Intrinsic value of Perficient, Inc. - PRFT

Previous Close

$37.54

  Intrinsic Value

$21.52

stock screener

  Rating & Target

sell

-43%

Previous close

$37.54

 
Intrinsic value

$21.52

 
Up/down potential

-43%

 
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 1.2

 

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, %
  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
  508
  520
  533
  548
  565
  583
  603
  624
  647
  672
  699
  727
  757
  789
  823
  860
  898
  938
  981
  1,026
  1,073
  1,124
  1,176
  1,232
  1,291
  1,353
  1,418
  1,486
  1,558
  1,634
Variable operating expenses, $m
  301
  307
  314
  322
  330
  340
  350
  361
  373
  386
  362
  377
  393
  409
  427
  446
  465
  486
  509
  532
  557
  583
  610
  639
  669
  701
  735
  770
  808
  847
Fixed operating expenses, $m
  173
  177
  180
  184
  188
  193
  197
  201
  206
  210
  215
  219
  224
  229
  234
  239
  245
  250
  256
  261
  267
  273
  279
  285
  291
  298
  304
  311
  318
  325
Total operating expenses, $m
  474
  484
  494
  506
  518
  533
  547
  562
  579
  596
  577
  596
  617
  638
  661
  685
  710
  736
  765
  793
  824
  856
  889
  924
  960
  999
  1,039
  1,081
  1,126
  1,172
Operating income, $m
  34
  36
  39
  42
  46
  50
  56
  62
  69
  76
  122
  131
  140
  151
  162
  174
  188
  202
  217
  233
  250
  268
  288
  308
  330
  354
  378
  405
  432
  462
EBITDA, $m
  82
  85
  87
  91
  95
  100
  106
  112
  120
  128
  136
  146
  156
  167
  179
  192
  206
  221
  237
  254
  272
  292
  312
  334
  357
  382
  408
  436
  465
  496
Interest expense (income), $m
  1
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  28
  30
  31
Earnings before tax, $m
  28
  29
  32
  35
  38
  42
  47
  53
  59
  66
  111
  119
  129
  138
  149
  160
  173
  186
  200
  215
  231
  248
  266
  286
  307
  329
  352
  377
  403
  431
Tax expense, $m
  8
  8
  9
  9
  10
  11
  13
  14
  16
  18
  30
  32
  35
  37
  40
  43
  47
  50
  54
  58
  62
  67
  72
  77
  83
  89
  95
  102
  109
  116
Net income, $m
  20
  21
  23
  25
  28
  31
  35
  39
  43
  48
  81
  87
  94
  101
  109
  117
  126
  136
  146
  157
  169
  181
  195
  209
  224
  240
  257
  275
  294
  314

