Intrinsic value of Pointer Telocation - PNTR

Previous Close

$12.00

  Intrinsic Value

$45.69

stock screener

  Rating & Target

str. buy

+281%

Previous close

$12.00

 
Intrinsic value

$45.69

 
Up/down potential

+281%

 
Rating

str. buy

We calculate the intrinsic value of PNTR 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 0.1

 

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, %
  21.50
  19.85
  18.37
  17.03
  15.83
  14.74
  13.77
  12.89
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.62
  6.46
  6.32
  6.18
  6.07
  5.96
  5.86
  5.78
Revenue, $m
  95
  114
  135
  158
  183
  210
  238
  269
  302
  336
  372
  410
  450
  491
  534
  579
  626
  674
  724
  777
  831
  888
  947
  1,008
  1,071
  1,138
  1,207
  1,279
  1,354
  1,432
Variable operating expenses, $m
  67
  80
  94
  109
  125
  143
  162
  183
  204
  227
  247
  272
  298
  326
  354
  384
  415
  447
  480
  515
  551
  589
  628
  668
  710
  754
  800
  848
  898
  949
Fixed operating expenses, $m
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
Total operating expenses, $m
  79
  93
  107
  122
  138
  157
  176
  197
  219
  242
  262
  288
  314
  342
  371
  401
  432
  465
  498
  534
  570
  608
  648
  688
  731
  775
  822
  870
  921
  972
Operating income, $m
  15
  22
  28
  36
  44
  53
  62
  72
  83
  94
  110
  123
  136
  149
  163
  178
  193
  209
  226
  243
  261
  280
  299
  319
  340
  362
  385
  409
  434
  459
EBITDA, $m
  22
  28
  35
  43
  52
  61
  71
  82
  93
  105
  118
  131
  145
  159
  175
  190
  207
  224
  241
  260
  279
  298
  319
  341
  363
  386
  410
  436
  462
  489
Interest expense (income), $m
  1
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  39
  42
Earnings before tax, $m
  15
  20
  26
  33
  40
  48
  57
  66
  76
  86
  101
  112
  124
  136
  149
  163
  176
  191
  206
  222
  238
  255
  272
  291
  310
  329
  350
  372
  394
  418
Tax expense, $m
  4
  5
  7
  9
  11
  13
  15
  18
  20
  23
  27
  30
  34
  37
  40
  44
  48
  52
  56
  60
  64
  69
  74
  78
  84
  89
  95
  100
  106
  113
Net income, $m
  11
  15
  19
  24
  30
  35
  42
  48
  55
  63
  74
  82
  91
  100
  109
  119
  129
  139
  150
  162
  174
  186
  199
  212
  226
  241
  256
  271
  288
  305

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
  115
  138
  163
  191
  221
  254
  289
  326
  365
  407
  451
  496
  544
  594
  647
  701
  757
  816
  877
  940
  1,006
  1,075
  1,146
  1,220
  1,297
  1,377
  1,461
  1,548
  1,639
  1,733
Adjusted assets (=assets-cash), $m
  115
  138
  163
  191
  221
  254
  289
  326
  365
  407
  451
  496
  544
  594
  647
  701
  757
  816
  877
  940
  1,006
  1,075
  1,146
  1,220
  1,297
  1,377
  1,461
  1,548
  1,639
  1,733
Revenue / Adjusted assets
  0.826
  0.826
  0.828
  0.827
  0.828
  0.827
  0.824
  0.825
  0.827
  0.826
  0.825
  0.827
  0.827
  0.827
  0.825
  0.826
  0.827
  0.826
  0.826
  0.827
  0.826
  0.826
  0.826
  0.826
  0.826
  0.826
  0.826
  0.826
  0.826
  0.826
Average production assets, $m
  32
  39
  46
  54
  62
  71
  81
  91
  103
  114
  127
  139
  153
  167
  182
  197
  213
  229
  246
  264
  283
  302
  322
  343
  364
  387
  410
  435
  460
  487
Working capital, $m
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  36
  40
  44
  48
  52
  56
  60
  64
  69
  74
  79
  84
  90
  95
  101
  107
  114
  120
  127
Total debt, $m
  17
  25
  33
  42
  52
  63
  75
  87
  100
  114
  128
  144
  160
  176
  193
  211
  230
  250
  270
  291
  313
  336
  359
  384
  409
  436
  464
  493
  523
  554
Total liabilities, $m
  38
  46
  54
  63
  73
  84
  96
  108
  121
  135
  150
  165
  181
  197
  215
  233
  251
  271
  291
  312
  334
  357
  380
  405
  431
  457
  485
  514
  544
  576
Total equity, $m
  77
  92
  109
  127
  148
  169
  193
  218
  244
  272
  301
  332
  364
  397
  432
  468
  506
  545
  586
  628
  672
  718
  766
  815
  867
  920
  976
  1,034
  1,095
  1,158
Total liabilities and equity, $m
  115
  138
  163
  190
  221
  253
  289
  326
  365
  407
  451
  497
  545
  594
  647
  701
  757
  816
  877
  940
  1,006
  1,075
  1,146
  1,220
  1,298
  1,377
  1,461
  1,548
  1,639
  1,734
Debt-to-equity ratio
  0.220
  0.270
  0.300
  0.330
  0.350
  0.370
  0.390
  0.400
  0.410
  0.420
  0.430
  0.430
  0.440
  0.440
  0.450
  0.450
  0.460
  0.460
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.480
  0.480
  0.480
  0.480
Adjusted equity ratio
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668
  0.668

