Intrinsic value of pdvWireless - PDVW

Previous Close

$39.78

  Intrinsic Value

$1.75

stock screener

  Rating & Target

str. sell

-96%

Previous close

$39.78

 
Intrinsic value

$1.75

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of PDVW 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 0.6

 

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, %
  40.50
  36.95
  33.76
  30.88
  28.29
  25.96
  23.87
  21.98
  20.28
  18.75
  17.38
  16.14
  15.03
  14.02
  13.12
  12.31
  11.58
  10.92
  10.33
  9.80
  9.32
  8.88
  8.50
  8.15
  7.83
  7.55
  7.29
  7.06
  6.86
  6.67
Revenue, $m
  9
  12
  16
  21
  27
  35
  43
  52
  63
  75
  88
  102
  117
  133
  151
  170
  189
  210
  232
  254
  278
  303
  328
  355
  383
  412
  442
  473
  505
  539
Variable operating expenses, $m
  9
  8
  8
  7
  6
  4
  3
  1
  -1
  -3
  -16
  -18
  -21
  -24
  -27
  -31
  -34
  -38
  -42
  -46
  -50
  -55
  -59
  -64
  -69
  -74
  -80
  -85
  -91
  -97
Fixed operating expenses, $m
  32
  32
  33
  34
  35
  35
  36
  37
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
Total operating expenses, $m
  41
  40
  41
  41
  41
  39
  39
  38
  37
  36
  23
  22
  20
  18
  16
  13
  11
  8
  5
  2
  -1
  -5
  -8
  -12
  -16
  -19
  -24
  -28
  -33
  -37
Operating income, $m
  -32
  -29
  -24
  -19
  -13
  -5
  4
  14
  26
  39
  64
  80
  97
  116
  135
  156
  179
  202
  227
  252
  279
  307
  336
  367
  399
  432
  466
  501
  538
  577
EBITDA, $m
  -18
  -13
  -8
  -1
  8
  18
  30
  44
  60
  77
  96
  118
  140
  165
  191
  219
  248
  280
  312
  346
  382
  419
  458
  498
  540
  584
  629
  676
  725
  776
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  15
  17
  20
  22
  24
  27
  29
  32
  34
  37
  40
  43
  47
  50
  53
Earnings before tax, $m
  -32
  -29
  -25
  -20
  -14
  -7
  1
  10
  21
  33
  57
  71
  87
  104
  122
  141
  161
  182
  205
  228
  253
  278
  305
  332
  361
  391
  422
  455
  489
  524
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  3
  6
  9
  15
  19
  23
  28
  33
  38
  43
  49
  55
  62
  68
  75
  82
  90
  98
  106
  114
  123
  132
  141
Net income, $m
  -32
  -29
  -25
  -20
  -14
  -7
  1
  7
  15
  24
  41
  52
  63
  76
  89
  103
  118
  133
  149
  167
  184
  203
  222
  243
  264
  286
  308
  332
  357
  382

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
  190
  260
  348
  455
  584
  736
  912
  1,112
  1,338
  1,588
  1,864
  2,165
  2,491
  2,840
  3,213
  3,608
  4,026
  4,466
  4,927
  5,409
  5,913
  6,439
  6,986
  7,555
  8,146
  8,761
  9,400
  10,064
  10,755
  11,472
Adjusted assets (=assets-cash), $m
  190
  260
  348
  455
  584
  736
  912
  1,112
  1,338
  1,588
  1,864
  2,165
  2,491
  2,840
  3,213
  3,608
  4,026
  4,466
  4,927
  5,409
  5,913
  6,439
  6,986
  7,555
  8,146
  8,761
  9,400
  10,064
  10,755
  11,472
Revenue / Adjusted assets
  0.047
  0.046
  0.046
  0.046
  0.046
  0.048
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
Average production assets, $m
  99
  136
  181
  237
  305
  384
  475
  580
  697
  828
  972
  1,129
  1,299
  1,481
  1,675
  1,881
  2,099
  2,328
  2,569
  2,821
  3,083
  3,357
  3,642
  3,939
  4,248
  4,568
  4,902
  5,248
  5,608
  5,982
Working capital, $m
  -5
  -7
  -9
  -12
  -15
  -19
  -23
  -28
  -34
  -41
  -48
  -55
  -64
  -73
  -82
  -92
  -103
  -114
  -126
  -139
  -151
  -165
  -179
  -194
  -209
  -224
  -241
  -258
  -275
  -294
Total debt, $m
  6
  12
  21
  31
  43
  57
  73
  92
  113
  136
  162
  190
  220
  252
  287
  324
  363
  403
  446
  491
  538
  587
  638
  691
  746
  803
  862
  924
  988
  1,055
Total liabilities, $m
  18
  24
  32
  42
  54
  68
  85
  103
  124
  148
  173
  201
  232
  264
  299
  336
  374
  415
  458
  503
  550
  599
  650
  703
  758
  815
  874
  936
  1,000
  1,067
Total equity, $m
  172
  236
  316
  413
  530
  668
  827
  1,009
  1,213
  1,441
  1,691
  1,964
  2,259
  2,576
  2,914
  3,273
  3,651
  4,050
  4,469
  4,906
  5,363
  5,840
  6,336
  6,852
  7,389
  7,947
  8,526
  9,128
  9,754
  10,405
Total liabilities and equity, $m
  190
  260
  348
  455
  584
  736
  912
  1,112
  1,337
  1,589
  1,864
  2,165
  2,491
  2,840
  3,213
  3,609
  4,025
  4,465
  4,927
  5,409
  5,913
  6,439
  6,986
  7,555
  8,147
  8,762
  9,400
  10,064
  10,754
  11,472
Debt-to-equity ratio
  0.030
  0.050
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
Adjusted equity ratio
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907
  0.907

