Intrinsic value of Micronet Enertec Technologies - MICT

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$1.15

  Intrinsic Value

$0.18

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  Rating & Target

str. sell

-85%

Previous close

$1.15

 
Intrinsic value

$0.18

 
Up/down potential

-85%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MICT 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Micronet Enertec Technologies (MICT) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -4.17
  40.00
  36.50
  33.35
  30.52
  27.96
  25.67
  23.60
  21.74
  20.07
  18.56
  17.20
  15.98
  14.89
  13.90
  13.01
  12.21
  11.49
  10.84
  10.25
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
Revenue, $m
  23
  32
  44
  59
  76
  98
  123
  152
  185
  222
  263
  309
  358
  411
  469
  530
  594
  663
  734
  810
  888
  971
  1,056
  1,146
  1,238
  1,335
  1,435
  1,539
  1,648
  1,760
  1,877
Variable operating expenses, $m
 
  35
  48
  64
  83
  106
  133
  165
  200
  241
  285
  334
  388
  446
  507
  573
  643
  717
  795
  877
  962
  1,051
  1,144
  1,240
  1,341
  1,445
  1,554
  1,667
  1,784
  1,906
  2,032
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
  30
  35
  48
  64
  83
  106
  133
  165
  200
  241
  285
  334
  388
  446
  507
  573
  643
  717
  795
  877
  962
  1,051
  1,144
  1,240
  1,341
  1,445
  1,554
  1,667
  1,784
  1,906
  2,032
Operating income, $m
  -7
  -3
  -4
  -5
  -6
  -8
  -10
  -13
  -15
  -18
  -22
  -26
  -30
  -34
  -39
  -44
  -49
  -55
  -61
  -67
  -73
  -80
  -87
  -95
  -102
  -110
  -119
  -127
  -136
  -145
  -155
EBITDA, $m
  -6
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -17
  -20
  -22
  -25
  -28
  -32
  -35
  -39
  -43
  -46
  -51
  -55
  -59
  -64
  -69
  -74
  -79
  -84
  -90
Interest expense (income), $m
  0
  0
  1
  1
  1
  2
  3
  4
  4
  6
  7
  8
  9
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  33
  36
  39
  42
  46
  49
  52
  56
Earnings before tax, $m
  -8
  -3
  -4
  -6
  -8
  -10
  -13
  -16
  -20
  -24
  -29
  -34
  -39
  -45
  -52
  -58
  -66
  -73
  -81
  -90
  -99
  -108
  -118
  -128
  -139
  -150
  -161
  -173
  -185
  -198
  -211
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
  0
Net income, $m
  -6
  -3
  -4
  -6
  -8
  -10
  -13
  -16
  -20
  -24
  -29
  -34
  -39
  -45
  -52
  -58
  -66
  -73
  -81
  -90
  -99
  -108
  -118
  -128
  -139
  -150
  -161
  -173
  -185
  -198
  -211

