,496
  1,567
  1,641
  1,719
  1,801
  1,888
  1,979
  2,075
  2,176
Fixed operating expenses, $m
  148
  151
  155
  158
  162
  165
  169
  173
  176
  180
  184
  188
  192
  197
  201
  205
  210
  215
  219
  224
  229
  234
  239
  244
  250
  255
  261
  267
  273
  279
Total operating expenses, $m
  829
  848
  869
  892
  919
  946
  976
  1,009
  1,043
  1,080
  1,115
  1,156
  1,201
  1,248
  1,298
  1,350
  1,406
  1,464
  1,525
  1,590
  1,659
  1,730
  1,806
  1,885
  1,969
  2,056
  2,149
  2,246
  2,348
  2,455
Operating income, $m
  25
  26
  28
  29
  32
  35
  38
  42
  46
  51
  61
  67
  73
  80
  88
  96
  105
  115
  125
  136
  148
  160
  174
  188
  203
  219
  236
  255
  274
  295
EBITDA, $m
  61
  63
  65
  68
  71
  75
  80
  85
  91
  97
  104
  112
  120
  129
  139
  149
  161
  173
  186
  199
  214
  230
  246
  264
  283
  303
  324
  347
  370
  396
Interest expense (income), $m
  23
  24
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
Earnings before tax, $m
  2
  2
  3
  4
  5
  7
  9
  12
  15
  18
  26
  30
  35
  40
  46
  52
  58
  66
  73
  82
  90
  100
  110
  121
  133
  145
  158
  173
  188
  204
Tax expense, $m
  1
  1
  1
  1
  1
  2
  2
  3
  4
  5
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  27
  30
  33
  36
  39
  43
  47
  51
  55
Net income, $m
  1
  2
  2
  3
  4
  5
  7
  8
  11
  13
  19
  22
  26
  29
  33
  38
  43
  48
  54
  60
  66
  73
  80
  88
  97
  106
  116
  126
  137
  149

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
  726
  743
  762
  783
  807
  833
  862
  892
  925
  961
  999
  1,040
  1,083
  1,129
  1,177
  1,229
  1,283
  1,341
  1,402
  1,467
  1,535
  1,606
  1,682
  1,762
  1,845
  1,934
  2,027
  2,124
  2,227
  2,335
Adjusted assets (=assets-cash), $m
  726
  743
  762
  783
  807
  833
  862
  892
  925
  961
  999
  1,040
  1,083
  1,129
  1,177
  1,229
  1,283
  1,341
  1,402
  1,467
  1,535
  1,606
  1,682
  1,762
  1,845
  1,934
  2,027
  2,124
  2,227
  2,335
Revenue / Adjusted assets
  1.178
  1.176
  1.177
  1.178
  1.177
  1.178
  1.176
  1.177
  1.177
  1.177
  1.177
  1.177
  1.176
  1.176
  1.178
  1.177
  1.178
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
  1.177
Average production assets, $m
  157
  161
  165
  170
  175
  180
  187
  193
  200
  208
  216
  225
  234
  244
  255
  266
  278
  290
  304
  318
  332
  348
  364
  381
  400
  419
  439
  460
  482
  506
Working capital, $m
  -38
  -38
  -39
  -41
  -42
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -64
  -66
  -69
  -73
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
Total debt, $m
  341
  351
  363
  376
  391
  408
  425
  445
  465
  488
  512
  537
  564
  593
  623
  656
  690
  726
  764
  805
  847
  892
  940
  990
  1,042
  1,098
  1,156
  1,217
  1,282
  1,350
Total liabilities, $m
  455
  466
  478
  491
  506
  522
  540
  560
  580
  603
  626
  652
  679
  708
  738
  770
  805
  841
  879
  920
  962
  1,007
  1,055
  1,104
  1,157
  1,212
  1,271
  1,332
  1,397
  1,464
Total equity, $m
  271
  277
  284
  292
  301
  311
  321
  333
  345
  358
  373
  388
  404
  421
  439
  458
  479
  500
  523
  547
  572
  599
  627
  657
  688
  721
  756
  792
  831
  871
Total liabilities and equity, $m
  726
  743
  762
  783
  807
  833
  861
  893
  925
  961
  999
  1,040
  1,083
  1,129
  1,177
  1,228
  1,284
  1,341
  1,402
  1,467
  1,534
  1,606
  1,682
  1,761
  1,845
  1,933
  2,027
  2,124
  2,228
  2,335
Debt-to-equity ratio
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.320
  1.340
  1.350
  1.360
  1.370
  1.380
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.510
  1.520
  1.530
  1.540
  1.540
  1.550
Adjusted equity ratio
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  2
  2
  3
  4
  5
  7
  8
  11
  13
  19
  22
  26
  29
  33
  38
  43
  48
  54
  60
  66
  73
  80
  88
  97
  106
  116
  126
  137
  149
Depreciation, amort., depletion, $m
  36
  37
  38
  39
  40
  41
  42
  43
  45
  46
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  66
  70
  73
  76
  80
  84
  88
  92
  96
  101
Funds from operations, $m
  37
  38
  40
  41
  43
  46
  49
  52
  55
  59
  62
  67
  73
  78
  84
  91
  98
  106
  114
  123
  132
  143
  153
  165
  177
  190
  203
  218
  233
  250
Change in working capital, $m
  -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
  38
  39
  41
  42
  45
  47
  50
  53
  57
  61
  64
  69
  75
  81
  87
  94
  101
  109
  117
  126
  136
  146
  157
  169
  181
  194
  208
  223
  239
  255
Maintenance CAPEX, $m
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -66
  -70
  -73
  -76
  -80
  -84
  -88
  -92
  -96
New CAPEX, $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Cash from investing activities, $m
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -62
  -65
  -69
  -71
  -75
  -79
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -119
Free cash flow, $m
  4
  4
  4
  5
  5
  6
  8
  9
  11
  13
  15
  17
  20
  24
  28
  32
  36
  41
  46
  52
  58
  64
  71
  79
  87
  95
  104
  114
  124
  135
Issuance/(repayment) of debt, $m
  9
  10
  12
  13
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  31
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  55
  58
  61
  65
  68
Issuance/(repurchase) of shares, $m
  4
  5
  5
  5
  5
  5
  4
  3
  2
  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  
  13
  15
  17
  18
  20
  21
  22
  22
  23
  22
  24
  25
  27
  29
  31
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  55
  58
  61
  65
  68
Total cash flow (excl. dividends), $m
  17
  19
  21
  23
  25
  27
  30
  32
  34
  36
  38
  43
  47
  53
  58
  64
  70
  77
  84
  92
  100
  109
  119
  129
  139
  151
  163
  175
  189
  203
Retained Cash Flow (-), $m
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
Prev. year cash balance distribution, $m
  30
  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
  42
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  28
  31
  35
  40
  45
  50
  56
  62
  68
  75
  82
  90
  99
  108
  118
  128
  139
  151
  163
Discount rate, %
  5.40
  5.67
  5.95
  6.25
  6.56
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.04
  15.80
  16.59
  17.42
  18.29
  19.20
  20.16
  21.17
  22.23
PV of cash for distribution, $m
  40
  12
  12
  12
  12
  12
  12
  11
  11
  10
  10
  10
  9
  9
  9
  8
  8
  7
  6
  5
  5
  4
  3
  2
  2
  1
  1
  1
  1
  0
Current shareholders' claim on cash, %
  99.0
  97.8
  96.6
  95.4
  94.2
  93.3
  92.4
  91.9
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5