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -32
  -29
  -25
  -20
  -14
  -7
  1
  7
  15
  24
  41
  52
  63
  76
  89
  103
  118
  133
  149
  167
  184
  203
  222
  243
  264
  286
  308
  332
  357
  382
Depreciation, amort., depletion, $m
  14
  15
  17
  19
  21
  23
  27
  30
  34
  38
  32
  38
  43
  49
  56
  63
  70
  78
  86
  94
  103
  112
  121
  131
  142
  152
  163
  175
  187
  199
Funds from operations, $m
  -18
  -14
  -8
  -2
  6
  16
  27
  37
  49
  62
  74
  90
  107
  125
  145
  165
  188
  211
  235
  261
  287
  315
  344
  374
  405
  438
  472
  507
  544
  582
Change in working capital, $m
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
Cash from operations, $m
  -16
  -12
  -6
  1
  10
  20
  32
  43
  55
  69
  81
  97
  115
  134
  154
  176
  198
  222
  247
  273
  300
  328
  358
  389
  421
  454
  488
  524
  561
  600
Maintenance CAPEX, $m
  -2
  -3
  -5
  -6
  -8
  -10
  -13
  -16
  -19
  -23
  -28
  -32
  -38
  -43
  -49
  -56
  -63
  -70
  -78
  -86
  -94
  -103
  -112
  -121
  -131
  -142
  -152
  -163
  -175
  -187
New CAPEX, $m
  -32
  -37
  -46
  -56
  -67
  -79
  -92
  -104
  -118
  -131
  -144
  -157
  -170
  -182
  -194
  -206
  -218
  -229
  -240
  -252
  -263
  -274
  -285
  -297
  -309
  -321
  -333
  -346
  -360
  -374
Cash from investing activities, $m
  -34
  -40
  -51
  -62
  -75
  -89
  -105
  -120
  -137
  -154
  -172
  -189
  -208
  -225
  -243
  -262
  -281
  -299
  -318
  -338
  -357
  -377
  -397
  -418
  -440
  -463
  -485
  -509
  -535
  -561
Free cash flow, $m
  -51
  -52
  -56
  -61
  -65
  -69
  -73
  -78
  -82
  -85
  -91
  -92
  -92
  -91
  -89
  -86
  -82
  -77
  -71
  -64
  -57
  -48
  -39
  -30
  -19
  -9
  3
  14
  26
  39
Issuance/(repayment) of debt, $m
  6
  7
  8
  10
  12
  14
  16
  19
  21
  23
  26
  28
  30
  32
  35
  37
  39
  41
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
Issuance/(repurchase) of shares, $m
  89
  93
  105
  118
  131
  145
  159
  174
  189
  204
  209
  221
  232
  241
  249
  256
  261
  266
  269
  271
  273
  273
  274
  273
  273
  272
  271
  270
  269
  269
Cash from financing (excl. dividends), $m  
  95
  100
  113
  128
  143
  159
  175
  193
  210
  227
  235
  249
  262
  273
  284
  293
  300
  307
  312
  316
  320
  322
  325
  326
  328
  329
  330
  332
  333
  336
Total cash flow (excl. dividends), $m
  43
  47
  56
  67
  78
  90
  102
  115
  128
  142
  144
  157
  170
  182
  194
  206
  218
  229
  241
  252
  263
  274
  285
  297
  309
  321
  333
  346
  360
  374
Retained Cash Flow (-), $m
  -89
  -93
  -105
  -118
  -131
  -145
  -159
  -182
  -205
  -228
  -250
  -273
  -295
  -317
  -338
  -359
  -379
  -399
  -418
  -438
  -457
  -477
  -496
  -516
  -537
  -558
  -580
  -602
  -626
  -651
Prev. year cash balance distribution, $m
  93
  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
  48
  -45
  -48
  -51
  -53
  -55
  -57
  -67
  -76
  -86
  -106
  -116
  -125
  -135
  -144
  -152
  -161
  -169
  -178
  -186
  -194
  -202
  -211
  -219
  -228
  -237
  -246
  -256
  -266
  -277
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
  46
  -41
  -42
  -42
  -41
  -40
  -39
  -42
  -44
  -45
  -51
  -49
  -48
  -45
  -42
  -39
  -35
  -31
  -27
  -24
  -20
  -17
  -14
  -11
  -9
  -7
  -5
  -4
  -3
  -2
Current shareholders' claim on cash, %
  78.3
  65.5
  56.5
  49.8
  44.6
  40.6
  37.4
  34.8
  32.6
  30.7
  29.2
  27.9
  26.7
  25.7
  24.9
  24.1
  23.4
  22.8
  22.3
  21.8
  21.4
  21.0
  20.6
  20.3
  20.0
  19.8
  19.5
  19.3
  19.1
  18.9

