Intrinsic value of Plantronics - PLT

Previous Close

$72.97

  Intrinsic Value

$66.74

stock screener

  Rating & Target

hold

-9%

Previous close

$72.97

 
Intrinsic value

$66.74

 
Up/down potential

-9%

 
Rating

hold

We calculate the intrinsic value of PLT 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 2.3

 

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, %
  2.80
  3.02
  3.22
  3.40
  3.56
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
Revenue, $m
  906
  933
  963
  996
  1,031
  1,069
  1,110
  1,154
  1,201
  1,251
  1,304
  1,360
  1,419
  1,482
  1,549
  1,620
  1,694
  1,772
  1,855
  1,942
  2,034
  2,131
  2,233
  2,340
  2,453
  2,572
  2,697
  2,828
  2,967
  3,112
Variable operating expenses, $m
  270
  278
  287
  297
  307
  318
  330
  343
  357
  372
  386
  403
  420
  439
  459
  480
  502
  525
  549
  575
  603
  631
  661
  693
  727
  762
  799
  838
  879
  922
Fixed operating expenses, $m
  515
  526
  538
  550
  562
  574
  587
  600
  613
  627
  640
  654
  669
  684
  699
  714
  730
  746
  762
  779
  796
  813
  831
  850
  868
  887
  907
  927
  947
  968
Total operating expenses, $m
  785
  804
  825
  847
  869
  892
  917
  943
  970
  999
  1,026
  1,057
  1,089
  1,123
  1,158
  1,194
  1,232
  1,271
  1,311
  1,354
  1,399
  1,444
  1,492
  1,543
  1,595
  1,649
  1,706
  1,765
  1,826
  1,890
Operating income, $m
  121
  129
  138
  149
  162
  177
  193
  211
  231
  252
  277
  303
  330
  360
  392
  426
  463
  502
  544
  588
  636
  686
  740
  797
  858
  923
  991
  1,064
  1,141
  1,222
EBITDA, $m
  139
  148
  158
  170
  183
  198
  215
  234
  255
  277
  302
  328
  357
  388
  421
  456
  494
  535
  578
  625
  674
  726
  782
  841
  904
  971
  1,042
  1,117
  1,196
  1,280
Interest expense (income), $m
  28
  29
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  44
  46
  48
  51
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  94
  99
  105
  110
Earnings before tax, $m
  91
  101
  109
  119
  131
  144
  159
  175
  193
  213
  236
  259
  284
  312
  341
  372
  406
  442
  481
  523
  567
  614
  663
  717
  773
  833
  897
  964
  1,036
  1,112
Tax expense, $m
  25
  27
  30
  32
  35
  39
  43
  47
  52
  57
  64
  70
  77
  84
  92
  101
  110
  119
  130
  141
  153
  166
  179
  193
  209
  225
  242
  260
  280
  300
Net income, $m
  67
  74
  80
  87
  96
  105
  116
  128
  141
  155
  172
  189
  208
  227
  249
  272
  297
  323
  351
  381
  414
  448
  484
  523
  564
  608
  655
  704
  756
  812

