Intrinsic value of Coda Octopus Group, Inc. - CODA

Previous Close

$14.77

  Intrinsic Value

$0.45

stock screener

  Rating & Target

str. sell

-97%

Previous close

$14.77

 
Intrinsic value

$0.45

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of CODA 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 0.2

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  29
  44
  67
  97
  136
  187
  251
  330
  425
  536
  666
  814
  982
  1,168
  1,373
  1,598
  1,840
  2,101
  2,380
  2,675
  2,988
  3,317
  3,663
  4,024
  4,402
  4,796
  5,206
  5,633
  6,077
  6,538
Variable operating expenses, $m
  22
  34
  50
  73
  103
  141
  189
  248
  319
  403
  500
  611
  736
  876
  1,030
  1,199
  1,381
  1,576
  1,785
  2,007
  2,242
  2,489
  2,748
  3,019
  3,303
  3,598
  3,906
  4,226
  4,559
  4,905
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
  22
  34
  50
  73
  103
  141
  189
  248
  319
  403
  500
  611
  736
  876
  1,030
  1,199
  1,381
  1,576
  1,785
  2,007
  2,242
  2,489
  2,748
  3,019
  3,303
  3,598
  3,906
  4,226
  4,559
  4,905
Operating income, $m
  7
  11
  16
  24
  34
  46
  62
  82
  106
  133
  166
  203
  245
  292
  343
  399
  460
  525
  594
  668
  746
  829
  915
  1,005
  1,100
  1,198
  1,300
  1,407
  1,518
  1,633
EBITDA, $m
  8
  13
  19
  27
  39
  53
  71
  94
  120
  152
  189
  231
  278
  331
  389
  453
  522
  596
  675
  758
  847
  940
  1,038
  1,141
  1,248
  1,360
  1,476
  1,597
  1,723
  1,853
Interest expense (income), $m
  1
  0
  0
  0
  1
  1
  1
  2
  2
  3
  4
  5
  7
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  34
  37
  41
  45
  49
  53
  57
  62
Earnings before tax, $m
  7
  10
  16
  23
  33
  45
  60
  79
  102
  129
  161
  197
  237
  282
  331
  385
  444
  506
  573
  644
  719
  798
  881
  968
  1,059
  1,153
  1,252
  1,354
  1,461
  1,571
Tax expense, $m
  2
  3
  4
  6
  9
  12
  16
  21
  28
  35
  43
  53
  64
  76
  89
  104
  120
  137
  155
  174
  194
  216
  238
  261
  286
  311
  338
  366
  394
  424
Net income, $m
  5
  8
  11
  17
  24
  33
  44
  58
  75
  94
  118
  144
  173
  206
  242
  281
  324
  370
  418
  470
  525
  583
  643
  707
  773
  842
  914
  989
  1,066
  1,147

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
  38
  58
  87
  126
  178
  244
  328
  431
  554
  700
  870
  1,063
  1,282
  1,525
  1,793
  2,086
  2,402
  2,743
  3,106
  3,493
  3,901
  4,331
  4,782
  5,254
  5,747
  6,261
  6,797
  7,354
  7,933
  8,536
Adjusted assets (=assets-cash), $m
  38
  58
  87
  126
  178
  244
  328
  431
  554
  700
  870
  1,063
  1,282
  1,525
  1,793
  2,086
  2,402
  2,743
  3,106
  3,493
  3,901
  4,331
  4,782
  5,254
  5,747
  6,261
  6,797
  7,354
  7,933
  8,536
Revenue / Adjusted assets
  0.763
  0.759
  0.770
  0.770
  0.764
  0.766
  0.765
  0.766
  0.767
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
Average production assets, $m
  11
  17
  26
  38
  53
  73
  98
  129
  166
  210
  260
  318
  384
  457
  537
  625
  720
  822
  930
  1,046
  1,168
  1,297
  1,432
  1,574
  1,721
  1,875
  2,036
  2,203
  2,376
  2,556
Working capital, $m
  13
  21
  31
  45
  63
  87
  116
  153
  197
  248
  308
  377
  455
  541
  636
  740
  852
  973
  1,102
  1,239
  1,383
  1,536
  1,696
  1,863
  2,038
  2,221
  2,411
  2,608
  2,814
  3,027
Total debt, $m
  4
  7
  11
  17
  24
  34
  46
  61
  78
  99
  124
  152
  183
  218
  257
  299
  345
  394
  446
  502
  560
  622
  687
  755
  826
  900
  977
  1,058
  1,141
  1,228
Total liabilities, $m
  5
  8
  13
  18
  26
  35
  47
  62
  80
  101
  125
  153
  185
  220
  258
  300
  346
  395
  447
  503
  562
  624
  689
  757
  828
  902
  979
  1,059
  1,142
  1,229
Total equity, $m
  32
  50
  74
  108
  152
  209
  281
  369
  475
  599
  744
  910
  1,097
  1,305
  1,535
  1,785
  2,056
  2,348
  2,659
  2,990
  3,339
  3,707
  4,093
  4,497
  4,919
  5,360
  5,818
  6,295
  6,791
  7,306
Total liabilities and equity, $m
  37
  58
  87
  126
  178
  244
  328
  431
  555
  700
  869
  1,063
  1,282
  1,525
  1,793
  2,085
  2,402
  2,743
  3,106
  3,493
  3,901
  4,331
  4,782
  5,254
  5,747
  6,262
  6,797
  7,354
  7,933
  8,535
Debt-to-equity ratio
  0.130
  0.140
  0.150
  0.160
  0.160
  0.160
  0.160
  0.160
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
Adjusted equity ratio
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856
  0.856