pdvWireless, Inc., formerly Pacific DataVision, Inc., is a wireless communications carrier and a provider of mobile workforce communication and location-based solutions. The Company's solutions focus on enhancing the productivity of its customers' field-based workers, and the efficiency of their dispatch and call center operations. The Company is deploying and operating the two-way radio networks that offer push-to-talk (PTT) communications services to primarily dispatch-centric, small and medium-sized businesses. The Company has launched its PTT networks in markets throughout the United States. The Company offers its DispatchPlus service, which combines pdvConnect, its suite of mobile communication and workforce management applications with digital network architecture and mobile devices. Developed for dispatch-centric businesses, pdvConnect enables businesses to locate and communicate with their field workers.

FINANCIAL RATIOS  of  pdvWireless (PDVW)

Valuation Ratios
P/E Ratio -14.6
Price to Sales 114.2
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow -21.2
Price to Free Cash Flow -19.7
Growth Rates
Sales Growth Rate 25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -81.8%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 124
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0.4%
Interest Coverage 0
Management Effectiveness
Return On Assets -15%
Ret/ On Assets - 3 Yr. Avg. -12%
Return On Total Capital -15.9%
Ret/ On T. Cap. - 3 Yr. Avg. -13.1%
Return On Equity -15.9%
Return On Equity - 3 Yr. Avg. -13.1%
Asset Turnover 0
Profitability Ratios
Gross Margin -40%
Gross Margin - 3 Yr. Avg. 8.9%
EBITDA Margin -620%
EBITDA Margin - 3 Yr. Avg. -537.2%
Operating Margin -660%
Oper. Margin - 3 Yr. Avg. -550.6%
Pre-Tax Margin -660%
Pre-Tax Margin - 3 Yr. Avg. -570%
Net Profit Margin -780%
Net Profit Margin - 3 Yr. Avg. -610%
Effective Tax Rate -18.2%
Eff/ Tax Rate - 3 Yr. Avg. -6.1%
Payout Ratio 0%

PDVW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PDVW stock intrinsic value calculation we used $6.355 million for the last fiscal year's total revenue generated by pdvWireless. The default revenue input number comes from 0001 income statement of pdvWireless. 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 PDVW stock valuation model: a) initial revenue growth rate of 40.5% 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 PDVW is calculated based on our internal credit rating of pdvWireless, 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 pdvWireless.
    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 PDVW stock the variable cost ratio is equal to 150%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $31 million in the base year in the intrinsic value calculation for PDVW 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 pdvWireless.

Corporate tax rate of 27% is the nominal tax rate for pdvWireless. 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 PDVW 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 PDVW are equal to 1109.4%.

Life of production assets of 42 years is the average useful life of capital assets used in pdvWireless 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 PDVW is equal to -54.5%. 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 - $208.529 million for pdvWireless - 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 14.51 million for pdvWireless 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 pdvWireless at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ pdvWireless Reports First Quarter Results   [08:27AM  PR Newswire]
▶ pdvWireless, Inc. to Host Earnings Call   [02:45PM  ACCESSWIRE]
▶ pdvWireless Reports Year End Results   [Jun-05-18 04:10PM  PR Newswire]
▶ Is pdvWireless Inc (NASDAQ:PDVW) Undervalued?   [Apr-26-18 07:30PM  Simply Wall St.]
▶ pdvWireless Announces Leadership Transition   [Apr-23-18 04:10PM  PR Newswire]
▶ pdvWireless Reports Third Quarter Results   [Feb-06-18 04:05PM  PR Newswire]
▶ pdvWireless, Inc. to Host Earnings Call   [12:30PM  ACCESSWIRE]
▶ pdvWireless Reports Second Quarter Results   [Nov-07-17 04:24PM  PR Newswire]
▶ pdvWireless, Inc. to Host Earnings Call   [12:40PM  ACCESSWIRE]
▶ pdvWireless Files Comments on FCC Notice of Inquiry   [Oct-03-17 01:13PM  PR Newswire]
▶ pdvWireless Reports First Quarter Results   [Aug-08-17 04:15PM  PR Newswire]
▶ pdvWireless Announces Issuance of Notice of Inquiry   [Aug-04-17 05:55PM  PR Newswire]
▶ ETFs with exposure to pdvWireless, Inc. : June 12, 2017   [Jun-12-17 02:20PM  Capital Cube]
▶ pdvWireless Reports Year End Results   [Jun-06-17 04:33PM  PR Newswire]
▶ pdvWireless Reports Third Quarter Results   [04:15PM  PR Newswire]

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