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
  672
  693
  715
  739
  766
  794
  824
  857
  892
  929
  968
  1,010
  1,054
  1,101
  1,150
  1,202
  1,258
  1,316
  1,377
  1,442
  1,510
  1,582
  1,658
  1,737
  1,821
  1,909
  2,002
  2,100
  2,202
  2,310
Adjusted assets (=assets-cash), $m
  672
  693
  715
  739
  766
  794
  824
  857
  892
  929
  968
  1,010
  1,054
  1,101
  1,150
  1,202
  1,258
  1,316
  1,377
  1,442
  1,510
  1,582
  1,658
  1,737
  1,821
  1,909
  2,002
  2,100
  2,202
  2,310
Revenue / Adjusted assets
  1.348
  1.346
  1.347
  1.348
  1.346
  1.346
  1.347
  1.347
  1.346
  1.347
  1.347
  1.347
  1.346
  1.346
  1.347
  1.348
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
  1.347
Average production assets, $m
  170
  175
  181
  187
  194
  201
  209
  217
  226
  235
  245
  256
  267
  279
  291
  304
  318
  333
  349
  365
  382
  401
  420
  440
  461
  484
  507
  532
  558
  585
Working capital, $m
  13
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
Total debt, $m
  461
  479
  499
  521
  545
  570
  598
  627
  658
  692
  727
  764
  804
  846
  891
  938
  988
  1,040
  1,095
  1,154
  1,215
  1,280
  1,348
  1,420
  1,495
  1,574
  1,658
  1,746
  1,838
  1,935
Total liabilities, $m
  605
  623
  643
  665
  689
  714
  742
  771
  802
  836
  871
  909
  948
  990
  1,035
  1,082
  1,132
  1,184
  1,240
  1,298
  1,359
  1,424
  1,492
  1,564
  1,639
  1,719
  1,802
  1,890
  1,982
  2,079
Total equity, $m
  67
  69
  71
  74
  77
  79
  82
  86
  89
  93
  97
  101
  105
  110
  115
  120
  126
  132
  138
  144
  151
  158
  166
  174
  182
  191
  200
  210
  220
  231
Total liabilities and equity, $m
  672
  692
  714
  739
  766
  793
  824
  857
  891
  929
  968
  1,010
  1,053
  1,100
  1,150
  1,202
  1,258
  1,316
  1,378
  1,442
  1,510
  1,582
  1,658
  1,738
  1,821
  1,910
  2,002
  2,100
  2,202
  2,310
Debt-to-equity ratio
  6.860
  6.920
  6.980
  7.050
  7.120
  7.180
  7.250
  7.320
  7.380
  7.450
  7.510
  7.570
  7.630
  7.690
  7.750
  7.800
  7.850
  7.900
  7.950
  8.000
  8.050
  8.090
  8.130
  8.170
  8.210
  8.250
  8.280
  8.310
  8.350
  8.380
Adjusted equity ratio
  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
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  67
  74
  80
  87
  96
  105
  116
  128
  141
  155
  172
  189
  208
  227
  249
  272
  297
  323
  351
  381
  414
  448
  484
  523
  564
  608
  655
  704
  756
  812
Depreciation, amort., depletion, $m
  19
  19
  20
  20
  21
  22
  22
  23
  24
  25
  25
  26
  27
  28
  29
  30
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
Funds from operations, $m
  85
  93
  100
  108
  117
  127
  138
  151
  165
  180
  197
  215
  234
  255
  278
  302
  328
  356
  386
  418
  452
  488
  526
  567
  610
  656
  705
  757
  812
  870
Change in working capital, $m
  0
  0
  0
  0
  0
  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
Cash from operations, $m
  85
  92
  99
  107
  116
  126
  138
  150
  164
  180
  196
  214
  233
  254
  277
  301
  327
  355
  385
  417
  451
  487
  525
  566
  609
  655
  704
  755
  810
  868
Maintenance CAPEX, $m
  -17
  -17
  -18
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
New CAPEX, $m
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
Cash from investing activities, $m
  -22
  -22
  -24
  -24
  -26
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -76
  -79
  -83
Free cash flow, $m
  64
  70
  76
  83
  91
  100
  110
  121
  134
  148
  162
  179
  197
  216
  237
  259
  283
  309
  336
  365
  397
  430
  466
  503
  544
  586
  632
  680
  731
  785
Issuance/(repayment) of debt, $m
  -30
  18
  20
  22
  24
  25
  27
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  52
  55
  58
  61
  65
  68
  72
  75
  79
  83
  88
  92
  97
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  -30
  18
  20
  22
  24
  25
  27
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  52
  55
  58
  61
  65
  68
  72
  75
  79
  83
  88
  92
  97
Total cash flow (excl. dividends), $m
  34
  89
  96
  105
  114
  125
  137
  151
  165
  181
  198
  216
  236
  258
  281
  306
  333
  361
  391
  424
  458
  495
  534
  575
  619
  666
  715
  768
  823
  882
Retained Cash Flow (-), $m
  -48
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Prev. year cash balance distribution, $m
  363
  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
  32
  33
  34
  35
  36
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  93
  97
  102
  107
Cash available for distribution, $m
  349
  87
  94
  102
  112
  122
  134
  147
  162
  177
  194
  212
  232
  253
  276
  301
  327
  355
  385
  417
  451
  488
  526
  567
  611
  657
  706
  758
  813
  871
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
  334
  79
  82
  84
  87
  89
  91
  92
  93
  93
  92
  91
  88
  85
  81
  76
  71
  65
  59
  53
  47
  40
  34
  29
  24
  19
  15
  12
  9
  7
Current shareholders' claim on cash, %
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Plantronics, Inc. (Plantronics) is engaged in the design, manufacture, and distribution of headsets for business and consumer applications, and other specialty products for the hearing impaired. The Company is a global designer, manufacturer and marketer of communications headsets, telephone headset systems, other communication endpoints and accessories for the business and consumer markets. The Company develops communication products for offices and contact centers, mobile devices, cordless phones, and computers and gaming consoles. Its product categories include Enterprise, which includes corded and cordless communication headsets, audio processors, and telephone systems, and Consumer, which includes Bluetooth and corded products for mobile device applications, personal computer (PC) and gaming headsets, and specialty products marketed for hearing impaired individuals. It offers its products under two brands: Plantronics and Clarity.

