Intrinsic value of PRGX Global - PRGX

Previous Close

$9.26

  Intrinsic Value

$6.76

stock screener

  Rating & Target

sell

-27%

Previous close

$9.26

 
Intrinsic value

$6.76

 
Up/down potential

-27%

 
Rating

sell

We calculate the intrinsic value of PRGX 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 0.2

 

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, %
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
Revenue, $m
  177
  192
  209
  226
  243
  262
  281
  300
  321
  342
  365
  388
  412
  437
  463
  490
  519
  549
  580
  612
  646
  681
  718
  757
  797
  839
  884
  930
  979
  1,029
Variable operating expenses, $m
  145
  157
  170
  184
  198
  213
  228
  244
  260
  277
  291
  310
  329
  349
  370
  392
  414
  438
  463
  489
  516
  544
  573
  604
  636
  670
  706
  743
  782
  822
Fixed operating expenses, $m
  22
  23
  23
  24
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  30
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
Total operating expenses, $m
  167
  180
  193
  208
  223
  238
  254
  270
  287
  304
  319
  339
  358
  379
  400
  423
  446
  471
  496
  523
  551
  580
  609
  641
  674
  709
  746
  783
  823
  864
Operating income, $m
  9
  12
  15
  18
  21
  24
  27
  31
  34
  38
  45
  50
  54
  58
  63
  68
  73
  78
  83
  89
  95
  102
  108
  115
  123
  130
  138
  147
  156
  165
EBITDA, $m
  19
  22
  26
  29
  33
  36
  40
  44
  49
  53
  58
  63
  68
  73
  78
  84
  90
  96
  103
  110
  117
  125
  133
  141
  150
  159
  168
  178
  189
  200
Interest expense (income), $m
  0
  3
  4
  5
  6
  8
  9
  10
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  43
  46
  48
  52
  55
  58
  62
  66
Earnings before tax, $m
  7
  8
  10
  11
  13
  15
  17
  19
  21
  23
  29
  31
  34
  36
  39
  42
  45
  48
  51
  54
  58
  62
  66
  70
  74
  79
  83
  89
  94
  99
Tax expense, $m
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
Net income, $m
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  21
  23
  25
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  65
  69
  73

