Intrinsic value of SP Plus - SP

Previous Close

$31.36

  Intrinsic Value

$39.16

stock screener

  Rating & Target

buy

+25%

Previous close

$31.36

 
Intrinsic value

$39.16

 
Up/down potential

+25%

 
Rating

buy

We calculate the intrinsic value of SP 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 0.7

 

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
  1,622
  1,660
  1,702
  1,750
  1,803
  1,861
  1,925
  1,993
  2,067
  2,147
  2,232
  2,322
  2,419
  2,521
  2,630
  2,745
  2,867
  2,996
  3,132
  3,276
  3,428
  3,588
  3,757
  3,935
  4,122
  4,320
  4,527
  4,746
  4,976
  5,217
Variable operating expenses, $m
  1,568
  1,603
  1,643
  1,688
  1,737
  1,792
  1,851
  1,915
  1,985
  2,059
  2,090
  2,175
  2,265
  2,361
  2,463
  2,571
  2,685
  2,806
  2,933
  3,068
  3,210
  3,360
  3,518
  3,685
  3,860
  4,045
  4,240
  4,444
  4,659
  4,886
Fixed operating expenses, $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 operating expenses, $m
  1,568
  1,603
  1,643
  1,688
  1,737
  1,792
  1,851
  1,915
  1,985
  2,059
  2,090
  2,175
  2,265
  2,361
  2,463
  2,571
  2,685
  2,806
  2,933
  3,068
  3,210
  3,360
  3,518
  3,685
  3,860
  4,045
  4,240
  4,444
  4,659
  4,886
Operating income, $m
  55
  57
  60
  63
  66
  70
  74
  78
  83
  88
  142
  148
  154
  160
  167
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  274
  288
  302
  316
  332
EBITDA, $m
  115
  117
  120
  124
  128
  132
  136
  141
  146
  152
  158
  164
  171
  178
  186
  194
  203
  212
  222
  232
  243
  254
  266
  278
  292
  306
  320
  336
  352
  369
Interest expense (income), $m
  9
  8
  9
  9
  10
  11
  12
  12
  13
  14
  16
  17
  18
  19
  21
  23
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  47
  50
  53
  57
  60
Earnings before tax, $m
  46
  48
  50
  53
  55
  58
  61
  65
  68
  72
  125
  129
  134
  139
  145
  150
  156
  163
  169
  176
  184
  192
  200
  209
  218
  227
  238
  248
  260
  271
Tax expense, $m
  12
  13
  14
  14
  15
  16
  17
  17
  18
  20
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
Net income, $m
  34
  35
  37
  38
  40
  42
  45
  47
  50
  53
  91
  95
  98
  102
  106
  110
  114
  119
  124
  129
  134
  140
  146
  152
  159
  166
  173
  181
  190
  198