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  32
  39
  54
  71
  93
  119
  150
  185
  225
  271
  321
  376
  436
  501
  571
  645
  724
  807
  894
  986
  1,082
  1,182
  1,287
  1,395
  1,508
  1,626
  1,748
  1,875
  2,007
  2,144
  2,287
Adjusted assets (=assets-cash), $m
  28
  39
  54
  71
  93
  119
  150
  185
  225
  271
  321
  376
  436
  501
  571
  645
  724
  807
  894
  986
  1,082
  1,182
  1,287
  1,395
  1,508
  1,626
  1,748
  1,875
  2,007
  2,144
  2,287
Revenue / Adjusted assets
  0.821
  0.821
  0.815
  0.831
  0.817
  0.824
  0.820
  0.822
  0.822
  0.819
  0.819
  0.822
  0.821
  0.820
  0.821
  0.822
  0.820
  0.822
  0.821
  0.822
  0.821
  0.821
  0.821
  0.822
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
Average production assets, $m
  4
  6
  8
  10
  13
  17
  21
  26
  32
  39
  46
  54
  62
  72
  82
  92
  103
  115
  128
  141
  155
  169
  184
  199
  215
  232
  250
  268
  287
  306
  327
Working capital, $m
  6
  16
  22
  29
  38
  49
  62
  76
  93
  111
  132
  154
  179
  206
  234
  265
  297
  331
  367
  405
  444
  485
  528
  573
  619
  667
  718
  770
  824
  880
  939
Total debt, $m
  14
  18
  29
  43
  59
  78
  101
  128
  158
  192
  230
  271
  316
  365
  417
  473
  532
  594
  660
  729
  801
  876
  954
  1,035
  1,120
  1,208
  1,300
  1,395
  1,494
  1,597
  1,704
Total liabilities, $m
  25
  29
  40
  54
  70
  89
  112
  139
  169
  203
  241
  282
  327
  376
  428
  484
  543
  605
  671
  740
  812
  887
  965
  1,046
  1,131
  1,219
  1,311
  1,406
  1,505
  1,608
  1,715
Total equity, $m
  7
  10
  13
  18
  23
  30
  37
  46
  56
  68
  80
  94
  109
  125
  143
  161
  181
  202
  224
  247
  271
  296
  322
  349
  377
  406
  437
  469
  502
  536
  572
Total liabilities and equity, $m
  32
  39
  53
  72
  93
  119
  149
  185
  225
  271
  321
  376
  436
  501
  571
  645
  724
  807
  895
  987
  1,083
  1,183
  1,287
  1,395
  1,508
  1,625
  1,748
  1,875
  2,007
  2,144
  2,287
Debt-to-equity ratio
  2.000
  1.880
  2.180
  2.380
  2.530
  2.630
  2.710
  2.760
  2.800
  2.840
  2.860
  2.880
  2.900
  2.910
  2.920
  2.930
  2.940
  2.950
  2.950
  2.960
  2.960
  2.960
  2.970
  2.970
  2.970
  2.970
  2.970
  2.980
  2.980
  2.980
  2.980
Adjusted equity ratio
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -3
  -4
  -6
  -8
  -10
  -13
  -16
  -20
  -24
  -29
  -34
  -39
  -45
  -52
  -58
  -66
  -73
  -81
  -90
  -99
  -108
  -118
  -128
  -139
  -150
  -161
  -173
  -185
  -198
  -211
Depreciation, amort., depletion, $m
  1
  1
  2
  2
  3
  4
  4
  5
  7
  8
  9
  11
  12
  14
  16
  18
  21
  23
  26
  28
  31
  34
  37
  40
  43
  46
  50
  54
  57
  61
  65
Funds from operations, $m
  -2
  -2
  -3
  -4
  -5
  -7
  -9
  -11
  -13
  -16
  -19
  -23
  -27
  -31
  -35
  -40
  -45
  -50
  -56
  -62
  -68
  -74
  -81
  -88
  -96
  -103
  -111
  -119
  -128
  -137
  -146
Change in working capital, $m
  2
  5
  6
  7
  9
  11
  13
  15
  17
  19
  21
  23
  25
  27
  29
  30
  32
  34
  36
  38
  39
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
Cash from operations, $m
  -4
  -6
  -9
  -11
  -14
  -17
  -21
  -25
  -30
  -35
  -40
  -45
  -51
  -57
  -64
  -70
  -77
  -84
  -92
  -99
  -107
  -116
  -124
  -133
  -142
  -151
  -161
  -171
  -182
  -193
  -204
Maintenance CAPEX, $m
  0
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -12
  -14
  -16
  -18
  -21
  -23
  -26
  -28
  -31
  -34
  -37
  -40
  -43
  -46
  -50
  -54
  -57
  -61
New CAPEX, $m
  0
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
Cash from investing activities, $m
  2
  -3
  -3
  -5
  -5
  -7
  -7
  -9
  -11
  -12
  -15
  -17
  -20
  -21
  -24
  -27
  -29
  -33
  -35
  -39
  -42
  -45
  -49
  -53
  -56
  -60
  -63
  -68
  -73
  -77
  -81
Free cash flow, $m
  -2
  -9
  -12
  -15
  -19
  -24
  -29
  -35
  -41
  -48
  -55
  -63
  -71
  -79
  -88
  -97
  -107
  -117
  -127
  -138
  -149
  -161
  -173
  -185
  -198
  -211
  -225
  -239
  -254
  -270
  -286
Issuance/(repayment) of debt, $m
  0
  8
  11
  13
  16
  20
  23
  27
  30
  34
  38
  41
  45
  49
  52
  56
  59
  62
  66
  69
  72
  75
  78
  82
  85
  88
  92
  95
  99
  103
  107
Issuance/(repurchase) of shares, $m
  1
  6
  8
  10
  13
  17
  21
  25
  30
  35
  41
  47
  54
  61
  69
  77
  85
  94
  103
  113
  123
  133
  144
  155
  167
  179
  191
  204
  218
  232
  247
Cash from financing (excl. dividends), $m  
  0
  14
  19
  23
  29
  37
  44
  52
  60
  69
  79
  88
  99
  110
  121
  133
  144
  156
  169
  182
  195
  208
  222
  237
  252
  267
  283
  299
  317
  335
  354
Total cash flow (excl. dividends), $m
  -2
  5
  7
  9
  10
  12
  15
  17
  19
  22
  24
  26
  29
  31
  33
  35
  37
  40
  42
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
Retained Cash Flow (-), $m
  4
  -6
  -8
  -10
  -13
  -17
  -21
  -25
  -30
  -35
  -41
  -47
  -54
  -61
  -69
  -77
  -85
  -94
  -103
  -113
  -123
  -133
  -144
  -155
  -167
  -179
  -191
  -204
  -218
  -232
  -247
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
 
