Intrinsic value of SPAR Group - SGRP

Previous Close

$0.88

  Intrinsic Value

$10.95

stock screener

  Rating & Target

str. buy

+999%

Previous close

$0.88

 
Intrinsic value

$10.95

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of SGRP 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 0.0

 

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, %
  36.80
  33.62
  30.76
  28.18
  25.86
  23.78
  21.90
  20.21
  18.69
  17.32
  16.09
  14.98
  13.98
  13.08
  12.27
  11.55
  10.89
  10.30
  9.77
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.28
  7.05
  6.85
  6.66
  6.50
Revenue, $m
  248
  332
  434
  556
  699
  866
  1,055
  1,269
  1,506
  1,767
  2,051
  2,358
  2,688
  3,039
  3,412
  3,806
  4,221
  4,656
  5,111
  5,586
  6,081
  6,597
  7,133
  7,691
  8,270
  8,873
  9,499
  10,149
  10,826
  11,529
Variable operating expenses, $m
  240
  320
  419
  537
  675
  836
  1,019
  1,225
  1,453
  1,705
  1,979
  2,276
  2,594
  2,933
  3,293
  3,673
  4,073
  4,493
  4,932
  5,391
  5,869
  6,366
  6,884
  7,422
  7,982
  8,563
  9,167
  9,795
  10,448
  11,126
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  242
  322
  421
  539
  677
  838
  1,021
  1,227
  1,455
  1,707
  1,982
  2,279
  2,597
  2,936
  3,296
  3,676
  4,076
  4,496
  4,935
  5,394
  5,872
  6,369
  6,887
  7,425
  7,985
  8,567
  9,171
  9,799
  10,452
  11,130
Operating income, $m
  6
  9
  13
  17
  22
  28
  34
  42
  50
  59
  69
  80
  91
  103
  116
  130
  144
  160
  175
  192
  209
  227
  246
  265
  285
  306
  328
  351
  374
  399
EBITDA, $m
  8
  11
  15
  20
  26
  32
  40
  48
  58
  68
  79
  92
  105
  119
  133
  149
  166
  183
  201
  220
  240
  260
  281
  304
  327
  351
  376
  401
  428
  456
Interest expense (income), $m
  0
  0
  1
  2
  3
  5
  6
  8
  10
  13
  16
  19
  22
  25
  29
  33
  37
  42
  47
  52
  57
  62
  68
  74
  80
  86
  93
  100
  107
  114
  122
Earnings before tax, $m
  6
  8
  11
  14
  17
  21
  26
  31
  37
  43
  51
  58
  66
  74
  83
  93
  103
  113
  124
  135
  147
  159
  172
  185
  199
  213
  228
  244
  260
  277
Tax expense, $m
  2
  2
  3
  4
  5
  6
  7
  8
  10
  12
  14
  16
  18
  20
  22
  25
  28
  31
  33
  36
  40
  43
  46
  50
  54
  58
  62
  66
  70
  75
Net income, $m
  4
  6
  8
  10
  13
  16
  19
  23
  27
  32
  37
  42
  48
  54
  61
  68
  75
  82
  90
  99
  107
  116
  126
  135
  145
  156
  167
  178
  190
  202

