Intrinsic value of Atento - ATTO

Previous Close

$11.55

  Intrinsic Value

$11.67

stock screener

  Rating & Target

hold

+1%

Previous close

$11.55

 
Intrinsic value

$11.67

 
Up/down potential

+1%

 
Rating

hold

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

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 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 0.9

 

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, %
  -9.85
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
Revenue, $m
  1,758
  1,856
  1,959
  2,067
  2,179
  2,297
  2,420
  2,548
  2,683
  2,824
  2,972
  3,127
  3,289
  3,459
  3,637
  3,824
  4,020
  4,226
  4,441
  4,667
  4,904
  5,153
  5,414
  5,688
  5,975
  6,277
  6,594
  6,926
  7,274
  7,640
  8,025
Variable operating expenses, $m
 
  1,739
  1,834
  1,934
  2,038
  2,148
  2,262
  2,381
  2,506
  2,637
  2,775
  2,904
  3,054
  3,212
  3,378
  3,551
  3,733
  3,924
  4,124
  4,334
  4,555
  4,786
  5,028
  5,282
  5,549
  5,829
  6,123
  6,432
  6,756
  7,096
  7,452
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
  1,641
  1,739
  1,834
  1,934
  2,038
  2,148
  2,262
  2,381
  2,506
  2,637
  2,775
  2,904
  3,054
  3,212
  3,378
  3,551
  3,733
  3,924
  4,124
  4,334
  4,555
  4,786
  5,028
  5,282
  5,549
  5,829
  6,123
  6,432
  6,756
  7,096
  7,452
Operating income, $m
  116
  118
  125
  133
  141
  149
  158
  167
  177
  187
  197
  223
  235
  247
  259
  273
  287
  301
  317
  333
  350
  367
  386
  406
  426
  448
  470
  494
  519
  545
  572
EBITDA, $m
  213
  209
  220
  232
  245
  258
  272
  286
  302
  317
  334
  351
  370
  389
  409
  430
  452
  475
  499
  524
  551
  579
  608
  639
  671
  705
  741
  778
  817
  859
  902
Interest expense (income), $m
  73
  63
  69
  76
  83
  91
  99
  107
  115
  124
  134
  144
  154
  165
  176
  188
  200
  213
  227
  241
  256
  272
  289
  306
  324
  343
  363
  384
  406
  430
  454
Earnings before tax, $m
  9
  55
  56
  57
  57
  58
  59
  60
  61
  62
  64
  79
  81
  82
  83
  85
  86
  88
  90
  92
  93
  95
  98
  100
  102
  104
  107
  110
  112
  115
  118
Tax expense, $m
  6
  15
  15
  15
  15
  16
  16
  16
  17
  17
  17
  21
  22
  22
  23
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
Net income, $m
  0
  40
  41
  41
  42
  43
  43
  44
  45
  46
  46
  58
  59
  60
  61
  62
  63
  64
  66
  67
  68
  70
  71
  73
  74
  76
  78
  80
  82
  84
  86

