Intrinsic value of Perficient - PRFT

Previous Close

$24.68

  Intrinsic Value

$13.48

stock screener

  Rating & Target

sell

-45%

Previous close

$24.68

 
Intrinsic value

$13.48

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of PRFT 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 0.9

 

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, %
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
Revenue, $m
  505
  526
  549
  573
  598
  625
  653
  683
  714
  747
  782
  819
  858
  899
  942
  988
  1,035
  1,086
  1,138
  1,194
  1,252
  1,314
  1,378
  1,446
  1,517
  1,592
  1,671
  1,754
  1,840
  1,932
Variable operating expenses, $m
  472
  491
  510
  531
  553
  576
  600
  626
  653
  682
  676
  708
  742
  777
  815
  854
  895
  939
  984
  1,032
  1,083
  1,136
  1,192
  1,250
  1,312
  1,377
  1,445
  1,516
  1,591
  1,670
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
  472
  491
  510
  531
  553
  576
  600
  626
  653
  682
  676
  708
  742
  777
  815
  854
  895
  939
  984
  1,032
  1,083
  1,136
  1,192
  1,250
  1,312
  1,377
  1,445
  1,516
  1,591
  1,670
Operating income, $m
  33
  36
  39
  42
  45
  49
  53
  57
  61
  66
  106
  111
  116
  122
  128
  134
  140
  147
  154
  162
  170
  178
  187
  196
  205
  216
  226
  237
  249
  262
EBITDA, $m
  79
  82
  86
  89
  93
  98
  102
  107
  112
  117
  122
  128
  134
  141
  147
  154
  162
  170
  178
  187
  196
  205
  215
  226
  237
  249
  261
  274
  288
  302
Interest expense (income), $m
  1
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
Earnings before tax, $m
  30
  32
  35
  38
  41
  44
  48
  51
  55
  59
  99
  104
  108
  113
  119
  124
  130
  136
  142
  149
  156
  164
  171
  180
  188
  197
  207
  217
  228
  239
Tax expense, $m
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  49
  51
  53
  56
  59
  61
  64
Net income, $m
  22
  24
  26
  28
  30
  32
  35
  38
  40
  43
  72
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  151
  158
  166
  174

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
  520
  541
  565
  589
  615
  643
  672
  702
  735
  769
  805
  843
  883
  925
  969
  1,016
  1,065
  1,117
  1,171
  1,228
  1,288
  1,352
  1,418
  1,488
  1,561
  1,638
  1,719
  1,804
  1,893
  1,987
Adjusted assets (=assets-cash), $m
  520
  541
  565
  589
  615
  643
  672
  702
  735
  769
  805
  843
  883
  925
  969
  1,016
  1,065
  1,117
  1,171
  1,228
  1,288
  1,352
  1,418
  1,488
  1,561
  1,638
  1,719
  1,804
  1,893
  1,987
Revenue / Adjusted assets
  0.971
  0.972
  0.972
  0.973
  0.972
  0.972
  0.972
  0.973
  0.971
  0.971
  0.971
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
  0.972
Average production assets, $m
  184
  192
  200
  209
  218
  228
  238
  249
  261
  273
  286
  299
  313
  328
  344
  360
  378
  396
  416
  436
  457
  480
  503
  528
  554
  581
  610
  640
  672
  705
Working capital, $m
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  120
  125
  131
  138
  145
  152
  159
  167
  175
  184
  193
  202
  212
  223
  234
  245
Total debt, $m
  61
  66
  72
  79
  86
  93
  101
  109
  118
  127
  136
  147
  157
  168
  180
  193
  206
  219
  234
  249
  265
  282
  299
  318
  338
  358
  380
  402
  426
  451
Total liabilities, $m
  138
  144
  150
  157
  164
  171
  179
  187
  195
  205
  214
  224
  235
  246
  258
  270
  283
  297
  312
  327
  343
  360
  377
  396
  415
  436
  457
  480
  504
  529
Total equity, $m
  381
  397
  414
  432
  451
  472
  493
  516
  539
  564
  591
  619
  648
  679
  712
  746
  782
  820
  860
  902
  946
  992
  1,041
  1,092
  1,146
  1,202
  1,262
  1,324
  1,390
  1,459
Total liabilities and equity, $m
  519
  541
  564
  589
  615
  643
  672
  703
  734
  769
  805
  843
  883
  925
  970
  1,016
  1,065
  1,117
  1,172
  1,229
  1,289
  1,352
  1,418
  1,488
  1,561
  1,638
  1,719
  1,804
  1,894
  1,988
Debt-to-equity ratio
  0.160
  0.170
  0.170
  0.180
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
  0.270
  0.270
  0.280
  0.280
  0.280
  0.290
  0.290
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
Adjusted equity ratio
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734
  0.734

