Intrinsic value of On Track Innovations Ltd - OTIV

Previous Close

$0.62

  Intrinsic Value

$2.37

stock screener

  Rating & Target

str. buy

+280%

Previous close

$0.62

 
Intrinsic value

$2.37

 
Up/down potential

+280%

 
Rating

str. buy

We calculate the intrinsic value of OTIV 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 0.0

 

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, %
  38.60
  35.24
  32.22
  29.49
  27.04
  24.84
  22.86
  21.07
  19.46
  18.02
  16.72
  15.54
  14.49
  13.54
  12.69
  11.92
  11.23
  10.60
  10.04
  9.54
  9.08
  8.68
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
Revenue, $m
  30
  41
  55
  71
  90
  112
  138
  167
  199
  235
  274
  317
  363
  412
  464
  519
  577
  639
  703
  770
  840
  913
  989
  1,067
  1,149
  1,235
  1,323
  1,415
  1,511
  1,610
Variable operating expenses, $m
  25
  34
  45
  58
  73
  92
  113
  136
  163
  192
  224
  259
  297
  337
  379
  425
  472
  522
  575
  630
  687
  747
  809
  873
  940
  1,010
  1,082
  1,158
  1,236
  1,317
Fixed operating expenses, $m
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
Total operating expenses, $m
  30
  39
  50
  63
  79
  98
  119
  142
  169
  198
  230
  265
  304
  344
  386
  432
  479
  529
  583
  638
  695
  755
  817
  881
  949
  1,019
  1,091
  1,167
  1,245
  1,327
Operating income, $m
  0
  2
  5
  7
  11
  15
  19
  24
  30
  37
  44
  51
  59
  68
  77
  87
  98
  109
  120
  132
  145
  158
  172
  186
  201
  216
  232
  248
  266
  283
EBITDA, $m
  2
  4
  7
  11
  15
  21
  26
  33
  41
  49
  58
  68
  78
  90
  102
  115
  128
  142
  157
  173
  189
  206
  223
  242
  261
  280
  301
  322
  345
  368
Interest expense (income), $m
  0
  0
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  16
  18
  20
  22
  25
  28
  30
  33
  36
  39
  42
  45
  49
  52
  56
  60
Earnings before tax, $m
  0
  2
  3
  6
  8
  12
  15
  19
  24
  29
  35
  41
  47
  54
  62
  69
  78
  86
  95
  105
  115
  125
  136
  147
  159
  171
  183
  196
  210
  224
Tax expense, $m
  0
  0
  1
  2
  2
  3
  4
  5
  6
  8
  9
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  46
  49
  53
  57
  60
Net income, $m
  0
  1
  3
  4
  6
  9
  11
  14
  18
  21
  25
  30
  35
  40
  45
  51
  57
  63
  70
  77
  84
  91
  99
  107
  116
  125
  134
  143
  153
  163

