Intrinsic value of I.D. Systems, Inc. - IDSY

Previous Close

$5.09

  Intrinsic Value

$12.32

stock screener

  Rating & Target

str. buy

+142%

Previous close

$5.09

 
Intrinsic value

$12.32

 
Up/down potential

+142%

 
Rating

str. buy

We calculate the intrinsic value of IDSY 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 0.1

 

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, %
  20.70
  19.13
  17.72
  16.45
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
Revenue, $m
  49
  59
  69
  81
  93
  106
  121
  136
  152
  169
  186
  205
  224
  244
  265
  287
  310
  333
  358
  383
  410
  437
  466
  496
  527
  559
  592
  628
  664
  702
Variable operating expenses, $m
  22
  26
  30
  35
  41
  46
  52
  59
  66
  73
  80
  88
  97
  105
  114
  124
  134
  144
  154
  165
  177
  189
  201
  214
  227
  241
  256
  271
  287
  303
Fixed operating expenses, $m
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
Total operating expenses, $m
  51
  55
  60
  66
  72
  78
  85
  92
  100
  108
  116
  124
  134
  143
  153
  164
  175
  185
  196
  208
  221
  234
  247
  261
  275
  290
  306
  322
  340
  357
Operating income, $m
  -1
  4
  9
  15
  21
  28
  36
  44
  52
  61
  70
  80
  90
  101
  112
  123
  135
  148
  161
  175
  189
  203
  219
  234
  251
  268
  286
  305
  325
  345
EBITDA, $m
  0
  5
  11
  17
  23
  30
  38
  46
  55
  64
  74
  84
  94
  105
  117
  128
  141
  154
  167
  181
  196
  211
  227
  243
  260
  278
  297
  316
  336
  358
Interest expense (income), $m
  0
  0
  1
  3
  4
  6
  8
  10
  12
  15
  17
  20
  23
  26
  29
  32
  35
  38
  42
  46
  49
  53
  58
  62
  66
  71
  76
  81
  86
  92
  97
Earnings before tax, $m
  -1
  3
  6
  11
  15
  20
  25
  31
  37
  43
  50
  57
  65
  72
  80
  88
  97
  106
  115
  125
  135
  146
  157
  168
  180
  192
  205
  219
  233
  248
Tax expense, $m
  0
  1
  2
  3
  4
  5
  7
  8
  10
  12
  14
  15
  17
  19
  22
  24
  26
  29
  31
  34
  36
  39
  42
  45
  49
  52
  55
  59
  63
  67
Net income, $m
  -1
  2
  5
  8
  11
  15
  19
  23
  27
  32
  37
  42
  47
  53
  59
  65
  71
  77
  84
  91
  99
  106
  114
  123
  131
  141
  150
  160
  170
  181

