Intrinsic value of CounterPath - CPAH

Previous Close

$2.12

  Intrinsic Value

$0.05

stock screener

  Rating & Target

str. sell

-98%

Previous close

$2.12

 
Intrinsic value

$0.05

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of CPAH 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 0.0

 

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, %
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
Revenue, $m
  15
  17
  20
  22
  26
  29
  32
  36
  39
  43
  48
  52
  56
  61
  66
  71
  76
  82
  87
  93
  99
  106
  112
  119
  126
  134
  142
  150
  158
  167
Variable operating expenses, $m
  17
  20
  23
  26
  29
  33
  36
  40
  45
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  125
  132
  140
  149
  157
  166
  176
  186
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  19
  22
  25
  28
  31
  35
  38
  42
  47
  51
  56
  61
  66
  71
  76
  82
  88
  94
  100
  106
  113
  120
  128
  135
  143
  153
  161
  170
  180
  190
Operating income, $m
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
EBITDA, $m
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
Earnings before tax, $m
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -9
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
Tax expense, $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
Net income, $m
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -9
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26

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
  16
  19
  22
  25
  28
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  104
  110
  117
  125
  132
  140
  149
  157
  166
  176
  186
Adjusted assets (=assets-cash), $m
  16
  19
  22
  25
  28
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  104
  110
  117
  125
  132
  140
  149
  157
  166
  176
  186
Revenue / Adjusted assets
  0.938
  0.895
  0.909
  0.880
  0.929
  0.906
  0.889
  0.900
  0.886
  0.896
  0.906
  0.897
  0.889
  0.897
  0.904
  0.899
  0.894
  0.901
  0.897
  0.894
  0.900
  0.906
  0.896
  0.902
  0.900
  0.899
  0.904
  0.904
  0.898
  0.898
Average production assets, $m
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  40
  42
  44
  47
  49
Working capital, $m
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
Total debt, $m
  1
  2
  3
  4
  6
  7
  9
  10
  12
  13
  15
  17
  19
  21
  23
  25
  27
  30
  32
  34
  37
  40
  43
  45
  49
  52
  55
  58
  62
  66
Total liabilities, $m
  6
  7
  8
  10
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
  64
  67
  71
Total equity, $m
  10
  12
  13
  15
  18
  20
  22
  25
  27
  30
  33
  36
  39
  42
  45
  49
  52
  56
  60
  64
  68
  73
  77
  82
  87
  92
  97
  103
  109
  115
Total liabilities and equity, $m
  16
  19
  21
  25
  29
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  84
  91
  97
  104
  110
  118
  125
  133
  141
  149
  157
  167
  176
  186
Debt-to-equity ratio
  0.110
  0.180
  0.240
  0.290
  0.330
  0.360
  0.390
  0.410
  0.430
  0.450
  0.460
  0.480
  0.490
  0.500
  0.510
  0.510
  0.520
  0.530
  0.530
  0.540
  0.540
  0.550
  0.550
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
Adjusted equity ratio
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -9
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
Funds from operations, $m
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
Cash from investing activities, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -5
Free cash flow, $m
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
Issuance/(repurchase) of shares, $m
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
Cash from financing (excl. dividends), $m  
  7
  7
  8
  8
  9
  10
  10
  12
  13
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  29
  30
  32
  34
  36
Total cash flow (excl. dividends), $m
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
Retained Cash Flow (-), $m
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
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
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
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
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  67.2
  47.4
  34.1
  25.1
  18.7
  14.1
  10.8
  8.3
  6.5
  5.1
  4.1
  3.3
  2.7
  2.2
  1.8
  1.4
  1.2
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1

CounterPath Corporation designs, develops and sells software and services that enable enterprises and telecommunication service providers to deliver unified communications (UC) services, including voice, video, messaging and collaboration functionality, over their Internet Protocol (IP)-based networks. The Company's solutions range from software products to cloud-based services. Its software products include applications for smartphones, tablets and desktop computers, a Software Development Kit (SDK) for software developers seeking to add voice, video and messaging capabilities to their existing applications, and server-based software solutions for configuring, managing and supporting softphones and for deploying messaging and collaboration services. These software products are also available to customers in the form of cloud-based hosted services. The Company is focused on selling its software products to enterprises, telecommunication service providers and channel partners.

