Intrinsic value of MAM Software Group - MAMS

Previous Close

$7.85

  Intrinsic Value

$8.75

stock screener

  Rating & Target

hold

+11%

Previous close

$7.85

 
Intrinsic value

$8.75

 
Up/down potential

+11%

 
Rating

hold

We calculate the intrinsic value of MAMS 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, %
  15.70
  14.63
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.61
  6.45
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
Revenue, $m
  37
  42
  48
  54
  60
  67
  74
  82
  90
  98
  106
  115
  124
  134
  144
  154
  165
  176
  188
  200
  213
  226
  239
  254
  268
  284
  300
  317
  335
  353
Variable operating expenses, $m
  32
  36
  41
  46
  51
  57
  63
  69
  75
  82
  87
  95
  102
  110
  118
  127
  136
  145
  155
  165
  175
  186
  197
  209
  221
  234
  247
  261
  275
  291
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
  32
  36
  41
  46
  51
  57
  63
  69
  75
  82
  87
  95
  102
  110
  118
  127
  136
  145
  155
  165
  175
  186
  197
  209
  221
  234
  247
  261
  275
  291
Operating income, $m
  5
  6
  7
  8
  9
  10
  11
  13
  14
  16
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  38
  40
  42
  45
  48
  50
  53
  56
  59
  63
EBITDA, $m
  7
  8
  9
  10
  11
  12
  14
  15
  17
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  66
Interest expense (income), $m
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  11
Earnings before tax, $m
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  37
  40
  42
  44
  47
  49
  52
Tax expense, $m
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
Net income, $m
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38

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
  30
  35
  40
  45
  50
  56
  62
  68
  75
  81
  88
  96
  104
  112
  120
  128
  137
  147
  156
  167
  177
  188
  199
  211
  224
  236
  250
  264
  279
  294
Adjusted assets (=assets-cash), $m
  30
  35
  40
  45
  50
  56
  62
  68
  75
  81
  88
  96
  104
  112
  120
  128
  137
  147
  156
  167
  177
  188
  199
  211
  224
  236
  250
  264
  279
  294
Revenue / Adjusted assets
  1.233
  1.200
  1.200
  1.200
  1.200
  1.196
  1.194
  1.206
  1.200
  1.210
  1.205
  1.198
  1.192
  1.196
  1.200
  1.203
  1.204
  1.197
  1.205
  1.198
  1.203
  1.202
  1.201
  1.204
  1.196
  1.203
  1.200
  1.201
  1.201
  1.201
Average production assets, $m
  9
  11
  12
  14
  16
  17
  19
  21
  23
  25
  27
  30
  32
  35
  37
  40
  43
  45
  48
  52
  55
  58
  62
  65
  69
  73
  77
  82
  86
  91
Working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
Total debt, $m
  11
  13
  16
  20
  23
  27
  30
  34
  39
  43
  47
  52
  57
  62
  67
  73
  79
  85
  91
  97
  104
  111
  118
  126
  134
  142
  150
  159
  169
  178
Total liabilities, $m
  19
  22
  25
  28
  32
  36
  39
  43
  47
  52
  56
  61
  66
  71
  76
  82
  88
  93
  100
  106
  113
  120
  127
  135
  142
  151
  159
  168
  177
  187
Total equity, $m
  11
  13
  14
  16
  18
  20
  22
  25
  27
  30
  32
  35
  38
  40
  43
  47
  50
  53
  57
  60
  64
  68
  72
  77
  81
  86
  91
  96
  101
  107
Total liabilities and equity, $m
  30
  35
  39
  44
  50
  56
  61
  68
  74
  82
  88
  96
  104
  111
  119
  129
  138
  146
  157
  166
  177
  188
  199
  212
  223
  237
  250
  264
  278
  294
Debt-to-equity ratio
  0.950
  1.060
  1.140
  1.210
  1.270
  1.320
  1.360
  1.400
  1.430
  1.450
  1.480
  1.500
  1.520
  1.540
  1.550
  1.560
  1.580
  1.590
  1.600
  1.610
  1.620
  1.620
  1.630
  1.640
  1.650
  1.650
  1.660
  1.660
  1.670
  1.670
Adjusted equity ratio
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
Depreciation, amort., depletion, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
Funds from operations, $m
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
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
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
New CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from investing activities, $m
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -8
  -8
Free cash flow, $m
  4
  4
  5
  5
  6
  6
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  32
  33
Issuance/(repayment) of debt, $m
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
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  
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
Total cash flow (excl. dividends), $m
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
  30
  32
  33
  35
  37
  39
  41
  43
Retained Cash Flow (-), $m
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
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
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
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
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  5
  5
  5
  5
  4
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
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

