Intrinsic value of Plantronics - PLT

Previous Close

$53.89

  Intrinsic Value

$24.93

stock screener

  Rating & Target

str. sell

-54%

Previous close

$53.89

 
Intrinsic value

$24.93

 
Up/down potential

-54%

 
Rating

str. sell

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 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 2.1

 

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, %
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  930
  1,006
  1,084
  1,166
  1,251
  1,340
  1,432
  1,527
  1,627
  1,730
  1,837
  1,950
  2,066
  2,188
  2,315
  2,447
  2,586
  2,730
  2,881
  3,038
  3,203
  3,376
  3,556
  3,745
  3,943
  4,150
  4,367
  4,594
  4,832
  5,081
Variable operating expenses, $m
  798
  862
  930
  1,000
  1,073
  1,149
  1,227
  1,309
  1,394
  1,483
  1,573
  1,669
  1,769
  1,873
  1,982
  2,095
  2,214
  2,337
  2,466
  2,601
  2,743
  2,890
  3,045
  3,206
  3,376
  3,553
  3,739
  3,933
  4,137
  4,351
Fixed operating expenses, $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 operating expenses, $m
  798
  862
  930
  1,000
  1,073
  1,149
  1,227
  1,309
  1,394
  1,483
  1,573
  1,669
  1,769
  1,873
  1,982
  2,095
  2,214
  2,337
  2,466
  2,601
  2,743
  2,890
  3,045
  3,206
  3,376
  3,553
  3,739
  3,933
  4,137
  4,351
Operating income, $m
  132
  143
  154
  166
  178
  191
  204
  218
  232
  247
  264
  280
  297
  315
  333
  352
  372
  393
  414
  437
  461
  485
  511
  539
  567
  597
  628
  661
  695
  731
EBITDA, $m
  156
  168
  182
  195
  210
  224
  240
  256
  272
  290
  308
  327
  346
  366
  388
  410
  433
  457
  483
  509
  537
  565
  596
  627
  660
  695
  731
  769
  809
  851
Interest expense (income), $m
  28
  30
  18
  20
  23
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  61
  65
  70
  74
  79
  85
  90
  96
  101
  108
  114
  121
  128
  135
  143
  151
Earnings before tax, $m
  103
  125
  134
  143
  152
  162
  172
  183
  194
  206
  219
  231
  244
  258
  272
  287
  302
  318
  335
  352
  371
  390
  410
  431
  453
  476
  500
  525
  552
  580
Tax expense, $m
  28
  34
  36
  39
  41
  44
  47
  49
  52
  55
  59
  62
  66
  70
  73
  77
  82
  86
  90
  95
  100
  105
  111
  116
  122
  128
  135
  142
  149
  156
Net income, $m
  75
  91
  98
  104
  111
  118
  126
  134
  142
  150
  160
  169
  178
  188
  199
  209
  221
  232
  244
  257
  271
  285
  299
  315
  331
  347
  365
  383
  403
  423