  0
  -1
  -2
  -3
  -4
  -6
  -8
  -11
  -14
  -17
  -21
  -26
  -30
  -36
  -42
  -48
  -55
  -62
  -69
  -77
  -86
  -94
  -104
  -113
  -123
  -133
  -144
  -155
  -167
  -179
Discount rate, %
 
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
 
  0
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  62.4
  39.6
  25.5
  16.6
  11.0
  7.4
  5.0
  3.4
  2.4
  1.6
  1.2
  0.8
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Micronet Enertec Technologies, Inc. (Micronet Enertec) operates through Israel-based companies, which include Enertec Systems 2001 Ltd (Enertec), its subsidiary, and Micronet Ltd (Micronet), which develops, manufactures, integrates and markets rugged computers, tablets and computer-based systems and instruments for the commercial, defense and aerospace markets. The Company's segments include defense and aerospace segment, and mobile resource management (MRM). The Company's products, solutions and services are designed to perform in severe environments and battlefield conditions. Micronet operates in the commercial mobile resource management market and is a developer, manufacturer and provider of mobile computing platforms, designed for integration into fleet management and mobile workforce management solutions. Enertec operates in the defense and aerospace markets. Enertec designs, develops and manufactures computer based instruments and aerospace electronic solutions.

FINANCIAL RATIOS  of  Micronet Enertec Technologies (MICT)

Valuation Ratios
P/E Ratio -1.2
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow -1.8
Price to Free Cash Flow -1.8
Growth Rates
Sales Growth Rate -4.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 14.3%
Total Debt to Equity 200%
Interest Coverage 0
Management Effectiveness
Return On Assets -16.7%
Ret/ On Assets - 3 Yr. Avg. -8.6%
Return On Total Capital -26.1%
Ret/ On T. Cap. - 3 Yr. Avg. -13.6%
Return On Equity -66.7%
Return On Equity - 3 Yr. Avg. -31.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 17.4%
Gross Margin - 3 Yr. Avg. 25.3%
EBITDA Margin -30.4%
EBITDA Margin - 3 Yr. Avg. -12.5%
Operating Margin -30.4%
Oper. Margin - 3 Yr. Avg. -14.9%
Pre-Tax Margin -34.8%
Pre-Tax Margin - 3 Yr. Avg. -17.7%
Net Profit Margin -26.1%
Net Profit Margin - 3 Yr. Avg. -13.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MICT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MICT stock intrinsic value calculation we used $23 million for the last fiscal year's total revenue generated by Micronet Enertec Technologies. The default revenue input number comes from 2016 income statement of Micronet Enertec Technologies. 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 MICT stock valuation model: a) initial revenue growth rate of 40% 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 9.6%, whose default value for MICT is calculated based on our internal credit rating of Micronet Enertec Technologies, 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 Micronet Enertec Technologies.
    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 MICT stock the variable cost ratio is equal to 108.7%.

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 MICT 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 3.5% for Micronet Enertec Technologies.

Corporate tax rate of 27% is the nominal tax rate for Micronet Enertec Technologies. 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 MICT 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 MICT are equal to 17.4%.

Life of production assets of 5 years is the average useful life of capital assets used in Micronet Enertec Technologies 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 MICT is equal to 50%. 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 - $7 million for Micronet Enertec Technologies - 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 8.554 million for Micronet Enertec Technologies 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 Micronet Enertec Technologies at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ DPW Holdings Agrees to Buy Enertec Systems 2001   [Jan-03-18 01:00PM  Zacks Small Cap Research]
▶ Micronet's Backlog Hits Record High at $11.5 Million   [May-25-17 08:00AM  PR Newswire]
Financial statements of MICT
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