Intrinsic value of Atento S.A. - ATTO

Previous Close

$3.91

  Intrinsic Value

$11.97

stock screener

  Rating & Target

str. buy

+206%

Previous close

$3.91

 
Intrinsic value

$11.97

 
Up/down potential

+206%

 
Rating

str. buy

We calculate the intrinsic value of ATTO 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 0.3

 

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, %
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
Revenue, $m
  2,100
  2,286
  2,480
  2,682
  2,891
  3,109
  3,336
  3,571
  3,816
  4,070
  4,335
  4,610
  4,896
  5,195
  5,506
  5,830
  6,168
  6,520
  6,888
  7,273
  7,674
  8,094
  8,533
  8,992
  9,473
  9,976
  10,502
  11,053
  11,631
  12,236
Variable operating expenses, $m
  1,958
  2,128
  2,305
  2,489
  2,681
  2,880
  3,087
  3,303
  3,526
  3,759
  3,962
  4,214
  4,476
  4,748
  5,032
  5,329
  5,637
  5,960
  6,296
  6,648
  7,015
  7,399
  7,800
  8,219
  8,659
  9,118
  9,600
  10,104
  10,631
  11,185
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
  1,958
  2,128
  2,305
  2,489
  2,681
  2,880
  3,087
  3,303
  3,526
  3,759
  3,962
  4,214
  4,476
  4,748
  5,032
  5,329
  5,637
  5,960
  6,296
  6,648
  7,015
  7,399
  7,800
  8,219
  8,659
  9,118
  9,600
  10,104
  10,631
  11,185
Operating income, $m
  142
  158
  175
  192
  210
  229
  248
  269
  290
  311
  373
  396
  421
  446
  473
  501
  530
  560
  592
  625
  660
  696
  733
  773
  814
  857
  903
  950
  1,000
  1,052
EBITDA, $m
  255
  278
  301
  326
  351
  378
  405
  434
  463
  494
  526
  560
  595
  631
  669
  708
  749
  792
  836
  883
  932
  983
  1,036
  1,092
  1,150
  1,211
  1,275
  1,342
  1,412
  1,486
Interest expense (income), $m
  73
  67
  76
  84
  94
  103
  113
  123
  134
  145
  157
  169
  182
  195
  208
  222
  237
  253
  269
  285
  303
  321
  340
  360
  381
  403
  425
  449
  474
  500
  528
Earnings before tax, $m
  75
  83
  90
  98
  107
  116
  125
  134
  144
  154
  203
  215
  226
  238
  251
  264
  278
  292
  307
  322
  339
  356
  373
  392
  412
  432
  453
  476
  499
  524
Tax expense, $m
  20
  22
  24
  27
  29
  31
  34
  36
  39
  42
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  122
  128
  135
  141
Net income, $m
  55
  60
  66
  72
  78
  84
  91
  98
  105
  113
  149
  157
  165
  174
  183
  193
  203
  213
  224
  235
  247
  260
  273
  286
  300
  315
  331
  347
  364
  382