MAM Software Group, Inc. (MAM) is a technology holding company. The Company is a provider of cloud-based business and on premise management solutions for the auto parts, tires and vertical distribution industries. Its segments include MAM UK and MAM NA. It operates through three subsidiaries: MAM Software, Inc. (MAM NA), MAM Software Limited (MAM Ltd.) and Origin Software Solutions Ltd. (Origin) (MAM Ltd. and Origin are collectively referred to as MAM UK). The Company provides software, information and related services to businesses engaged in the automotive aftermarket in the United States, Canada, the United Kingdom and Ireland. In the United Kingdom Market, it also provides management solutions to businesses involved in the wholesale of construction materials. Its products and services include business management systems, information products, online services, and customer support and consulting and training.

FINANCIAL RATIOS  of  MAM Software Group (MAMS)

Valuation Ratios
P/E Ratio 19.3
Price to Sales 3
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 16.1
Price to Free Cash Flow 32.2
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 60%
Total Debt to Equity 80%
Interest Coverage 0
Management Effectiveness
Return On Assets 20.4%
Ret/ On Assets - 3 Yr. Avg. 16.3%
Return On Total Capital 30.3%
Ret/ On T. Cap. - 3 Yr. Avg. 23.9%
Return On Equity 66.7%
Return On Equity - 3 Yr. Avg. 39.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 53.1%
Gross Margin - 3 Yr. Avg. 55.2%
EBITDA Margin 15.6%
EBITDA Margin - 3 Yr. Avg. 15.6%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 12.5%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 15.6%
Net Profit Margin - 3 Yr. Avg. 12.5%
Effective Tax Rate -25%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MAMS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MAMS stock intrinsic value calculation we used $31.596 million for the last fiscal year's total revenue generated by MAM Software Group. The default revenue input number comes from 0001 income statement of MAM Software Group. 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 MAMS stock valuation model: a) initial revenue growth rate of 15.7% 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 MAMS is calculated based on our internal credit rating of MAM Software Group, 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 MAM Software Group.
    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 MAMS stock the variable cost ratio is equal to 87.5%.

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 MAMS 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 6.3% for MAM Software Group.

Corporate tax rate of 27% is the nominal tax rate for MAM Software Group. 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 MAMS 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 MAMS are equal to 25.8%.

Life of production assets of 29.7 years is the average useful life of capital assets used in MAM Software Group 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 MAMS is equal to -1.1%. 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 - $9.675 million for MAM Software Group - 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 12.593 million for MAM Software Group 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 MAM Software Group at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Who Owns Most Of MAM Software Group Inc (NASDAQ:MAMS)?   [Oct-10-18 11:54AM  Simply Wall St.]
▶ MAM Software Announces Share Repurchase Program   [Sep-19-18 05:09PM  PR Newswire]
▶ MAM Software: Fiscal 4Q Earnings Snapshot   [05:07PM  Associated Press]
▶ MAM Software set to join Russell Microcap® Index   [Jun-12-18 09:24AM  PR Newswire]
▶ 3 Tech Stocks Under $10 to Buy Now   [08:15AM  InvestorPlace]
▶ 3 Tech Stocks Under $10 to Buy Now   [Jun-11-18 02:52PM  Zacks]
▶ 5 Top Efficient Stocks to Keep on Your Radar   [May-25-18 09:57AM  Zacks]
▶ MAM Software: Fiscal 3Q Earnings Snapshot   [May-10-18 06:44PM  Associated Press]
▶ 3 Tech Stocks Under $10 to Buy Now   [Apr-09-18 01:00PM  Zacks]
▶ MAM Software Group, Inc. to Host Earnings Call   [Feb-09-18 07:00AM  ACCESSWIRE]
▶ MAM Software reports 2Q loss   [Feb-08-18 07:45PM  Associated Press]
▶ MAM Software posts 1Q profit   [05:14AM  Associated Press]
▶ 5 of the Most Efficient Stocks to Buy Now   [Nov-15-17 08:23AM  Zacks]
▶ MAM Software Reports Fiscal First Quarter Results   [Nov-14-17 04:22PM  PR Newswire]
▶ 3 Tech Stocks Under $10 to Buy Now   [Nov-06-17 03:21PM  Zacks]
▶ 5 of the Best Stocks Under $10 for 2017   [Oct-05-17 01:57PM  Zacks]
▶ MAM Software posts 4Q profit   [Sep-28-17 10:20PM  Associated Press]
▶ MAM Software posts 3Q profit   [May-15-17 07:12PM  Associated Press]
▶ MAM Software posts 2Q profit   [05:49PM  Associated Press]
▶ New Strong Buy Stocks for December 7th   [Dec-07-16 09:27AM  Zacks]

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