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
  588
  636
  686
  738
  792
  848
  906
  967
  1,029
  1,095
  1,163
  1,234
  1,308
  1,385
  1,465
  1,549
  1,636
  1,728
  1,823
  1,923
  2,027
  2,137
  2,251
  2,370
  2,495
  2,626
  2,764
  2,907
  3,058
  3,216
Adjusted assets (=assets-cash), $m
  588
  636
  686
  738
  792
  848
  906
  967
  1,029
  1,095
  1,163
  1,234
  1,308
  1,385
  1,465
  1,549
  1,636
  1,728
  1,823
  1,923
  2,027
  2,137
  2,251
  2,370
  2,495
  2,626
  2,764
  2,907
  3,058
  3,216
Revenue / Adjusted assets
  1.582
  1.582
  1.580
  1.580
  1.580
  1.580
  1.581
  1.579
  1.581
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.581
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
Average production assets, $m
  167
  181
  195
  210
  225
  241
  258
  275
  293
  311
  331
  351
  372
  394
  417
  441
  465
  491
  519
  547
  577
  608
  640
  674
  710
  747
  786
  827
  870
  915
Working capital, $m
  124
  134
  144
  155
  166
  178
  190
  203
  216
  230
  244
  259
  275
  291
  308
  325
  344
  363
  383
  404
  426
  449
  473
  498
  524
  552
  581
  611
  643
  676
Total debt, $m
  298
  341
  386
  433
  481
  532
  584
  638
  695
  754
  815
  879
  946
  1,015
  1,087
  1,163
  1,241
  1,324
  1,410
  1,499
  1,593
  1,691
  1,794
  1,902
  2,014
  2,132
  2,256
  2,385
  2,521
  2,663
Total liabilities, $m
  530
  573
  618
  664
  713
  763
  815
  870
  926
  985
  1,047
  1,110
  1,177
  1,246
  1,319
  1,394
  1,473
  1,555
  1,641
  1,731
  1,825
  1,923
  2,026
  2,133
  2,246
  2,364
  2,487
  2,617
  2,752
  2,895
Total equity, $m
  59
  64
  69
  74
  79
  85
  91
  97
  103
  109
  116
  123
  131
  138
  147
  155
  164
  173
  182
  192
  203
  214
  225
  237
  250
  263
  276
  291
  306
  322
Total liabilities and equity, $m
  589
  637
  687
  738
  792
  848
  906
  967
  1,029
  1,094
  1,163
  1,233
  1,308
  1,384
  1,466
  1,549
  1,637
  1,728
  1,823
  1,923
  2,028
  2,137
  2,251
  2,370
  2,496
  2,627
  2,763
  2,908
  3,058
  3,217
Debt-to-equity ratio
  5.070
  5.360
  5.630
  5.860
  6.080
  6.270
  6.450
  6.610
  6.750
  6.890
  7.010
  7.120
  7.230
  7.330
  7.420
  7.510
  7.590
  7.660
  7.730
  7.800
  7.860
  7.920
  7.970
  8.020
  8.070
  8.120
  8.160
  8.200
  8.240
  8.280
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
  75
  91
  98
  104
  111
  118
  126
  134
  142
  150
  160
  169
  178
  188
  199
  209
  221
  232
  244
  257
  271
  285
  299
  315
  331
  347
  365
  383
  403
  423
Depreciation, amort., depletion, $m
  24
  25
  27
  29
  31
  33
  35
  38
  40
  43
  44
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
Funds from operations, $m
  98
  117
  125
  134
  142
  152
  161
  171
  182
  193
  203
  215
  227
  240
  253
  267
  282
  297
  313
  329
  346
  365
  383
  403
  424
  446
  468
  492
  517
  543
Change in working capital, $m
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
Cash from operations, $m
  89
  107
  114
  123
  131
  140
  149
  159
  169
  179
  189
  200
  212
  224
  237
  250
  263
  278
  293
  308
  325
  342
  359
  378
  398
  418
  440
  462
  486
  510
Maintenance CAPEX, $m
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -109
  -114
New CAPEX, $m
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
Cash from investing activities, $m
  -33
  -36
  -38
  -41
  -43
  -46
  -49
  -51
  -54
  -58
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -96
  -102
  -107
  -112
  -118
  -125
  -130
  -137
  -144
  -152
  -159
Free cash flow, $m
  55
  71
  77
  82
  88
  94
  101
  108
  114
  122
  129
  137
  145
  153
  162
  171
  181
  190
  201
  212
  223
  235
  247
  260
  273
  288
  302
  318
  334
  351
Issuance/(repayment) of debt, $m
  -194
  43
  45
  47
  48
  50
  52
  54
  57
  59
  61
  64
  67
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  129
  136
  142
Issuance/(repurchase) of shares, $m
  165
  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  
  -29
  43
  45
  47
  48
  50
  52
  54
  57
  59
  61
  64
  67
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  129
  136
  142
Total cash flow (excl. dividends), $m
  27
  114
  121
  129
  137
  145
  153
  162
  171
  181
  190
  200
  211
  222
  234
  246
  259
  273
  287
  301
  317
  333
  350
  367
  386
  405
  426
  447
  470
  493
Retained Cash Flow (-), $m
  -240
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
Prev. year cash balance distribution, $m
  534
  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
  320
  109
  116
  124
  131
  139
  147
  156
  165
  174
  183
  193
  204
  215
  226
  238
  251
  264
  277
  291
  306
  322
  338
  356
  374
  392
  412
  433
  454
  477
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
  307
  100
  101
  102
  102
  101
  100
  97
  95
  91
  87
  82
  77
  72
  66
  60
  55
  49
  43
  37
  32
  27
  22
  18
  15
  11
  9
  7
  5
  4
Current shareholders' claim on cash, %
  50.0
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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 21.7
Price to Sales 2
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 13.1
Price to Free Cash Flow 15.7
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 $856.903 million for the last fiscal year's total revenue generated by Plantronics. The default revenue input number comes from 0001 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 8.5% 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 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 85.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 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 PLT are equal to 18%.

Life of production assets of 7.6 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 13.3%. 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 - $352.97 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 39.723 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 $2.1 billion.

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COMPANY NEWS

▶ Plantronics: Fiscal 2Q Earnings Snapshot   [06:18PM  Associated Press]
▶ Plantronics Announces Quarterly Earnings Release Date   [Oct-11-18 05:00AM  GlobeNewswire]
▶ Is Plantronics Inc (NYSE:PLT) A Good Dividend Stock?   [Sep-20-18 08:26AM  Simply Wall St.]
▶ 5 Stocks Riding High on Increasing Cash Flow to Buy Now   [Aug-27-18 04:29PM  InvestorPlace]
▶ Plantronics Announces Kathy Crusco as a New Board Member   [Aug-13-18 05:00PM  GlobeNewswire]
▶ Plantronics: Fiscal 1Q Earnings Snapshot   [04:33PM  Associated Press]
▶ Plantronics (PLT) Enters Oversold Territory   [Aug-01-18 04:04AM  Zacks]
▶ 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]

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