Altisource Portfolio Solutions S.A. is a marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. The Company's business processes, vendor and electronic payment management software and behavioral science-based analytics manage outcomes for marketplace participants. It operates through three segments: Mortgage Services, Financial Services and Technology Services. The Mortgage Services segment provides loan servicers, originators, rental property investors and real estate consumers with products, services and technologies. The Financial Services segment provides collection services to debt originators and servicers and customer relationship management services. The Technology Services segment provides software and data analytics solutions that support management of mortgage and real estate activities and marketplace transactions across mortgage and real estate lifecycles and information technology infrastructure management services.

FINANCIAL RATIOS  of  Altisource Portfolio Solutions S.A. (ASPS)

Valuation Ratios
P/E Ratio 11.1
Price to Sales 0.3
Price to Book 5.3
Price to Tangible Book
Price to Cash Flow 2.5
Price to Free Cash Flow 3.1
Growth Rates
Sales Growth Rate -5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.1%
Cap. Spend. - 3 Yr. Gr. Rate -7.5%
Financial Strength
Quick Ratio 35
Current Ratio 0.1
LT Debt to Equity 767.2%
Total Debt to Equity 777%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 11.8%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 11.6%
Return On Equity 51.8%
Return On Equity - 3 Yr. Avg. 93.4%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 30.8%
Gross Margin - 3 Yr. Avg. 33.3%
EBITDA Margin 15.2%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin 4.4%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 29.5%
Eff/ Tax Rate - 3 Yr. Avg. 17.1%
Payout Ratio 0%

ASPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASPS stock intrinsic value calculation we used $838 million for the last fiscal year's total revenue generated by Altisource Portfolio Solutions S.A.. The default revenue input number comes from 0001 income statement of Altisource Portfolio Solutions S.A.. 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 ASPS 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 5.4%, whose default value for ASPS is calculated based on our internal credit rating of Altisource Portfolio Solutions S.A., 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 Altisource Portfolio Solutions S.A..
    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 ASPS stock the variable cost ratio is equal to 79.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $145 million in the base year in the intrinsic value calculation for ASPS 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 7.1% for Altisource Portfolio Solutions S.A..

Corporate tax rate of 27% is the nominal tax rate for Altisource Portfolio Solutions S.A.. 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 ASPS 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 ASPS are equal to 18.4%.

Life of production assets of 4.2 years is the average useful life of capital assets used in Altisource Portfolio Solutions S.A. 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 ASPS is equal to -4.4%. 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 - $295.431 million for Altisource Portfolio Solutions S.A. - 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 16.303 million for Altisource Portfolio Solutions S.A. 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 Altisource Portfolio Solutions S.A. at the current share price and the inputted number of shares is $0.4 billion.

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