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
  36
  49
  65
  84
  107
  133
  164
  198
  237
  280
  326
  377
  432
  490
  552
  618
  687
  760
  837
  917
  1,000
  1,087
  1,177
  1,271
  1,368
  1,470
  1,575
  1,685
  1,799
  1,917
Adjusted assets (=assets-cash), $m
  36
  49
  65
  84
  107
  133
  164
  198
  237
  280
  326
  377
  432
  490
  552
  618
  687
  760
  837
  917
  1,000
  1,087
  1,177
  1,271
  1,368
  1,470
  1,575
  1,685
  1,799
  1,917
Revenue / Adjusted assets
  0.833
  0.837
  0.846
  0.845
  0.841
  0.842
  0.841
  0.843
  0.840
  0.839
  0.840
  0.841
  0.840
  0.841
  0.841
  0.840
  0.840
  0.841
  0.840
  0.840
  0.840
  0.840
  0.840
  0.839
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
Average production assets, $m
  8
  11
  15
  19
  24
  30
  37
  45
  54
  64
  75
  86
  99
  112
  126
  141
  157
  174
  191
  209
  228
  248
  269
  290
  313
  336
  360
  385
  411
  438
Working capital, $m
  2
  3
  4
  6
  7
  9
  11
  13
  16
  18
  21
  25
  28
  32
  36
  40
  45
  50
  55
  60
  66
  71
  77
  83
  90
  96
  103
  110
  118
  126
Total debt, $m
  10
  17
  25
  35
  47
  61
  77
  95
  115
  138
  162
  189
  217
  248
  281
  315
  351
  390
  430
  472
  515
  561
  608
  657
  708
  761
  817
  874
  934
  996
Total liabilities, $m
  19
  26
  34
  44
  56
  70
  86
  104
  124
  146
  171
  198
  226
  257
  289
  324
  360
  398
  438
  480
  524
  569
  617
  666
  717
  770
  825
  883
  942
  1,004
Total equity, $m
  17
  23
  31
  40
  51
  63
  78
  94
  113
  133
  155
  179
  205
  233
  263
  294
  327
  362
  398
  436
  476
  517
  560
  605
  651
  700
  750
  802
  856
  912
Total liabilities and equity, $m
  36
  49
  65
  84
  107
  133
  164
  198
  237
  279
  326
  377
  431
  490
  552
  618
  687
  760
  836
  916
  1,000
  1,086
  1,177
  1,271
  1,368
  1,470
  1,575
  1,685
  1,798
  1,916
Debt-to-equity ratio
  0.600
  0.730
  0.820
  0.880
  0.930
  0.960
  0.990
  1.010
  1.020
  1.040
  1.040
  1.050
  1.060
  1.060
  1.070
  1.070
  1.070
  1.080
  1.080
  1.080
  1.080
  1.080
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
Adjusted equity ratio
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  1
  3
  4
  6
  9
  11
  14
  18
  21
  25
  30
  35
  40
  45
  51
  57
  63
  70
  77
  84
  91
  99
  107
  116
  125
  134
  143
  153
  163
Depreciation, amort., depletion, $m
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  17
  19
  22
  24
  27
  30
  33
  37
  40
  44
  48
  52
  56
  60
  65
  69
  74
  79
  84
Funds from operations, $m
  2
  3
  5
  8
  11
  14
  18
  23
  28
  34
  40
  46
  53
  61
  69
  78
  87
  96
  106
  117
  128
  139
  151
  163
  176
  189
  203
  217
  232
  248
Change in working capital, $m
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
Cash from operations, $m
  1
  3
  4
  7
  9
  13
  16
  21
  25
  31
  37
  43
  50
  57
  65
  74
  82
  92
  101
  112
  122
  133
  145
  157
  169
  182
  196
  210
  225
  240
Maintenance CAPEX, $m
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -14
  -17
  -19
  -22
  -24
  -27
  -30
  -33
  -37
  -40
  -44
  -48
  -52
  -56
  -60
  -65
  -69
  -74
  -79
New CAPEX, $m
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Cash from investing activities, $m
  -3
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -18
  -20
  -23
  -26
  -29
  -32
  -36
  -39
  -43
  -47
  -50
  -55
  -59
  -64
  -69
  -73
  -78
  -83
  -89
  -94
  -100
  -106
Free cash flow, $m
  -2
  -2
  -1
  -1
  1
  2
  4
  6
  8
  11
  14
  17
  21
  25
  29
  34
  39
  45
  51
  57
  63
  70
  77
  84
  91
  99
  107
  116
  125
  134
Issuance/(repayment) of debt, $m
  5
  7
  8
  10
  12
  14
  16
  18
  20
  22
  24
  27
  29
  31
  33
  34
  36
  38
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
Issuance/(repurchase) of shares, $m
  5
  5
  5
  5
  5
  4
  3
  2
  1
  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  
  10
  12
  13
  15
  17
  18
  19
  20
  21
  22
  24
  27
  29
  31
  33
  34
  36
  38
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
Total cash flow (excl. dividends), $m
  8
  10
  12
  14
  17
  20
  23
  26
  29
  33
  38
  44
  49
  56
  62
  69
  76
  83
  91
  98
  107
  115
  124
  133
  142
  152
  163
  173
  184
  196
Retained Cash Flow (-), $m
  -5
  -6
  -8
  -9
  -11
  -13
  -15
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
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
  3
  4
  4
  5
  6
  7
  8
  9
  11
  13
  16
  20
  23
  28
  32
  37
  43
  48
  54
  60
  67
  74
  81
  88
  96
  104
  112
  121
  130
  139
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
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  8
  8
  9
  9
  10
  10
  9
  9
  8
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  84.4
  74.2
  67.3
  62.5
  59.2
  56.9
  55.5
  54.7
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5
  54.5