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  8
  11
  17
  24
  33
  44
  58
  75
  94
  118
  144
  173
  206
  242
  281
  324
  370
  418
  470
  525
  583
  643
  707
  773
  842
  914
  989
  1,066
  1,147
Depreciation, amort., depletion, $m
  1
  2
  3
  4
  5
  7
  9
  12
  15
  19
  22
  27
  33
  39
  46
  54
  62
  71
  80
  90
  101
  112
  123
  136
  148
  162
  175
  190
  205
  220
Funds from operations, $m
  6
  10
  14
  21
  29
  40
  53
  70
  90
  113
  140
  171
  206
  245
  288
  335
  386
  440
  499
  560
  626
  695
  767
  842
  921
  1,004
  1,089
  1,178
  1,271
  1,368
Change in working capital, $m
  5
  7
  10
  14
  18
  24
  30
  36
  44
  52
  60
  69
  77
  86
  95
  104
  112
  121
  129
  137
  145
  152
  160
  167
  175
  182
  190
  198
  205
  214
Cash from operations, $m
  1
  2
  4
  7
  11
  16
  23
  33
  46
  61
  80
  102
  129
  159
  193
  231
  273
  320
  370
  423
  481
  542
  607
  675
  746
  821
  899
  981
  1,066
  1,154
Maintenance CAPEX, $m
  -1
  -1
  -1
  -2
  -3
  -5
  -6
  -8
  -11
  -14
  -18
  -22
  -27
  -33
  -39
  -46
  -54
  -62
  -71
  -80
  -90
  -101
  -112
  -123
  -136
  -148
  -162
  -175
  -190
  -205
New CAPEX, $m
  -4
  -6
  -9
  -12
  -16
  -20
  -25
  -31
  -37
  -44
  -51
  -58
  -65
  -73
  -80
  -88
  -95
  -102
  -109
  -116
  -122
  -129
  -135
  -141
  -148
  -154
  -160
  -167
  -174
  -180
Cash from investing activities, $m
  -5
  -7
  -10
  -14
  -19
  -25
  -31
  -39
  -48
  -58
  -69
  -80
  -92
  -106
  -119
  -134
  -149
  -164
  -180
  -196
  -212
  -230
  -247
  -264
  -284
  -302
  -322
  -342
  -364
  -385
Free cash flow, $m
  -4
  -5
  -6
  -7
  -8
  -9
  -8
  -6
  -2
  3
  11
  22
  36
  53
  73
  97
  125
  156
  190
  228
  269
  313
  360
  410
  463
  519
  577
  638
  702
  769
Issuance/(repayment) of debt, $m
  2
  3
  4
  6
  7
  10
  12
  15
  18
  21
  24
  28
  31
  35
  39
  42
  46
  49
  52
  56
  59
  62
  65
  68
  71
  74
  77
  80
  83
  87
Issuance/(repurchase) of shares, $m
  7
  10
  13
  17
  21
  24
  27
  30
  31
  31
  27
  22
  14
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  9
  13
  17
  23
  28
  34
  39
  45
  49
  52
  51
  50
  45
  37
  39
  42
  46
  49
  52
  56
  59
  62
  65
  68
  71
  74
  77
  80
  83
  87
Total cash flow (excl. dividends), $m
  6
  8
  11
  15
  20
  25
  32
  39
  46
  55
  63
  72
  81
  90
  112
  139
  170
  205
  242
  283
  327
  375
  425
  478
  534
  593
  654
  719
  786
  856
Retained Cash Flow (-), $m
  -12
  -18
  -25
  -34
  -44
  -57
  -72
  -88
  -106
  -125
  -145
  -166
  -187
  -208
  -229
  -251
  -271
  -291
  -311
  -331
  -349
  -368
  -386
  -404
  -422
  -440
  -458
  -477
  -496
  -515
Prev. year cash balance distribution, $m
  4
  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
  -2
  -9
  -13
  -18
  -25
  -32
  -40
  -49
  -59
  -70
  -82
  -94
  -106
  -118
  -118
  -111
  -101
  -87
  -69
  -47
  -22
  7
  39
  74
  112
  153
  196
  242
  290
  340
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -2
  -9
  -12
  -15
  -19
  -23
  -27
  -31
  -34
  -37
  -39
  -40
  -40
  -40
  -35
  -28
  -22
  -16
  -11
  -6
  -2
  1
  3
  4
  4
  4
  4
  4
  3
  3
Current shareholders' claim on cash, %
  94.7
  90.4
  86.8
  83.9
  81.5
  79.5
  78.0
  76.7
  75.7
  75.0
  74.4
  74.1
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9
  73.9

