Intrinsic value of SharpSpring - SHSP

Previous Close

$13.25

  Intrinsic Value

$0.26

stock screener

  Rating & Target

str. sell

-98%

Previous close

$13.25

 
Intrinsic value

$0.26

 
Up/down potential

-98%

 
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, %
  38.40
  35.06
  32.05
  29.35
  26.91
  24.72
  22.75
  20.98
  19.38
  17.94
  16.65
  15.48
  14.43
  13.49
  12.64
  11.88
  11.19
  10.57
  10.01
  9.51
  9.06
  8.65
  8.29
  7.96
  7.66
  7.40
  7.16
  6.94
  6.75
  6.57
Revenue, $m
  19
  25
  33
  43
  54
  68
  83
  101
  120
  142
  166
  191
  219
  249
  280
  313
  348
  385
  424
  464
  506
  550
  595
  643
  692
  743
  797
  852
  909
  969
Variable operating expenses, $m
  17
  22
  29
  37
  47
  58
  71
  86
  102
  120
  139
  161
  184
  209
  235
  263
  293
  323
  356
  390
  425
  462
  500
  540
  581
  624
  669
  715
  764
  814
Fixed operating expenses, $m
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
Total operating expenses, $m
  25
  30
  38
  46
  56
  67
  80
  96
  112
  130
  149
  171
  195
  220
  246
  274
  305
  335
  368
  402
  438
  475
  513
  553
  595
  638
  683
  730
  779
  829
Operating income, $m
  -6
  -5
  -4
  -3
  -1
  1
  3
  6
  8
  12
  16
  20
  24
  29
  34
  39
  44
  50
  56
  62
  68
  75
  82
  90
  97
  105
  113
  122
  131
  140
EBITDA, $m
  -5
  -3
  -2
  0
  2
  4
  7
  10
  14
  18
  22
  27
  32
  37
  43
  49
  56
  63
  70
  77
  85
  94
  102
  111
  120
  130
  140
  150
  161
  172
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
Earnings before tax, $m
  -6
  -5
  -4
  -3
  -2
  0
  3
  5
  8
  11
  15
  19
  23
  27
  32
  37
  42
  47
  53
  59
  65
  72
  78
  85
  93
  100
  108
  116
  125
  133
Tax expense, $m
  0
  0
  0
  0
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  9
  10
  11
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  31
  34
  36
Net income, $m
  -6
  -5
  -4
  -3
  -2
  0
  2
  4
  6
  8
  11
  14
  17
  20
  23
  27
  31
  35
  39
  43
  48
  52
  57
  62
  68
  73
  79
  85
  91
  97

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
  26
  35
  46
  59
  75
  93
  115
  139
  166
  195
  228
  263
  301
  341
  385
  430
  478
  529
  582
  637
  695
  755
  818
  883
  951
  1,021
  1,094
  1,170
  1,249
  1,331
Adjusted assets (=assets-cash), $m
  26
  35
  46
  59
  75
  93
  115
  139
  166
  195
  228
  263
  301
  341
  385
  430
  478
  529
  582
  637
  695
  755
  818
  883
  951
  1,021
  1,094
  1,170
  1,249
  1,331
Revenue / Adjusted assets
  0.731
  0.714
  0.717
  0.729
  0.720
  0.731
  0.722
  0.727
  0.723
  0.728
  0.728
  0.726
  0.728
  0.730
  0.727
  0.728
  0.728
  0.728
  0.729
  0.728
  0.728
  0.728
  0.727
  0.728
  0.728
  0.728
  0.729
  0.728
  0.728
  0.728
Average production assets, $m
  9
  13
  17
  22
  28
  34
  42
  51
  61
  72
  84
  97
  111
  126
  142
  159
  176
  195
  214
  235
  256
  278
  301
  325
  350
  376
  403
  431
  460
  490
Working capital, $m
  3
  4
  5
  7
  9
  11
  13
  16
  19
  23
  27
  31
  35
  40
  45
  50
  56
  62
  68
  75
  81
  89
  96
  103
  111
  120
  128
  137
  146
  156
Total debt, $m
  1
  2
  3
  4
  6
  7
  9
  12
  14
  17
  21
  24
  28
  32
  36
  40
  45
  50
  55
  61
  66
  72
  78
  85
  91
  98
  105
  113
  121
  129
Total liabilities, $m
  3
  3
  4
  6
  7
  9
  11
  14
  16
  19
  22
  26
  29
  33
  38
  42
  47
  52
  57
  62
  68
  74
  80
  87
  93
  100
  107
  115
  122
  130
Total equity, $m
  23
  31
  41
  53
  68
  84
  103
  125
  149
  176
  205
  237
  271
  308
  347
  388
  432
  477
  525
  575
  627
  681
  738
  796
  858
  921
  987
  1,055
  1,127
  1,201
Total liabilities and equity, $m
  26
  34
  45
  59
  75
  93
  114
  139
  165
  195
  227
  263
  300
  341
  385
  430
  479
  529
  582
  637
  695
  755
  818
  883
  951
  1,021
  1,094
  1,170
  1,249
  1,331
Debt-to-equity ratio
  0.030
  0.050
  0.070
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
Adjusted equity ratio
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -5
  -4
  -3
  -2
  0
  2
  4
  6
  8
  11
  14
  17
  20
  23
  27
  31
  35
  39
  43
  48
  52
  57
  62
  68
  73
  79
  85
  91
  97
Depreciation, amort., depletion, $m
  2
  2
  2
  3
  3
  3
  4
  4
  5
  6
  6
  6
  7
  8
  9
  10
  12
  13
  14
  15
  17
  18
  20
  21
  23
  25
  27
  28
  30
  32
Funds from operations, $m
  -5
  -4
  -2
  -1
  1
  4
  6
  8
  11
  14
  17
  20
  24
  28
  33
  37
  42
  47
  53
  59
  64
  71
  77
  84
  91
  98
  105
  113
  121
  130
Change in working capital, $m
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
Cash from operations, $m
  -5
  -5
  -3
  -2
  0
  1
  3
  5
  8
  10
  13
  16
  20
  24
  28
  32
  37
  42
  47
  52
  58
  64
  70
  76
  83
  90
  97
  104
  112
  120
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -25
  -27
  -28
  -30
New CAPEX, $m
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
Cash from investing activities, $m
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -13
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -33
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -57
  -60
Free cash flow, $m
  -9
  -9
  -8
  -8
  -8
  -7
  -7
  -6
  -6
  -5
  -4
  -2
  -1
  1
  4
  6
  8
  11
  14
  18
  21
  25
  28
  32
  36
  41
  45
  50
  55
  60
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
Issuance/(repurchase) of shares, $m
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  18
  18
  17
  17
  16
  14
  13
  11
  9
  7
  5
  2
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  14
  15
  15
  16
  18
  18
  19
  20
  22
  22
  21
  21
  21
  21
  20
  18
  18
  16
  14
  12
  11
  8
  6
  6
  7
  7
  7
  7
  8
  8
Total cash flow (excl. dividends), $m
  5
  6
  7
  8
  10
  11
  13
  14
  16
  17
  18
  19
  20
  22
  23
  25
  26
  27
  29
  30
  31
  32
  34
  39
  43
  48
  52
  57
  62
  68
Retained Cash Flow (-), $m
  -13
  -14
  -14
  -15
  -16
  -17
  -19
  -22
  -24
  -27
  -29
  -32
  -34
  -37
  -39
  -41
  -43
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -63
  -66
  -69
  -71
  -74
Prev. year cash balance distribution, $m
  4
  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
  -4
  -8
  -7
  -7
  -6
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -22
  -20
  -18
  -16
  -14
  -11
  -9
  -6
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
  -4
  -7
  -6
  -6
  -5
  -4
  -4
  -5
  -5
  -5
  -6
  -5
  -5
  -5
  -5
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  87.3
  79.1
  73.1
  68.6
  65.2
  62.5
  60.3
  58.5
  57.0
  55.8
  54.8
  54.0
  53.3
  52.7
  52.2
  51.9
  51.6
  51.3
  51.2
  51.1
  51.0
  51.0
  51.0
  51.0
  51.0
  51.0
  51.0
  51.0
  51.0
  51.0

