Intrinsic value of Mitek Systems, Inc. - MITK

Previous Close

$9.63

  Intrinsic Value

$5.69

stock screener

  Rating & Target

sell

-41%

Previous close

$9.63

 
Intrinsic value

$5.69

 
Up/down potential

-41%

 
Rating

sell

We calculate the intrinsic value of MITK 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 0.4

 

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, %
  45.70
  41.63
  37.97
  34.67
  31.70
  29.03
  26.63
  24.47
  22.52
  20.77
  19.19
  17.77
  16.49
  15.35
  14.31
  13.38
  12.54
  11.79
  11.11
  10.50
  9.95
  9.45
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
Revenue, $m
  93
  132
  182
  245
  323
  417
  528
  657
  805
  972
  1,159
  1,365
  1,590
  1,834
  2,097
  2,377
  2,676
  2,991
  3,323
  3,672
  4,037
  4,419
  4,817
  5,232
  5,663
  6,112
  6,578
  7,063
  7,566
  8,090
Variable operating expenses, $m
  84
  117
  159
  211
  276
  354
  447
  554
  678
  817
  966
  1,138
  1,325
  1,529
  1,747
  1,981
  2,230
  2,492
  2,769
  3,060
  3,364
  3,682
  4,014
  4,360
  4,719
  5,093
  5,482
  5,885
  6,305
  6,741
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
  84
  117
  159
  211
  276
  354
  447
  554
  678
  817
  966
  1,138
  1,325
  1,529
  1,747
  1,981
  2,230
  2,492
  2,769
  3,060
  3,364
  3,682
  4,014
  4,360
  4,719
  5,093
  5,482
  5,885
  6,305
  6,741
Operating income, $m
  9
  15
  24
  34
  47
  63
  81
  103
  128
  155
  193
  228
  265
  306
  350
  396
  446
  499
  554
  612
  673
  737
  803
  872
  944
  1,019
  1,096
  1,177
  1,261
  1,348
EBITDA, $m
  19
  27
  37
  50
  66
  86
  108
  135
  165
  200
  238
  280
  327
  377
  431
  488
  550
  614
  683
  754
  829
  908
  989
  1,074
  1,163
  1,255
  1,351
  1,451
  1,554
  1,661
Interest expense (income), $m
  0
  0
  1
  2
  3
  5
  7
  9
  12
  16
  20
  24
  29
  35
  41
  48
  55
  62
  70
  79
  87
  97
  107
  117
  128
  139
  150
  162
  175
  188
  201
Earnings before tax, $m
  9
  15
  22
  31
  42
  56
  72
  90
  112
  136
  169
  198
  230
  265
  302
  342
  384
  428
  475
  525
  576
  630
  686
  744
  805
  868
  934
  1,002
  1,073
  1,147
Tax expense, $m
  2
  4
  6
  8
  11
  15
  19
  24
  30
  37
  46
  54
  62
  71
  82
  92
  104
  116
  128
  142
  156
  170
  185
  201
  217
  234
  252
  271
  290
  310
Net income, $m
  6
  11
  16
  23
  31
  41
  52
  66
  81
  99
  123
  145
  168
  193
  220
  249
  280
  313
  347
  383
  421
  460
  501
  543
  588
  634
  682
  732
  784
  837