Coda Octopus Group, Inc. designs and manufactures real time three-dimensional (3D) sonar solutions and other products for sale to the subsea, defense, mining and marine sciences markets, among others. In addition, the Company supplies, through its marine engineering businesses, services to prime defense contractors. The Company operates through two segments: Marine Technology Business (Products segment) and Marine Engineering Business (Services segment). The Products segment sells marine products in range of market segments, including commercial marine geophysical survey; oil and gas; energy and renewables; underwater security, law enforcement and naval operations; underwater construction; environmental applications, and salvage and decommissioning. The Services segment includes Coda Octopus Colmek, Inc. and Coda Octopus Martech Limited. The Services segment provides engineering services to a range of clients in the defense markets.

FINANCIAL RATIOS  of  Coda Octopus Group, Inc. (CODA)

Valuation Ratios
P/E Ratio 26.9
Price to Sales 6.4
Price to Book 13.4
Price to Tangible Book
Price to Cash Flow 33.6
Price to Free Cash Flow 44.8
Growth Rates
Sales Growth Rate 10.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 90%
Total Debt to Equity 100%
Interest Coverage 6
Management Effectiveness
Return On Assets 26.7%
Ret/ On Assets - 3 Yr. Avg. 16.9%
Return On Total Capital 25.6%
Ret/ On T. Cap. - 3 Yr. Avg. 13.9%
Return On Equity 71.4%
Return On Equity - 3 Yr. Avg. 66.7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 59%
EBITDA Margin 33.3%
EBITDA Margin - 3 Yr. Avg. 20.9%
Operating Margin 23.8%
Oper. Margin - 3 Yr. Avg. 17.7%
Pre-Tax Margin 23.8%
Pre-Tax Margin - 3 Yr. Avg. 13.9%
Net Profit Margin 23.8%
Net Profit Margin - 3 Yr. Avg. 13.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CODA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CODA stock intrinsic value calculation we used $18 million for the last fiscal year's total revenue generated by Coda Octopus Group, Inc.. The default revenue input number comes from 0001 income statement of Coda Octopus Group, Inc.. 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 CODA stock valuation model: a) initial revenue growth rate of 60% 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 4.3%, whose default value for CODA is calculated based on our internal credit rating of Coda Octopus Group, Inc., 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 Coda Octopus Group, Inc..
    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 CODA stock the variable cost ratio is equal to 77.8%.

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 CODA 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 5.4% for Coda Octopus Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Coda Octopus Group, Inc.. 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 CODA 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 CODA are equal to 39.1%.

Life of production assets of 11.6 years is the average useful life of capital assets used in Coda Octopus Group, Inc. 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 CODA is equal to 46.3%. 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 - $24.38695 million for Coda Octopus Group, Inc. - 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 10.665 million for Coda Octopus Group, Inc. 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 Coda Octopus Group, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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