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
  74
  88
  103
  120
  138
  158
  179
  202
  225
  250
  277
  304
  333
  363
  394
  426
  460
  495
  532
  569
  609
  650
  692
  736
  782
  830
  880
  932
  987
  1,043
Adjusted assets (=assets-cash), $m
  74
  88
  103
  120
  138
  158
  179
  202
  225
  250
  277
  304
  333
  363
  394
  426
  460
  495
  532
  569
  609
  650
  692
  736
  782
  830
  880
  932
  987
  1,043
Revenue / Adjusted assets
  0.662
  0.670
  0.670
  0.675
  0.674
  0.671
  0.676
  0.673
  0.676
  0.676
  0.671
  0.674
  0.673
  0.672
  0.673
  0.674
  0.674
  0.673
  0.673
  0.673
  0.673
  0.672
  0.673
  0.674
  0.674
  0.673
  0.673
  0.674
  0.673
  0.673
Average production assets, $m
  8
  10
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  40
  43
  47
  51
  55
  59
  63
  67
  72
  76
  81
  86
  92
  97
  103
  109
  115
Working capital, $m
  4
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  17
  19
  21
  23
  24
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  50
  53
  56
  60
Total debt, $m
  6
  12
  19
  27
  36
  45
  54
  65
  76
  87
  99
  112
  125
  139
  153
  168
  183
  199
  216
  233
  251
  270
  290
  310
  331
  353
  376
  400
  425
  451
Total liabilities, $m
  34
  40
  47
  55
  64
  73
  82
  93
  103
  115
  127
  140
  153
  167
  181
  196
  211
  227
  244
  261
  279
  298
  318
  338
  359
  381
  404
  428
  453
  479
Total equity, $m
  40
  47
  56
  65
  75
  86
  97
  109
  122
  135
  150
  165
  180
  196
  213
  231
  249
  268
  288
  308
  329
  351
  374
  398
  423
  449
  476
  504
  534
  564
Total liabilities and equity, $m
  74
  87
  103
  120
  139
  159
  179
  202
  225
  250
  277
  305
  333
  363
  394
  427
  460
  495
  532
  569
  608
  649
  692
  736
  782
  830
  880
  932
  987
  1,043
Debt-to-equity ratio
  0.150
  0.260
  0.350
  0.420
  0.480
  0.520
  0.560
  0.590
  0.620
  0.640
  0.660
  0.680
  0.690
  0.710
  0.720
  0.730
  0.740
  0.740
  0.750
  0.760
  0.760
  0.770
  0.770
  0.780
  0.780
  0.790
  0.790
  0.790
  0.800
  0.800
Adjusted equity ratio
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  2
  5
  8
  11
  15
  19
  23
  27
  32
  37
  42
  47
  53
  59
  65
  71
  77
  84
  91
  99
  106
  114
  123
  131
  141
  150
  160
  170
  181
Depreciation, amort., depletion, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
Funds from operations, $m
  0
  3
  6
  9
  13
  17
  21
  25
  30
  35
  40
  45
  51
  57
  63
  70
  76
  83
  91
  98
  106
  114
  123
  131
  141
  150
  160
  171
  182
  193
Change in working capital, $m
  1
  1
  1
  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
Cash from operations, $m
  0
  2
  5
  9
  12
  16
  20
  24
  29
  34
  39
  44
  49
  55
  61
  68
  74
  81
  88
  96
  104
  112
  120
  129
  138
  148
  158
  168
  179
  190
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
New CAPEX, $m
  -1
  -2
  -2
  -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
Cash from investing activities, $m
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -14
  -16
  -16
  -17
  -18
Free cash flow, $m
  -2
  0
  3
  5
  9
  12
  16
  20
  24
  28
  33
  38
  43
  48
  54
  59
  66
  72
  79
  85
  93
  100
  108
  116
  124
  133
  142
  152
  162
  172
Issuance/(repayment) of debt, $m
  6
  6
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
Issuance/(repurchase) of shares, $m
  8
  6
  4
  1
  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  
  14
  12
  11
  9
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
Total cash flow (excl. dividends), $m
  11
  12
  13
  15
  17
  21
  25
  30
  35
  40
  45
  50
  56
  62
  68
  74
  81
  88
  95
  103
  111
  119
  127
  136
  145
  155
  165
  176
  187
  198
Retained Cash Flow (-), $m
  -8
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
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
  5
  5
  5
  7
  10
  14
  18
  22
  26
  31
  35
  40
  46
  51
  57
  63
  69
  76
  82
  89
  97
  104
  112
  120
  129
  138
  147
  157
  168
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
  4
  4
  4
  5
  7
  9
  11
  12
  14
  14
  15
  15
  15
  15
  14
  14
  13
  12
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
Current shareholders' claim on cash, %
  92.4
  87.9
  85.5
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8

I.D. Systems, Inc. (I.D. Systems) develops, markets and sells wireless machine-to-machine solutions for managing and securing enterprise assets, which include industrial vehicles, such as forklifts and airport ground support equipment, rental vehicles, and transportation assets, such as dry van trailers, refrigerated trailers, railcars and containers. Its systems utilize radio frequency identification (RFID), wireless fidelity (Wi-Fi), satellite or cellular communications, and sensor technology and software to control, track, monitor and analyze assets. It provides data reporting and analysis software tool platform, I.D. Systems Analytics PowerFleet IQ (for fleets of forklifts and other industrial trucks) and VeriWise IQ (for fleets of containers, trailers and other transportation assets). Its solutions include industrial and rental fleet asset management, industrial fleet asset management, transportation asset management and rental fleet asset management solutions.

FINANCIAL RATIOS  of  I.D. Systems, Inc. (IDSY)

Valuation Ratios
P/E Ratio -11.7
Price to Sales 1.9
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow -35
Price to Free Cash Flow -23.4
Growth Rates
Sales Growth Rate -11.9%
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 2
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 18.8%
Interest Coverage 0
Management Effectiveness
Return On Assets -13.6%
Ret/ On Assets - 3 Yr. Avg. -18.9%
Return On Total Capital -30%
Ret/ On T. Cap. - 3 Yr. Avg. -36.4%
Return On Equity -32.4%
Return On Equity - 3 Yr. Avg. -37.2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 48.6%
Gross Margin - 3 Yr. Avg. 44.2%
EBITDA Margin -13.5%
EBITDA Margin - 3 Yr. Avg. -18.9%
Operating Margin -16.2%
Oper. Margin - 3 Yr. Avg. -22%
Pre-Tax Margin -16.2%
Pre-Tax Margin - 3 Yr. Avg. -22%
Net Profit Margin -16.2%
Net Profit Margin - 3 Yr. Avg. -22%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IDSY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IDSY stock intrinsic value calculation we used $41 million for the last fiscal year's total revenue generated by I.D. Systems, Inc.. The default revenue input number comes from 0001 income statement of I.D. 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 IDSY stock valuation model: a) initial revenue growth rate of 20.7% 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 IDSY is calculated based on our internal credit rating of I.D. 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 I.D. 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 IDSY stock the variable cost ratio is equal to 43.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for IDSY 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 22.9% for I.D. Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for I.D. 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 IDSY 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 IDSY are equal to 16.4%.

Life of production assets of 9.3 years is the average useful life of capital assets used in I.D. 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 IDSY is equal to 8.5%. 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 - $32.971 million for I.D. 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 18.120 million for I.D. 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 I.D. Systems, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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