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
  80
  106
  139
  178
  224
  277
  338
  406
  482
  566
  657
  755
  861
  974
  1,093
  1,220
  1,352
  1,492
  1,638
  1,790
  1,948
  2,114
  2,286
  2,464
  2,650
  2,843
  3,043
  3,252
  3,469
  3,694
Adjusted assets (=assets-cash), $m
  80
  106
  139
  178
  224
  277
  338
  406
  482
  566
  657
  755
  861
  974
  1,093
  1,220
  1,352
  1,492
  1,638
  1,790
  1,948
  2,114
  2,286
  2,464
  2,650
  2,843
  3,043
  3,252
  3,469
  3,694
Revenue / Adjusted assets
  3.100
  3.132
  3.122
  3.124
  3.121
  3.126
  3.121
  3.126
  3.124
  3.122
  3.122
  3.123
  3.122
  3.120
  3.122
  3.120
  3.122
  3.121
  3.120
  3.121
  3.122
  3.121
  3.120
  3.121
  3.121
  3.121
  3.122
  3.121
  3.121
  3.121
Average production assets, $m
  6
  8
  11
  14
  17
  22
  26
  32
  38
  44
  51
  59
  67
  76
  85
  95
  106
  116
  128
  140
  152
  165
  178
  192
  207
  222
  237
  254
  271
  288
Working capital, $m
  17
  23
  30
  38
  48
  60
  73
  88
  104
  122
  141
  163
  185
  210
  235
  263
  291
  321
  353
  385
  420
  455
  492
  531
  571
  612
  655
  700
  747
  796
Total debt, $m
  21
  39
  60
  86
  117
  152
  192
  237
  288
  343
  403
  468
  538
  612
  691
  775
  863
  955
  1,051
  1,152
  1,257
  1,366
  1,479
  1,597
  1,720
  1,848
  1,980
  2,118
  2,261
  2,410
Total liabilities, $m
  53
  70
  92
  118
  148
  183
  224
  269
  319
  374
  434
  499
  569
  644
  723
  806
  894
  986
  1,082
  1,183
  1,288
  1,397
  1,511
  1,629
  1,752
  1,879
  2,012
  2,150
  2,293
  2,442
Total equity, $m
  27
  36
  47
  60
  76
  94
  115
  138
  164
  192
  223
  256
  292
  330
  371
  413
  458
  506
  555
  607
  661
  717
  775
  835
  898
  964
  1,032
  1,102
  1,176
  1,252
Total liabilities and equity, $m
  80
  106
  139
  178
  224
  277
  339
  407
  483
  566
  657
  755
  861
  974
  1,094
  1,219
  1,352
  1,492
  1,637
  1,790
  1,949
  2,114
  2,286
  2,464
  2,650
  2,843
  3,044
  3,252
  3,469
  3,694
Debt-to-equity ratio
  0.790
  1.080
  1.280
  1.430
  1.540
  1.620
  1.680
  1.720
  1.760
  1.790
  1.810
  1.830
  1.840
  1.850
  1.870
  1.870
  1.880
  1.890
  1.890
  1.900
  1.900
  1.910
  1.910
  1.910
  1.910
  1.920
  1.920
  1.920
  1.920
  1.920
Adjusted equity ratio
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  6
  8
  10
  13
  16
  19
  23
  27
  32
  37
  42
  48
  54
  61
  68
  75
  82
  90
  99
  107
  116
  126
  135
  145
  156
  167
  178
  190
  202
Depreciation, amort., depletion, $m
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  17
  19
  21
  23
  26
  28
  30
  33
  36
  38
  41
  44
  47
  51
  54
  58
Funds from operations, $m
  6
  8
  10
  13
  16
  20
  25
  29
  35
  41
  47
  54
  62
  69
  78
  87
  96
  106
  116
  127
  138
  149
  161
  174
  187
  200
  214
  229
  244
  260
Change in working capital, $m
  5
  6
  7
  8
  10
  11
  13
  15
  16
  18
  20
  21
  23
  24
  26
  27
  29
  30
  31
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
Cash from operations, $m
  1
  2
  3
  5
  6
  9
  11
  15
  19
  23
  28
  33
  39
  45
  52
  60
  67
  76
  85
  94
  104
  114
  124
  135
  147
  159
  171
  184
  197
  211
Maintenance CAPEX, $m
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -10
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -36
  -38
  -41
  -44
  -47
  -51
  -54
New CAPEX, $m
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
Cash from investing activities, $m
  -3
  -3
  -5
  -5
  -7
  -7
  -9
  -10
  -12
  -15
  -16
  -18
  -20
  -22
  -24
  -27
  -29
  -32
  -34
  -38
  -40
  -43
  -46
  -50
  -52
  -56
  -60
  -63
  -68
  -72
Free cash flow, $m
  -1
  -1
  -1
  -1
  0
  1
  2
  4
  6
  9
  12
  15
  19
  23
  28
  33
  38
  44
  50
  56
  63
  70
  78
  86
  94
  102
  111
  120
  129
  139
Issuance/(repayment) of debt, $m
  14
  18
  22
  26
  30
  35
  40
  45
  50
  55
  60
  65
  70
  74
  79
  83
  88
  92
  96
  101
  105
  109
  114
  118
  123
  128
  133
  138
  143
  149
Issuance/(repurchase) of shares, $m
  3
  3
  3
  3
  3
  3
  2
  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  
  17
  21
  25
  29
  33
  38
  42
  45
  50
  55
  60
  65
  70
  74
  79
  83
  88
  92
  96
  101
  105
  109
  114
  118
  123
  128
  133
  138
  143
  149
Total cash flow (excl. dividends), $m
  16
  20
  24
  29
  34
  39
  44
  50
  56
  64
  72
  80
  89
  97
  107
  116
  126
  136
  146
  157
  168
  180
  191
  204
  216
  230
  243
  258
  273
  288
Retained Cash Flow (-), $m
  -7
  -9
  -11
  -13
  -16
  -18
  -21
  -23
  -26
  -28
  -31
  -33
  -36
  -38
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -58
  -61
  -63
  -65
  -68
  -71
  -73
  -76
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
  9
  11
  13
  15
  18
  21
  24
  27
  31
  36
  41
  47
  53
  59
  66
  73
  81
  89
  97
  105
  114
  124
  133
  143
  154
  164
  175
  187
  199
  212
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
  8
  10
  11
  13
  14
  15
  16
  17
  18
  19
  19
  20
  20
  20
  19
  19
  18
  16
  15
  13
  12
  10
  9
  7
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  85.8
  76.0
  69.0
  64.1
  60.8
  58.7
  57.6
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
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Spar Group, Inc. is an international merchandising and marketing services company. The Company provides its merchandising and other marketing services to manufacturers, distributors and retailers across the world, primarily in mass merchandisers, office supply, grocery, drug store, independent, convenience, toy, home improvement and electronics stores. It operates through two segments: the Domestic Division and the International Division. The Domestic Division provides merchandising and marketing services, furniture and other product assembly services, audit services, and technology services to manufacturers, distributors and retailers in the United States. Those services are primarily performed in mass merchandisers, office supply, grocery, drug store, dollar and electronics stores. The International Division provides merchandising, marketing services and in-store event staffing through subsidiaries in Japan, Canada, South Africa, India, China, Australia, Mexico and Turkey.

