Intrinsic value of Manhattan Associates - MANH

Previous Close

$48.37

  Intrinsic Value

$33.66

stock screener

  Rating & Target

sell

-30%

Previous close

$48.37

 
Intrinsic value

$33.66

 
Up/down potential

-30%

 
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 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 3.2

 

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
  606
  620
  636
  654
  674
  696
  720
  745
  773
  803
  834
  868
  904
  942
  983
  1,026
  1,072
  1,120
  1,171
  1,225
  1,282
  1,341
  1,405
  1,471
  1,541
  1,615
  1,692
  1,774
  1,860
  1,950
Variable operating expenses, $m
  82
  84
  86
  88
  91
  94
  97
  100
  103
  107
  105
  109
  114
  118
  123
  129
  135
  141
  147
  154
  161
  168
  176
  185
  193
  203
  212
  223
  233
  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
  587
  604
  620
  637
  654
  672
  690
  709
  729
  750
  770
  793
  815
  839
  863
  889
Operating income, $m
  182
  186
  193
  200
  210
  221
  233
  247
  262
  279
  304
  324
  346
  370
  395
  423
  452
  484
  517
  553
  592
  632
  676
  722
  770
  822
  877
  935
  997
  1,062
EBITDA, $m
  194
  198
  205
  213
  222
  233
  246
  260
  275
  293
  312
  332
  354
  379
  404
  432
  462
  494
  528
  565
  603
  645
  689
  735
  785
  837
  893
  952
  1,014
  1,080
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
  9
  10
  11
  12
  13
  14
  15
  16
Earnings before tax, $m
  182
  186
  192
  200
  209
  220
  232
  245
  260
  277
  301
  321
  343
  366
  391
  418
  447
  478
  511
  546
  584
  624
  666
  711
  759
  810
  864
  921
  982
  1,046
Tax expense, $m
  49
  50
  52
  54
  56
  59
  63
  66
  70
  75
  81
  87
  93
  99
  106
  113
  121
  129
  138
  147
  158
  168
  180
  192
  205
  219
  233
  249
  265
  282
Net income, $m
  133
  136
  140
  146
  153
  160
  169
  179
  190
  202
  220
  234
  250
  267
  285
  305
  326
  349
  373
  399
  426
  455
  486
  519
  554
  591
  631
  673
  717
  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
  327
  335
  345
  355
  367
  379
  393
  407
  423
  440
  458
  477
  497
  518
  541
  565
  590
  617
  646
  676
  707
  740
  775
  812
  851
  892
  935
  981
  1,028
Adjusted assets (=assets-cash), $m
  320
  327
  335
  345
  355
  367
  379
  393
  407
  423
  440
  458
  477
  497
  518
  541
  565
  590
  617
  646
  676
  707
  740
  775
  812
  851
  892
  935
  981
  1,028
Revenue / Adjusted assets
  1.894
  1.896
  1.899
  1.896
  1.899
  1.896
  1.900
  1.896
  1.899
  1.898
  1.895
  1.895
  1.895
  1.895
  1.898
  1.896
  1.897
  1.898
  1.898
  1.896
  1.896
  1.897
  1.899
  1.898
  1.898
  1.898
  1.897
  1.897
  1.896
  1.897
Average production assets, $m
  49
  50
  51
  52
  54
  56
  58
  60
  62
  64
  67
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  142
  149
  156
Working capital, $m
  -22
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -58
  -61
  -64
  -67
  -70
Total debt, $m
  3
  6
  10
  14
  18
  24
  29
  35
  42
  49
  56
  64
  73
  82
  91
  101
  112
  123
  135
  148
  161
  175
  190
  206
  222
  240
  258
  277
  297
  319
Total liabilities, $m
  143
  146
  150
  154
  158
  164
  169
  175
  182
  189
  196
  204
  213
  222
  231
  241
  252
  263
  275
  288
  301
  315
  330
  346
  362
  380
  398
  417
  437
  459
Total equity, $m
  177
  181
  186
  191
  197
  203
  210
  218
  226
  234
  244
  254
  264
  275
  287
  300
  313
  327
  342
  358
  374
  392
  410
  430
  450
  472
  494
  518
  543
  570
Total liabilities and equity, $m
  320
  327
  336
  345
  355
  367
  379
  393
  408
  423
  440
  458
  477
  497
  518
  541
  565
  590
  617
  646
  675
  707
  740
  776
  812
  852
  892
  935
  980
  1,029
Debt-to-equity ratio
  0.010
  0.030
  0.050
  0.070
  0.090
  0.120
  0.140
  0.160
  0.180
  0.210
  0.230
  0.250
  0.270
  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
  0.530
  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
  140
  146
  153
  160
  169
  179
  190
  202
  220
  234
  250
  267
  285
  305
  326
  349
  373
  399
  426
  455
  486
  519
  554
  591
  631
  673
  717
  764
Depreciation, amort., depletion, $m
  12
  12
  12
  12
  12
  13
  13
  13
  13
  14
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
Funds from operations, $m
  144
  148
  152
  158
  165
  173
  182
  192
  203
  216
  228
  242
  258
  276
  294
  315
  336
  359
  384
  410
  438
  468
  499
  533
  569
  606
  646
  689
  734
  782
Change in working capital, $m
  0
  -1
  -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
  -3
  -3
  -3
Cash from operations, $m
  145
  148
  153
  159
  166
  174
  183
  193
  204
  217
  229
  244
  260
  277
  296
  316
  338
  361
  386
  412
  440
  470
  502
  535
  571
  609
  649
  692
  737
  785
Maintenance CAPEX, $m
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
Cash from investing activities, $m
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -20
  -20
  -21
  -23
  -23
  -24
Free cash flow, $m
  139
  142
  146
  152
  158
  166
  174
  184
  195
  207
  219
  233
  249
  266
  284
  304
  325
  347
  371
  397
  424
  453
  484
  517
  552
  589
  628
  670
  714
  760
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  5
  5
  6
  6
  6
  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
  6
  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
  145
  150
  156
  163
  171
  180
  190
  202
  214
  226
  241
  257
  275
  294
  314
  335
  358
  383
  409
  437
  467
  499
  533
  568
  606
  646
  689
  734
  782
Retained Cash Flow (-), $m
  -3
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -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
  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
  139
  141
  145
  151
  157
  165
  173
  183
  194
  206
  217
  231
  247
  264
  282
  301
  322
  344
  368
  394
  421
  450
  481
  513
  548
  585
  624
  665
  709
  755
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
  129
  126
  124
  122
  119
  117
  114
  111
  108
  103
  99
  94
  89
  83
  77
  70
  63
  57
  50
  44
  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 27.4
Price to Sales 5.6
Price to Book 20.1
Price to Tangible Book
Price to Cash Flow 24.4
Price to Free Cash Flow 25.7
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 $594.599 million for the last fiscal year's total revenue generated by Manhattan Associates. The default revenue input number comes from 0001 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 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%.

Life of production assets of 8.7 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 -3.6%. 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 - $174.956 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 65.76 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 $3.2 billion.

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COMPANY NEWS

▶ Manhattan Associates: 3Q Earnings Snapshot   [04:39PM  Associated Press]
▶ 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]

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