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
  1,124
  1,224
  1,328
  1,436
  1,548
  1,664
  1,786
  1,912
  2,043
  2,179
  2,320
  2,468
  2,621
  2,781
  2,947
  3,121
  3,302
  3,490
  3,687
  3,893
  4,108
  4,333
  4,568
  4,814
  5,071
  5,340
  5,622
  5,917
  6,226
  6,550
Adjusted assets (=assets-cash), $m
  1,124
  1,224
  1,328
  1,436
  1,548
  1,664
  1,786
  1,912
  2,043
  2,179
  2,320
  2,468
  2,621
  2,781
  2,947
  3,121
  3,302
  3,490
  3,687
  3,893
  4,108
  4,333
  4,568
  4,814
  5,071
  5,340
  5,622
  5,917
  6,226
  6,550
Revenue / Adjusted assets
  1.868
  1.868
  1.867
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.869
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
  1.868
Average production assets, $m
  380
  414
  449
  485
  523
  563
  604
  646
  691
  737
  785
  834
  886
  940
  997
  1,055
  1,116
  1,180
  1,247
  1,316
  1,389
  1,465
  1,544
  1,628
  1,715
  1,806
  1,901
  2,001
  2,105
  2,215
Working capital, $m
  443
  482
  523
  566
  610
  656
  704
  754
  805
  859
  915
  973
  1,033
  1,096
  1,162
  1,230
  1,301
  1,376
  1,453
  1,535
  1,619
  1,708
  1,800
  1,897
  1,999
  2,105
  2,216
  2,332
  2,454
  2,582
Total debt, $m
  548
  612
  679
  748
  820
  895
  973
  1,054
  1,138
  1,225
  1,316
  1,411
  1,509
  1,612
  1,718
  1,830
  1,946
  2,067
  2,194
  2,326
  2,464
  2,608
  2,759
  2,917
  3,082
  3,255
  3,436
  3,625
  3,824
  4,032
Total liabilities, $m
  722
  786
  852
  922
  994
  1,069
  1,146
  1,227
  1,311
  1,399
  1,490
  1,584
  1,683
  1,785
  1,892
  2,004
  2,120
  2,241
  2,367
  2,499
  2,638
  2,782
  2,933
  3,090
  3,256
  3,428
  3,609
  3,799
  3,997
  4,205
Total equity, $m
  402
  438
  475
  514
  554
  596
  639
  684
  731
  780
  831
  883
  938
  996
  1,055
  1,117
  1,182
  1,250
  1,320
  1,394
  1,471
  1,551
  1,635
  1,723
  1,815
  1,912
  2,013
  2,118
  2,229
  2,345
Total liabilities and equity, $m
  1,124
  1,224
  1,327
  1,436
  1,548
  1,665
  1,785
  1,911
  2,042
  2,179
  2,321
  2,467
  2,621
  2,781
  2,947
  3,121
  3,302
  3,491
  3,687
  3,893
  4,109
  4,333
  4,568
  4,813
  5,071
  5,340
  5,622
  5,917
  6,226
  6,550
Debt-to-equity ratio
  1.360
  1.400
  1.430
  1.460
  1.480
  1.500
  1.520
  1.540
  1.560
  1.570
  1.580
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
  1.650
  1.660
  1.670
  1.680
  1.680
  1.690
  1.690
  1.700
  1.700
  1.710
  1.710
  1.720
  1.720
Adjusted equity ratio
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  55
  60
  66
  72
  78
  84
  91
  98
  105
  113
  149
  157
  165
  174
  183
  193
  203
  213
  224
  235
  247
  260
  273
  286
  300
  315
  331
  347
  364
  382
Depreciation, amort., depletion, $m
  113
  119
  126
  133
  141
  149
  157
  165
  174
  183
  154
  164
  174
  184
  195
  207
  219
  231
  244
  258
  272
  287
  303
  319
  336
  354
  373
  392
  413
  434
Funds from operations, $m
  168
  180
  192
  205
  219
  233
  248
  263
  279
  296
  302
  320
  339
  358
  378
  399
  421
  444
  468
  493
  520
  547
  575
  605
  637
  669
  704
  740
  777
  817
Change in working capital, $m
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
  66
  68
  71
  74
  78
  81
  85
  89
  93
  97
  101
  106
  111
  116
  122
  128
Cash from operations, $m
  130
  140
  151
  163
  175
  187
  200
  213
  227
  242
  247
  262
  278
  295
  313
  331
  350
  370
  391
  412
  435
  458
  483
  508
  535
  563
  593
  623
  655
  689
Maintenance CAPEX, $m
  -68
  -75
  -81
  -88
  -95
  -103
  -110
  -118
  -127
  -135
  -144
  -154
  -164
  -174
  -184
  -195
  -207
  -219
  -231
  -244
  -258
  -272
  -287
  -303
  -319
  -336
  -354
  -373
  -392
  -413
New CAPEX, $m
  -32
  -34
  -35
  -37
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
Cash from investing activities, $m
  -100
  -109
  -116
  -125
  -133
  -142
  -151
  -161
  -171
  -181
  -192
  -204
  -216
  -228
  -240
  -254
  -268
  -283
  -298
  -314
  -331
  -348
  -366
  -386
  -406
  -427
  -449
  -473
  -497
  -523
Free cash flow, $m
  29
  32
  35
  38
  42
  45
  49
  52
  56
  60
  54
  58
  63
  67
  72
  77
  82
  87
  93
  98
  104
  110
  116
  122
  129
  136
  143
  151
  159
  167
Issuance/(repayment) of debt, $m
  62
  64
  67
  69
  72
  75
  78
  81
  84
  87
  91
  95
  98
  103
  107
  111
  116
  121
  127
  132
  138
  144
  151
  158
  165
  173
  181
  189
  198
  208
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  
  62
  64
  67
  69
  72
  75
  78
  81
  84
  87
  91
  95
  98
  103
  107
  111
  116
  121
  127
  132
  138
  144
  151
  158
  165
  173
  181
  189
  198
  208
Total cash flow (excl. dividends), $m
  91
  96
  102
  108
  114
  120
  127
  133
  140
  148
  145
  153
  161
  170
  179
  188
  198
  208
  219
  230
  242
  254
  267
  280
  294
  309
  324
  340
  357
  375
Retained Cash Flow (-), $m
  -34
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -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
  57
  60
  65
  69
  73
  78
  83
  88
  94
  99
  94
  100
  106
  113
  119
  126
  133
  141
  149
  157
  165
  174
  183
  192
  202
  213
  223
  235
  246
  259
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  54
  55
  55
  56
  55
  55
  54
  52
  50
  48
  41
  39
  36
  34
  31
  28
  25
  22
  19
  16
  13
  11
  9
  7
  6
  4
  3
  2
  2
  1
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

