Intrinsic value of Park City Group - PCYG

Previous Close

$8.20

  Intrinsic Value

$16.77

stock screener

  Rating & Target

str. buy

+105%

Previous close

$8.20

 
Intrinsic value

$16.77

 
Up/down potential

+105%

 
Rating

str. buy

We calculate the intrinsic value of PCYG 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 0.2

 

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, %
  35.20
  32.18
  29.46
  27.02
  24.81
  22.83
  21.05
  19.44
  18.00
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
Revenue, $m
  26
  34
  44
  56
  70
  86
  104
  124
  146
  170
  197
  225
  256
  288
  323
  359
  397
  437
  478
  522
  567
  614
  663
  714
  767
  822
  879
  938
  1,000
  1,064
Variable operating expenses, $m
  9
  11
  13
  16
  20
  24
  29
  34
  39
  46
  50
  57
  65
  73
  82
  91
  101
  111
  122
  133
  144
  156
  169
  182
  195
  209
  223
  239
  254
  271
Fixed operating expenses, $m
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
Total operating expenses, $m
  17
  19
  22
  25
  29
  33
  38
  44
  49
  56
  60
  67
  76
  84
  93
  102
  113
  123
  134
  145
  157
  169
  182
  195
  209
  223
  237
  254
  269
  286
Operating income, $m
  9
  15
  22
  31
  41
  53
  66
  81
  97
  115
  137
  158
  180
  204
  230
  256
  284
  314
  345
  377
  410
  445
  481
  519
  558
  599
  641
  685
  731
  778
EBITDA, $m
  14
  21
  30
  40
  52
  65
  81
  98
  117
  138
  161
  186
  212
  240
  270
  301
  334
  368
  404
  441
  480
  521
  563
  607
  653
  701
  750
  801
  855
  910
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
Earnings before tax, $m
  9
  15
  22
  30
  40
  51
  64
  79
  95
  112
  134
  154
  176
  199
  224
  250
  277
  306
  336
  367
  400
  434
  469
  506
  544
  584
  625
  668
  712
  759
Tax expense, $m
  2
  4
  6
  8
  11
  14
  17
  21
  26
  30
  36
  42
  48
  54
  60
  68
  75
  83
  91
  99
  108
  117
  127
  137
  147
  158
  169
  180
  192
  205
Net income, $m
  6
  11
  16
  22
  29
  38
  47
  57
  69
  82
  97
  112
  128
  145
  164
  183
  203
  224
  245
  268
  292
  317
  343
  369
  397
  426
  456
  487
  520
  554

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
  54
  72
  93
  118
  147
  181
  219
  262
  309
  360
  416
  477
  541
  610
  682
  759
  839
  923
  1,011
  1,103
  1,199
  1,298
  1,402
  1,510
  1,621
  1,738
  1,858
  1,984
  2,115
  2,250
Adjusted assets (=assets-cash), $m
  54
  72
  93
  118
  147
  181
  219
  262
  309
  360
  416
  477
  541
  610
  682
  759
  839
  923
  1,011
  1,103
  1,199
  1,298
  1,402
  1,510
  1,621
  1,738
  1,858
  1,984
  2,115
  2,250
Revenue / Adjusted assets
  0.481
  0.472
  0.473
  0.475
  0.476
  0.475
  0.475
  0.473
  0.472
  0.472
  0.474
  0.472
  0.473
  0.472
  0.474
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
Average production assets, $m
  32
  42
  54
  69
  86
  106
  128
  153
  181
  211
  244
  279
  317
  357
  399
  444
  491
  541
  592
  646
  702
  760
  821
  884
  949
  1,018
  1,088
  1,162
  1,238
  1,318
Working capital, $m
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -32
Total debt, $m
  5
  8
  12
  16
  21
  27
  34
  41
  50
  59
  69
  79
  90
  103
  115
  129
  143
  158
  173
  189
  206
  224
  242
  261
  281
  301
  322
  344
  367
  391
Total liabilities, $m
  10
  13
  16
  21
  26
  32
  39
  46
  54
  63
  73
  84
  95
  107
  120
  134
  148
  163
  178
  194
  211
  229
  247
  266
  285
  306
  327
  349
  372
  396
Total equity, $m
  45
  59
  77
  97
  121
  149
  181
  216
  254
  297
  343
  393
  446
  502
  562
  625
  691
  761
  833
  909
  988
  1,070
  1,155
  1,244
  1,336
  1,432
  1,531
  1,635
  1,742
  1,854
Total liabilities and equity, $m
  55
  72
  93
  118
  147
  181
  220
  262
  308
  360
  416
  477
  541
  609
  682
  759
  839
  924
  1,011
  1,103
  1,199
  1,299
  1,402
  1,510
  1,621
  1,738
  1,858
  1,984
  2,114
  2,250
Debt-to-equity ratio
  0.110
  0.130
  0.150
  0.160
  0.170
  0.180
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
Adjusted equity ratio
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824
  0.824