FINANCIAL RATIOS  of  SPAR Group (SGRP)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.1
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 18.2
Price to Free Cash Flow -18.2
Growth Rates
Sales Growth Rate 12.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 50%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 7.5%
Asset Turnover 2.7
Profitability Ratios
Gross Margin 22.4%
Gross Margin - 3 Yr. Avg. 23.8%
EBITDA Margin 3%
EBITDA Margin - 3 Yr. Avg. 3.8%
Operating Margin 1.5%
Oper. Margin - 3 Yr. Avg. 2.2%
Pre-Tax Margin 1.5%
Pre-Tax Margin - 3 Yr. Avg. 2.2%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SGRP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SGRP stock intrinsic value calculation we used $181.381 million for the last fiscal year's total revenue generated by SPAR Group. The default revenue input number comes from 0001 income statement of SPAR Group. 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 SGRP stock valuation model: a) initial revenue growth rate of 36.8% 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 SGRP is calculated based on our internal credit rating of SPAR Group, 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 SPAR Group.
    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 SGRP stock the variable cost ratio is equal to 96.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for SGRP 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 SPAR Group.

Corporate tax rate of 27% is the nominal tax rate for SPAR Group. 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 SGRP 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 SGRP are equal to 2.5%.

Life of production assets of 3 years is the average useful life of capital assets used in SPAR Group 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 SGRP is equal to 6.9%. 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 - $19.65 million for SPAR Group - 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 20.648 million for SPAR Group 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 SPAR Group at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
ISIG Insignia Syste 1.85 96.03  str.buy

COMPANY NEWS

▶ Should You Sell SPAR Group Inc (SGRP) At This PE Ratio?   [Nov-20-17 06:05AM  Simply Wall St.]
▶ SPAR Group Announces Appointment of New President and CEO   [Aug-30-17 08:45AM  GlobeNewswire]
▶ SPAR Group Announces Departure of CEO   [May-17-17 05:00PM  GlobeNewswire]
▶ SPAR Group Announces Departure of Chief Information Officer   [Apr-27-16 05:28PM  GlobeNewswire]
▶ SPAR Group, Inc. Q2 Earnings, 2015   [Aug-25  01:14PM  Capital Cube]
▶ 10-Q for SPAR Group, Inc.   [Aug-16  08:12PM  at Company Spotlight]
▶ 10-Q for SPAR Group, Inc.   [May-16  08:09PM  at Company Spotlight]
▶ 10-K for SPAR Group, Inc.   [Apr-23  08:10PM  at Company Spotlight]
▶ 10-Q for SPAR Group, Inc.   [Nov-16  07:08PM  Company Spotlight]

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