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  195
  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
  1,378
  1,249
  1,319
  1,391
  1,466
  1,546
  1,628
  1,715
  1,806
  1,901
  2,000
  2,104
  2,213
  2,328
  2,448
  2,573
  2,705
  2,844
  2,989
  3,141
  3,300
  3,468
  3,643
  3,828
  4,021
  4,224
  4,437
  4,661
  4,895
  5,142
  5,400
Adjusted assets (=assets-cash), $m
  1,183
  1,249
  1,319
  1,391
  1,466
  1,546
  1,628
  1,715
  1,806
  1,901
  2,000
  2,104
  2,213
  2,328
  2,448
  2,573
  2,705
  2,844
  2,989
  3,141
  3,300
  3,468
  3,643
  3,828
  4,021
  4,224
  4,437
  4,661
  4,895
  5,142
  5,400
Revenue / Adjusted assets
  1.486
  1.486
  1.485
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
  1.486
Average production assets, $m
  405
  427
  451
  475
  501
  528
  557
  586
  617
  650
  684
  719
  756
  796
  837
  880
  925
  972
  1,021
  1,073
  1,128
  1,185
  1,245
  1,308
  1,374
  1,444
  1,517
  1,593
  1,673
  1,757
  1,846
Working capital, $m
  226
  91
  96
  101
  107
  113
  119
  125
  131
  138
  146
  153
  161
  169
  178
  187
  197
  207
  218
  229
  240
  252
  265
  279
  293
  308
  323
  339
  356
  374
  393
Total debt, $m
  535
  530
  582
  637
  694
  753
  816
  881
  949
  1,021
  1,096
  1,175
  1,257
  1,343
  1,434
  1,528
  1,628
  1,732
  1,841
  1,956
  2,076
  2,203
  2,335
  2,474
  2,620
  2,773
  2,934
  3,102
  3,279
  3,465
  3,660
Total liabilities, $m
  947
  942
  994
  1,049
  1,106
  1,165
  1,228
  1,293
  1,361
  1,433
  1,508
  1,587
  1,669
  1,755
  1,846
  1,940
  2,040
  2,144
  2,253
  2,368
  2,488
  2,615
  2,747
  2,886
  3,032
  3,185
  3,346
  3,514
  3,691
  3,877
  4,072
Total equity, $m
  431
  307
  324
  342
  361
  380
  401
  422
  444
  468
  492
  518
  544
  573
  602
  633
  665
  700
  735
  773
  812
  853
  896
  942
  989
  1,039
  1,092
  1,147
  1,204
  1,265
  1,328
Total liabilities and equity, $m
  1,378
  1,249
  1,318
  1,391
  1,467
  1,545
  1,629
  1,715
  1,805
  1,901
  2,000
  2,105
  2,213
  2,328
  2,448
  2,573
  2,705
  2,844
  2,988
  3,141
  3,300
  3,468
  3,643
  3,828
  4,021
  4,224
  4,438
  4,661
  4,895
  5,142
  5,400
Debt-to-equity ratio
  1.241
  1.720
  1.790
  1.860
  1.920
  1.980
  2.040
  2.090
  2.140
  2.180
  2.230
  2.270
  2.310
  2.350
  2.380
  2.410
  2.450
  2.480
  2.500
  2.530
  2.560
  2.580
  2.610
  2.630
  2.650
  2.670
  2.690
  2.710
  2.720
  2.740
  2.750
Adjusted equity ratio
  0.199
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  40
  41
  41
  42
  43
  43
  44
  45
  46
  46
  58
  59
  60
  61
  62
  63
  64
  66
  67
  68
  70
  71
  73
  74
  76
  78
  80
  82
  84
  86
Depreciation, amort., depletion, $m
  97
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  128
  135
  142
  149
  157
  165
  174
  182
  192
  201
  212
  222
  234
  245
  258
  271
  284
  299
  314
  330
Funds from operations, $m
  97
  131
  136
  141
  146
  151
  157
  163
  170
  176
  183
  186
  194
  202
  210
  219
  228
  238
  248
  259
  270
  281
  294
  306
  320
  334
  349
  364
  381
  398
  416
Change in working capital, $m
  -45
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
Cash from operations, $m
  142
  126
  131
  135
  140
  146
  151
  157
  163
  169
  176
  179
  186
  194
  202
  210
  219
  228
  237
  247
  258
  269
  281
  293
  306
  319
  333
  348
  364
  380
  397
Maintenance CAPEX, $m
  0
  -72
  -76
  -80
  -85
  -90
  -94
  -99
  -105
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -165
  -174
  -182
  -192
  -201
  -212
  -222
  -234
  -245
  -258
  -271
  -284
  -299
  -314
New CAPEX, $m
  -70
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
Cash from investing activities, $m
  -75
  -94
  -100
  -105
  -111
  -117
  -122
  -129
  -136
  -142
  -150
  -158
  -165
  -174
  -183
  -192
  -202
  -212
  -224
  -234
  -247
  -258
  -272
  -285
  -300
  -314
  -331
  -347
  -364
  -383
  -402
Free cash flow, $m
  67
  32
  31
  30
  30
  29
  29
  28
  27
  27
  26
  21
  20
  19
  18
  18
  16
  15
  14
  13
  12
  10
  9
  8
  6
  4
  3
  1
  -1
  -3
  -5
Issuance/(repayment) of debt, $m
  -63
  50
  52
  55
  57
  60
  62
  65
  68
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  115
  120
  126
  132
  139
  146
  153
  161
  169
  177
  186
  195
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
  0
Cash from financing (excl. dividends), $m  
  -63
  50
  52
  55
  57
  60
  62
  65
  68
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  115
  120
  126
  132
  139
  146
  153
  161
  169
  177
  186
  195
Total cash flow (excl. dividends), $m
  10
  82
  83
  85
  87
  89
  91
  93
  96
  98
  101
  100
  103
  106
  109
  112
  116
  120
  124
  128
  132
  137
  142
  147
  152
  157
  163
  169
  176
  183
  190
Retained Cash Flow (-), $m
  -33
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -52
  -55
  -58
  -61
  -64
Prev. year cash balance distribution, $m
 
