Intrinsic value of Mitek Systems - MITK

Previous Close

$9.30

  Intrinsic Value

$3.23

stock screener

  Rating & Target

str. sell

-65%

Previous close

$9.30

 
Intrinsic value

$3.23

 
Up/down potential

-65%

 
Rating

str. 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 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 0.3

 

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, %
  30.80
  28.22
  25.90
  23.81
  21.93
  20.23
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
Revenue, $m
  59
  75
  95
  118
  143
  172
  205
  240
  279
  321
  366
  414
  464
  518
  574
  634
  696
  760
  828
  898
  971
  1,047
  1,126
  1,208
  1,293
  1,382
  1,474
  1,570
  1,670
  1,774
Variable operating expenses, $m
  53
  68
  85
  105
  128
  154
  183
  215
  249
  287
  326
  369
  414
  462
  512
  565
  620
  678
  738
  801
  866
  934
  1,004
  1,078
  1,154
  1,233
  1,315
  1,400
  1,489
  1,582
Fixed operating expenses, $m
  1
  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
  2
  2
  2
  2
Total operating expenses, $m
  54
  69
  86
  106
  129
  155
  184
  216
  250
  288
  327
  370
  415
  463
  513
  566
  621
  679
  740
  803
  868
  936
  1,006
  1,080
  1,156
  1,235
  1,317
  1,402
  1,491
  1,584
Operating income, $m
  5
  7
  9
  11
  14
  17
  20
  24
  28
  33
  38
  43
  49
  55
  61
  67
  74
  81
  88
  96
  103
  112
  120
  129
  138
  148
  158
  168
  179
  190
EBITDA, $m
  6
  8
  10
  13
  16
  20
  24
  28
  33
  38
  43
  49
  55
  61
  68
  75
  83
  91
  99
  107
  116
  125
  135
  145
  155
  166
  177
  189
  201
  213
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  5
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
Earnings before tax, $m
  5
  6
  8
  11
  13
  16
  19
  22
  26
  30
  35
  39
  44
  50
  55
  61
  67
  73
  79
  86
  93
  100
  108
  116
  124
  132
  141
  150
  160
  170
Tax expense, $m
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  16
  18
  20
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
Net income, $m
  4
  5
  6
  8
  10
  12
  14
  16
  19
  22
  25
  29
  32
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  84
  90
  97
  103
  110
  117
  124

