Intrinsic value of Perficient - PRFT

Previous Close

$19.37

  Intrinsic Value

$15.19

stock screener

  Rating & Target

sell

-22%

Previous close

$19.37

 
Intrinsic value

$15.19

 
Up/down potential

-22%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.74
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  487
  507
  529
  552
  577
  602
  630
  658
  689
  721
  755
  790
  828
  867
  909
  953
  999
  1,047
  1,098
  1,152
  1,208
  1,268
  1,330
  1,395
  1,464
  1,536
  1,612
  1,692
  1,776
  1,864
  1,956
Variable operating expenses, $m
 
  468
  487
  507
  528
  550
  574
  599
  625
  653
  682
  686
  718
  753
  789
  827
  867
  909
  953
  999
  1,048
  1,100
  1,154
  1,210
  1,270
  1,333
  1,399
  1,468
  1,541
  1,617
  1,697
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
  455
  468
  487
  507
  528
  550
  574
  599
  625
  653
  682
  686
  718
  753
  789
  827
  867
  909
  953
  999
  1,048
  1,100
  1,154
  1,210
  1,270
  1,333
  1,399
  1,468
  1,541
  1,617
  1,697
Operating income, $m
  32
  40
  43
  46
  49
  52
  56
  60
  64
  68
  72
  105
  110
  115
  120
  126
  132
  139
  145
  153
  160
  168
  176
  185
  194
  204
  214
  224
  235
  247
  259
EBITDA, $m
  50
  70
  74
  77
  80
  84
  87
  91
  96
  100
  105
  110
  115
  121
  126
  132
  139
  146
  153
  160
  168
  176
  185
  194
  203
  213
  224
  235
  247
  259
  272
Interest expense (income), $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
Earnings before tax, $m
  31
  39
  41
  44
  47
  51
  54
  58
  61
  65
  70
  102
  106
  111
  117
  122
  128
  134
  140
  147
  154
  162
  170
  178
  186
  196
  205
  215
  226
  237
  248
Tax expense, $m
  11
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
Net income, $m
  20
  28
  30
  32
  35
  37
  39
  42
  45
  48
  51
  74
  78
  81
  85
  89
  93
  98
  103
  107
  113
  118
  124
  130
  136
  143
  150
  157
  165
  173
  181

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  457
  466
  486
  507
  529
  553
  578
  605
  633
  662
  693
  726
  760
  797
  835
  875
  917
  962
  1,009
  1,058
  1,110
  1,164
  1,221
  1,281
  1,344
  1,411
  1,480
  1,554
  1,631
  1,712
  1,796
Adjusted assets (=assets-cash), $m
  447
  466
  486
  507
  529
  553
  578
  605
  633
  662
  693
  726
  760
  797
  835
  875
  917
  962
  1,009
  1,058
  1,110
  1,164
  1,221
  1,281
  1,344
  1,411
  1,480
  1,554
  1,631
  1,712
  1,796
Revenue / Adjusted assets
  1.089
  1.088
  1.088
  1.089
  1.091
  1.089
  1.090
  1.088
  1.088
  1.089
  1.089
  1.088
  1.089
  1.088
  1.089
  1.089
  1.089
  1.088
  1.088
  1.089
  1.088
  1.089
  1.089
  1.089
  1.089
  1.089
  1.089
  1.089
  1.089
  1.089
  1.089
Average production assets, $m
  58
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  112
  118
  124
  130
  136
  143
  150
  157
  165
  173
  181
  190
  200
  210
  220
  231
Working capital, $m
  77
  70
  73
  76
  80
  83
  87
  91
  95
  99
  104
  109
  114
  120
  125
  131
  138
  145
  152
  159
  167
  175
  184
  193
  202
  212
  222
  234
  245
  257
  270
Total debt, $m
  32
  36
  40
  45
  50
  55
  61
  66
  73
  79
  86
  93
  100
  108
  117
  126
  135
  145
  155
  166
  177
  189
  201
  215
  228
  243
  258
  274
  291
  309
  327
Total liabilities, $m
  97
  102
  106
  111
  116
  121
  127
  132
  139
  145
  152
  159
  166
  174
  183
  192
  201
  211
  221
  232
  243
  255
  267
  281
  294
  309
  324
  340
  357
  375
  393
Total equity, $m
  359
  364
  380
  396
  414
  432
  452
  472
  494
  517
  541
  567
  594
  622
  652
  683
  716
  751
  788
  826
  867
  909
  954
  1,001
  1,050
  1,102
  1,156
  1,213
  1,274
  1,337
  1,403
Total liabilities and equity, $m
  456
  466
  486
  507
  530
  553
  579
  604
  633
  662
  693
  726
  760
  796
  835
  875
  917
  962
  1,009
  1,058
  1,110
  1,164
  1,221
  1,282
  1,344
  1,411
  1,480
  1,553
  1,631
  1,712
  1,796
Debt-to-equity ratio
  0.089
  0.100
  0.110
  0.110
  0.120
  0.130
  0.130
  0.140
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.220
  0.220
  0.220
  0.230
  0.230
  0.230
  0.230
Adjusted equity ratio
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781
  0.781

