Intrinsic value of CPI Card Group Inc. - PMTS

Previous Close

$2.67

  Intrinsic Value

$22.30

stock screener

  Rating & Target

str. buy

+735%

Previous close

$2.67

 
Intrinsic value

$22.30

 
Up/down potential

+735%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as PMTS.

We calculate the intrinsic value of PMTS 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, %
  19.20
  17.78
  16.50
  15.35
  14.32
  13.38
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
Revenue, $m
  305
  359
  419
  483
  552
  626
  705
  788
  875
  967
  1,063
  1,164
  1,269
  1,378
  1,492
  1,610
  1,733
  1,860
  1,993
  2,131
  2,274
  2,423
  2,578
  2,740
  2,908
  3,083
  3,265
  3,456
  3,654
  3,861
Variable operating expenses, $m
  77
  90
  104
  119
  136
  153
  172
  192
  213
  235
  254
  278
  303
  329
  356
  384
  414
  444
  476
  509
  543
  579
  616
  654
  694
  736
  780
  825
  872
  922
Fixed operating expenses, $m
  194
  198
  203
  207
  212
  217
  221
  226
  231
  236
  241
  247
  252
  258
  263
  269
  275
  281
  287
  294
  300
  307
  313
  320
  327
  335
  342
  349
  357
  365
Total operating expenses, $m
  271
  288
  307
  326
  348
  370
  393
  418
  444
  471
  495
  525
  555
  587
  619
  653
  689
  725
  763
  803
  843
  886
  929
  974
  1,021
  1,071
  1,122
  1,174
  1,229
  1,287
Operating income, $m
  34
  71
  112
  156
  205
  256
  311
  370
  431
  496
  568
  639
  714
  791
  872
  956
  1,044
  1,135
  1,230
  1,329
  1,431
  1,538
  1,649
  1,765
  1,886
  2,012
  2,144
  2,281
  2,424
  2,574
EBITDA, $m
  53
  92
  136
  183
  235
  290
  349
  411
  477
  546
  619
  695
  774
  857
  943
  1,033
  1,127
  1,224
  1,325
  1,430
  1,540
  1,654
  1,772
  1,896
  2,025
  2,159
  2,299
  2,446
  2,599
  2,758
Interest expense (income), $m
  15
  24
  13
  16
  20
  23
  27
  31
  36
  40
  45
  50
  56
  61
  67
  73
  80
  86
  93
  100
  108
  116
  124
  132
  141
  150
  159
  169
  179
  190
  201
Earnings before tax, $m
  11
  58
  96
  137
  181
  229
  280
  334
  391
  451
  518
  584
  652
  724
  799
  877
  958
  1,042
  1,129
  1,221
  1,316
  1,414
  1,517
  1,625
  1,736
  1,853
  1,975
  2,102
  2,234
  2,373
Tax expense, $m
  3
  16
  26
  37
  49
  62
  76
  90
  106
  122
  140
  158
  176
  195
  216
  237
  259
  281
  305
  330
  355
  382
  410
  439
  469
  500
  533
  567
  603
  641
Net income, $m
  8
  42
  70
  100
  132
  167
  204
  244
  285
  329
  378
  426
  476
  529
  583
  640
  699
  761
  825
  891
  960
  1,033
  1,108
  1,186
  1,268
  1,353
  1,442
  1,534
  1,631
  1,732

