Intrinsic value of SharpSpring, Inc. - SHSP

Previous Close

$12.88

  Intrinsic Value

$0.05

stock screener

  Rating & Target

str. sell

-100%

Previous close

$12.88

 
Intrinsic value

$0.05

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of SHSP 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 0.1

 

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, %
  36.70
  33.53
  30.68
  28.11
  25.80
  23.72
  21.85
  20.16
  18.65
  17.28
  16.05
  14.95
  13.95
  13.06
  12.25
  11.53
  10.87
  10.29
  9.76
  9.28
  8.85
  8.47
  8.12
  7.81
  7.53
  7.28
  7.05
  6.84
  6.66
  6.49
Revenue, $m
  26
  35
  45
  58
  73
  90
  110
  132
  157
  184
  214
  246
  280
  316
  355
  396
  439
  484
  532
  581
  632
  686
  742
  800
  860
  922
  987
  1,055
  1,125
  1,198
Variable operating expenses, $m
  32
  43
  56
  71
  89
  110
  134
  161
  190
  223
  257
  296
  337
  381
  428
  477
  529
  584
  641
  700
  762
  827
  894
  964
  1,036
  1,112
  1,190
  1,271
  1,356
  1,444
Fixed operating expenses, $m
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
Total operating expenses, $m
  35
  46
  59
  74
  92
  113
  137
  165
  194
  227
  261
  300
  341
  385
  432
  481
  533
  588
  646
  705
  767
  832
  899
  969
  1,041
  1,117
  1,195
  1,277
  1,362
  1,450
Operating income, $m
  -9
  -11
  -14
  -16
  -19
  -23
  -27
  -32
  -37
  -43
  -48
  -54
  -61
  -69
  -77
  -85
  -94
  -104
  -114
  -124
  -134
  -146
  -157
  -169
  -182
  -194
  -208
  -222
  -236
  -252
EBITDA, $m
  -8
  -9
  -11
  -14
  -16
  -20
  -23
  -27
  -32
  -37
  -42
  -48
  -54
  -61
  -68
  -75
  -83
  -91
  -100
  -109
  -118
  -128
  -138
  -149
  -160
  -171
  -183
  -195
  -208
  -221
Interest expense (income), $m
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  17
  18
  20
  22
  24
  25
  27
  29
  31
  34
  36
Earnings before tax, $m
  -10
  -12
  -15
  -18
  -21
  -25
  -30
  -35
  -41
  -47
  -53
  -61
  -69
  -78
  -87
  -97
  -107
  -118
  -129
  -141
  -153
  -166
  -179
  -193
  -207
  -222
  -237
  -253
  -270
  -287
Tax expense, $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
Net income, $m
  -10
  -12
  -15
  -18
  -21
  -25
  -30
  -35
  -41
  -47
  -53
  -61
  -69
  -78
  -87
  -97
  -107
  -118
  -129
  -141
  -153
  -166
  -179
  -193
  -207
  -222
  -237
  -253
  -270
  -287