On Track Innovations Ltd. is a developer of cashless payment solutions. The Company's segments include Retail and Mass Transit, Petroleum, Parking and Other. The Company offers solutions for banking, mobile network operators, vending, mass transit, petroleum and parking. The Company provides its customers with training and installation support, customer service and technical support. Its PayEnable technology can be implemented into a range of products. Its Retail and Mass Transit products include TRIO mPOS, Pico BT, WAVE, WAVE PKI, oti SATURN 6700 UNO, oti SATURN 6500 TRIO and oti SCI 6000. It also offers otiMetry and oti CONNECT 3000. Its EasyFuel Plus solution is a wireless, cashless, cardless and paperless refueling tracking and payment solution. Its EasyPark set of parking solutions provides parking fee collection, parking payment enforcement and parking management solution. Its MediSmart solution is an information management and claims submission system for the medical sector.

FINANCIAL RATIOS  of  On Track Innovations Ltd (OTIV)

Valuation Ratios
P/E Ratio -25.5
Price to Sales 1.2
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow -12.8
Price to Free Cash Flow -12.8
Growth Rates
Sales Growth Rate 16.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 16.7%
Total Debt to Equity 50%
Interest Coverage 0
Management Effectiveness
Return On Assets -3.4%
Ret/ On Assets - 3 Yr. Avg. -16.3%
Return On Total Capital -5.1%
Ret/ On T. Cap. - 3 Yr. Avg. -24.5%
Return On Equity -7.4%
Return On Equity - 3 Yr. Avg. -32.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 47.6%
Gross Margin - 3 Yr. Avg. 48.4%
EBITDA Margin -4.8%
EBITDA Margin - 3 Yr. Avg. -27%
Operating Margin -4.8%
Oper. Margin - 3 Yr. Avg. -28.8%
Pre-Tax Margin -9.5%
Pre-Tax Margin - 3 Yr. Avg. -32%
Net Profit Margin -4.8%
Net Profit Margin - 3 Yr. Avg. -30.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

OTIV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OTIV stock intrinsic value calculation we used $22 million for the last fiscal year's total revenue generated by On Track Innovations Ltd. The default revenue input number comes from 0001 income statement of On Track Innovations Ltd. 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 OTIV stock valuation model: a) initial revenue growth rate of 38.6% 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 OTIV is calculated based on our internal credit rating of On Track Innovations Ltd, 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 On Track Innovations Ltd.
    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 OTIV stock the variable cost ratio is equal to 81.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5 million in the base year in the intrinsic value calculation for OTIV 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 6.4% for On Track Innovations Ltd.

Corporate tax rate of 27% is the nominal tax rate for On Track Innovations Ltd. 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 OTIV 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 OTIV are equal to 27.2%.

Life of production assets of 5.2 years is the average useful life of capital assets used in On Track Innovations Ltd 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 OTIV is equal to 7.8%. 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 - $12.451 million for On Track Innovations Ltd - 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 41.287 million for On Track Innovations Ltd 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 On Track Innovations Ltd at the current share price and the inputted number of shares is $0.0 billion.

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