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
  247
  291
  339
  391
  447
  507
  571
  638
  709
  783
  861
  942
  1,027
  1,116
  1,208
  1,304
  1,403
  1,506
  1,614
  1,725
  1,842
  1,962
  2,088
  2,218
  2,355
  2,496
  2,644
  2,798
  2,959
  3,126
Adjusted assets (=assets-cash), $m
  247
  291
  339
  391
  447
  507
  571
  638
  709
  783
  861
  942
  1,027
  1,116
  1,208
  1,304
  1,403
  1,506
  1,614
  1,725
  1,842
  1,962
  2,088
  2,218
  2,355
  2,496
  2,644
  2,798
  2,959
  3,126
Revenue / Adjusted assets
  1.235
  1.234
  1.236
  1.235
  1.235
  1.235
  1.235
  1.235
  1.234
  1.235
  1.235
  1.236
  1.236
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
  1.235
Average production assets, $m
  100
  118
  138
  159
  182
  206
  232
  259
  288
  318
  350
  383
  417
  453
  491
  530
  570
  612
  656
  701
  748
  797
  848
  901
  957
  1,014
  1,074
  1,137
  1,202
  1,270
Working capital, $m
  27
  32
  37
  43
  49
  56
  63
  70
  78
  86
  95
  104
  113
  123
  133
  143
  154
  166
  177
  190
  202
  216
  229
  244
  259
  274
  291
  308
  325
  344
Total debt, $m
  171
  211
  254
  301
  351
  405
  463
  523
  587
  654
  724
  797
  874
  953
  1,036
  1,122
  1,212
  1,305
  1,401
  1,502
  1,606
  1,715
  1,828
  1,946
  2,068
  2,196
  2,329
  2,467
  2,612
  2,763
Total liabilities, $m
  222
  262
  305
  352
  402
  456
  513
  574
  638
  705
  775
  848
  925
  1,004
  1,087
  1,173
  1,263
  1,356
  1,452
  1,553
  1,657
  1,766
  1,879
  1,997
  2,119
  2,247
  2,380
  2,518
  2,663
  2,814
Total equity, $m
  25
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  94
  103
  112
  121
  130
  140
  151
  161
  173
  184
  196
  209
  222
  235
  250
  264
  280
  296
  313
Total liabilities and equity, $m
  247
  291
  339
  391
  447
  507
  570
  638
  709
  783
  861
  942
  1,028
  1,116
  1,208
  1,303
  1,403
  1,507
  1,613
  1,726
  1,841
  1,962
  2,088
  2,219
  2,354
  2,497
  2,644
  2,798
  2,959
  3,127
Debt-to-equity ratio
  6.940
  7.250
  7.500
  7.700
  7.860
  7.990
  8.110
  8.200
  8.280
  8.350
  8.410
  8.460
  8.500
  8.540
  8.580
  8.610
  8.640
  8.660
  8.680
  8.700
  8.720
  8.740
  8.760
  8.770
  8.780
  8.800
  8.810
  8.820
  8.830
  8.840
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
  8
  42
  70
  100
  132
  167
  204
  244
  285
  329
  378
  426
  476
  529
  583
  640
  699
  761
  825
  891
  960
  1,033
  1,108
  1,186
  1,268
  1,353
  1,442
  1,534
  1,631
  1,732
Depreciation, amort., depletion, $m
  18
  21
  24
  27
  30
  34
  37
  41
  46
  50
  51
  55
  60
  66
  71
  77
  83
  89
  95
  102
  108
  116
  123
  131
  139
  147
  156
  165
  174
  184
Funds from operations, $m
  26
  63
  94
  127
  163
  201
  242
  285
  331
  379
  429
  482
  537
  594
  654
  717
  782
  849
  920
  993
  1,069
  1,148
  1,231
  1,317
  1,406
  1,500
  1,597
  1,699
  1,805
  1,916
Change in working capital, $m
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
Cash from operations, $m
  22
  59
  89
  121
  156
  194
  235
  278
  323
  371
  420
  473
  527
  585
  644
  706
  771
  838
  908
  980
  1,056
  1,135
  1,217
  1,302
  1,391
  1,484
  1,581
  1,682
  1,788
  1,898
Maintenance CAPEX, $m
  -12
  -15
  -17
  -20
  -23
  -26
  -30
  -34
  -38
  -42
  -46
  -51
  -55
  -60
  -66
  -71
  -77
  -83
  -89
  -95
  -102
  -108
  -116
  -123
  -131
  -139
  -147
  -156
  -165
  -174
New CAPEX, $m
  -16
  -18
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -65
  -68
Cash from investing activities, $m
  -28
  -33
  -37
  -41
  -46
  -50
  -56
  -61
  -67
  -72
  -78
  -84
  -90
  -96
  -103
  -110
  -117
  -125
  -133
  -140
  -149
  -157
  -167
  -176
  -186
  -197
  -207
  -219
  -230
  -242
Free cash flow, $m
  -7
  26
  52
  80
  111
  144
  179
  217
  257
  299
  342
  389
  437
  488
  541
  596
  654
  713
  775
  840
  907
  977
  1,050
  1,126
  1,205
  1,288
  1,374
  1,464
  1,558
  1,656
Issuance/(repayment) of debt, $m
  -134
  40
  43
  47
  50
  54
  57
  61
  64
  67
  70
  73
  76
  80
  83
  86
  90
  93
  97
  100
  104
  109
  113
  118
  122
  128
  133
  139
  145
  151
Issuance/(repurchase) of shares, $m
  166
  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  
  32
  40
  43
  47
  50
  54
  57
  61
  64
  67
  70
  73
  76
  80
  83
  86
  90
  93
  97
  100
  104
  109
  113
  118
  122
  128
  133
  139
  145
  151
Total cash flow (excl. dividends), $m
  26
  66
  95
  127
  161
  198
  236
  277
  321
  366
  412
  462
  514
  568
  624
  682
  743
  806
  872
  940
  1,012
  1,086
  1,163
  1,244
  1,328
  1,415
  1,507
  1,602
  1,702
  1,807
Retained Cash Flow (-), $m
  -174
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
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
  -149
  61
  90
  122
  156
  192
  230
  271
  314
  359
  405
  454
  505
  559
  615
  673
  733
  796
  861
  929
  1,000
  1,074
  1,151
  1,231
  1,314
  1,401
  1,492
  1,587
  1,686
  1,790
Discount rate, %
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
  24.20
  25.41
  26.68
  28.02
  29.42
  30.89
  32.43
  34.05
  35.76
  37.54
  39.42
  41.39
  43.46
  45.63
  47.92
  50.31
  52.83
  55.47
  58.24
  61.15
  64.21
PV of cash for distribution, $m
  -129
  45
  56
  63
  65
  64
  61
  55
  48
  41
  34
  27
  20
  15
  11
  8
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