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  11
  16
  22
  29
  38
  47
  57
  69
  82
  97
  112
  128
  145
  164
  183
  203
  224
  245
  268
  292
  317
  343
  369
  397
  426
  456
  487
  520
  554
Depreciation, amort., depletion, $m
  5
  6
  8
  9
  11
  13
  15
  18
  20
  23
  24
  28
  32
  36
  40
  44
  49
  54
  59
  65
  70
  76
  82
  88
  95
  102
  109
  116
  124
  132
Funds from operations, $m
  12
  17
  23
  31
  40
  50
  62
  75
  89
  105
  122
  140
  160
  181
  203
  227
  252
  278
  305
  333
  362
  393
  425
  458
  492
  528
  565
  604
  644
  686
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  12
  17
  24
  31
  40
  51
  63
  76
  90
  106
  123
  141
  161
  182
  205
  228
  253
  279
  306
  334
  364
  394
  426
  459
  494
  530
  567
  605
  646
  688
Maintenance CAPEX, $m
  -2
  -3
  -4
  -5
  -7
  -9
  -11
  -13
  -15
  -18
  -21
  -24
  -28
  -32
  -36
  -40
  -44
  -49
  -54
  -59
  -65
  -70
  -76
  -82
  -88
  -95
  -102
  -109
  -116
  -124
New CAPEX, $m
  -8
  -10
  -12
  -15
  -17
  -20
  -22
  -25
  -28
  -30
  -33
  -35
  -38
  -40
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -58
  -61
  -63
  -65
  -68
  -71
  -74
  -76
  -80
Cash from investing activities, $m
  -10
  -13
  -16
  -20
  -24
  -29
  -33
  -38
  -43
  -48
  -54
  -59
  -66
  -72
  -79
  -85
  -91
  -98
  -106
  -113
  -121
  -128
  -137
  -145
  -153
  -163
  -173
  -183
  -192
  -204
Free cash flow, $m
  1
  4
  7
  11
  16
  22
  30
  38
  47
  58
  69
  82
  95
  110
  126
  143
  161
  180
  200
  221
  243
  266
  289
  314
  340
  367
  394
  423
  453
  484
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
Issuance/(repurchase) of shares, $m
  5
  4
  2
  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  
  8
  7
  6
  4
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  9
  11
  13
  16
  22
  28
  36
  45
  56
  67
  79
  92
  107
  122
  139
  157
  175
  195
  216
  237
  260
  283
  308
  333
  360
  387
  416
  445
  476
  508
Retained Cash Flow (-), $m
  -11
  -14
  -17
  -21
  -24
  -28
  -31
  -35
  -39
  -42
  -46
  -50
  -53
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -103
  -108
  -112
Prev. year cash balance distribution, $m
  3
  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
  1
  2
  2
  3
  4
  5
  6
  7
  8
  10
  11
  13
  15
  17
  19
  22
  24
  27
  29
  32
  35
  38
  41
  44
  48
  51
  55
  59
  63
  67
Cash available for distribution, $m
  0
  -4
  -5
  -5
  -3
  1
  5
  10
  17
  24
  33
  42
  54
  66
  79
  94
  109
  126
  143
  162
  181
  201
  222
  244
  267
  291
  316
  342
  368
  396
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
  0
  -3
  -4
  -4
  -2
  0
  3
  6
  10
  13
  15
  18
  20
  22
  23
  24
  24
  23
  22
  21
  19
  17
  15
  12
  10
  8
  7
  5
  4
  3
Current shareholders' claim on cash, %
  96.6
  94.7
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
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Park City Group, Inc. is a software-as-a-service (SaaS) provider. The Company delivers its services through software products designed, developed, marketed and supported by the Company. The Company also has a Professional Services business, which conducts customization, implementation and training. The Company has approximately two services groups, such as The Business Analytics Group and The Professional Services Group. The Business Analytics Group offers business-consulting services to suppliers and retailers in the grocery, convenience store and specialty retail industries. The Professional Services Group provides consulting services. The Company's solutions include Advanced Commerce and Supply-Chain Solutions, and Food Safety Solutions. The Company's primary advanced commerce and supply-chain solutions include Scan Based Trading, ScoreTracker, Vendor Managed Inventory, Store Level Replenishment, Enterprise Supply Chain Planning, Fresh Market Manager and ActionManager.

