Intrinsic value of ShotSpotter, Inc. - SSTI

Previous Close

$27.08

  Intrinsic Value

$86.13

stock screener

  Rating & Target

str. buy

+218%

Previous close

$27.08

 
Intrinsic value

$86.13

 
Up/down potential

+218%

 
Rating

str. buy

We calculate the intrinsic value of SSTI 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 0.3

 

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, %
  48.90
  44.51
  40.56
  37.00
  33.80
  30.92
  28.33
  26.00
  23.90
  22.01
  20.31
  18.78
  17.40
  16.16
  15.04
  14.04
  13.13
  12.32
  11.59
  10.93
  10.34
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
Revenue, $m
  52
  75
  106
  145
  194
  254
  326
  411
  509
  621
  747
  887
  1,042
  1,210
  1,392
  1,588
  1,796
  2,017
  2,251
  2,497
  2,755
  3,025
  3,307
  3,602
  3,908
  4,226
  4,557
  4,902
  5,259
  5,631
Variable operating expenses, $m
  43
  62
  87
  120
  160
  209
  269
  338
  419
  511
  615
  731
  858
  996
  1,146
  1,307
  1,479
  1,661
  1,853
  2,056
  2,268
  2,491
  2,723
  2,965
  3,217
  3,479
  3,752
  4,035
  4,330
  4,636
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
  51
  70
  96
  129
  169
  218
  278
  348
  429
  521
  625
  741
  869
  1,007
  1,157
  1,318
  1,491
  1,673
  1,865
  2,068
  2,281
  2,504
  2,736
  2,978
  3,231
  3,493
  3,766
  4,050
  4,345
  4,651
Operating income, $m
  1
  5
  10
  17
  25
  36
  48
  63
  80
  100
  122
  146
  173
  203
  235
  269
  306
  345
  386
  429
  474
  522
  571
  623
  677
  733
  791
  851
  914
  980
EBITDA, $m
  5
  11
  19
  29
  41
  57
  75
  97
  122
  151
  184
  220
  260
  303
  350
  401
  455
  512
  572
  636
  702
  772
  845
  921
  1,000
  1,083
  1,168
  1,257
  1,350
  1,446
Interest expense (income), $m
  1
  0
  1
  2
  3
  5
  7
  10
  13
  17
  22
  27
  33
  39
  47
  54
  63
  72
  81
  92
  102
  114
  126
  138
  151
  165
  179
  194
  209
  225
  241
Earnings before tax, $m
  1
  4
  8
  13
  20
  28
  38
  49
  63
  78
  95
  114
  134
  156
  181
  206
  234
  263
  294
  326
  360
  396
  433
  472
  512
  554
  597
  642
  689
  738
Tax expense, $m
  0
  1
  2
  4
  5
  8
  10
  13
  17
  21
  26
  31
  36
  42
  49
  56
  63
  71
  79
  88
  97
  107
  117
  127
  138
  150
  161
  173
  186
  199
Net income, $m
  1
  3
  6
  10
  15
  21
  28
  36
  46
  57
  69
  83
  98
  114
  132
  151
  171
  192
  215
  238
  263
  289
  316
  344
  374
  404
  436
  469
  503
  539

