Intrinsic value of GP Strategies - GPX

Previous Close

$14.20

  Intrinsic Value

$24.73

stock screener

  Rating & Target

str. buy

+74%

Previous close

$14.20

 
Intrinsic value

$24.73

 
Up/down potential

+74%

 
Rating

str. buy

We calculate the intrinsic value of GPX 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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  519
  531
  545
  560
  577
  596
  616
  638
  662
  687
  714
  743
  774
  807
  842
  879
  918
  959
  1,003
  1,049
  1,098
  1,149
  1,203
  1,260
  1,320
  1,383
  1,449
  1,519
  1,593
  1,670
Variable operating expenses, $m
  485
  496
  508
  522
  538
  555
  573
  593
  614
  637
  647
  673
  701
  730
  762
  795
  831
  868
  908
  949
  993
  1,040
  1,089
  1,140
  1,194
  1,251
  1,312
  1,375
  1,441
  1,512
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
  485
  496
  508
  522
  538
  555
  573
  593
  614
  637
  647
  673
  701
  730
  762
  795
  831
  868
  908
  949
  993
  1,040
  1,089
  1,140
  1,194
  1,251
  1,312
  1,375
  1,441
  1,512
Operating income, $m
  34
  35
  37
  38
  40
  41
  43
  45
  48
  50
  68
  71
  74
  77
  80
  84
  87
  91
  95
  100
  104
  109
  114
  120
  125
  131
  138
  144
  151
  159
EBITDA, $m
  53
  54
  56
  57
  59
  61
  63
  65
  68
  70
  73
  76
  79
  82
  86
  90
  94
  98
  102
  107
  112
  117
  123
  129
  135
  141
  148
  155
  163
  171
Interest expense (income), $m
  0
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
Earnings before tax, $m
  31
  31
  33
  34
  35
  37
  38
  40
  42
  44
  61
  63
  66
  68
  71
  74
  77
  80
  83
  87
  91
  95
  99
  103
  108
  113
  118
  123
  129
  135
Tax expense, $m
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  16
  17
  18
  18
  19
  20
  21
  22
  23
  23
  24
  26
  27
  28
  29
  30
  32
  33
  35
  36
Net income, $m
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  45
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98

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
  373
  381
  391
  402
  414
  428
  442
  458
  475
  493
  513
  533
  555
  579
  604
  630
  658
  688
  719
  752
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
Adjusted assets (=assets-cash), $m
  373
  381
  391
  402
  414
  428
  442
  458
  475
  493
  513
  533
  555
  579
  604
  630
  658
  688
  719
  752
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
Revenue / Adjusted assets
  1.391
  1.394
  1.394
  1.393
  1.394
  1.393
  1.394
  1.393
  1.394
  1.394
  1.392
  1.394
  1.395
  1.394
  1.394
  1.395
  1.395
  1.394
  1.395
  1.395
  1.395
  1.394
  1.394
  1.394
  1.394
  1.394
  1.393
  1.394
  1.394
  1.394
Average production assets, $m
  78
  80
  82
  84
  87
  89
  92
  96
  99
  103
  107
  112
  116
  121
  126
  132
  138
  144
  150
  157
  165
  172
  180
  189
  198
  207
  217
  228
  239
  251
Working capital, $m
  77
  79
  81
  83
  86
  89
  92
  95
  99
  102
  106
  111
  115
  120
  125
  131
  137
  143
  149
  156
  164
  171
  179
  188
  197
  206
  216
  226
  237
  249
Total debt, $m
  69
  74
  78
  84
  90
  96
  103
  111
  119
  128
  137
  147
  158
  170
  182
  195
  208
  222
  238
  254
  271
  288
  307
  327
  348
  370
  393
  417
  443
  470
Total liabilities, $m
  181
  185
  190
  195
  201
  207
  214
  222
  230
  239
  249
  259
  269
  281
  293
  306
  319
  334
  349
  365
  382
  400
  419
  438
  459
  481
  504
  529
  554
  581
Total equity, $m
  192
  196
  201
  207
  213
  220
  228
  236
  245
  254
  264
  275
  286
  298
  311
  325
  339
  354
  370
  388
  405
  424
  444
  465
  488
  511
  535
  561
  588
  617
Total liabilities and equity, $m
  373
  381
  391
  402
  414
  427
  442
  458
  475
  493
  513
  534
  555
  579
  604
  631
  658
  688
  719
  753
  787
  824
  863
  903
  947
  992
  1,039
  1,090
  1,142
  1,198
Debt-to-equity ratio
  0.360
  0.370
  0.390
  0.400
  0.420
  0.440
  0.450
  0.470
  0.490
  0.500
  0.520
  0.540
  0.550
  0.570
  0.580
  0.600
  0.610
  0.630
  0.640
  0.650
  0.670
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
Adjusted equity ratio
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  45
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98
Depreciation, amort., depletion, $m
  19
  19
  19
  19
  19
  20
  20
  20
  20
  20
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
Funds from operations, $m
  41
  42
  43
  44
  45
  46
  47
  49
  50
  52
  50
  51
  53
  55
  58
  60
  63
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
  105
  110
Change in working capital, $m
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
Cash from operations, $m
  40
  40
  41
  42
  42
  43
  44
  46
  47
  48
  46
  47
  49
  51
  52
  55
  57
  59
  61
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
Maintenance CAPEX, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
New CAPEX, $m
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
Cash from investing activities, $m
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -12
  -14
  -14
  -14
  -16
  -16
  -17
  -18
  -18
  -20
  -20
  -22
  -23
Free cash flow, $m
  35
  35
  35
  35
  36
  37
  37
  38
  39
  40
  37
  38
  39
  40
  42
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
Issuance/(repayment) of debt, $m
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
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  
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
Total cash flow (excl. dividends), $m
  39
  39
  40
  41
  42
  43
  44
  46
  47
  49
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
Retained Cash Flow (-), $m
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
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
  35
  35
  35
  35
  36
  36
  37
  37
  38
  39
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
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
  33
  32
  30
  29
  28
  26
  25
  23
  22
  21
  17
  16
  15
  13
  12
  11
  10
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  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

