Intrinsic value of Insignia Systems - ISIG

Previous Close

$1.95

  Intrinsic Value

$95.86

stock screener

  Rating & Target

str. buy

+999%

Previous close

$1.95

 
Intrinsic value

$95.86

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of ISIG 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, %
  41.00
  37.40
  34.16
  31.24
  28.62
  26.26
  24.13
  22.22
  20.50
  18.95
  17.55
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.00
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.58
  7.33
  7.09
  6.88
  6.70
Revenue, $m
  37
  51
  69
  90
  116
  146
  182
  222
  268
  318
  374
  435
  501
  572
  648
  728
  813
  903
  997
  1,095
  1,198
  1,305
  1,416
  1,532
  1,653
  1,778
  1,909
  2,044
  2,185
  2,331
Variable operating expenses, $m
  11
  16
  21
  28
  36
  45
  56
  68
  82
  98
  115
  134
  154
  176
  200
  224
  251
  278
  307
  337
  369
  402
  436
  472
  509
  548
  588
  630
  673
  718
Fixed operating expenses, $m
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
Total operating expenses, $m
  30
  36
  41
  49
  57
  67
  78
  91
  105
  122
  139
  159
  179
  202
  226
  251
  279
  306
  336
  366
  399
  433
  467
  504
  542
  581
  622
  665
  709
  754
Operating income, $m
  6
  16
  27
  42
  59
  80
  104
  131
  162
  197
  235
  277
  322
  370
  422
  477
  535
  597
  661
  728
  799
  872
  949
  1,028
  1,111
  1,197
  1,287
  1,379
  1,476
  1,577
EBITDA, $m
  7
  17
  29
  43
  61
  83
  107
  135
  167
  203
  242
  285
  331
  381
  435
  491
  551
  614
  681
  750
  822
  898
  977
  1,058
  1,143
  1,232
  1,324
  1,420
  1,519
  1,622
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  17
  18
  20
  21
  23
  25
  27
  29
  31
Earnings before tax, $m
  6
  15
  27
  41
  58
  78
  102
  129
  159
  193
  231
  272
  316
  363
  414
  468
  525
  585
  649
  715
  784
  856
  931
  1,009
  1,090
  1,174
  1,262
  1,353
  1,447
  1,546
Tax expense, $m
  2
  4
  7
  11
  16
  21
  28
  35
  43
  52
  62
  73
  85
  98
  112
  126
  142
  158
  175
  193
  212
  231
  251
  272
  294
  317
  341
  365
  391
  417
Net income, $m
  5
  11
  20
  30
  42
  57
  74
  94
  116
  141
  168
  198
  231
  265
  302
  342
  383
  427
  473
  522
  572
  625
  679
  736
  795
  857
  921
  987
  1,057
  1,128

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
  31
  43
  57
  75
  97
  122
  152
  185
  223
  266
  312
  363
  418
  477
  540
  607
  678
  753
  831
  913
  999
  1,088
  1,181
  1,278
  1,379
  1,483
  1,592
  1,705
  1,822
  1,944
Adjusted assets (=assets-cash), $m
  31
  43
  57
  75
  97
  122
  152
  185
  223
  266
  312
  363
  418
  477
  540
  607
  678
  753
  831
  913
  999
  1,088
  1,181
  1,278
  1,379
  1,483
  1,592
  1,705
  1,822
  1,944
Revenue / Adjusted assets
  1.194
  1.186
  1.211
  1.200
  1.196
  1.197
  1.197
  1.200
  1.202
  1.195
  1.199
  1.198
  1.199
  1.199
  1.200
  1.199
  1.199
  1.199
  1.200
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
Average production assets, $m
  4
  5
  7
  9
  11
  14
  18
  22
  26
  31
  37
  43
  49
  56
  63
  71
  80
  88
  98
  107
  117
  128
  139
  150
  162
  174
  187
  200
  214
  228
Working capital, $m
  10
  14
  19
  25
  32
  40
  50
  61
  74
  88
  103
  120
  138
  157
  178
  200
  224
  248
  274
  301
  329
  359
  389
  421
  455
  489
  525
  562
  601
  641
Total debt, $m
  3
  7
  11
  17
  24
  32
  41
  52
  64
  77
  92
  108
  125
  144
  164
  185
  208
  231
  256
  282
  309
  337
  366
  397
  429
  462
  496
  532
  569
  607
Total liabilities, $m
  10
  13
  18
  24
  31
  39
  48
  59
  71
  84
  99
  115
  132
  151
  171
  192
  214
  238
  263
  289
  316
  344
  373
  404
  436
  469
  503
  539
  576
  614
Total equity, $m
  21
  29
  39
  51
  66
  84
  104
  127
  153
  182
  213
  248
  286
  326
  370
  415
  464
  515
  569
  625
  683
  744
  808
  874
  943
  1,014
  1,089
  1,166
  1,246
  1,330
Total liabilities and equity, $m
  31
  42
  57
  75
  97
  123
  152
  186
  224
  266
  312
  363
  418
  477
  541
  607
  678
  753
  832
  914
  999
  1,088
  1,181
  1,278
  1,379
  1,483
  1,592
  1,705
  1,822
  1,944
Debt-to-equity ratio
  0.140
  0.230
  0.290
  0.330
  0.360
  0.380
  0.400
  0.410
  0.420
  0.420
  0.430
  0.430
  0.440
  0.440
  0.440
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.460
  0.460
  0.460
  0.460
  0.460
Adjusted equity ratio
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684
  0.684