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  15
  19
  24
  30
  35
  42
  48
  55
  63
  74
  82
  91
  100
  109
  119
  129
  139
  150
  162
  174
  186
  199
  212
  226
  241
  256
  271
  288
  305
Depreciation, amort., depletion, $m
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
  30
Funds from operations, $m
  17
  21
  26
  32
  38
  44
  51
  58
  66
  74
  82
  91
  100
  110
  120
  131
  142
  154
  166
  178
  191
  205
  219
  233
  249
  264
  281
  298
  316
  335
Change in working capital, $m
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
Cash from operations, $m
  15
  20
  24
  30
  35
  42
  48
  55
  63
  71
  78
  87
  97
  106
  116
  127
  138
  149
  161
  173
  186
  200
  213
  228
  243
  258
  275
  292
  309
  328
Maintenance CAPEX, $m
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
New CAPEX, $m
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -27
Cash from investing activities, $m
  -8
  -8
  -9
  -11
  -11
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -55
Free cash flow, $m
  8
  11
  15
  19
  24
  29
  34
  40
  46
  53
  59
  67
  74
  83
  91
  100
  110
  120
  130
  140
  151
  163
  175
  187
  200
  213
  227
  242
  257
  273
Issuance/(repayment) of debt, $m
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
Issuance/(repurchase) of shares, $m
  3
  1
  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  
  10
  9
  8
  9
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
Total cash flow (excl. dividends), $m
  18
  19
  23
  28
  34
  40
  46
  52
  59
  67
  74
  82
  90
  99
  109
  118
  129
  139
  150
  161
  173
  186
  198
  212
  226
  240
  255
  271
  287
  304
Retained Cash Flow (-), $m
  -14
  -15
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -49
  -51
  -54
  -56
  -58
  -61
  -63
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
  4
  4
  6
  10
  14
  18
  22
  28
  33
  39
  44
  51
  58
  66
  74
  82
  91
  100
  109
  119
  129
  140
  151
  162
  174
  187
  199
  213
  227
  241
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
  4
  4
  6
  8
  10
  13
  15
  17
  19
  20
  21
  22
  22
  22
  22
  21
  20
  18
  17
  15
  13
  12
  10
  8
  7
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  97.1
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6

Pointer Telocation Ltd. is a provider of mobile resource management (MRM) products and services for the automotive, insurance industries and other mobile tracking markets, such as cargo, assets, shipping and containers. The Company offers roadside assistance (RSA) services, automobile repair and towing services, stolen vehicle recovery (SVR) and other services. The Company operates through three segments: Cellocator, MRM and RSA. The Cellocator segment designs, develops and produces MRM products that include asset tracking, fleet management and security products. Through the MRM segment, the Company acts as an operator in Israel, Brazil, Argentina, Mexico and South Africa by bundling its products together with a range of MRM services, including fleet management, asset tracking services and SVR services. Through the RSA segment, the Company provides RSA services, emergency repair services for sale to automotive and insurance companies and car sharing services.

FINANCIAL RATIOS  of  Pointer Telocation (PNTR)

Valuation Ratios
P/E Ratio 31.5
Price to Sales 1.5
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 18.9
Growth Rates
Sales Growth Rate 4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -4.4%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 23.3%
Total Debt to Equity 34.9%
Interest Coverage 6
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 9.1%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.8%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 13.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 48.2%
EBITDA Margin 14.1%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 7.8%
Pre-Tax Margin - 3 Yr. Avg. 7.9%
Net Profit Margin 4.7%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 40%
Eff/ Tax Rate - 3 Yr. Avg. -33.3%
Payout Ratio 0%

PNTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PNTR stock intrinsic value calculation we used $78.155 million for the last fiscal year's total revenue generated by Pointer Telocation. The default revenue input number comes from 0001 income statement of Pointer Telocation. 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 PNTR stock valuation model: a) initial revenue growth rate of 21.5% 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 PNTR is calculated based on our internal credit rating of Pointer Telocation, 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 Pointer Telocation.
    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 PNTR stock the variable cost ratio is equal to 71.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12 million in the base year in the intrinsic value calculation for PNTR 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 8% for Pointer Telocation.

Corporate tax rate of 27% is the nominal tax rate for Pointer Telocation. 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 PNTR 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 PNTR are equal to 34%.

Life of production assets of 16.2 years is the average useful life of capital assets used in Pointer Telocation 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 PNTR 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 - $63.134 million for Pointer Telocation - 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 8.2 million for Pointer Telocation 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 Pointer Telocation at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Pointer Gets AIS 140 Indian ITS Standard Certification   [Sep-04-18 06:00AM  PR Newswire]
▶ Pointer Telocation Ltd. to Host Earnings Call   [Aug-15-18 08:00AM  ACCESSWIRE]
▶ Pointer Telocation's Q2 Earnings Preview   [Aug-14-18 02:54PM  Benzinga]
▶ Pointer Telocation Ltd. to Host Earnings Call   [Feb-27-18 08:00AM  ACCESSWIRE]
▶ Pointer Telocation to Present at Upcoming Conferences   [Aug-31-17 12:20PM  PR Newswire]
▶ Pointer Telocation to Present at Upcoming Conferences   [Aug-25-16 06:36AM  PR Newswire]
▶ Pointer Completes Spin-off of Shagrir   [Jun-29-16 10:26AM  PR Newswire]

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