GP Strategies Corporation is a global performance improvement solutions provider of training, e-Learning solutions, management consulting and engineering services. The Company operates through four business segments: Learning Solutions, Professional & Technical Services, Sandy Training & Marketing, and Performance Readiness Solutions. The Learning Solutions segment delivers training, curriculum design and development, e-Learning services, system hosting, training business process outsourcing and consulting services globally. The Professional & Technical Services segment provides training, consulting, engineering and technical services, including lean consulting, emergency preparedness, safety and regulatory compliance, chemical demilitarization and environmental services. The Sandy Training & Marketing segment provides custom product sales training. The Performance Readiness Solutions segment provides performance consulting and technology consulting services. _tck('aft');

FINANCIAL RATIOS  of  GP Strategies (GPX)

Valuation Ratios
P/E Ratio 11.3
Price to Sales 0.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 17
Price to Free Cash Flow 30.2
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 133.3%
Cap. Spend. - 3 Yr. Gr. Rate 28.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 9.2%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 13.3%
Ret/ On T. Cap. - 3 Yr. Avg. 13.9%
Return On Equity 13.3%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 17.4%
Gross Margin - 3 Yr. Avg. 17.5%
EBITDA Margin 10.8%
EBITDA Margin - 3 Yr. Avg. 10.6%
Operating Margin 8.9%
Oper. Margin - 3 Yr. Avg. 8.8%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 5.5%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 36.8%
Eff/ Tax Rate - 3 Yr. Avg. 36.2%
Payout Ratio 0%

GPX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GPX stock intrinsic value calculation we used $509.208 million for the last fiscal year's total revenue generated by GP Strategies. The default revenue input number comes from 0001 income statement of GP Strategies. 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 GPX stock valuation model: a) initial revenue growth rate of 2% 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 GPX is calculated based on our internal credit rating of GP Strategies, 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 GP Strategies.
    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 GPX stock the variable cost ratio is equal to 93.5%.

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 GPX 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 GP Strategies.

Corporate tax rate of 27% is the nominal tax rate for GP Strategies. 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 GPX 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 GPX are equal to 15%.

Life of production assets of 21.3 years is the average useful life of capital assets used in GP Strategies 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 GPX is equal to 14.9%. 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 - $188.054 million for GP Strategies - 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 16.535 million for GP Strategies 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 GP Strategies at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ GP Strategies: 3Q Earnings Snapshot   [08:32AM  Associated Press]
▶ GP Strategies Goes Live on Oracle ERP Cloud   [Oct-23-18 06:45AM  PR Newswire]
▶ The top Baltimore-area performers during the stock market's longest bull run   [Aug-22-18 03:03PM  American City Business Journals]
▶ GP Strategies Elects New Board Members   [Aug-15-18 06:45AM  PR Newswire]
▶ GP Strategies: 2Q Earnings Snapshot   [08:30AM  Associated Press]
▶ GP Strategies: 1Q Earnings Snapshot   [08:28AM  Associated Press]
▶ GP Strategies Announces Agreement with ManchesterCF   [Apr-10-18 06:45AM  PR Newswire]
▶ GP Strategies to Present at 30th Annual ROTH Conference   [Mar-05-18 03:27PM  PR Newswire]
▶ GP Strategies reports 4Q loss   [07:07AM  Associated Press]
▶ GP Strategies Reports Record 2017 Revenue   [06:45AM  PR Newswire]
▶ Bet on These 5 PEG-Ratio Based GARP Picks   [Jan-09-18 07:42AM  Zacks]
▶ Wired News - GP Strategies Acquired Hula Partners   [Dec-22-17 07:40AM  ACCESSWIRE]
▶ GP Strategies to Acquire Hula Partners   [Dec-20-17 06:45AM  PR Newswire]
▶ New Strong Sell Stocks for November 29th   [Nov-29-17 07:57AM  Zacks]
▶ GP Strategies beats 3Q profit forecasts   [Nov-02-17 08:27AM  Associated Press]
▶ GP Strategies Corporation (GPX): Poised For Long-Term Success?   [Oct-30-17 08:41AM  Simply Wall St.]
▶ 5 Stocks With Exciting Interest Coverage Ratio   [Sep-18-17 10:14AM  Zacks]
▶ GP Strategies Acquires YouTrain   [Sep-05-17 06:45AM  PR Newswire]
▶ Top Ranked Value Stocks to Buy for August 29th   [Aug-29-17 10:12AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for August 23rd   [Aug-23-17 10:31AM  Zacks]
▶ GP Strategies Releases New eBook on Micro-learning   [Aug-08-17 07:00AM  PR Newswire]
▶ GP Strategies beats 2Q profit forecasts   [Jul-27-17 09:15PM  Associated Press]
▶ New Strong Sell Stocks for June 15th   [Jun-15-17 08:35AM  Zacks]
▶ ETFs with exposure to GP Strategies Corp. : May 4, 2017   [May-04-17 04:00PM  Capital Cube]
▶ GP Strategies meets 1Q profit forecasts   [May-02-17 06:57AM  Associated Press]
▶ GP Strategies Acquires Emantras   [Apr-04-17 06:45AM  PR Newswire]

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