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
  185
  263
  362
  488
  642
  829
  1,050
  1,307
  1,601
  1,933
  2,304
  2,714
  3,162
  3,647
  4,169
  4,726
  5,319
  5,946
  6,607
  7,300
  8,027
  8,785
  9,577
  10,401
  11,259
  12,151
  13,078
  14,041
  15,042
  16,083
Adjusted assets (=assets-cash), $m
  185
  263
  362
  488
  642
  829
  1,050
  1,307
  1,601
  1,933
  2,304
  2,714
  3,162
  3,647
  4,169
  4,726
  5,319
  5,946
  6,607
  7,300
  8,027
  8,785
  9,577
  10,401
  11,259
  12,151
  13,078
  14,041
  15,042
  16,083
Revenue / Adjusted assets
  0.503
  0.502
  0.503
  0.502
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
Average production assets, $m
  30
  43
  59
  80
  105
  136
  172
  214
  262
  316
  377
  444
  517
  596
  681
  773
  870
  972
  1,080
  1,193
  1,312
  1,436
  1,566
  1,700
  1,841
  1,986
  2,138
  2,295
  2,459
  2,629
Working capital, $m
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
Total debt, $m
  15
  34
  59
  90
  129
  176
  231
  295
  368
  452
  544
  647
  759
  880
  1,010
  1,150
  1,298
  1,455
  1,620
  1,793
  1,975
  2,165
  2,362
  2,569
  2,783
  3,006
  3,238
  3,479
  3,729
  3,989
Total liabilities, $m
  46
  66
  91
  122
  161
  207
  262
  327
  400
  483
  576
  678
  790
  912
  1,042
  1,182
  1,330
  1,487
  1,652
  1,825
  2,007
  2,196
  2,394
  2,600
  2,815
  3,038
  3,269
  3,510
  3,761
  4,021
Total equity, $m
  139
  197
  272
  366
  482
  622
  787
  980
  1,201
  1,450
  1,728
  2,035
  2,371
  2,735
  3,127
  3,545
  3,989
  4,460
  4,955
  5,475
  6,020
  6,589
  7,183
  7,801
  8,444
  9,113
  9,808
  10,531
  11,282
  12,062
Total liabilities and equity, $m
  185
  263
  363
  488
  643
  829
  1,049
  1,307
  1,601
  1,933
  2,304
  2,713
  3,161
  3,647
  4,169
  4,727
  5,319
  5,947
  6,607
  7,300
  8,027
  8,785
  9,577
  10,401
  11,259
  12,151
  13,077
  14,041
  15,043
  16,083
Debt-to-equity ratio
  0.100
  0.170
  0.220
  0.250
  0.270
  0.280
  0.290
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
Adjusted equity ratio
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  11
  16
  23
  31
  41
  52
  66
  81
  99
  123
  145
  168
  193
  220
  249
  280
  313
  347
  383
  421
  460
  501
  543
  588
  634
  682
  732
  784
  837
Depreciation, amort., depletion, $m
  10
  12
  14
  16
  19
  23
  27
  32
  38
  44
  45
  53
  62
  71
  81
  92
  104
  116
  129
  142
  156
  171
  186
  202
  219
  236
  255
  273
  293
  313
Funds from operations, $m
  17
  22
  30
  39
  50
  64
  80
  98
  119
  143
  168
  197
  230
  264
  302
  341
  384
  428
  476
  525
  577
  631
  687
  746
  807
  870
  936
  1,005
  1,076
  1,150
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  17
  23
  30
  39
  50
  64
  80
  99
  120
  144
  169
  198
  230
  265
  303
  343
  385
  430
  477
  526
  578
  632
  689
  748
  809
  872
  938
  1,007
  1,078
  1,152
Maintenance CAPEX, $m
  -2
  -4
  -5
  -7
  -9
  -13
  -16
  -20
  -25
  -31
  -38
  -45
  -53
  -62
  -71
  -81
  -92
  -104
  -116
  -129
  -142
  -156
  -171
  -186
  -202
  -219
  -236
  -255
  -273
  -293
New CAPEX, $m
  -10
  -13
  -16
  -21
  -25
  -30
  -36
  -42
  -48
  -54
  -61
  -67
  -73
  -79
  -85
  -91
  -97
  -103
  -108
  -113
  -119
  -124
  -129
  -135
  -140
  -146
  -152
  -157
  -164
  -170
Cash from investing activities, $m
  -12
  -17
  -21
  -28
  -34
  -43
  -52
  -62
  -73
  -85
  -99
  -112
  -126
  -141
  -156
  -172
  -189
  -207
  -224
  -242
  -261
  -280
  -300
  -321
  -342
  -365
  -388
  -412
  -437
  -463
Free cash flow, $m
  5
  6
  8
  12
  16
  21
  28
  36
  46
  58
  71
  86
  104
  124
  146
  170
  196
  224
  253
  284
  317
  352
  388
  426
  466
  507
  550
  595
  641
  690
Issuance/(repayment) of debt, $m
  15
  19
  25
  31
  39
  47
  55
  64
  74
  83
  93
  102
  112
  121
  130
  139
  148
  157
  165
  173
  182
  190
  198
  206
  214
  223
  232
  241
  250
  260
Issuance/(repurchase) of shares, $m
  37
  47
  59
  72
  85
  99
  113
  127
  139
  150
  155
  163
  168
  171
  171
  169
  164
  157
  148
  137
  124
  109
  93
  75
  55
  35
  13
  0
  0
  0
Cash from financing (excl. dividends), $m  
  52
  66
  84
  103
  124
  146
  168
  191
  213
  233
  248
  265
  280
  292
  301
  308
  312
  314
  313
  310
  306
  299
  291
  281
  269
  258
  245
  241
  250
  260
Total cash flow (excl. dividends), $m
  57
  73
  92
  114
  139
  167
  196
  227
  259
  292
  318
  351
  384
  416
  448
  479
  509
  538
  567
  595
  623
  651
  679
  707
  736
  765
  795
  836
  892
  950
Retained Cash Flow (-), $m
  -44
  -58
  -75
  -94
  -116
  -140
  -166
  -193
  -221
  -249
  -278
  -307
  -336
  -364
  -391
  -418
  -445
  -470
  -495
  -520
  -545
  -569
  -594
  -618
  -643
  -669
  -695
  -723
  -751
  -780
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
  13
  15
  17
  20
  23
  27
  31
  34
  38
  43
  40
  44
  48
  52
  56
  60
  64
  68
  71
  75
  78
  82
  85
  89
  93
  96
  100
  113
  141
  169
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
  13
  14
  15
  17
  18
  19
  21
  22
  22
  22
  19
  19
  18
  18
  17
  15
  14
  12
  11
  10
  8
  7
  6
  5
  4
  3
  2
  2
  2
  1
Current shareholders' claim on cash, %
  90.9
  83.7
  77.7
  72.8
  68.7
  65.3
  62.4
  59.9
  57.8
  56.0
  54.5
  53.3
  52.2
  51.2
  50.4
  49.7
  49.1
  48.6
  48.2
  47.9
  47.6
  47.4
  47.2
  47.1
  47.0
  47.0
  47.0
  47.0
  47.0
  47.0

