Intrinsic value of Computer Programs and Systems, Inc. - CPSI

Previous Close

$26.99

  Intrinsic Value

$2.20

stock screener

  Rating & Target

str. sell

-92%

Previous close

$26.99

 
Intrinsic value

$2.20

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of CPSI 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, %
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
Revenue, $m
  286
  296
  307
  318
  331
  344
  358
  373
  389
  406
  424
  443
  463
  484
  506
  530
  554
  581
  608
  637
  668
  700
  734
  769
  807
  846
  887
  931
  976
  1,025
Variable operating expenses, $m
  271
  280
  290
  301
  313
  325
  338
  352
  367
  383
  399
  417
  436
  456
  477
  499
  522
  547
  573
  600
  629
  659
  691
  724
  760
  797
  836
  876
  920
  965
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
  271
  280
  290
  301
  313
  325
  338
  352
  367
  383
  399
  417
  436
  456
  477
  499
  522
  547
  573
  600
  629
  659
  691
  724
  760
  797
  836
  876
  920
  965
Operating income, $m
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
EBITDA, $m
  24
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  70
  73
  77
  81
  85
Interest expense (income), $m
  6
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
  33
Earnings before tax, $m
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
Tax expense, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Net income, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20

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
  329
  340
  353
  366
  380
  395
  411
  429
  447
  466
  487
  509
  532
  556
  582
  609
  637
  667
  699
  732
  767
  804
  843
  884
  927
  972
  1,020
  1,070
  1,122
  1,178
Adjusted assets (=assets-cash), $m
  329
  340
  353
  366
  380
  395
  411
  429
  447
  466
  487
  509
  532
  556
  582
  609
  637
  667
  699
  732
  767
  804
  843
  884
  927
  972
  1,020
  1,070
  1,122
  1,178
Revenue / Adjusted assets
  0.869
  0.871
  0.870
  0.869
  0.871
  0.871
  0.871
  0.869
  0.870
  0.871
  0.871
  0.870
  0.870
  0.871
  0.869
  0.870
  0.870
  0.871
  0.870
  0.870
  0.871
  0.871
  0.871
  0.870
  0.871
  0.870
  0.870
  0.870
  0.870
  0.870
Average production assets, $m
  145
  150
  156
  162
  168
  175
  182
  189
  198
  206
  215
  225
  235
  246
  257
  269
  282
  295
  309
  324
  339
  355
  373
  391
  410
  430
  451
  473
  496
  520
Working capital, $m
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  69
  72
  75
  79
  83
Total debt, $m
  148
  155
  162
  170
  178
  186
  196
  206
  216
  227
  239
  251
  264
  278
  293
  308
  325
  342
  360
  379
  399
  420
  443
  466
  491
  516
  544
  572
  602
  634
Total liabilities, $m
  188
  195
  202
  209
  217
  226
  235
  245
  256
  267
  279
  291
  304
  318
  333
  348
  364
  382
  400
  419
  439
  460
  482
  506
  530
  556
  583
  612
  642
  674
Total equity, $m
  141
  146
  151
  157
  163
  169
  176
  183
  191
  200
  208
  218
  228
  238
  249
  261
  273
  286
  299
  313
  328
  344
  361
  378
  397
  416
  437
  458
  480
  504
Total liabilities and equity, $m
  329
  341
  353
  366
  380
  395
  411
  428
  447
  467
  487
  509
  532
  556
  582
  609
  637
  668
  699
  732
  767
  804
  843
  884
  927
  972
  1,020
  1,070
  1,122
  1,178
Debt-to-equity ratio
  1.050
  1.060
  1.070
  1.080
  1.090
  1.100
  1.110
  1.120
  1.130
  1.140
  1.150
  1.150
  1.160
  1.170
  1.180
  1.180
  1.190
  1.200
  1.200
  1.210
  1.220
  1.220
  1.230
  1.230
  1.240
  1.240
  1.250
  1.250
  1.250
  1.260
Adjusted equity ratio
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
Depreciation, amort., depletion, $m
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Funds from operations, $m
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
Cash from operations, $m
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  39
  41
Maintenance CAPEX, $m
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
New CAPEX, $m
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Cash from investing activities, $m
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -28
  -30
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
Free cash flow, $m
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
Issuance/(repayment) of debt, $m
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
Cash from financing (excl. dividends), $m  
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  29
  30
  32
  33
  36
Total cash flow (excl. dividends), $m
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
Retained Cash Flow (-), $m
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -24
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
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Discount rate, %
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
  3
  3
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  99.9
  99.9
  99.9
  99.9
  99.8
  99.8
  99.8
  99.7
  99.6
  99.4
  99.3
  99.1
  99.0
  98.8
  98.6
  98.4
  98.1
  97.9
  97.7
  97.4
  97.1
  96.9

Computer Programs and Systems, Inc. (CPSI) is a provider of healthcare information technology (IT) solutions for rural and community hospitals, and post-acute care facilities. The Company's segments include acute care EHR, post-acute care EHR, and TruBridge, Rycan, and other outsourcing. Its Acute Care EHR segment consists of acute care software solutions and supports sales generated by its subsidiaries, Evident, LLC (Evident) and Healthland Inc. (Healthland). Its Post-acute Care EHR segment consists of post-acute care software solutions and support sales generated by American HealthTech, Inc. (AHT). Its TruBridge, Rycan, and Other Outsourcing segment primarily consists of business management, consulting and managed IT services sales generated by TruBridge, LLC (TruBridge) and the sale of Rycan Technologies, Inc.'s (Rycan's) revenue cycle management workflow and automation software.

FINANCIAL RATIOS  of  Computer Programs and Systems, Inc. (CPSI)

Valuation Ratios
P/E Ratio 91.3
Price to Sales 1.4
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 182.6
Price to Free Cash Flow 182.6
Growth Rates
Sales Growth Rate 46.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 93%
Total Debt to Equity 96.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 18.8%
Return On Total Capital 2.1%
Ret/ On T. Cap. - 3 Yr. Avg. 23%
Return On Equity 3.4%
Return On Equity - 3 Yr. Avg. 23.5%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 51.7%
Gross Margin - 3 Yr. Avg. 53%
EBITDA Margin 10.1%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 5.2%
Oper. Margin - 3 Yr. Avg. 14.5%
Pre-Tax Margin 3%
Pre-Tax Margin - 3 Yr. Avg. 13.7%
Net Profit Margin 1.5%
Net Profit Margin - 3 Yr. Avg. 9.2%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 37.3%
Payout Ratio 625%

CPSI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPSI stock intrinsic value calculation we used $277 million for the last fiscal year's total revenue generated by Computer Programs and Systems, Inc.. The default revenue input number comes from 0001 income statement of Computer Programs and Systems, 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 CPSI stock valuation model: a) initial revenue growth rate of 3.3% 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 8.1%, whose default value for CPSI is calculated based on our internal credit rating of Computer Programs and Systems, 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 Computer Programs and Systems, 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 CPSI stock the variable cost ratio is equal to 94.6%.

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 CPSI 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 Computer Programs and Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for Computer Programs and Systems, 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 CPSI 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 CPSI are equal to 50.8%.

Life of production assets of 20.9 years is the average useful life of capital assets used in Computer Programs and Systems, 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 CPSI is equal to 8.1%. 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 - $136.086 million for Computer Programs and Systems, 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 14.086 million for Computer Programs and Systems, 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 Computer Programs and Systems, Inc. at the current share price and the inputted number of shares is $0.4 billion.

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