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  22
  24
  26
  28
  30
  32
  35
  38
  40
  43
  72
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  151
  158
  166
  174
Depreciation, amort., depletion, $m
  46
  47
  47
  48
  48
  49
  49
  50
  51
  51
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
  38
  40
Funds from operations, $m
  68
  70
  73
  75
  78
  81
  84
  87
  91
  94
  89
  93
  97
  101
  106
  111
  116
  122
  128
  134
  140
  147
  154
  161
  169
  177
  186
  195
  204
  214
Change in working capital, $m
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  10
  11
  12
Cash from operations, $m
  65
  68
  70
  72
  75
  78
  81
  84
  87
  90
  84
  88
  92
  96
  101
  105
  110
  115
  121
  127
  133
  139
  146
  153
  160
  168
  176
  184
  193
  203
Maintenance CAPEX, $m
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -38
New CAPEX, $m
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
Cash from investing activities, $m
  -17
  -19
  -19
  -20
  -21
  -22
  -23
  -25
  -25
  -27
  -29
  -29
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -65
  -69
  -71
Free cash flow, $m
  48
  49
  51
  52
  54
  55
  57
  59
  61
  63
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
  86
  91
  95
  99
  104
  109
  114
  119
  125
  131
Issuance/(repayment) of debt, $m
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  20
  22
  23
  24
  25
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  
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  20
  22
  23
  24
  25
Total cash flow (excl. dividends), $m
  54
  55
  57
  59
  61
  63
  65
  67
  70
  72
  65
  68
  71
  75
  78
  82
  85
  89
  93
  98
  102
  107
  112
  118
  123
  129
  136
  142
  149
  156
Retained Cash Flow (-), $m
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -59
  -62
  -66
  -69
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
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  39
  40
  42
  44
  45
  47
  49
  51
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
  83
  87
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
  37
  36
  35
  33
  32
  31
  29
  28
  26
  25
  19
  17
  16
  15
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
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
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Perficient, Inc. is an information technology and management consulting firm. The Company's solutions include business intelligence and analytics, commerce, content management, custom applications, platform implementations, portals and collaboration, business integration and application program interfaces, management consulting, business process management, and customer relationship management, among others. It provides services to the healthcare (pharma and life sciences), financial services (banking and insurance), retail and consumer goods, automotive and transport products, electronics and computer hardware, telecommunications, manufacturing, business services, and leisure, and media and entertainment markets, among others.

FINANCIAL RATIOS  of  Perficient (PRFT)

Valuation Ratios
P/E Ratio 41.8
Price to Sales 1.7
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 13.3
Price to Free Cash Flow 14.7
Growth Rates
Sales Growth Rate 2.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate -5.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 8.9%
Total Debt to Equity 8.9%
Interest Coverage 32
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital 5%
Ret/ On T. Cap. - 3 Yr. Avg. 6.1%
Return On Equity 5.6%
Return On Equity - 3 Yr. Avg. 6.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 31%
Gross Margin - 3 Yr. Avg. 32.1%
EBITDA Margin 10.3%
EBITDA Margin - 3 Yr. Avg. 11.4%
Operating Margin 6.6%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 7.2%
Net Profit Margin 4.1%
Net Profit Margin - 3 Yr. Avg. 4.7%
Effective Tax Rate 35.5%
Eff/ Tax Rate - 3 Yr. Avg. 35.1%
Payout Ratio 0%

PRFT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PRFT stock intrinsic value calculation we used $485.261 million for the last fiscal year's total revenue generated by Perficient. The default revenue input number comes from 0001 income statement of Perficient. 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 PRFT stock valuation model: a) initial revenue growth rate of 4.1% 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 PRFT is calculated based on our internal credit rating of Perficient, 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 Perficient.
    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 PRFT stock the variable cost ratio is equal to 93.8%.

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 PRFT 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 Perficient.

Corporate tax rate of 27% is the nominal tax rate for Perficient. 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 PRFT 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 PRFT are equal to 36.5%.

Life of production assets of 17.5 years is the average useful life of capital assets used in Perficient 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 PRFT is equal to 12.7%. 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 - $366.351 million for Perficient - 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 34.81 million for Perficient 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 Perficient at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ What other CEOs are telling analysts about IBM-Red Hat   [Nov-05-18 11:52AM  American City Business Journals]
▶ Perficient (PRFT) Beats Q3 Earnings Estimates   [Nov-01-18 10:41AM  Zacks]
▶ Perficient: 3Q Earnings Snapshot   [08:32AM  Associated Press]
▶ Perficient acquires $6 million marketing consultancy   [Oct-29-18 11:07AM  American City Business Journals]
▶ Perficient Announces Acquisition of Elixiter   [09:00AM  Business Wire]
▶ Red Hat Names Perficient Rising Star Partner of the Year   [Oct-11-18 11:30AM  Business Wire]
▶ Company Profile for Perficient   [Aug-17-18 02:44PM  Business Wire]
▶ Perficient (PRFT) Tops Q2 Earnings Estimates   [Aug-02-18 11:05AM  Zacks]
▶ Perficient: 2Q Earnings Snapshot   [09:59AM  Associated Press]
▶ Perficient, Inc. to Host Earnings Call   [08:00AM  ACCESSWIRE]
▶ Perficient acquires $9 million digital marketing agency   [Jul-16-18 12:18PM  American City Business Journals]
▶ Perficient Acquires Stone Temple Consulting   [09:00AM  Business Wire]
▶ Perficient: 1Q Earnings Snapshot   [May-01-18 09:12AM  Associated Press]
▶ Perficient Acquires Southport Services Group   [Apr-02-18 04:31PM  Business Wire]
▶ Perficient posts 4Q profit   [09:39AM  Associated Press]
▶ Perficient, Inc. to Host Earnings Call   [08:15AM  ACCESSWIRE]
▶ Perficient posts 3Q profit   [Nov-02-17 09:30AM  Associated Press]
▶ Perficient, Inc. to Host Earnings Call   [08:25AM  ACCESSWIRE]
▶ Perficient posts 2Q profit   [Aug-03-17 05:48PM  Associated Press]
▶ Perficient acquires Chicago firm   [Jun-23-17 11:45AM  American City Business Journals]
▶ Perficient Acquires Clarity Consulting   [08:00AM  Business Wire]
▶ Perficient Repatriating Offshore Capital   [Jun-16-17 05:30PM  Business Wire]

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