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
  24
  32
  41
  53
  67
  83
  101
  121
  143
  168
  195
  224
  256
  289
  324
  362
  401
  442
  485
  531
  578
  626
  677
  730
  785
  842
  902
  963
  1,028
  1,094
Adjusted assets (=assets-cash), $m
  24
  32
  41
  53
  67
  83
  101
  121
  143
  168
  195
  224
  256
  289
  324
  362
  401
  442
  485
  531
  578
  626
  677
  730
  785
  842
  902
  963
  1,028
  1,094
Revenue / Adjusted assets
  1.083
  1.094
  1.098
  1.094
  1.090
  1.084
  1.089
  1.091
  1.098
  1.095
  1.097
  1.098
  1.094
  1.093
  1.096
  1.094
  1.095
  1.095
  1.097
  1.094
  1.093
  1.096
  1.096
  1.096
  1.096
  1.095
  1.094
  1.096
  1.094
  1.095
Average production assets, $m
  9
  12
  16
  20
  25
  31
  38
  45
  54
  63
  73
  84
  96
  109
  122
  136
  151
  166
  182
  199
  217
  235
  254
  274
  295
  316
  339
  362
  386
  411
Working capital, $m
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -16
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -33
  -35
  -37
  -40
Total debt, $m
  13
  18
  24
  32
  40
  51
  62
  76
  90
  106
  124
  142
  163
  184
  207
  231
  257
  284
  311
  341
  371
  403
  436
  470
  505
  542
  581
  621
  662
  705
Total liabilities, $m
  15
  20
  27
  34
  43
  53
  65
  78
  93
  109
  126
  145
  165
  187
  210
  234
  259
  286
  314
  343
  374
  405
  438
  472
  508
  545
  583
  623
  665
  708
Total equity, $m
  8
  11
  15
  19
  24
  29
  35
  43
  51
  59
  69
  79
  90
  102
  114
  128
  142
  156
  171
  187
  204
  221
  239
  258
  277
  297
  318
  340
  363
  386
Total liabilities and equity, $m
  23
  31
  42
  53
  67
  82
  100
  121
  144
  168
  195
  224
  255
  289
  324
  362
  401
  442
  485
  530
  578
  626
  677
  730
  785
  842
  901
  963
  1,028
  1,094
Debt-to-equity ratio
  1.510
  1.590
  1.650
  1.690
  1.720
  1.740
  1.760
  1.770
  1.780
  1.790
  1.790
  1.800
  1.800
  1.810
  1.810
  1.810
  1.810
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.820
  1.830
  1.830
  1.830
Adjusted equity ratio
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -10
  -12
  -15
  -18
  -21
  -25
  -30
  -35
  -41
  -47
  -53
  -61
  -69
  -78
  -87
  -97
  -107
  -118
  -129
  -141
  -153
  -166
  -179
  -193
  -207
  -222
  -237
  -253
  -270
  -287
Depreciation, amort., depletion, $m
  2
  2
  2
  3
  3
  3
  4
  4
  5
  6
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  18
  19
  20
  22
  24
  25
  27
  29
  31
Funds from operations, $m
  -8
  -10
  -12
  -15
  -18
  -22
  -26
  -31
  -36
  -42
  -48
  -55
  -62
  -70
  -78
  -87
  -96
  -105
  -115
  -126
  -137
  -148
  -160
  -172
  -185
  -198
  -212
  -226
  -241
  -257
Change in working capital, $m
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  -8
  -10
  -12
  -15
  -18
  -21
  -25
  -30
  -35
  -41
  -47
  -54
  -61
  -68
  -77
  -85
  -94
  -104
  -114
  -124
  -135
  -146
  -158
  -170
  -183
  -196
  -210
  -224
  -239
  -254
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -24
  -25
  -27
  -29
New CAPEX, $m
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
Cash from investing activities, $m
  -2
  -4
  -5
  -5
  -6
  -8
  -9
  -11
  -11
  -13
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -31
  -33
  -34
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -54
Free cash flow, $m
  -11
  -13
  -16
  -20
  -24
  -29
  -34
  -40
  -47
  -54
  -62
  -70
  -79
  -88
  -98
  -108
  -119
  -130
  -142
  -155
  -167
  -181
  -195
  -209
  -224
  -240
  -256
  -272
  -290
  -308
Issuance/(repayment) of debt, $m
  4
  5
  6
  8
  9
  10
  12
  13
  15
  16
  17
  19
  20
  22
  23
  24
  25
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
Issuance/(repurchase) of shares, $m
  12
  15
  18
  22
  26
  31
  36
  42
  49
  56
  63
  71
  80
  90
  99
  110
  121
  132
  144
  157
  169
  183
  197
  211
  226
  242
  258
  275
  293
  311
Cash from financing (excl. dividends), $m  
  16
  20
  24
  30
  35
  41
  48
  55
  64
  72
  80
  90
  100
  112
  122
  134
  146
  159
  172
  186
  199
  215
  230
  245
  262
  279
  296
  315
  335
  354
Total cash flow (excl. dividends), $m
  5
  7
  8
  9
  11
  12
  14
  15
  17
  18
  19
  20
  22
  23
  24
  26
  27
  28
  30
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
Retained Cash Flow (-), $m
  -12
  -15
  -18
  -22
  -26
  -31
  -36
  -42
  -49
  -56
  -63
  -71
  -80
  -90
  -99
  -110
  -121
  -132
  -144
  -157
  -169
  -183
  -197
  -211
  -226
  -242
  -258
  -275
  -293
  -311
Prev. year cash balance distribution, $m
  7
  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
  0
  -8
  -10
  -13
  -15
  -19
  -23
  -27
  -32
  -38
  -44
  -51
  -59
  -67
  -75
  -84
  -94
  -104
  -114
  -125
  -137
  -149
  -162
  -175
  -188
  -203
  -217
  -233
  -248
  -265
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
  0
  -8
  -9
  -10
  -12
  -14
  -15
  -17
  -19
  -20
  -21
  -22
  -22
  -22
  -22
  -21
  -20
  -19
  -18
  -16
  -14
  -12
  -11
  -9
  -7
  -6
  -5
  -4
  -3
  -2
Current shareholders' claim on cash, %
  81.4
  67.6
  57.0
  48.7
  42.0
  36.5
  31.9
  28.1
  24.8
  22.0
  19.6
  17.5
  15.7
  14.1
  12.7
  11.4
  10.3
  9.3
  8.4
  7.6
  6.9
  6.2
  5.7
  5.1
  4.7
  4.2
  3.9
  3.5
  3.2
  2.9