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
  50
  64
  81
  100
  122
  147
  175
  205
  238
  273
  312
  353
  396
  442
  490
  540
  593
  648
  706
  766
  828
  893
  960
  1,030
  1,103
  1,178
  1,257
  1,338
  1,423
  1,512
Adjusted assets (=assets-cash), $m
  50
  64
  81
  100
  122
  147
  175
  205
  238
  273
  312
  353
  396
  442
  490
  540
  593
  648
  706
  766
  828
  893
  960
  1,030
  1,103
  1,178
  1,257
  1,338
  1,423
  1,512
Revenue / Adjusted assets
  1.180
  1.172
  1.173
  1.180
  1.172
  1.170
  1.171
  1.171
  1.172
  1.176
  1.173
  1.173
  1.172
  1.172
  1.171
  1.174
  1.174
  1.173
  1.173
  1.172
  1.173
  1.172
  1.173
  1.173
  1.172
  1.173
  1.173
  1.173
  1.174
  1.173
Average production assets, $m
  8
  10
  13
  16
  19
  23
  27
  32
  37
  42
  48
  55
  61
  68
  76
  84
  92
  100
  109
  119
  128
  138
  149
  159
  171
  182
  195
  207
  220
  234
Working capital, $m
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -13
  -15
  -17
  -20
  -22
  -24
  -27
  -29
  -32
  -35
  -38
  -41
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -74
Total debt, $m
  3
  6
  11
  16
  22
  29
  36
  44
  53
  62
  73
  83
  95
  107
  120
  134
  148
  162
  178
  194
  210
  228
  246
  264
  284
  304
  325
  347
  369
  393
Total liabilities, $m
  13
  17
  22
  27
  33
  39
  47
  55
  63
  73
  83
  94
  106
  118
  131
  144
  158
  173
  188
  204
  221
  238
  256
  275
  294
  315
  336
  357
  380
  404
Total equity, $m
  37
  47
  59
  74
  90
  108
  128
  150
  174
  200
  228
  258
  290
  324
  359
  396
  435
  475
  517
  561
  607
  654
  704
  755
  808
  864
  921
  981
  1,043
  1,108
Total liabilities and equity, $m
  50
  64
  81
  101
  123
  147
  175
  205
  237
  273
  311
  352
  396
  442
  490
  540
  593
  648
  705
  765
  828
  892
  960
  1,030
  1,102
  1,179
  1,257
  1,338
  1,423
  1,512
Debt-to-equity ratio
  0.070
  0.140
  0.180
  0.220
  0.240
  0.260
  0.280
  0.290
  0.300
  0.310
  0.320
  0.320
  0.330
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
Adjusted equity ratio
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  5
  6
  8
  10
  12
  14
  16
  19
  22
  25
  29
  32
  36
  40
  44
  49
  53
  58
  63
  68
  73
  79
  84
  90
  97
  103
  110
  117
  124
Depreciation, amort., depletion, $m
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
Funds from operations, $m
  5
  6
  8
  10
  12
  14
  17
  20
  23
  27
  30
  34
  39
  43
  48
  53
  58
  63
  69
  75
  81
  87
  94
  100
  107
  115
  123
  130
  139
  147
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
Cash from operations, $m
  5
  7
  9
  11
  13
  16
  18
  21
  25
  28
  32
  36
  41
  45
  50
  55
  60
  66
  72
  78
  84
  90
  97
  104
  111
  119
  126
  135
  143
  152
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
New CAPEX, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
Cash from investing activities, $m
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -8
  -8
  -10
  -10
  -11
  -12
  -13
  -14
  -16
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
Free cash flow, $m
  3
  4
  5
  6
  8
  10
  12
  14
  17
  19
  22
  25
  28
  32
  36
  40
  44
  48
  53
  57
  62
  67
  73
  78
  84
  90
  96
  102
  109
  116
Issuance/(repayment) of debt, $m
  3
  4
  4
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
Issuance/(repurchase) of shares, $m
  5
  6
  6
  6
  7
  7
  6
  6
  5
  4
  3
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  8
  10
  10
  11
  13
  14
  13
  14
  14
  14
  13
  12
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  11
  13
  16
  18
  21
  23
  26
  28
  31
  33
  35
  37
  40
  44
  49
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  124
  132
  140
Retained Cash Flow (-), $m
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
Prev. year cash balance distribution, $m
  33
  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
  5
  7
  9
  11
  14
  17
  21
  25
  29
  34
  39
  44
  50
  56
  63
  70
  77
  84
  92
  100
  109
  118
  127
  136
  146
  157
  167
  178
  190
  202
Cash available for distribution, $m
  35
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  11
  13
  16
  19
  22
  26
  29
  33
  37
  41
  46
  50
  55
  59
  64
  69
  75
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
  34
  3
  3
  3
  3
  4
  4
  4
  4
  4
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
Current shareholders' claim on cash, %
  96.4
  93.5
  91.2
  89.2
  87.7
  86.4
  85.4
  84.6
  84.1
  83.7
  83.5
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4

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 (MITK)

Valuation Ratios
P/E Ratio 22.4
Price to Sales 7
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 31.4
Price to Free Cash Flow 31.4
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 $45 million for the last fiscal year's total revenue generated by Mitek Systems. The default revenue input number comes from 2017 income statement of Mitek Systems. 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 30.8% 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, 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.
    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 90.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1 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.

Corporate tax rate of 27% is the nominal tax rate for Mitek Systems. 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 12.1%.

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 13.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Mitek Systems 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 -4.2%. 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 - $61 million for Mitek Systems - 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 33 million for Mitek Systems 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 at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Mitek Achieves ISO 27001 Certification   [Jul-17-18 07:00AM  GlobeNewswire]
▶ Why Mitek Systems Inc (NASDAQ:MITK) Could Be A Buy   [Jun-23-18 09:30AM  Simply Wall St.]
▶ Mitek to Participate in ROTH London Conference   [Jun-18-18 07:00AM  GlobeNewswire]
▶ Mitek Systems: Fiscal 2Q Earnings Snapshot   [May-01-18 06:06PM  Associated Press]
▶ 3 Top Stocks That Aren't on Wall Street's Radar   [Apr-25-18 06:00AM  Motley Fool]
▶ Miteks Mobile Verify® Selected by Leading Job Site   [Dec-05-17 07:00AM  GlobeNewswire]
▶ Is It The Right Time To Buy Mitek Systems Inc (MITK)?   [Nov-07-17 08:08PM  Simply Wall St.]
▶ Mitek Systems tops Street 4Q forecasts   [06:11PM  Associated Press]
▶ ETFs with exposure to Mitek Systems, Inc. : July 31, 2017   [Jul-31-17 04:53PM  Capital Cube]
▶ Mitek Systems meets 3Q profit forecasts   [Jul-27-17 11:46PM  Associated Press]
▶ ETFs with exposure to Mitek Systems, Inc. : July 10, 2017   [Jul-10-17 02:52PM  Capital Cube]
▶ ETFs with exposure to Mitek Systems, Inc. : June 27, 2017   [Jun-27-17 03:25PM  Capital Cube]
▶ Mitek Awarded 30th Patent For Mobile Capture Innovation   [Jun-06-17 07:00AM  GlobeNewswire]
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