Intrinsic value of Iteris - ITI

Previous Close

$4.79

  Intrinsic Value

$0.16

stock screener

  Rating & Target

str. sell

-97%

Previous close

$4.79

 
Intrinsic value

$0.16

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of ITI 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
  106
  108
  111
  114
  118
  121
  126
  130
  135
  140
  146
  151
  158
  164
  172
  179
  187
  195
  204
  214
  224
  234
  245
  257
  269
  282
  295
  310
  324
  340
Variable operating expenses, $m
  107
  109
  112
  115
  119
  122
  126
  131
  136
  141
  144
  150
  156
  163
  170
  178
  185
  194
  203
  212
  222
  232
  243
  255
  267
  279
  293
  307
  322
  337
Fixed operating expenses, $m
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
Total operating expenses, $m
  111
  113
  116
  119
  123
  127
  131
  136
  141
  146
  149
  155
  161
  168
  176
  184
  191
  200
  209
  218
  228
  238
  250
  262
  274
  286
  300
  314
  330
  345
Operating income, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
EBITDA, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -2
  -2
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
Earnings before tax, $m
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
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
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8

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
  64
  65
  67
  69
  71
  73
  76
  79
  82
  85
  88
  92
  95
  99
  104
  108
  113
  118
  124
  129
  135
  141
  148
  155
  163
  170
  179
  187
  196
  206
Adjusted assets (=assets-cash), $m
  64
  65
  67
  69
  71
  73
  76
  79
  82
  85
  88
  92
  95
  99
  104
  108
  113
  118
  124
  129
  135
  141
  148
  155
  163
  170
  179
  187
  196
  206
Revenue / Adjusted assets
  1.656
  1.662
  1.657
  1.652
  1.662
  1.658
  1.658
  1.646
  1.646
  1.647
  1.659
  1.641
  1.663
  1.657
  1.654
  1.657
  1.655
  1.653
  1.645
  1.659
  1.659
  1.660
  1.655
  1.658
  1.650
  1.659
  1.648
  1.658
  1.653
  1.650
Average production assets, $m
  11
  12
  12
  12
  13
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
Working capital, $m
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
Total debt, $m
  0
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  37
  40
  43
  46
  50
  53
Total liabilities, $m
  24
  24
  25
  26
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  70
  73
  77
Total equity, $m
  40
  41
  42
  43
  45
  46
  48
  49
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
  102
  107
  112
  118
  123
  129
Total liabilities and equity, $m
  64
  65
  67
  69
  71
  73
  76
  78
  81
  84
  88
  92
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  155
  162
  170
  178
  188
  196
  206
Debt-to-equity ratio
  0.010
  0.020
  0.040
  0.050
  0.070
  0.090
  0.100
  0.120
  0.140
  0.150
  0.170
  0.190
  0.200
  0.220
  0.230
  0.250
  0.260
  0.280
  0.290
  0.300
  0.320
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
Adjusted equity ratio
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
Funds from operations, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
Change in working capital, $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 operations, $m
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
Maintenance CAPEX, $m
  -1
  -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
  -3
  -3
New CAPEX, $m
  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
  -2
  -2
  -2
Cash from investing activities, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -5
  -5
Free cash flow, $m
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -9
Issuance/(repayment) of debt, $m
  0
  1
  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
Issuance/(repurchase) of shares, $m
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
Cash from financing (excl. dividends), $m  
  6
  7
  7
  8
  8
  8
  8
  9
  9
  9
  7
  8
  8
  9
  10
  10
  10
  11
  11
  11
  12
  12
  12
  14
  14
  15
  15
  16
  16
  18
Total cash flow (excl. dividends), $m
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Retained Cash Flow (-), $m
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
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
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
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
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.5
  93.0
  89.6
  86.2
  83.0
  79.8
  76.8
  73.9
  71.1
  68.5
  66.5
  64.5
  62.6
  60.8
  59.0
  57.3
  55.6
  54.0
  52.5
  51.0
  49.5
  48.1
  46.8
  45.5
  44.2
  43.0
  41.8
  40.7
  39.6
  38.6

Iteris, Inc. is a provider of information solutions for both the traffic management and global agribusiness markets. The Company operates through three segments: Roadway Sensors, Transportation Systems and Performance Analytics. The Roadway Sensors segment provides various vehicle detection and information systems and products for traffic intersection control, incident detection and roadway traffic data collection applications. The Transportation Systems segment includes transportation engineering and consulting services, and the development of transportation management and traveler information systems for the Intelligent Transportation Systems (ITS) industry. The Performance Analytics segment includes iPeMS, its specialized transportation performance measurement and traffic analytics solutions, as well as ClearPath Weather, its road-maintenance applications, and ClearAg, its precision agriculture solutions.

