Intrinsic value of Manhattan Associates, Inc. - MANH

Previous Close

$69.13

  Intrinsic Value

$28.97

stock screener

  Rating & Target

str. sell

-58%

Previous close

$69.13

 
Intrinsic value

$28.97

 
Up/down potential

-58%

 
Rating

str. 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 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 4.5

 

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
  570
  583
  598
  615
  634
  654
  677
  701
  727
  754
  784
  816
  850
  886
  924
  965
  1,008
  1,053
  1,101
  1,152
  1,205
  1,261
  1,321
  1,383
  1,449
  1,518
  1,591
  1,668
  1,749
  1,834
Variable operating expenses, $m
  392
  400
  411
  422
  435
  448
  463
  480
  497
  516
  530
  552
  575
  599
  625
  652
  681
  712
  744
  778
  814
  852
  893
  935
  979
  1,026
  1,075
  1,127
  1,182
  1,239
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
  392
  400
  411
  422
  435
  448
  463
  480
  497
  516
  530
  552
  575
  599
  625
  652
  681
  712
  744
  778
  814
  852
  893
  935
  979
  1,026
  1,075
  1,127
  1,182
  1,239
Operating income, $m
  179
  183
  188
  193
  199
  206
  213
  221
  229
  238
  254
  265
  275
  287
  300
  313
  327
  341
  357
  373
  390
  409
  428
  448
  470
  492
  516
  541
  567
  594
EBITDA, $m
  190
  194
  199
  205
  211
  218
  225
  233
  242
  251
  261
  272
  283
  295
  308
  321
  336
  351
  367
  384
  401
  420
  440
  461
  483
  506
  530
  556
  583
  611
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
Earnings before tax, $m
  179
  183
  187
  193
  198
  205
  212
  219
  227
  236
  251
  261
  272
  283
  294
  307
  320
  334
  349
  365
  381
  399
  417
  436
  457
  478
  501
  525
  550
  576
Tax expense, $m
  48
  49
  51
  52
  54
  55
  57
  59
  61
  64
  68
  70
  73
  76
  80
  83
  86
  90
  94
  99
  103
  108
  113
  118
  123
  129
  135
  142
  148
  155
Net income, $m
  130
  133
  137
  141
  145
  149
  154
  160
  166
  172
  183
  191
  198
  206
  215
  224
  234
  244
  255
  266
  278
  291
  304
  319
  333
  349
  366
  383
  401
  420