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
  131
  143
  155
  167
  180
  194
  208
  223
  238
  254
  271
  288
  306
  324
  344
  364
  385
  407
  430
  454
  479
  505
  533
  561
  591
  623
  655
  690
  726
  764
Adjusted assets (=assets-cash), $m
  131
  143
  155
  167
  180
  194
  208
  223
  238
  254
  271
  288
  306
  324
  344
  364
  385
  407
  430
  454
  479
  505
  533
  561
  591
  623
  655
  690
  726
  764
Revenue / Adjusted assets
  1.351
  1.343
  1.348
  1.353
  1.350
  1.351
  1.351
  1.345
  1.349
  1.346
  1.347
  1.347
  1.346
  1.349
  1.346
  1.346
  1.348
  1.349
  1.349
  1.348
  1.349
  1.349
  1.347
  1.349
  1.349
  1.347
  1.350
  1.348
  1.348
  1.347
Average production assets, $m
  33
  36
  39
  42
  45
  49
  52
  56
  60
  64
  68
  72
  77
  81
  86
  91
  97
  102
  108
  114
  120
  127
  134
  141
  148
  156
  164
  173
  182
  191
Working capital, $m
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
Total debt, $m
  19
  25
  31
  37
  44
  50
  57
  65
  72
  80
  88
  97
  106
  115
  125
  135
  145
  156
  168
  180
  192
  205
  219
  233
  248
  264
  280
  297
  315
  334
Total liabilities, $m
  65
  71
  77
  83
  90
  97
  104
  111
  119
  127
  135
  143
  152
  161
  171
  181
  192
  203
  214
  226
  239
  252
  265
  279
  294
  310
  326
  344
  362
  380
Total equity, $m
  66
  72
  78
  84
  91
  97
  105
  112
  120
  128
  136
  144
  153
  163
  172
  183
  193
  204
  216
  228
  240
  254
  267
  282
  297
  313
  329
  346
  364
  383
Total liabilities and equity, $m
  131
  143
  155
  167
  181
  194
  209
  223
  239
  255
  271
  287
  305
  324
  343
  364
  385
  407
  430
  454
  479
  506
  532
  561
  591
  623
  655
  690
  726
  763
Debt-to-equity ratio
  0.290
  0.350
  0.400
  0.440
  0.480
  0.520
  0.550
  0.580
  0.600
  0.630
  0.650
  0.670
  0.690
  0.710
  0.720
  0.740
  0.750
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.840
  0.850
  0.860
  0.860
  0.870
Adjusted equity ratio
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  21
  23
  25
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  65
  69
  73
Depreciation, amort., depletion, $m
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
Funds from operations, $m
  14
  16
  18
  20
  21
  23
  25
  27
  30
  32
  33
  36
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  72
  76
  81
  86
  91
  96
  102
  107
Change in working capital, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
Cash from operations, $m
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  52
  56
  59
  63
  67
  71
  75
  80
  84
  89
  95
  100
  106
Maintenance CAPEX, $m
  -5
  -6
  -7
  -7
  -8
  -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
New CAPEX, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
Cash from investing activities, $m
  -8
  -9
  -10
  -10
  -11
  -11
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -34
  -35
  -36
  -39
  -40
  -42
Free cash flow, $m
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  20
  22
  24
  25
  27
  29
  31
  34
  36
  38
  41
  44
  47
  50
  53
  56
  60
  63
Issuance/(repayment) of debt, $m
  5
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
Issuance/(repurchase) of shares, $m
  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
  0
Cash from financing (excl. dividends), $m  
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
Total cash flow (excl. dividends), $m
  12
  12
  14
  15
  16
  18
  19
  21
  23
  24
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  78
  82
Retained Cash Flow (-), $m
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
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
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  20
  22
  23
  25
  27
  29
  31
  34
  36
  38
  41
  44
  47
  49
  53
  56
  59
  63
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
  6
  6
  7
  7
  8
  8
  8
  9
  9
  9
  8
  8
  8
  7
  7
  6
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
Current shareholders' claim on cash, %
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7

PRGX Global, Inc. (PRGX), together with its subsidiaries, provides recovery audit and spend analytics services. The Company provides recovery audit, procure-to-pay performance improvement, spend analytics and risk management services principally to large businesses and government agencies. The Company operates through three segments: Recovery Audit Services-Americas, Recovery Audit Services-Europe/Asia-Pacific and Adjacent Services. The Recovery Audit Services-Americas segment represents recovery audit services the Company provides in the United States, Canada and Latin America. The Recovery Audit Services-Europe/Asia-Pacific segment represents recovery audit services it provides in Europe, Asia and the Pacific region. The Adjacent Services segment includes spend analytics (data transformation and cost harmonization), Supplier Information Management (SIM) and Chartered Institute of Purchasing & Supply (CIPS) Sustainability Index (CSI).

FINANCIAL RATIOS  of  PRGX Global (PRGX)

Valuation Ratios
P/E Ratio 202.3
Price to Sales 1.4
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 20.2
Price to Free Cash Flow 50.6
Growth Rates
Sales Growth Rate 2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate -3%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 7.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.2%
Ret/ On Assets - 3 Yr. Avg. -3%
Return On Total Capital 1.9%
Ret/ On T. Cap. - 3 Yr. Avg. -4.2%
Return On Equity 1.9%
Return On Equity - 3 Yr. Avg. -4.2%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 35.5%
Gross Margin - 3 Yr. Avg. 33.2%
EBITDA Margin 7.1%
EBITDA Margin - 3 Yr. Avg. 7%
Operating Margin 2.1%
Oper. Margin - 3 Yr. Avg. 2.5%
Pre-Tax Margin 2.1%
Pre-Tax Margin - 3 Yr. Avg. 1.4%
Net Profit Margin 0.7%
Net Profit Margin - 3 Yr. Avg. -2.1%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 144.4%
Payout Ratio 0%

PRGX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PRGX stock intrinsic value calculation we used $161.62 million for the last fiscal year's total revenue generated by PRGX Global. The default revenue input number comes from 0001 income statement of PRGX Global. 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 PRGX stock valuation model: a) initial revenue growth rate of 9.3% 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 PRGX is calculated based on our internal credit rating of PRGX Global, 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 PRGX Global.
    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 PRGX stock the variable cost ratio is equal to 82.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $22 million in the base year in the intrinsic value calculation for PRGX 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 20.8% for PRGX Global.

