Intrinsic value of Manhattan Associates - MANH

Previous Close

$53.59

  Intrinsic Value

$31.88

stock screener

  Rating & Target

sell

-41%

Previous close

$53.59

 
Intrinsic value

$31.88

 
Up/down potential

-41%

 
Rating

sell

We calculate the intrinsic value of MANH 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 2017), $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 3.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

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
  607
  621
  637
  655
  675
  696
  720
  746
  773
  803
  835
  869
  905
  943
  984
  1,027
  1,073
  1,121
  1,172
  1,226
  1,282
  1,342
  1,406
  1,472
  1,542
  1,616
  1,694
  1,775
  1,861
  1,952
Variable operating expenses, $m
  82
  84
  86
  88
  91
  94
  97
  100
  103
  107
  105
  109
  114
  118
  124
  129
  135
  141
  147
  154
  161
  169
  177
  185
  194
  203
  213
  223
  234
  245
Fixed operating expenses, $m
  342
  350
  358
  365
  374
  382
  390
  399
  407
  416
  426
  435
  445
  454
  464
  475
  485
  496
  507
  518
  529
  541
  553
  565
  577
  590
  603
  616
  630
  644
Total operating expenses, $m
  424
  434
  444
  453
  465
  476
  487
  499
  510
  523
  531
  544
  559
  572
  588
  604
  620
  637
  654
  672
  690
  710
  730
  750
  771
  793
  816
  839
  864
  889
Operating income, $m
  182
  187
  193
  201
  210
  221
  233
  247
  263
  280
  304
  325
  347
  370
  396
  423
  453
  484
  518
  554
  592
  633
  676
  722
  771
  823
  878
  936
  998
  1,063
EBITDA, $m
  196
  201
  208
  216
  225
  236
  249
  263
  279
  296
  315
  336
  359
  383
  409
  437
  467
  499
  534
  570
  609
  651
  695
  742
  792
  844
  900
  960
  1,022
  1,089
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
Earnings before tax, $m
  182
  187
  193
  200
  209
  220
  232
  246
  261
  277
  302
  322
  343
  366
  392
  419
  447
  478
  511
  547
  584
  624
  667
  712
  760
  811
  865
  922
  983
  1,047
Tax expense, $m
  49
  50
  52
  54
  57
  59
  63
  66
  70
  75
  81
  87
  93
  99
  106
  113
  121
  129
  138
  148
  158
  169
  180
  192
  205
  219
  234
  249
  265
  283
Net income, $m
  133
  136
  141
  146
  153
  161
  169
  179
  190
  202
  220
  235
  251
  268
  286
  306
  327
  349
  373
  399
  427
  456
  487
  520
  555
  592
  632
  673
  718
  764