CPI Card Group Inc., formerly CPI Holdings I, Inc., provides Financial Payment Card solutions in North America. The Company is engaged in the design, production, data personalization, packaging and fulfillment of Financial Payment Cards, which it defines as credit cards, debit cards and prepaid debit cards issued on the networks of the Payment Card Brands in the United States, Europe and Canada. It is also engaged in the design, production, data personalization, packaging and fulfillment of retail gift and loyalty cards. Its segments include U.S. Debit and Credit, which produces Financial Payment Cards and provides integrated card services to card-issuing banks in the United States; U.S. Prepaid Debit, which provides integrated card services to Prepaid Debit Card issuers in the United States; U.K. Limited, which produces retail cards for customers in the United Kingdom and continental Europe, and Other, which has operations in Ontario, Canada and Petersfield, United Kingdom.

FINANCIAL RATIOS  of  CPI Card Group Inc. (PMTS)

Valuation Ratios
P/E Ratio 5.9
Price to Sales 0.1
Price to Book -0.3
Price to Tangible Book
Price to Cash Flow 0.5
Price to Free Cash Flow 0.6
Growth Rates
Sales Growth Rate -17.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -26.3%
Cap. Spend. - 3 Yr. Gr. Rate 9.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -317.9%
Total Debt to Equity -317.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 9%
Return On Total Capital 2.3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity -5.5%
Return On Equity - 3 Yr. Avg. -27.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 33%
Gross Margin - 3 Yr. Avg. 33.6%
EBITDA Margin 13.3%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 13.4%
Pre-Tax Margin 2.9%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 1.6%
Net Profit Margin - 3 Yr. Avg. 5%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 39.9%
Payout Ratio 160%

PMTS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PMTS stock intrinsic value calculation we used $256 million for the last fiscal year's total revenue generated by CPI Card Group Inc.. The default revenue input number comes from 0001 income statement of CPI Card Group Inc.. 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 PMTS stock valuation model: a) initial revenue growth rate of 19.2% 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 15.6%, whose default value for PMTS is calculated based on our internal credit rating of CPI Card Group Inc., 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 CPI Card Group Inc..
    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 PMTS stock the variable cost ratio is equal to 25.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $190 million in the base year in the intrinsic value calculation for PMTS 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 7.7% for CPI Card Group Inc..

Corporate tax rate of 27% is the nominal tax rate for CPI Card Group Inc.. 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 PMTS 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 PMTS are equal to 32.9%.

Life of production assets of 6.9 years is the average useful life of capital assets used in CPI Card Group Inc. 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 PMTS is equal to 8.9%. 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 - $-149.576 million for CPI Card Group Inc. - 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 11.161 million for CPI Card Group Inc. 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 CPI Card Group Inc. at the current share price and the inputted number of shares is $0.0 billion.

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