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  28
  30
  32
  35
  37
  39
  42
  45
  48
  51
  74
  78
  81
  85
  89
  93
  98
  103
  107
  113
  118
  124
  130
  136
  143
  150
  157
  165
  173
  181
Depreciation, amort., depletion, $m
  18
  31
  31
  31
  31
  31
  32
  32
  32
  32
  32
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
Funds from operations, $m
  71
  59
  61
  63
  66
  68
  71
  74
  77
  80
  83
  79
  83
  87
  91
  95
  100
  105
  110
  115
  120
  126
  132
  139
  146
  153
  160
  168
  176
  185
  194
Change in working capital, $m
  8
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
  13
Cash from operations, $m
  63
  56
  58
  60
  62
  65
  67
  70
  73
  76
  79
  74
  78
  81
  85
  89
  93
  98
  103
  107
  113
  118
  124
  130
  136
  143
  150
  157
  165
  173
  181
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
New CAPEX, $m
  -6
  -2
  -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
  -9
  -10
  -10
  -11
Cash from investing activities, $m
  -14
  -5
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -17
  -17
  -18
  -19
  -19
  -21
  -21
  -23
Free cash flow, $m
  49
  51
  52
  54
  56
  58
  60
  62
  65
  67
  70
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
  103
  108
  113
  119
  125
  131
  137
  144
  151
  158
Issuance/(repayment) of debt, $m
  -24
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
Issuance/(repurchase) of shares, $m
  -18
  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  
  -48
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
Total cash flow (excl. dividends), $m
  1
  55
  57
  59
  61
  63
  66
  68
  71
  74
  77
  73
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
  127
  133
  139
  146
  153
  161
  169
  177
Retained Cash Flow (-), $m
  -10
  -15
  -16
  -17
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
Prev. year cash balance distribution, $m
 
  10
  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
 
  50
  41
  42
  43
  45
  46
  47
  49
  51
  53
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  83
  87
  92
  96
  101
  105
  110
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
 
  48
  38
  37
  36
  35
  33
  32
  31
  29
  28
  22
  21
  19
  18
  16
  15
  13
  12
  10
  9
  8
  6
  5
  4
  3
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  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 32.8
Price to Sales 1.3
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 10.4
Price to Free Cash Flow 11.5
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 $487 million for the last fiscal year's total revenue generated by Perficient. The default revenue input number comes from 2016 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 4.2% 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 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 92.4%.

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 3.5% 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 11.8%.

Life of production assets of 18.3 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 13.8%. 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 - $359 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 35.365 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 $0.7 billion.

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COMPANY NEWS

▶ 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]
▶ ETFs with exposure to Perficient, Inc. : May 30, 2017   [May-30-17 12:39PM  Capital Cube]
▶ ETFs with exposure to Perficient, Inc. : May 12, 2017   [May-12-17 04:21PM  Capital Cube]
▶ Perficient posts 1Q profit   [May-04-17 08:33AM  Associated Press]
▶ Perficient posts 4Q profit   [08:35AM  Associated Press]
▶ IT consultant Perficient makes first acquisition of the year   [Jan-11-17 03:48PM  at bizjournals.com]
▶ Colorado business consulting firm is bought by Missouri company   [Jan-05-17 11:35AM  at bizjournals.com]
▶ Perficient Acquires RAS & Associates   [09:00AM  Business Wire]
▶ Perficient Named a Salesforce Platinum Consulting Partner   [Dec-22-16 03:30PM  Business Wire]
▶ Is Perficient, Inc. (PRFT) A Good Stock to Buy?   [Dec-12-16 05:09PM  at Insider Monkey]
▶ Stocks Rise as Perficient Earns Award (PRFT)   [Nov-08-16 08:11AM  at Investopedia]
Financial statements of PRFT
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