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
  320
  328
  336
  346
  356
  367
  380
  394
  408
  424
  441
  458
  477
  498
  519
  542
  566
  591
  618
  647
  677
  708
  742
  777
  814
  853
  894
  937
  982
  1,030
Adjusted assets (=assets-cash), $m
  320
  328
  336
  346
  356
  367
  380
  394
  408
  424
  441
  458
  477
  498
  519
  542
  566
  591
  618
  647
  677
  708
  742
  777
  814
  853
  894
  937
  982
  1,030
Revenue / Adjusted assets
  1.897
  1.893
  1.896
  1.893
  1.896
  1.896
  1.895
  1.893
  1.895
  1.894
  1.893
  1.897
  1.897
  1.894
  1.896
  1.895
  1.896
  1.897
  1.896
  1.895
  1.894
  1.895
  1.895
  1.894
  1.894
  1.894
  1.895
  1.894
  1.895
  1.895
Average production assets, $m
  80
  82
  84
  86
  89
  92
  95
  98
  102
  106
  110
  115
  119
  124
  130
  136
  142
  148
  155
  162
  169
  177
  186
  194
  204
  213
  224
  234
  246
  258
Working capital, $m
  -15
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
Total debt, $m
  3
  6
  10
  14
  19
  24
  29
  36
  42
  49
  56
  64
  73
  82
  92
  102
  112
  124
  136
  148
  162
  176
  191
  206
  223
  240
  259
  278
  298
  319
Total liabilities, $m
  143
  146
  150
  154
  159
  164
  169
  176
  182
  189
  196
  204
  213
  222
  232
  242
  252
  264
  276
  288
  302
  316
  331
  346
  363
  380
  399
  418
  438
  459
Total equity, $m
  177
  182
  186
  191
  197
  204
  211
  218
  226
  235
  244
  254
  265
  276
  288
  300
  314
  328
  343
  358
  375
  392
  411
  430
  451
  472
  495
  519
  544
  571
Total liabilities and equity, $m
  320
  328
  336
  345
  356
  368
  380
  394
  408
  424
  440
  458
  478
  498
  520
  542
  566
  592
  619
  646
  677
  708
  742
  776
  814
  852
  894
  937
  982
  1,030
Debt-to-equity ratio
  0.020
  0.030
  0.050
  0.070
  0.100
  0.120
  0.140
  0.160
  0.190
  0.210
  0.230
  0.250
  0.280
  0.300
  0.320
  0.340
  0.360
  0.380
  0.400
  0.410
  0.430
  0.450
  0.460
  0.480
  0.490
  0.510
  0.520
  0.540
  0.550
  0.560
Adjusted equity ratio
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  133
  136
  141
  146
  153
  161
  169
  179
  190
  202
  220
  235
  251
  268
  286
  306
  327
  349
  373
  399
  427
  456
  487
  520
  555
  592
  632
  673
  718
  764
Depreciation, amort., depletion, $m
  14
  14
  15
  15
  15
  15
  16
  16
  16
  17
  11
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  25
  26
Funds from operations, $m
  147
  151
  155
  161
  168
  176
  185
  195
  207
  219
  231
  246
  262
  280
  299
  319
  341
  364
  389
  415
  443
  474
  505
  539
  575
  613
  654
  697
  742
  790
Change in working capital, $m
  0
  0
  0
  0
  0
  -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
Cash from operations, $m
  147
  151
  156
  161
  168
  176
  186
  196
  207
  220
  232
  247
  263
  281
  300
  320
  342
  365
  390
  417
  445
  475
  507
  541
  577
  615
  656
  699
  744
  792
Maintenance CAPEX, $m
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -25
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
  -10
  -10
  -11
  -11
  -12
Cash from investing activities, $m
  -9
  -10
  -10
  -10
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -20
  -20
  -22
  -22
  -23
  -25
  -26
  -28
  -28
  -30
  -31
  -33
  -34
  -37
Free cash flow, $m
  138
  141
  145
  151
  157
  165
  173
  183
  194
  206
  217
  232
  247
  264
  282
  301
  322
  345
  369
  394
  421
  450
  481
  514
  548
  585
  624
  666
  709
  756
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
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  
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
Total cash flow (excl. dividends), $m
  141
  144
  149
  155
  162
  170
  179
  189
  200
  213
  225
  240
  256
  273
  292
  312
  333
  356
  381
  407
  435
  464
  496
  529
  565
  602
  642
  685
  730
  777
Retained Cash Flow (-), $m
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -26
Prev. year cash balance distribution, $m
  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
  0
  0
  0
Cash flow adjustment, $m
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
Cash available for distribution, $m
  139
  140
  144
  150
  156
  163
  172
  182
  192
  204
  215
  230
  245
  262
  280
  299
  320
  342
  366
  391
  418
  447
  477
  510
  544
  581
  620
  661
  704
  751
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
  133
  128
  126
  123
  121
  119
  116
  113
  110
  107
  102
  98
  93
  88
  82
  76
  70
  63
  56
  50
  43
  37
  31
  26
  21
  17
  13
  10
  8
  6
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

Manhattan Associates, Inc. (Manhattan) is a developer and provider of supply chain commerce solutions. The Company operates through three geographical segments: the Americas, Europe, Middle East and Africa (EMEA), and the Asia Pacific (APAC). It is engaged in developing, selling, deploying, servicing and maintaining software solutions designed to manage supply chains, inventory and omni-channel operations for retailers, wholesalers, manufacturers, logistics providers and other organizations. Its solutions consist of software, services and hardware, which coordinate people, workflows, assets, events and tasks across the functions linked in a supply chain from planning through execution. Its supply chain solutions consist of three components: Distribution Management, Transportation Management and Visibility. Its Omni-Channel Solutions include Omni-Channel Central Solutions and Omni-Channel Local Solutions. Its Inventory solutions include Inventory Optimization and Planning.