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
  778
  796
  816
  839
  865
  893
  923
  956
  992
  1,030
  1,070
  1,114
  1,160
  1,209
  1,261
  1,317
  1,375
  1,437
  1,502
  1,571
  1,644
  1,721
  1,802
  1,887
  1,977
  2,072
  2,171
  2,276
  2,386
  2,502
Adjusted assets (=assets-cash), $m
  778
  796
  816
  839
  865
  893
  923
  956
  992
  1,030
  1,070
  1,114
  1,160
  1,209
  1,261
  1,317
  1,375
  1,437
  1,502
  1,571
  1,644
  1,721
  1,802
  1,887
  1,977
  2,072
  2,171
  2,276
  2,386
  2,502
Revenue / Adjusted assets
  2.085
  2.085
  2.086
  2.086
  2.084
  2.084
  2.086
  2.085
  2.084
  2.084
  2.086
  2.084
  2.085
  2.085
  2.086
  2.084
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
  2.085
Average production assets, $m
  279
  285
  293
  301
  310
  320
  331
  343
  356
  369
  384
  399
  416
  434
  452
  472
  493
  515
  539
  564
  590
  617
  646
  677
  709
  743
  779
  816
  856
  897
Working capital, $m
  -67
  -68
  -70
  -72
  -74
  -76
  -79
  -82
  -85
  -88
  -91
  -95
  -99
  -103
  -108
  -113
  -118
  -123
  -128
  -134
  -141
  -147
  -154
  -161
  -169
  -177
  -186
  -195
  -204
  -214
Total debt, $m
  163
  173
  185
  199
  214
  231
  248
  268
  289
  311
  335
  361
  388
  417
  448
  481
  515
  552
  590
  631
  674
  719
  767
  817
  870
  926
  985
  1,047
  1,112
  1,180
Total liabilities, $m
  459
  470
  482
  495
  510
  527
  545
  564
  585
  607
  631
  657
  684
  713
  744
  777
  811
  848
  886
  927
  970
  1,015
  1,063
  1,114
  1,167
  1,222
  1,281
  1,343
  1,408
  1,476
Total equity, $m
  319
  326
  335
  344
  355
  366
  379
  392
  407
  422
  439
  457
  476
  496
  517
  540
  564
  589
  616
  644
  674
  706
  739
  774
  811
  849
  890
  933
  978
  1,026
Total liabilities and equity, $m
  778
  796
  817
  839
  865
  893
  924
  956
  992
  1,029
  1,070
  1,114
  1,160
  1,209
  1,261
  1,317
  1,375
  1,437
  1,502
  1,571
  1,644
  1,721
  1,802
  1,888
  1,978
  2,071
  2,171
  2,276
  2,386
  2,502
Debt-to-equity ratio
  0.510
  0.530
  0.550
  0.580
  0.600
  0.630
  0.660
  0.680
  0.710
  0.740
  0.760
  0.790
  0.820
  0.840
  0.870
  0.890
  0.910
  0.940
  0.960
  0.980
  1.000
  1.020
  1.040
  1.060
  1.070
  1.090
  1.110
  1.120
  1.140
  1.150
Adjusted equity ratio
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  35
  37
  38
  40
  42
  45
  47
  50
  53
  91
  95
  98
  102
  106
  110
  114
  119
  124
  129
  134
  140
  146
  152
  159
  166
  173
  181
  190
  198
Depreciation, amort., depletion, $m
  60
  61
  61
  61
  62
  62
  62
  63
  63
  64
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
Funds from operations, $m
  94
  96
  97
  100
  102
  104
  107
  110
  113
  117
  107
  111
  115
  120
  124
  129
  135
  140
  146
  152
  159
  166
  173
  181
  189
  197
  206
  215
  225
  236
Change in working capital, $m
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
Cash from operations, $m
  95
  97
  99
  102
  104
  107
  110
  113
  116
  120
  111
  115
  119
  124
  129
  134
  140
  146
  152
  158
  165
  172
  180
  188
  196
  205
  215
  224
  235
  246
Maintenance CAPEX, $m
  -11
  -12
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
New CAPEX, $m
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
Cash from investing activities, $m
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -60
  -64
  -67
  -71
  -74
  -78
Free cash flow, $m
  79
  79
  80
  81
  82
  84
  85
  87
  89
  91
  81
  83
  86
  89
  92
  95
  99
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  154
  161
  168
Issuance/(repayment) of debt, $m
  9
  11
  12
  14
  15
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  56
  59
  62
  65
  68
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  
  9
  11
  12
  14
  15
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  56
  59
  62
  65
  68
Total cash flow (excl. dividends), $m
  88
  90
  92
  95
  97
  100
  103
  107
  110
  114
  105
  109
  113
  118
  123
  128
  133
  139
  145
  152
  158
  165
  173
  181
  189
  197
  207
  216
  226
  237
Retained Cash Flow (-), $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
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
  82
  82
  84
  85
  87
  89
  91
  93
  96
  98
  88
  91
  94
  98
  101
  105
  109
  114
  118
  123
  128
  134
  140
  146
  152
  159
  166
  173
  181
  189
Discount rate, %
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
  78
  74
  71
  68
  64
  61
  57
  54
  50
  46
  37
  33
  30
  27
  24
  21
  18
  16
  13
  11
  9
  7
  6
  4
  3
  3
  2
  1
  1
  1
Current shareholders' claim on cash, %
  100.0
  100.0
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SP Plus Corporation (SP Plus) is a provider of parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in the United States, Puerto Rico and Canada. The Company's segments include Region One (Urban), Region Two (Airport transportation), Region Three and Other. Region One (Urban) encompasses its services in healthcare facilities, municipalities, including government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as shuttle and transportation services, valet services, taxi and livery dispatch services. Region Two (Airport transportation) encompasses its services at all major airports, as well as ancillary services, which includes shuttle and transportation services and valet services. Region Three encompasses other operating segments, including USA Parking and event planning, including shuttle and transportation services.