Mitek Systems, Inc. develops, markets and sells mobile capture and identity verification software solutions for enterprise customers. The Company's technology allows users to remotely deposit checks, open accounts, get insurance quotes, pay bills, as well as verify their identity by taking pictures of various documents with their camera-equipped smartphones and tablets instead of using the device keyboard. Its technology uses algorithms to correct image distortion, extract relevant data, route images to their desired location and process transactions. Its technology processes images of documents in various ways. The Company's products include Mobile Verify, Mobile Fill, Mobile Docs, Mobile Deposit and Commercial Mobile Deposit Capture. Its mobile technology solutions are provided in two parts: a software development kit (SDK) for mobile capture, and a software platform for image correction, detection, extraction and authentication.

FINANCIAL RATIOS  of  Mitek Systems, Inc. (MITK)

Valuation Ratios
P/E Ratio 23.2
Price to Sales 7.2
Price to Book 5.3
Price to Tangible Book
Price to Cash Flow 32.5
Price to Free Cash Flow 32.5
Growth Rates
Sales Growth Rate 28.6%
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 NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 23.3%
Ret/ On Assets - 3 Yr. Avg. 12.2%
Return On Total Capital 28%
Ret/ On T. Cap. - 3 Yr. Avg. 15%
Return On Equity 28%
Return On Equity - 3 Yr. Avg. 15%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 91.1%
Gross Margin - 3 Yr. Avg. 90.6%
EBITDA Margin 8.9%
EBITDA Margin - 3 Yr. Avg. 9.4%
Operating Margin 4.4%
Oper. Margin - 3 Yr. Avg. 6.1%
Pre-Tax Margin 6.7%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin 31.1%
Net Profit Margin - 3 Yr. Avg. 16.3%
Effective Tax Rate -366.7%
Eff/ Tax Rate - 3 Yr. Avg. -138.9%
Payout Ratio 0%

MITK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MITK stock intrinsic value calculation we used $64 million for the last fiscal year's total revenue generated by Mitek Systems, Inc.. The default revenue input number comes from 0001 income statement of Mitek Systems, 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 MITK stock valuation model: a) initial revenue growth rate of 45.7% 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 MITK is calculated based on our internal credit rating of Mitek Systems, 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 Mitek Systems, 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 MITK stock the variable cost ratio is equal to 93.8%.

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 MITK 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 Mitek Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for Mitek Systems, 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 MITK 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 MITK are equal to 32.5%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Mitek Systems, 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 MITK is equal to -0.4%. 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 - $95.394 million for Mitek Systems, 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 38.734 million for Mitek Systems, 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 Mitek Systems, Inc. at the current share price and the inputted number of shares is $0.4 billion.

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