FINANCIAL RATIOS  of  CounterPath (CPAH)

Valuation Ratios
P/E Ratio -5.2
Price to Sales 1
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow -10.5
Price to Free Cash Flow -10.5
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -16.7%
Ret/ On Assets - 3 Yr. Avg. -21%
Return On Total Capital -25%
Ret/ On T. Cap. - 3 Yr. Avg. -29.5%
Return On Equity -25%
Return On Equity - 3 Yr. Avg. -29.5%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 81.8%
Gross Margin - 3 Yr. Avg. 82.3%
EBITDA Margin -18.2%
EBITDA Margin - 3 Yr. Avg. -26.3%
Operating Margin -27.3%
Oper. Margin - 3 Yr. Avg. -32.1%
Pre-Tax Margin -18.2%
Pre-Tax Margin - 3 Yr. Avg. -26.3%
Net Profit Margin -18.2%
Net Profit Margin - 3 Yr. Avg. -26.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CPAH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPAH stock intrinsic value calculation we used $12.381741 million for the last fiscal year's total revenue generated by CounterPath. The default revenue input number comes from 0001 income statement of CounterPath. 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 CPAH stock valuation model: a) initial revenue growth rate of 17.9% 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 CPAH is calculated based on our internal credit rating of CounterPath, 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 CounterPath.
    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 CPAH stock the variable cost ratio is equal to 116.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for CPAH 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 CounterPath.

Corporate tax rate of 27% is the nominal tax rate for CounterPath. 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 CPAH 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 CPAH are equal to 29.6%.

Life of production assets of 61.3 years is the average useful life of capital assets used in CounterPath 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 CPAH is equal to -12.2%. 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 - $8.241186 million for CounterPath - 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 5.933 million for CounterPath 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 CounterPath at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ CounterPath Enters into Loan Agreement   [Oct-11-18 04:25PM  FSCWire]
▶ CounterPath Enters into Loan Agreement   [04:20PM  ACCESSWIRE]
▶ CounterPath Announces Resignation of CEO   [Sep-18-18 08:15AM  ACCESSWIRE]
▶ CounterPath: Fiscal 4Q Earnings Snapshot   [Jul-25-18 08:36AM  Associated Press]
▶ 3 Tech Stocks Under $10 to Buy Now   [Feb-08-18 12:54PM  Zacks]
▶ CounterPath Announces Closing of Private Placement   [Jan-24-18 08:50PM  GlobeNewswire]
▶ CounterPath Announces Private Placement   [08:30AM  GlobeNewswire]
▶ CounterPath Expands Partnership with Telegate   [Jan-18-18 08:15AM  ACCESSWIRE]
▶ 3 Tech Stocks Under $10 to Buy Now   [Jan-08-18 01:47PM  Zacks]
▶ 3 Buy-Ranked Tech Stocks That Soared This Month   [Dec-28-17 02:02PM  Zacks]
▶ CounterPath posts 2Q profit   [Dec-14-17 08:33AM  Associated Press]
▶ CounterPath reports 1Q loss   [12:00AM  Associated Press]
▶ CounterPath reports 4Q loss   [Jul-13-17 06:59PM  Associated Press]
▶ CounterPath reports 3Q loss   [Mar-13-17 08:26AM  Associated Press]
▶ CounterPath Closes Private Placement   [Dec-15-16 08:01PM  Marketwired]
▶ CounterPath Announces Private Placement   [Dec-14-16 08:25AM  Marketwired]

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