FINANCIAL RATIOS  of  Park City Group (PCYG)

Valuation Ratios
P/E Ratio 39.8
Price to Sales 8.4
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 79.6
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate 35.7%
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 5
Current Ratio 0
LT Debt to Equity 5.6%
Total Debt to Equity 13.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 9.4%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. -1.5%
Return On Equity 11.9%
Return On Equity - 3 Yr. Avg. -1.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 73.7%
Gross Margin - 3 Yr. Avg. 67.4%
EBITDA Margin 21.1%
EBITDA Margin - 3 Yr. Avg. 4.6%
Operating Margin 21.1%
Oper. Margin - 3 Yr. Avg. -0.1%
Pre-Tax Margin 21.1%
Pre-Tax Margin - 3 Yr. Avg. -0.1%
Net Profit Margin 21.1%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PCYG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PCYG stock intrinsic value calculation we used $19 million for the last fiscal year's total revenue generated by Park City Group. The default revenue input number comes from 2017 income statement of Park City Group. 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 PCYG stock valuation model: a) initial revenue growth rate of 35.2% 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 PCYG is calculated based on our internal credit rating of Park City Group, 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 Park City Group.
    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 PCYG stock the variable cost ratio is equal to 37%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $8 million in the base year in the intrinsic value calculation for PCYG 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 Park City Group.

Corporate tax rate of 27% is the nominal tax rate for Park City Group. 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 PCYG stock is equal to 6.7%.

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 PCYG are equal to 123.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Park City Group 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 PCYG is equal to -3%. 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 - $36 million for Park City Group - 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 19 million for Park City Group 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 Park City Group at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Park City Group: Fiscal 3Q Earnings Snapshot   [May-10-18 04:46PM  Associated Press]
▶ Park City Group And Other Top Growth Stocks   [Feb-21-18 11:02AM  Simply Wall St.]
▶ Park City Group posts 2Q profit   [Feb-08-18 05:29PM  Associated Press]
▶ Best Growth Stocks To Buy Now   [Jan-21-18 11:02AM  Simply Wall St.]
▶ Flavor Of The Month: ACM Research And More   [Dec-15-17 11:02AM  Simply Wall St.]
▶ Best-In-Class NasdaqCM Growth Stocks   [Nov-14-17 11:02AM  Simply Wall St.]
▶ Park City Group posts 1Q profit   [Nov-09-17 05:37PM  Associated Press]
▶ Park City Group posts 4Q profit   [Sep-13-17 11:31PM  Associated Press]
▶ 5 E-Commerce Stocks To Watch   [Sep-07-17 10:49AM  Benzinga]
▶ Park City Group posts 3Q profit   [May-10-17 04:28PM  Associated Press]
▶ Park City Group Reports Fiscal 3Q17 Results   [04:01PM  GlobeNewswire]
▶ Park City Group to Present at Upcoming Investor Conferences   [May-09-17 08:30AM  GlobeNewswire]
▶ ReposiTrak® Sales Team Grows to Meet Increased Demand   [Mar-29-17 06:30AM  GlobeNewswire]
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