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
  313
  320
  329
  338
  348
  359
  372
  385
  399
  415
  431
  448
  467
  487
  508
  530
  554
  579
  605
  633
  662
  693
  726
  760
  796
  834
  874
  916
  961
  1,008
Adjusted assets (=assets-cash), $m
  313
  320
  329
  338
  348
  359
  372
  385
  399
  415
  431
  448
  467
  487
  508
  530
  554
  579
  605
  633
  662
  693
  726
  760
  796
  834
  874
  916
  961
  1,008
Revenue / Adjusted assets
  1.821
  1.822
  1.818
  1.820
  1.822
  1.822
  1.820
  1.821
  1.822
  1.817
  1.819
  1.821
  1.820
  1.819
  1.819
  1.821
  1.819
  1.819
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.821
  1.820
  1.819
Average production assets, $m
  47
  48
  49
  50
  52
  54
  55
  57
  60
  62
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  119
  124
  130
  137
  143
  150
Working capital, $m
  -31
  -31
  -32
  -33
  -34
  -35
  -37
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
Total debt, $m
  3
  7
  11
  16
  21
  27
  34
  41
  48
  56
  65
  74
  83
  94
  105
  116
  128
  141
  155
  170
  185
  201
  218
  236
  255
  275
  295
  317
  341
  365
Total liabilities, $m
  163
  167
  171
  176
  181
  187
  194
  201
  208
  216
  225
  234
  243
  254
  265
  276
  288
  301
  315
  330
  345
  361
  378
  396
  415
  435
  455
  477
  501
  525
Total equity, $m
  150
  154
  157
  162
  167
  172
  178
  184
  191
  199
  206
  215
  224
  233
  243
  254
  265
  277
  290
  303
  317
  332
  348
  364
  381
  400
  419
  439
  460
  483
Total liabilities and equity, $m
  313
  321
  328
  338
  348
  359
  372
  385
  399
  415
  431
  449
  467
  487
  508
  530
  553
  578
  605
  633
  662
  693
  726
  760
  796
  835
  874
  916
  961
  1,008
Debt-to-equity ratio
  0.020
  0.050
  0.070
  0.100
  0.130
  0.160
  0.190
  0.220
  0.250
  0.280
  0.310
  0.340
  0.370
  0.400
  0.430
  0.460
  0.480
  0.510
  0.540
  0.560
  0.580
  0.610
  0.630
  0.650
  0.670
  0.690
  0.710
  0.720
  0.740
  0.760
Adjusted equity ratio
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  130
  133
  137
  141
  145
  149
  154
  160
  166
  172
  183
  191
  198
  206
  215
  224
  234
  244
  255
  266
  278
  291
  304
  319
  333
  349
  366
  383
  401
  420
Depreciation, amort., depletion, $m
  11
  12
  12
  12
  12
  12
  12
  13
  13
  13
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
Funds from operations, $m
  142
  145
  148
  152
  157
  162
  167
  172
  179
  185
  190
  198
  206
  214
  223
  233
  243
  254
  265
  277
  289
  303
  317
  331
  347
  363
  380
  398
  417
  437
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
Cash from operations, $m
  142
  146
  149
  153
  158
  163
  168
  174
  180
  187
  192
  200
  208
  216
  225
  235
  245
  256
  268
  280
  292
  306
  320
  335
  350
  367
  384
  402
  422
  442
Maintenance CAPEX, $m
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
Cash from investing activities, $m
  -6
  -6
  -6
  -6
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -14
  -14
  -14
  -16
  -16
  -17
  -18
  -19
  -20
  -20
  -22
  -23
Free cash flow, $m
  137
  139
  143
  146
  151
  155
  160
  166
  171
  178
  183
  190
  198
  206
  214
  223
  233
  243
  254
  265
  277
  290
  303
  317
  332
  348
  364
  382
  400
  419
Issuance/(repayment) of debt, $m
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
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
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  140
  143
  147
  151
  156
  161
  167
  173
  179
  186
  191
  199
  207
  216
  225
  235
  245
  256
  268
  280
  293
  306
  320
  335
  351
  368
  385
  403
  423
  443
Retained Cash Flow (-), $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
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
  137
  140
  143
  147
  151
  156
  161
  166
  172
  178
  183
  191
  198
  206
  215
  224
  234
  244
  255
  267
  279
  291
  305
  319
  334
  349
  366
  383
  402
  421
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
  131
  128
  124
  121
  117
  113
  109
  104
  99
  94
  87
  81
  75
  69
  63
  57
  51
  45
  39
  34
  29
  24
  20
  16
  13
  10
  8
  6
  4
  3
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, Inc. (MANH)

Valuation Ratios
P/E Ratio 39.2
Price to Sales 8
Price to Book 28.7
Price to Tangible Book
Price to Cash Flow 34.9
Price to Free Cash Flow 36.8
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 $559 million for the last fiscal year's total revenue generated by Manhattan Associates, Inc.. The default revenue input number comes from 0001 income statement of Manhattan Associates, 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 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, 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 Manhattan Associates, 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 MANH stock the variable cost ratio is equal to 68.7%.

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 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Manhattan Associates, 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 MANH 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 MANH are equal to 8.2%.

Life of production assets of 9 years is the average useful life of capital assets used in Manhattan Associates, 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 MANH is equal to -5.4%. 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 - $147.147 million for Manhattan Associates, 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 64.966 million for Manhattan Associates, 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 Manhattan Associates, Inc. at the current share price and the inputted number of shares is $4.5 billion.

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