Corporate tax rate of 27% is the nominal tax rate for PRGX Global. 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 PRGX 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 PRGX are equal to 18.6%.

Life of production assets of 5.5 years is the average useful life of capital assets used in PRGX Global 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 PRGX is equal to 3.2%. 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 - $60.314 million for PRGX Global - 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 23.516 million for PRGX Global 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 PRGX Global at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
RECN Resources Conn 16.52 19.51  buy
COTV Cotiviti Holdi 44.74 35.83  hold
CBZ CBIZ Inc 21.81 28.87  buy
HRB H&R Block 28.39 24.73  hold
ADP Automatic Data 144.17 150.66  hold

COMPANY NEWS

▶ PRGX Global (PRGX) Beats Q3 Earnings Estimates   [Nov-01-18 07:15PM  Zacks]
▶ PRGX Global: 3Q Earnings Snapshot   [06:11PM  Associated Press]
▶ Do Institutions Own Shares In PRGX Global Inc (NASDAQ:PRGX)?   [Sep-05-18 03:28PM  Simply Wall St.]
▶ PRGX Global: 2Q Earnings Snapshot   [05:25PM  Associated Press]
▶ PRGX Global, Inc. to Host Earnings Call   [03:00PM  ACCESSWIRE]
▶ What Does PRGX Global Incs (NASDAQ:PRGX) Share Price Indicate?   [Jun-21-18 03:13PM  Simply Wall St.]
▶ PRGX OPTIX® Suite Powers Adjacent Services Momentum   [Jun-14-18 04:57PM  GlobeNewswire]
▶ PRGX Set to Join Russell 3000® Index   [Jun-11-18 03:00PM  GlobeNewswire]
▶ PRGX Announces Appointment of New Chief Information Officer   [Jun-04-18 06:03PM  GlobeNewswire]
▶ PRGX Announces Appointment of New Chief Financial Officer   [May-16-18 04:05PM  GlobeNewswire]
▶ PRGX Recognized As A 2018 Spend Matters Provider to Watch   [May-08-18 10:22AM  GlobeNewswire]
▶ PRGX Global: 1Q Earnings Snapshot   [May-01-18 05:09PM  Associated Press]
▶ Growing top 20 accounting firm relocating to Cumberland-Galleria area (Photos)   [Mar-27-18 12:52PM  American City Business Journals]
▶ Top Ranked Momentum Stocks to Buy for March 8th   [Mar-08-18 07:20AM  Zacks]
▶ PRGX Global posts 4Q profit   [Mar-01-18 05:31PM  Associated Press]
▶ PRGX Global, Inc. to Host Earnings Call   [01:00PM  ACCESSWIRE]
▶ PRGX Announces Lavante® SIM 7.0   [10:38AM  GlobeNewswire]
▶ PRGX Global posts 3Q profit   [Nov-02-17 05:49PM  Associated Press]
▶ PRGX Global, Inc. to Host Earnings Call   [01:20PM  ACCESSWIRE]
▶ PRGX Global, Inc. to Host Earnings Call   [01:05PM  ACCESSWIRE]
▶ PRGX Announces Multi-Year Contract With Kroger   [Oct-17-17 05:39PM  GlobeNewswire]
▶ PRGX Global reports 2Q loss   [Aug-01-17 10:38PM  Associated Press]
▶ ETFs with exposure to PRGX Global, Inc. : May 16, 2017   [May-16-17 12:58PM  Capital Cube]
▶ ETFs with exposure to PRGX Global, Inc. : April 11, 2017   [Apr-11-17 02:23PM  Capital Cube]
▶ PRGX Global reports 4Q loss   [08:19AM  Associated Press]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.