FINANCIAL RATIOS  of  SP Plus (SP)

Valuation Ratios
P/E Ratio 30.1
Price to Sales 0.4
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30.8%
Cap. Spend. - 3 Yr. Gr. Rate 1.2%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 65.3%
Total Debt to Equity 72.8%
Interest Coverage 6
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 8.9%
Return On Equity - 3 Yr. Avg. 8.9%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 10.9%
Gross Margin - 3 Yr. Avg. 10.9%
EBITDA Margin 5.3%
EBITDA Margin - 3 Yr. Avg. 4.7%
Operating Margin 3.3%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 1.3%
Effective Tax Rate 38.1%
Eff/ Tax Rate - 3 Yr. Avg. 19.4%
Payout Ratio 0%

SP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SP stock intrinsic value calculation we used $1590.5 million for the last fiscal year's total revenue generated by SP Plus. The default revenue input number comes from 0001 income statement of SP Plus. 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 SP 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 5.1%, whose default value for SP is calculated based on our internal credit rating of SP Plus, 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 SP Plus.
    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 SP 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 $0 million in the base year in the intrinsic value calculation for SP 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 SP Plus.

Corporate tax rate of 27% is the nominal tax rate for SP Plus. 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 SP 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 SP are equal to 17.2%.

Life of production assets of 23.9 years is the average useful life of capital assets used in SP Plus 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 SP is equal to -4.1%. 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 - $312.9 million for SP Plus - 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 22.73 million for SP Plus 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 SP Plus at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ SP Plus: 3Q Earnings Snapshot   [04:34PM  Associated Press]
▶ How Much is SP Plus Corporations (NASDAQ:SP) CEO Getting Paid?   [Oct-26-18 11:25AM  Simply Wall St.]
▶ SP Plus Corporation Agrees to Acquire Bags   [Oct-17-18 06:30AM  GlobeNewswire]
▶ Why Fundamental Investors Love SP Plus Corporation (NASDAQ:SP)   [Sep-03-18 11:26AM  Simply Wall St.]
▶ SP+ Launches Parking.com   [Aug-06-18 08:16PM  GlobeNewswire]
▶ SP Plus: 2Q Earnings Snapshot   [Jul-31-18 06:38PM  Associated Press]
▶ SP Plus: 1Q Earnings Snapshot   [May-02-18 07:37PM  Associated Press]
▶ Top Ranked Value Stocks to Buy for April 16th   [Apr-16-18 08:15AM  Zacks]
▶ Top Ranked Value Stocks to Buy for April 13th   [Apr-13-18 06:45AM  Zacks]
▶ Bet on These 6 Stocks with Solid Net Profit Margin   [Mar-19-18 12:45PM  InvestorPlace]
▶ SP Plus Corporation Announces Date for 2018 Annual Meeting   [Mar-08-18 04:30PM  GlobeNewswire]
▶ New Strong Buy Stocks for February 28th   [Feb-28-18 09:12AM  Zacks]
▶ SP+ Elects Alice M. Peterson to Board of Directors   [Feb-23-18 04:05PM  GlobeNewswire]
▶ SP Plus posts 4Q profit   [05:03AM  Associated Press]
▶ SP Plus: Not Sexy, but Plenty of Potential   [Dec-13-17 12:56PM  GuruFocus.com]
▶ ETFs with exposure to SP Plus Corp. : November 28, 2017   [Nov-28-17 01:11PM  Capital Cube]
▶ ETFs with exposure to SP Plus Corp. : November 16, 2017   [Nov-16-17 12:03PM  Capital Cube]
▶ SP Plus posts 3Q profit   [05:50AM  Associated Press]
▶ SP Plus posts 2Q profit   [Aug-01-17 06:06PM  Associated Press]
▶ SP Plus Corp. Value Analysis (NASDAQ:SP) : June 30, 2017   [Jun-30-17 04:07PM  Capital Cube]
▶ SP+ Elects Gregory A. Reid to Board of Directors   [May-11-17 09:08AM  GlobeNewswire]
▶ SP Plus posts 1Q profit   [May-02-17 07:07PM  Associated Press]

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