FINANCIAL RATIOS  of  Manhattan Associates (MANH)

Valuation Ratios
P/E Ratio 30.4
Price to Sales 6.2
Price to Book 22.3
Price to Tangible Book
Price to Cash Flow 27.1
Price to Free Cash Flow 28.5
Growth Rates
Sales Growth Rate 8.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.4%
Cap. Spend. - 3 Yr. Gr. Rate 7%
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 39.4%
Ret/ On Assets - 3 Yr. Avg. 32.6%
Return On Total Capital 68.1%
Ret/ On T. Cap. - 3 Yr. Avg. 55.9%
Return On Equity 68.1%
Return On Equity - 3 Yr. Avg. 55.9%
Asset Turnover 1.9
Profitability Ratios
Gross Margin 58.7%
Gross Margin - 3 Yr. Avg. 57.8%
EBITDA Margin 33.9%
EBITDA Margin - 3 Yr. Avg. 30.6%
Operating Margin 32.2%
Oper. Margin - 3 Yr. Avg. 29%
Pre-Tax Margin 32.4%
Pre-Tax Margin - 3 Yr. Avg. 29.2%
Net Profit Margin 20.5%
Net Profit Margin - 3 Yr. Avg. 18.6%
Effective Tax Rate 36.7%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 0%

MANH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MANH stock intrinsic value calculation we used $595 million for the last fiscal year's total revenue generated by Manhattan Associates. The default revenue input number comes from 2017 income statement of Manhattan Associates. 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 MANH 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 MANH is calculated based on our internal credit rating of Manhattan Associates, 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 Manhattan Associates.
    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 MANH stock the variable cost ratio is equal to 13.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $335 million in the base year in the intrinsic value calculation for MANH 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 Manhattan Associates.

Corporate tax rate of 27% is the nominal tax rate for Manhattan Associates. 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 MANH stock is equal to 2.7%.

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 MANH are equal to 13.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Manhattan Associates 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 MANH is equal to -2.4%. 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 - $175 million for Manhattan Associates - 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 69 million for Manhattan Associates 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 Manhattan Associates at the current share price and the inputted number of shares is $3.7 billion.

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COMPANY NEWS

▶ Manhattan Associates: 2Q Earnings Snapshot   [Jul-24-18 04:23PM  Associated Press]
▶ Manhattan Associates: 1Q Earnings Snapshot   [Apr-24-18 04:27PM  Associated Press]
▶ Logistics provider Flexport expands New York City operations   [Mar-13-18 01:08PM  American City Business Journals]
▶ 3 Growth Stocks I'd Buy Right Now   [Feb-23-18 07:31PM  Motley Fool]
▶ Manhattan Associates Deals With Cloud Challenges   [Feb-06-18 07:25PM  Motley Fool]
▶ Manhattan Associates meets 4Q profit forecasts   [04:39PM  Associated Press]
▶ Manhattan Associates Launches New Branding: Push Possible   [Jan-14-18 08:30AM  GlobeNewswire]
▶ 3 Stocks to Help Millennials Reach Their Goals   [Oct-28-17 01:02PM  Motley Fool]
▶ Retail Weakness Keeps Hammering Manhattan Associates   [Oct-24-17 06:20PM  Motley Fool]
▶ Manhattan Associates tops Street 3Q forecasts   [04:37PM  Associated Press]
▶ Data privacy firm plans 500-job expansion in Atlanta   [Sep-25-17 10:03AM  American City Business Journals]
▶ Manhattan Associates beats Street 2Q forecasts   [Jul-20-17 09:21PM  Associated Press]
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