SharpSpring, Inc. is a cloud-based marketing technology company. The Company offers SharpSpring, a marketing automation solution for small and medium-sized businesses and is primarily sold to marketing agencies that use the platform on behalf of their clients. The features of SharpSpring includes Web tracking, lead scoring and automated workflow that enables businesses deliver the message to the customer. SharpSpring marketing automation solution also offers customer relation management tool and call tracking functionality. Its SharpSpring Mail+ provides customers with marketing automation functionality and traditional email marketing capabilities. SharpSpring Mail+ offers tools, such as automated workflows, triggered emails and dynamic list segmentation. The Company’s subsidiaries include SharpSpring Technologies, Inc., InterInbox SA, ERNEPH 2012A (Pty) Ltd. doing business as ISMS, Quattro Hosting LLC, SMTP Holdings S.a.r.l and InterCloud Ltd.

FINANCIAL RATIOS  of  SharpSpring, Inc. (SHSP)

Valuation Ratios
P/E Ratio 21.5
Price to Sales 9
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow -15.4
Price to Free Cash Flow -15.4
Growth Rates
Sales Growth Rate 33.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.5
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 21.7%
Ret/ On Assets - 3 Yr. Avg. -7.9%
Return On Total Capital 27.8%
Ret/ On T. Cap. - 3 Yr. Avg. -16.8%
Return On Equity 27.8%
Return On Equity - 3 Yr. Avg. -16.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 58.3%
Gross Margin - 3 Yr. Avg. 66.7%
EBITDA Margin -50%
EBITDA Margin - 3 Yr. Avg. -50.5%
Operating Margin -66.7%
Oper. Margin - 3 Yr. Avg. -59.3%
Pre-Tax Margin -66.7%
Pre-Tax Margin - 3 Yr. Avg. -63.4%
Net Profit Margin 41.7%
Net Profit Margin - 3 Yr. Avg. -19.9%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 8.3%
Payout Ratio 0%

SHSP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHSP stock intrinsic value calculation we used $19 million for the last fiscal year's total revenue generated by SharpSpring, Inc.. The default revenue input number comes from 0001 income statement of SharpSpring, 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 SHSP stock valuation model: a) initial revenue growth rate of 36.7% 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 SHSP is calculated based on our internal credit rating of SharpSpring, 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 SharpSpring, 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 SHSP stock the variable cost ratio is equal to 126.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3 million in the base year in the intrinsic value calculation for SHSP 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 SharpSpring, Inc..

Corporate tax rate of 27% is the nominal tax rate for SharpSpring, 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 SHSP 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 SHSP are equal to 34.3%.

Life of production assets of 13.4 years is the average useful life of capital assets used in SharpSpring, 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 SHSP is equal to -3.3%. 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 - $12.787718 million for SharpSpring, 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 8.629 million for SharpSpring, 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 SharpSpring, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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