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  11
  20
  30
  42
  57
  74
  94
  116
  141
  168
  198
  231
  265
  302
  342
  383
  427
  473
  522
  572
  625
  679
  736
  795
  857
  921
  987
  1,057
  1,128
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  9
  10
  11
  13
  14
  16
  18
  20
  21
  23
  26
  28
  30
  32
  35
  37
  40
  43
  46
Funds from operations, $m
  5
  12
  21
  32
  45
  60
  78
  98
  122
  147
  176
  207
  240
  277
  315
  356
  399
  445
  493
  543
  596
  650
  707
  766
  828
  892
  958
  1,028
  1,099
  1,174
Change in working capital, $m
  3
  4
  5
  6
  7
  8
  10
  11
  13
  14
  15
  17
  18
  20
  21
  22
  23
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
Cash from operations, $m
  2
  8
  16
  26
  38
  52
  68
  87
  109
  133
  160
  190
  222
  257
  294
  334
  376
  420
  467
  516
  567
  621
  676
  734
  795
  857
  923
  990
  1,061
  1,134
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -9
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -21
  -23
  -26
  -28
  -30
  -32
  -35
  -37
  -40
  -43
New CAPEX, $m
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
Cash from investing activities, $m
  -2
  -2
  -3
  -3
  -5
  -5
  -6
  -8
  -8
  -10
  -11
  -13
  -15
  -17
  -18
  -21
  -22
  -25
  -27
  -30
  -31
  -33
  -37
  -39
  -42
  -44
  -48
  -50
  -54
  -57
Free cash flow, $m
  1
  6
  13
  22
  33
  46
  62
  80
  100
  123
  149
  177
  207
  240
  276
  313
  353
  396
  440
  487
  536
  587
  640
  695
  753
  813
  875
  940
  1,007
  1,077
Issuance/(repayment) of debt, $m
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  16
  17
  19
  20
  21
  22
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
Issuance/(repurchase) of shares, $m
  2
  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  
  5
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  16
  17
  19
  20
  21
  22
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
Total cash flow (excl. dividends), $m
  6
  10
  18
  28
  40
  54
  71
  90
  112
  137
  163
  193
  225
  259
  296
  335
  376
  419
  465
  513
  563
  615
  669
  726
  785
  846
  909
  975
  1,044
  1,115
Retained Cash Flow (-), $m
  -6
  -8
  -10
  -12
  -15
  -17
  -20
  -23
  -26
  -29
  -32
  -35
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -56
  -59
  -61
  -64
  -66
  -69
  -72
  -74
  -77
  -80
  -83
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
  -1
  2
  8
  16
  25
  37
  51
  67
  86
  108
  131
  158
  187
  218
  252
  289
  327
  368
  411
  457
  504
  554
  606
  660
  716
  774
  835
  898
  964
  1,032
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
  -1
  2
  7
  13
  20
  27
  35
  42
  50
  56
  62
  67
  71
  73
  74
  73
  71
  68
  63
  58
  52
  46
  40
  34
  28
  23
  18
  14
  11
  8
Current shareholders' claim on cash, %
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9

Insignia Systems, Inc. (Insignia) is a developer and marketer of in-store products, programs and services for consumer goods manufacturers and retail partners drive sales at the point of purchase. The Company's products include the Insignia Point-of-Purchase Services (POPS) in-store marketing program, thermal sign card supplies for the Company's Impulse Retail System, laser printable cardstock and label supplies, and The Like Machine. Its POPS program is an account-specific, shelf-edge advertising and promotion tactic. The program allows manufacturers to deliver product information to consumers at the point-of-purchase and to leverage the local retailer brand and store-specific prices to provide a call to action that draws attention to the featured brand and triggers a purchase decision. It focuses on managing a retail network, made up of over 22,000 store locations, for the purpose of providing at-shelf market access for consumer packaged goods manufacturers' marketing programs.

FINANCIAL RATIOS  of  Insignia Systems (ISIG)

Valuation Ratios
P/E Ratio -22.7
Price to Sales 0.9
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow -5.7
Price to Free Cash Flow -4.5
Growth Rates
Sales Growth Rate -10.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate 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 -3.3%
Ret/ On Assets - 3 Yr. Avg. 1%
Return On Total Capital -5%
Ret/ On T. Cap. - 3 Yr. Avg. 1%
Return On Equity -5%
Return On Equity - 3 Yr. Avg. 1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 28%
Gross Margin - 3 Yr. Avg. 40.2%
EBITDA Margin -4%
EBITDA Margin - 3 Yr. Avg. 6%
Operating Margin -8%
Oper. Margin - 3 Yr. Avg. -0.3%
Pre-Tax Margin -8%
Pre-Tax Margin - 3 Yr. Avg. 2.2%
Net Profit Margin -4%
Net Profit Margin - 3 Yr. Avg. 1%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 61.1%
Payout Ratio 0%

ISIG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ISIG stock intrinsic value calculation we used $26.43 million for the last fiscal year's total revenue generated by Insignia Systems. The default revenue input number comes from 0001 income statement of Insignia Systems. 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 ISIG stock valuation model: a) initial revenue growth rate of 41% 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 ISIG is calculated based on our internal credit rating of Insignia Systems, 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 Insignia Systems.
    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 ISIG stock the variable cost ratio is equal to 30.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $19 million in the base year in the intrinsic value calculation for ISIG 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 Insignia Systems.

Corporate tax rate of 27% is the nominal tax rate for Insignia Systems. 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 ISIG 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 ISIG are equal to 9.8%.

Life of production assets of 1.9 years is the average useful life of capital assets used in Insignia Systems 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 ISIG is equal to 27.5%. 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 - $14.841 million for Insignia Systems - 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 11.832 million for Insignia Systems 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 Insignia Systems at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Penny Stocks to Watch for November 2018   [Nov-01-18 08:50AM  Investopedia]
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▶ Insignia Systems, Inc. Announces Special Cash Dividend   [Nov-28-16 06:30PM  Accesswire]

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