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 (SHSP)

Valuation Ratios
P/E Ratio 22.2
Price to Sales 9.2
Price to Book 4.8
Price to Tangible Book
Price to Cash Flow -15.8
Price to Free Cash Flow -15.8
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 $13.448752 million for the last fiscal year's total revenue generated by SharpSpring. The default revenue input number comes from 0001 income statement of SharpSpring. 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 38.4% 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, 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.
    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 92.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $8 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.

Corporate tax rate of 27% is the nominal tax rate for SharpSpring. 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 50.6%.

Life of production assets of 15.2 years is the average useful life of capital assets used in SharpSpring 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 16.1%. 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 - $19.932208 million for SharpSpring - 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 8.513 million for SharpSpring 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 at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ SharpSpring Reports Third Quarter 2018 Results   [Nov-07-18 03:05PM  ACCESSWIRE]
▶ SharpSpring Adds Record 346 New Customers in Q3 2018   [Oct-09-18 08:30AM  ACCESSWIRE]
▶ SharpSpring Reports Second Quarter 2018 Results   [Aug-02-18 04:05PM  ACCESSWIRE]
▶ SharpSpring, Inc. to Host Earnings Call   [02:30PM  ACCESSWIRE]
▶ SharpSpring Adds Record 301 New Customers in Q2 2018   [Jul-12-18 08:30AM  ACCESSWIRE]
▶ SharpSpring Reports First Quarter 2018 Results   [May-08-18 04:05PM  ACCESSWIRE]
▶ SharpSpring Adds 223 New Customers in Q1 2018   [Apr-24-18 09:00AM  ACCESSWIRE]
▶ Evercel to Invest in Marketing Automation Software Company   [Mar-28-18 05:01PM  GlobeNewswire]
▶ [$$] Morgan Stanley: Three Stocks It's Buying Now   [Dec-18-17 02:21PM  Barrons.com]
▶ SharpSpring Reports Third Quarter 2017 Results   [Nov-08-17 02:43PM  GlobeNewswire]
▶ SharpSpring, Inc. to Host Earnings Call   [12:40PM  ACCESSWIRE]
▶ SharpSpring Reports Second Quarter 2017 Results   [Aug-09-17 04:05PM  GlobeNewswire]
▶ SharpSpring Adds 208 New Customers in Q2 2017   [Jul-13-17 09:00AM  GlobeNewswire]
▶ SharpSpring Joins Russell Microcap Index   [Jun-26-17 04:15PM  GlobeNewswire]
▶ ETFs with exposure to SharpSpring, Inc. : June 14, 2017   [Jun-14-17 01:49PM  Capital Cube]
▶ SharpSpring Reports First Quarter 2017 Results   [May-11-17 04:05PM  GlobeNewswire]
▶ ETFs with exposure to SharpSpring, Inc. : April 24, 2017   [Apr-24-17 02:43PM  Capital Cube]
▶ ETFs with exposure to SharpSpring, Inc. : April 7, 2017   [Apr-07-17 05:28PM  Capital Cube]
▶ SharpSpring Adds 213 New Customers in Q4 2016   [Jan-26-17 09:00AM  GlobeNewswire]

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