Intrinsic value of Spok Holdings, Inc. - SPOK

Previous Close

$11.31

  Intrinsic Value

$10.16

stock screener

  Rating & Target

hold

-10%

Previous close

$11.31

 
Intrinsic value

$10.16

 
Up/down potential

-10%

 
Rating

hold

We calculate the intrinsic value of SPOK 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, %
  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
  172
  176
  181
  186
  192
  198
  205
  212
  220
  228
  237
  247
  257
  268
  279
  292
  305
  318
  333
  348
  364
  381
  399
  418
  438
  459
  481
  504
  529
  554
Variable operating expenses, $m
  161
  164
  168
  172
  177
  183
  188
  195
  201
  208
  202
  211
  219
  229
  238
  249
  260
  272
  284
  297
  311
  325
  341
  357
  374
  392
  410
  430
  451
  473
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
  161
  164
  168
  172
  177
  183
  188
  195
  201
  208
  202
  211
  219
  229
  238
  249
  260
  272
  284
  297
  311
  325
  341
  357
  374
  392
  410
  430
  451
  473
Operating income, $m
  11
  12
  13
  13
  14
  15
  16
  17
  18
  20
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  71
  74
  78
  81
EBITDA, $m
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  45
  47
  48
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
  100
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
  3
  4
  4
  4
  5
  5
  5
  6
  6
Earnings before tax, $m
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  34
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  57
  60
  63
  66
  69
  72
  75
Tax expense, $m
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
Net income, $m
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55

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
  291
  298
  306
  314
  324
  334
  345
  358
  371
  385
  401
  417
  434
  453
  472
  493
  515
  538
  562
  588
  615
  644
  674
  706
  740
  775
  813
  852
  893
  936
Adjusted assets (=assets-cash), $m
  291
  298
  306
  314
  324
  334
  345
  358
  371
  385
  401
  417
  434
  453
  472
  493
  515
  538
  562
  588
  615
  644
  674
  706
  740
  775
  813
  852
  893
  936
Revenue / Adjusted assets
  0.591
  0.591
  0.592
  0.592
  0.593
  0.593
  0.594
  0.592
  0.593
  0.592
  0.591
  0.592
  0.592
  0.592
  0.591
  0.592
  0.592
  0.591
  0.593
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
Average production assets, $m
  83
  85
  88
  90
  93
  96
  99
  103
  106
  110
  115
  119
  124
  130
  135
  141
  147
  154
  161
  168
  176
  185
  193
  202
  212
  222
  233
  244
  256
  268
Working capital, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
Total debt, $m
  1
  2
  4
  5
  7
  9
  11
  13
  16
  19
  21
  24
  28
  31
  35
  38
  43
  47
  51
  56
  61
  67
  72
  78
  84
  91
  98
  105
  113
  121
Total liabilities, $m
  54
  55
  57
  58
  60
  62
  64
  67
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  105
  109
  114
  120
  125
  131
  138
  144
  151
  158
  166
  174
Total equity, $m
  237
  242
  249
  256
  263
  272
  281
  291
  302
  314
  326
  339
  353
  368
  384
  401
  419
  438
  458
  479
  501
  524
  549
  575
  602
  631
  661
  693
  727
  762
Total liabilities and equity, $m
  291
  297
  306
  314
  323
  334
  345
  358
  371
  386
  401
  417
  434
  452
  472
  493
  515
  538
  563
  588
  615
  644
  674
  706
  740
  775
  812
  851
  893
  936
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.030
  0.030
  0.040
  0.050
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.100
  0.100
  0.110
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.140
  0.140
  0.150
  0.150
  0.160
  0.160
Adjusted equity ratio
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814
  0.814

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
Depreciation, amort., depletion, $m
  20
  20
  20
  20
  20
  21
  21
  21
  21
  22
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
Funds from operations, $m
  28
  29
  29
  30
  31
  31
  32
  33
  34
  35
  33
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  62
  64
  67
  71
  74
Change in working capital, $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 operations, $m
  28
  29
  29
  30
  31
  31
  32
  33
  34
  35
  33
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  74
Maintenance CAPEX, $m
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
New CAPEX, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from investing activities, $m
  -8
  -8
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
Free cash flow, $m
  21
  21
  21
  21
  22
  22
  22
  23
  23
  24
  21
  21
  22
  23
  24
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
Issuance/(repayment) of debt, $m
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
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  
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
Total cash flow (excl. dividends), $m
  22
  22
  22
  23
  23
  24
  24
  25
  26
  26
  24
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
Retained Cash Flow (-), $m
  -5
  -5
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
Prev. year cash balance distribution, $m
  42
  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
  59
  17
  16
  16
  16
  15
  15
  15
  15
  15
  11
  11
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  16
  16
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
  57
  15
  14
  13
  12
  11
  10
  9
  9
  8
  5
  5
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Spok Holdings, Inc., through its subsidiary, Spok, Inc., provides various communications solutions to healthcare, government, public safety, and other industries in the United States, Europe, Canada, Australia, Asia, and the Middle East. The company provides paging services comprising one-way messaging, including numeric messaging services, which enable subscribers to receive messages comprising numbers, such as phone numbers; and alphanumeric messages, including numbers and letters that enable subscribers to receive text messages. It also offers two-way messaging services that enable subscribers to send and receive messages to and from other wireless messaging devices, such as pagers, personal digital assistants, and personal computers; and voice mail, personalized greeting, message storage and retrieval, and equipment loss and/or maintenance protection to one-way and two-way messaging subscribers. In addition, the company develops, sells, and supports enterprise-wide systems to automate, centralize, and standardize mission critical communications for contact centers, clinical alerting and notification, mobile communications, and messaging, as well as for public safety notifications. Further, it provides professional and customer support services, as well as ancillary services, such as voicemail and equipment loss or maintenance protection services; and sells devices to resellers who lease or resell them to their subscribers. The company serves businesses, professionals, management personnel, medical personnel, field sales personnel and service forces, members of the construction industry and construction trades, real estate brokers and developers, sales and service organizations, specialty trade organizations, manufacturing organizations, and government agencies. The company was formerly known as USA Mobility, Inc. and changed its name to Spok Holdings, Inc. in July 2014. Spok Holdings, Inc. is headquartered in Springfield, Virginia.

FINANCIAL RATIOS  of  Spok Holdings, Inc. (SPOK)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
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 NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SPOK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPOK stock intrinsic value calculation we used $169 million for the last fiscal year's total revenue generated by Spok Holdings, Inc.. The default revenue input number comes from 0001 income statement of Spok Holdings, 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 SPOK 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 4.3%, whose default value for SPOK is calculated based on our internal credit rating of Spok Holdings, 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 Spok Holdings, 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 SPOK stock the variable cost ratio is equal to 93.5%.

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 SPOK 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 Spok Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for Spok Holdings, 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 SPOK 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 SPOK are equal to 48.4%.

Life of production assets of 14.1 years is the average useful life of capital assets used in Spok Holdings, 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 SPOK is equal to -0.8%. 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 - $274.554 million for Spok Holdings, 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 19.343 million for Spok Holdings, 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 Spok Holdings, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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