Atento S.A. is a provider of customer-relationship management and business-process outsourcing (CRM BPO) services and solutions in Latin America. The Company offers a portfolio of CRM BPO services, including customer care, sales, collections, back office and technical support. The Company operates through three segments: EMEA, Americas and Brazil. Its services and solutions are delivered across multiple channels including digital (short message service (SMS), e-mail, chats, social media and applications, among others) and voice, and are enabled by process design, technology and intelligence functions. The Company also has client relationships across a range of industries working in sectors, such as telecommunications, banking and financial services and multi-sector, which comprise the consumer goods, services, public administration, pay television, healthcare, transportation, technology and media industries.

FINANCIAL RATIOS  of  Atento S.A. (ATTO)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.2
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 2
Price to Free Cash Flow 4
Growth Rates
Sales Growth Rate -9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -27.1%
Cap. Spend. - 3 Yr. Gr. Rate -11.5%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 111.4%
Total Debt to Equity 124.1%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.8%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -4.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 10.2%
EBITDA Margin - 3 Yr. Avg. 10.4%
Operating Margin 6.7%
Oper. Margin - 3 Yr. Avg. 5.6%
Pre-Tax Margin 0.5%
Pre-Tax Margin - 3 Yr. Avg. 1.1%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0.2%
Effective Tax Rate 66.7%
Eff/ Tax Rate - 3 Yr. Avg. 4.9%
Payout Ratio 0%

ATTO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATTO stock intrinsic value calculation we used $1921 million for the last fiscal year's total revenue generated by Atento S.A.. The default revenue input number comes from 0001 income statement of Atento 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 ATTO stock valuation model: a) initial revenue growth rate of 9.3% 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 4.8%, whose default value for ATTO is calculated based on our internal credit rating of Atento 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 Atento 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 ATTO stock the variable cost ratio is equal to 93.4%.

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 ATTO 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 13.8% for Atento S.A..

Corporate tax rate of 27% is the nominal tax rate for Atento 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 ATTO 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 ATTO are equal to 18.1%.

Life of production assets of 5.1 years is the average useful life of capital assets used in Atento 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 ATTO is equal to 21.1%. 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 - $368.363 million for Atento 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 73.909 million for Atento 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 Atento S.A. at the current share price and the inputted number of shares is $0.3 billion.

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