FINANCIAL RATIOS  of  Iteris (ITI)

Valuation Ratios
P/E Ratio -31.1
Price to Sales 1.6
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 51.9
Price to Free Cash Flow 155.6
Growth Rates
Sales Growth Rate 23.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
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 -8.2%
Ret/ On Assets - 3 Yr. Avg. -9.3%
Return On Total Capital -12%
Ret/ On T. Cap. - 3 Yr. Avg. -12.7%
Return On Equity -12%
Return On Equity - 3 Yr. Avg. -12.7%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 38.5%
Gross Margin - 3 Yr. Avg. 39.1%
EBITDA Margin -3.1%
EBITDA Margin - 3 Yr. Avg. -1.5%
Operating Margin -5.2%
Oper. Margin - 3 Yr. Avg. -3.9%
Pre-Tax Margin -5.2%
Pre-Tax Margin - 3 Yr. Avg. -3.9%
Net Profit Margin -5.2%
Net Profit Margin - 3 Yr. Avg. -7.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -94.4%
Payout Ratio 0%

ITI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ITI stock intrinsic value calculation we used $103.729 million for the last fiscal year's total revenue generated by Iteris. The default revenue input number comes from 0001 income statement of Iteris. 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 ITI 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 ITI is calculated based on our internal credit rating of Iteris, 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 Iteris.
    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 ITI stock the variable cost ratio is equal to 101%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4 million in the base year in the intrinsic value calculation for ITI 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 Iteris.

Corporate tax rate of 27% is the nominal tax rate for Iteris. 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 ITI 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 ITI are equal to 10.7%.

Life of production assets of 12.9 years is the average useful life of capital assets used in Iteris 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 ITI is equal to 1.9%. 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 - $39.521 million for Iteris - 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 33.24 million for Iteris 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 Iteris at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Iteris: Fiscal 2Q Earnings Snapshot   [05:48PM  Associated Press]
▶ Do Institutions Own Shares In Iteris Inc (NASDAQ:ITI)?   [Sep-13-18 02:18PM  Simply Wall St.]
▶ Iteris, Inc. to Host Earnings Call   [02:30PM  ACCESSWIRE]
▶ California firm wins $3.2M subcontract for services at Tampa transportation center   [Jun-12-18 11:35AM  American City Business Journals]
▶ Iteris: Fiscal 4Q Earnings Snapshot   [Jun-07-18 04:42PM  Associated Press]
▶ Earnings Outlook For Iteris   [07:43AM  Benzinga]
▶ Laura Siegal Joins Iteris Board of Directors   [May-16-18 08:30AM  Business Wire]
▶ Iteris beats 3Q profit forecasts   [Feb-07-18 04:31PM  Associated Press]
▶ Iteris, Inc. to Host Earnings Call   [12:00PM  ACCESSWIRE]
▶ Iteris ClearAg to Power AgSpace Contour Platform   [Jan-31-18 08:30AM  Business Wire]
▶ ETFs with exposure to Iteris, Inc. : December 26, 2017   [Dec-26-17 11:41AM  Capital Cube]
▶ ETFs with exposure to Iteris, Inc. : December 12, 2017   [Dec-12-17 01:23PM  Capital Cube]
▶ ETFs with exposure to Iteris, Inc. : December 1, 2017   [Dec-01-17 10:40AM  Capital Cube]
▶ Iteris reports 2Q loss   [05:41PM  Associated Press]
▶ ITERIS, INC. to Host Earnings Call   [12:30PM  ACCESSWIRE]
▶ ETFs with exposure to Iteris, Inc. : October 30, 2017   [Oct-30-17 11:59AM  Capital Cube]
▶ ETFs with exposure to Iteris, Inc. : October 16, 2017   [Oct-16-17 09:54AM  Capital Cube]
▶ ETFs with exposure to Iteris, Inc. : October 4, 2017   [Oct-04-17 10:48AM  Capital Cube]
▶ ETFs with exposure to Iteris, Inc. : September 6, 2017   [Sep-05-17 09:06PM  Capital Cube]
▶ Iteris Expands ClearAg Spray Advisor Capabilities   [Aug-30-17 08:30AM  Business Wire]
▶ Iteris reports 1Q loss   [Aug-07-17 11:58PM  Associated Press]
▶ Iteris Added to Russell 2000® Index   [Jun-26-17 08:30AM  Business Wire]
▶ ETFs with exposure to Iteris, Inc. : June 16, 2017   [Jun-16-17 03:57PM  Capital Cube]

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