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
  582
  595
  611
  628
  647
  668
  690
  715
  741
  770
  800
  833
  867
  904
  943
  985
  1,028
  1,075
  1,123
  1,175
  1,230
  1,287
  1,348
  1,411
  1,479
  1,549
  1,624
  1,702
  1,785
  1,871
Adjusted assets (=assets-cash), $m
  582
  595
  611
  628
  647
  668
  690
  715
  741
  770
  800
  833
  867
  904
  943
  985
  1,028
  1,075
  1,123
  1,175
  1,230
  1,287
  1,348
  1,411
  1,479
  1,549
  1,624
  1,702
  1,785
  1,871
Revenue / Adjusted assets
  0.873
  0.874
  0.872
  0.873
  0.873
  0.873
  0.874
  0.873
  0.873
  0.873
  0.874
  0.873
  0.873
  0.873
  0.873
  0.873
  0.874
  0.873
  0.874
  0.873
  0.872
  0.873
  0.872
  0.873
  0.873
  0.873
  0.873
  0.873
  0.873
  0.873
Average production assets, $m
  194
  199
  204
  209
  216
  223
  230
  238
  247
  257
  267
  278
  289
  302
  315
  328
  343
  358
  375
  392
  410
  429
  449
  471
  493
  517
  541
  568
  595
  624
Working capital, $m
  59
  60
  62
  64
  65
  68
  70
  72
  75
  78
  81
  84
  88
  92
  96
  100
  104
  109
  114
  119
  125
  130
  136
  143
  150
  157
  164
  172
  181
  189
Total debt, $m
  124
  129
  135
  142
  149
  157
  166
  175
  185
  196
  207
  220
  233
  247
  262
  277
  294
  312
  330
  350
  370
  392
  415
  440
  465
  492
  520
  550
  581
  614
Total liabilities, $m
  221
  226
  232
  239
  246
  254
  262
  272
  282
  293
  304
  316
  330
  344
  358
  374
  391
  408
  427
  447
  467
  489
  512
  536
  562
  589
  617
  647
  678
  711
Total equity, $m
  361
  369
  379
  389
  401
  414
  428
  443
  460
  477
  496
  516
  538
  561
  585
  610
  638
  666
  697
  729
  762
  798
  835
  875
  917
  961
  1,007
  1,055
  1,106
  1,160
Total liabilities and equity, $m
  582
  595
  611
  628
  647
  668
  690
  715
  742
  770
  800
  832
  868
  905
  943
  984
  1,029
  1,074
  1,124
  1,176
  1,229
  1,287
  1,347
  1,411
  1,479
  1,550
  1,624
  1,702
  1,784
  1,871
Debt-to-equity ratio
  0.340
  0.350
  0.360
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.420
  0.430
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
  0.470
  0.480
  0.490
  0.490
  0.500
  0.500
  0.510
  0.510
  0.520
  0.520
  0.530
  0.530
Adjusted equity ratio
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  21
  23
  25
  28
  31
  35
  39
  43
  48
  81
  87
  94
  101
  109
  117
  126
  136
  146
  157
  169
  181
  195
  209
  224
  240
  257
  275
  294
  314
Depreciation, amort., depletion, $m
  48
  48
  49
  49
  49
  50
  50
  51
  51
  52
  15
  15
  16
  16
  17
  18
  19
  20
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  33
  34
Funds from operations, $m
  68
  70
  72
  74
  77
  81
  85
  89
  94
  100
  96
  102
  110
  117
  126
  135
  145
  155
  166
  178
  191
  205
  219
  234
  251
  268
  286
  306
  327
  348
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
  8
  9
Cash from operations, $m
  67
  69
  70
  73
  75
  79
  82
  87
  92
  97
  93
  99
  106
  114
  122
  131
  140
  151
  161
  173
  186
  199
  213
  228
  244
  261
  279
  298
  318
  340
Maintenance CAPEX, $m
  -10
  -11
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
New CAPEX, $m
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
Cash from investing activities, $m
  -14
  -15
  -16
  -17
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -58
  -62
Free cash flow, $m
  53
  53
  54
  56
  58
  60
  63
  66
  70
  74
  68
  74
  79
  86
  92
  100
  108
  116
  126
  135
  146
  157
  169
  182
  196
  210
  226
  242
  260
  278
Issuance/(repayment) of debt, $m
  4
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
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  
  4
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
Total cash flow (excl. dividends), $m
  57
  59
  60
  62
  65
  68
  71
  75
  80
  85
  80
  86
  93
  100
  107
  116
  124
  134
  144
  155
  167
  179
  192
  206
  221
  237
  254
  272
  291
  311
Retained Cash Flow (-), $m
  -7
  -8
  -9
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
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
  50
  50
  51
  52
  53
  55
  57
  60
  63
  67
  61
  66
  71
  77
  83
  90
  97
  105
  114
  123
  133
  143
  155
  167
  180
  193
  208
  223
  240
  257
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
  46
  44
  42
  41
  40
  39
  38
  36
  35
  29
  28
  27
  26
  24
  23
  21
  19
  18
  16
  14
  12
  10
  8
  7
  6
  4
  3
  3
  2
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
  100.0
  100.0
  100.0
  100.0
  100.0

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, Inc. (PRFT)

Valuation Ratios
P/E Ratio 63.6
Price to Sales 2.6
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 20.2
Price to Free Cash Flow 22.3
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 $498 million for the last fiscal year's total revenue generated by Perficient, Inc.. The default revenue input number comes from 0001 income statement of Perficient, 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 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, 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 Perficient, 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 PRFT stock the variable cost ratio is equal to 59.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $169 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Perficient, 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 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 38.2%.

Life of production assets of 18.3 years is the average useful life of capital assets used in Perficient, 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 PRFT is equal to 11.6%. 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 - $353.684 million for Perficient, 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 33.175 million for Perficient, 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 Perficient, Inc. at the current share price and the inputted number of shares is $1.2 billion.

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