  140
  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
 
  205
  66
  67
  68
  69
  71
  72
  73
  75
  76
  74
  76
  78
  79
  81
  83
  86
  88
  90
  93
  96
  98
  101
  104
  108
  111
  114
  118
  122
  126
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  196
  60
  57
  55
  52
  49
  46
  43
  40
  37
  32
  29
  26
  23
  20
  18
  15
  13
  11
  9
  7
  6
  5
  4
  3
  2
  1
  1
  1
  1
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
  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 (ATTO)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.5
Price to Book 2
Price to Tangible Book
Price to Cash Flow 6
Price to Free Cash Flow 11.9
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 $1758 million for the last fiscal year's total revenue generated by Atento. The default revenue input number comes from 2016 income statement of Atento. 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 5.6% 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 4.9%, whose default value for ATTO is calculated based on our internal credit rating of Atento, 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.
    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 93.7%.

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 13.1% for Atento.

Corporate tax rate of 27% is the nominal tax rate for Atento. 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 23%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Atento 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 4.9%. 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 - $431 million for Atento - 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 73.752 million for Atento 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 at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ Top Ranked Value Stocks to Buy for October 9th   [Oct-09-17 07:53AM  Zacks]
▶ Should You Be Holding Atento SA (ATTO) Right Now?   [Oct-02-17 11:27AM  Simply Wall St.]
▶ Atento SA Value Analysis (NYSE:ATTO) : September 26, 2017   [Sep-26-17 11:14AM  Capital Cube]
▶ New Strong Buy Stocks for September 25th   [Sep-25-17 09:05AM  Zacks]
▶ Atento Board Approves Dividend Policy   [08:05AM  PR Newswire]
▶ Atento reports 2Q loss   [Aug-14-17 11:52PM  Associated Press]
▶ Atento Announces Pricing of Senior Secured Notes   [Jul-28-17 08:00AM  PR Newswire]
▶ Atento Sets Date for Fiscal 2017 Second Quarter Results   [Jul-21-17 09:57AM  PR Newswire]
▶ Atento Announces Intention to Offer Senior Secured Notes   [Jul-20-17 09:09AM  PR Newswire]
▶ Atento Appoints David Cardoso as Atento Digital Director   [Jun-30-17 12:19PM  PR Newswire]
▶ Atento beats 1Q profit forecasts   [07:30PM  Associated Press]
▶ Atento beats 4Q profit forecasts   [05:07PM  Associated Press]
Financial statements of ATTO
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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