FINANCIAL RATIOS  of  Plantronics (PLT)

Valuation Ratios
P/E Ratio 29.4
Price to Sales 2.8
Price to Book 6.4
Price to Tangible Book
Price to Cash Flow 17.7
Price to Free Cash Flow 21.2
Growth Rates
Sales Growth Rate 2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.8%
Cap. Spend. - 3 Yr. Gr. Rate -14.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 128.5%
Total Debt to Equity 128.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 10.8%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 9.9%
Ret/ On T. Cap. - 3 Yr. Avg. 11.3%
Return On Equity 23.9%
Return On Equity - 3 Yr. Avg. 17.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 50.1%
Gross Margin - 3 Yr. Avg. 51.4%
EBITDA Margin 17.1%
EBITDA Margin - 3 Yr. Avg. 16.5%
Operating Margin 14.2%
Oper. Margin - 3 Yr. Avg. 14.7%
Pre-Tax Margin 11.6%
Pre-Tax Margin - 3 Yr. Avg. 12.6%
Net Profit Margin 9.4%
Net Profit Margin - 3 Yr. Avg. 10.1%
Effective Tax Rate 18.6%
Eff/ Tax Rate - 3 Yr. Avg. 19.5%
Payout Ratio 24.1%

PLT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PLT stock intrinsic value calculation we used $881 million for the last fiscal year's total revenue generated by Plantronics. The default revenue input number comes from 2017 income statement of Plantronics. 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 PLT stock valuation model: a) initial revenue growth rate of 2.8% 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 PLT is calculated based on our internal credit rating of Plantronics, 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 Plantronics.
    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 PLT stock the variable cost ratio is equal to 29.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $504 million in the base year in the intrinsic value calculation for PLT 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% for Plantronics.

Corporate tax rate of 27% is the nominal tax rate for Plantronics. 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 PLT stock is equal to 3.6%.

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 PLT are equal to 18.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Plantronics 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 PLT is equal to 1.4%. 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 - $382 million for Plantronics - 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 32 million for Plantronics 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 Plantronics at the current share price and the inputted number of shares is $2.3 billion.

RELATED COMPANIES Price Int.Val. Rating
AAPL Apple 191.44 163.88  hold
CSCO Cisco Systems 42.01 37.63  hold
LOGI Logitech Inter 46.63 43.31  buy
MSFT Microsoft 106.27 60.61  sell
VCRA Vocera Communi 32.59 6.66  str.sell
CLRO ClearOne 3.63 4.09  sell

COMPANY NEWS

▶ Treat Amazons Move as a Buying Opportunity for Cisco Stock   [Jul-17-18 11:23AM  InvestorPlace]
▶ Plantronics Completes Acquisition of Polycom   [Jul-02-18 02:00PM  GlobeNewswire]
▶ Plantronics: Fiscal 4Q Earnings Snapshot   [May-01-18 04:49PM  Associated Press]
▶ Earnings Preview For Plantronics   [07:30AM  Benzinga]
▶ Plantronics reports 3Q loss   [Jan-30-18 04:29PM  Associated Press]
▶ Plantronics Q3 Earnings Preview   [01:43PM  Benzinga]
▶ Charles Brandes Picks Up 5 Stocks in 3rd Quarter   [Nov-27-17 12:24PM  GuruFocus.com]
▶ Plantronics tops Street 2Q forecasts   [Oct-31-17 04:27PM  Associated Press]
▶ Plantronics, Inc. to Host Earnings Call   [09:40AM  ACCESSWIRE]
▶ ETFs with exposure to Plantronics, Inc. : August 28, 2017   [Aug-28-17 06:14PM  Capital Cube]
▶ Plantronics misses Street 1Q forecasts   [Jul-27-17 05:04PM  Associated Press]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.