Intrinsic value of Perficient - PRFT

Previous Close

$27.05

  Intrinsic Value

$14.02

stock screener

  Rating & Target

sell

-48%

Previous close

$27.05

 
Intrinsic value

$14.02

 
Up/down potential

-48%

 
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 2017), $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
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  495
  506
  519
  534
  550
  568
  587
  608
  630
  655
  680
  708
  738
  769
  802
  837
  874
  914
  955
  999
  1,045
  1,094
  1,146
  1,200
  1,257
  1,317
  1,381
  1,447
  1,517
  1,591
Variable operating expenses, $m
  463
  473
  484
  497
  511
  526
  543
  561
  581
  602
  588
  612
  638
  665
  693
  724
  756
  790
  826
  864
  904
  946
  991
  1,037
  1,087
  1,139
  1,194
  1,251
  1,312
  1,376
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
  463
  473
  484
  497
  511
  526
  543
  561
  581
  602
  588
  612
  638
  665
  693
  724
  756
  790
  826
  864
  904
  946
  991
  1,037
  1,087
  1,139
  1,194
  1,251
  1,312
  1,376
Operating income, $m
  31
  33
  35
  37
  39
  41
  44
  47
  50
  53
  92
  96
  100
  104
  109
  113
  118
  124
  129
  135
  142
  148
  155
  162
  170
  178
  187
  196
  205
  215
EBITDA, $m
  102
  105
  107
  110
  114
  117
  121
  126
  130
  135
  141
  146
  153
  159
  166
  173
  181
  189
  198
  207
  216
  226
  237
  248
  260
  272
  285
  299
  314
  329
Interest expense (income), $m
  1
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
Earnings before tax, $m
  28
  30
  31
  33
  35
  37
  40
  42
  45
  48
  87
  90
  94
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
Tax expense, $m
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  53
Net income, $m
  21
  22
  23
  24
  26
  27
  29
  31
  33
  35
  63
  66
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
  105
  109
  114
  120
  125
  131
  137
  144

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
  509
  521
  534
  549
  566
  584
  604
  625
  649
  673
  700
  729
  759
  791
  825
  861
  899
  940
  983
  1,028
  1,075
  1,126
  1,179
  1,235
  1,293
  1,355
  1,420
  1,489
  1,561
  1,637
Adjusted assets (=assets-cash), $m
  509
  521
  534
  549
  566
  584
  604
  625
  649
  673
  700
  729
  759
  791
  825
  861
  899
  940
  983
  1,028
  1,075
  1,126
  1,179
  1,235
  1,293
  1,355
  1,420
  1,489
  1,561
  1,637
Revenue / Adjusted assets
  0.972
  0.971
  0.972
  0.973
  0.972
  0.973
  0.972
  0.973
  0.971
  0.973
  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
  0.973
  0.972
  0.972
  0.972
Average production assets, $m
  353
  361
  371
  381
  393
  405
  419
  434
  450
  467
  486
  506
  527
  549
  573
  598
  624
  652
  682
  713
  746
  781
  818
  857
  898
  940
  986
  1,033
  1,083
  1,136
Working capital, $m
  -24
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -73
  -76
Total debt, $m
  57
  60
  64
  68
  72
  77
  83
  88
  94
  101
  108
  116
  124
  132
  141
  151
  161
  172
  183
  195
  208
  221
  235
  250
  266
  282
  300
  318
  337
  357
Total liabilities, $m
  135
  138
  142
  146
  150
  155
  161
  166
  173
  179
  186
  194
  202
  210
  219
  229
  239
  250
  261
  273
  286
  299
  314
  328
  344
  360
  378
  396
  415
  435
Total equity, $m
  374
  382
  392
  403
  415
  429
  443
  459
  476
  494
  514
  535
  557
  581
  606
  632
  660
  690
  721
  754
  789
  826
  865
  906
  949
  995
  1,042
  1,093
  1,146
  1,201
Total liabilities and equity, $m
  509
  520
  534
  549
  565
  584
  604
  625
  649
  673
  700
  729
  759
  791
  825
  861
  899
  940
  982
  1,027
  1,075
  1,125
  1,179
  1,234
  1,293
  1,355
  1,420
  1,489
  1,561
  1,636
Debt-to-equity ratio
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.190
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
  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
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
  21
  22
  23
  24
  26
  27
  29
  31
  33
  35
  63
  66
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
  105
  109
  114
  120
  125
  131
  137
  144
Depreciation, amort., depletion, $m
  71
  72
  73
  74
  75
  76
  78
  79
  81
  82
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
  103
  108
  114
Funds from operations, $m
  92
  94
  96
  98
  101
  103
  106
  110
  113
  117
  112
  116
  121
  126
  131
  137
  143
  149
  156
  163
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
Cash from operations, $m
  92
  94
  96
  99
  101
  104
  107
  111
  115
  118
  113
  118
  122
  127
  133
  139
  145
  151
  158
  165
  172
  180
  189
  198
  207
  217
  227
  238
  249
  261
Maintenance CAPEX, $m
  -35
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -103
  -108
New CAPEX, $m
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
Cash from investing activities, $m
  -42
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -59
  -62
  -65
  -69
  -72
  -75
  -79
  -82
  -87
  -90
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -133
  -139
  -147
  -153
  -161
Free cash flow, $m
  51
  51
  51
  51
  52
  52
  53
  54
  55
  56
  48
  49
  51
  53
  54
  56
  58
  61
  63
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
Issuance/(repayment) of debt, $m
  2
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
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  
  2
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
Total cash flow (excl. dividends), $m
  53
  54
  54
  55
  56
  57
  58
  60
  61
  63
  55
  57
  59
  61
  63
  66
  69
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
Retained Cash Flow (-), $m
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
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
  14
  14
  15
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
Cash available for distribution, $m
  45
  45
  45
  44
  44
  44
  44
  44
  44
  45
  35
  36
  37
  37
  38
  39
  40
  42
  43
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
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
  43
  41
  39
  36
  34
  32
  30
  27
  25
  23
  17
  15
  14
  13
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
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
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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 45.8
Price to Sales 1.9
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 16.1
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 million for the last fiscal year's total revenue generated by Perficient. The default revenue input number comes from 2017 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 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 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 2.9%.

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 71.4%.

Life of production assets of 10 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 -4.8%. 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 - $366 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 33 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

▶ 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]
▶ 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]
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