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
  70
  101
  142
  195
  261
  342
  439
  553
  685
  836
  1,005
  1,194
  1,402
  1,629
  1,874
  2,137
  2,417
  2,715
  3,030
  3,361
  3,708
  4,072
  4,452
  4,847
  5,259
  5,688
  6,134
  6,597
  7,079
  7,579
Adjusted assets (=assets-cash), $m
  70
  101
  142
  195
  261
  342
  439
  553
  685
  836
  1,005
  1,194
  1,402
  1,629
  1,874
  2,137
  2,417
  2,715
  3,030
  3,361
  3,708
  4,072
  4,452
  4,847
  5,259
  5,688
  6,134
  6,597
  7,079
  7,579
Revenue / Adjusted assets
  0.743
  0.743
  0.746
  0.744
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
  0.743
Average production assets, $m
  22
  31
  44
  60
  80
  105
  135
  170
  211
  257
  309
  367
  431
  501
  576
  657
  744
  835
  932
  1,034
  1,141
  1,253
  1,369
  1,491
  1,618
  1,750
  1,887
  2,029
  2,177
  2,331
Working capital, $m
  -18
  -26
  -36
  -50
  -67
  -87
  -112
  -141
  -175
  -214
  -257
  -305
  -358
  -416
  -479
  -546
  -618
  -694
  -774
  -859
  -948
  -1,041
  -1,138
  -1,239
  -1,344
  -1,454
  -1,568
  -1,686
  -1,809
  -1,937
Total debt, $m
  15
  34
  61
  94
  136
  187
  249
  322
  406
  502
  610
  730
  862
  1,006
  1,162
  1,329
  1,507
  1,697
  1,897
  2,108
  2,329
  2,560
  2,801
  3,053
  3,315
  3,588
  3,871
  4,166
  4,472
  4,790
Total liabilities, $m
  45
  64
  91
  124
  166
  217
  279
  352
  436
  532
  639
  760
  892
  1,036
  1,192
  1,359
  1,537
  1,727
  1,927
  2,138
  2,359
  2,590
  2,831
  3,083
  3,345
  3,618
  3,901
  4,196
  4,502
  4,820
Total equity, $m
  26
  37
  52
  71
  95
  124
  160
  201
  249
  304
  366
  435
  510
  593
  682
  778
  880
  988
  1,103
  1,223
  1,350
  1,482
  1,620
  1,764
  1,914
  2,070
  2,233
  2,401
  2,577
  2,759
Total liabilities and equity, $m
  71
  101
  143
  195
  261
  341
  439
  553
  685
  836
  1,005
  1,195
  1,402
  1,629
  1,874
  2,137
  2,417
  2,715
  3,030
  3,361
  3,709
  4,072
  4,451
  4,847
  5,259
  5,688
  6,134
  6,597
  7,079
  7,579
Debt-to-equity ratio
  0.570
  0.930
  1.170
  1.330
  1.430
  1.510
  1.560
  1.600
  1.630
  1.650
  1.670
  1.680
  1.690
  1.700
  1.700
  1.710
  1.710
  1.720
  1.720
  1.720
  1.730
  1.730
  1.730
  1.730
  1.730
  1.730
  1.730
  1.730
  1.740
  1.740
Adjusted equity ratio
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  3
  6
  10
  15
  21
  28
  36
  46
  57
  69
  83
  98
  114
  132
  151
  171
  192
  215
  238
  263
  289
  316
  344
  374
  404
  436
  469
  503
  539
Depreciation, amort., depletion, $m
  5
  6
  9
  12
  16
  21
  27
  34
  42
  52
  62
  73
  86
  100
  115
  131
  149
  167
  186
  207
  228
  251
  274
  298
  324
  350
  377
  406
  435
  466
Funds from operations, $m
  5
  9
  15
  22
  31
  42
  55
  70
  88
  108
  131
  156
  184
  214
  247
  282
  320
  359
  401
  445
  491
  540
  590
  643
  697
  754
  813
  875
  939
  1,005
Change in working capital, $m
  -6
  -8
  -11
  -13
  -17
  -21
  -25
  -29
  -34
  -39
  -43
  -48
  -53
  -58
  -63
  -67
  -72
  -76
  -80
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -114
  -118
  -123
  -128
Cash from operations, $m
  11
  17
  25
  35
  48
  62
  80
  99
  122
  147
  174
  205
  237
  272
  310
  349
  391
  435
  481
  530
  580
  632
  687
  744
  803
  864
  927
  993
  1,062
  1,133
Maintenance CAPEX, $m
  -3
  -4
  -6
  -9
  -12
  -16
  -21
  -27
  -34
  -42
  -51
  -62
  -73
  -86
  -100
  -115
  -131
  -149
  -167
  -186
  -207
  -228
  -251
  -274
  -298
  -324
  -350
  -377
  -406
  -435
New CAPEX, $m
  -7
  -10
  -13
  -16
  -20
  -25
  -30
  -35
  -41
  -46
  -52
  -58
  -64
  -70
  -75
  -81
  -86
  -92
  -97
  -102
  -107
  -112
  -117
  -122
  -127
  -132
  -137
  -143
  -148
  -154
Cash from investing activities, $m
  -10
  -14
  -19
  -25
  -32
  -41
  -51
  -62
  -75
  -88
  -103
  -120
  -137
  -156
  -175
  -196
  -217
  -241
  -264
  -288
  -314
  -340
  -368
  -396
  -425
  -456
  -487
  -520
  -554
  -589
Free cash flow, $m
  1
  3
  7
  11
  15
  22
  29
  37
  47
  58
  71
  85
  100
  116
  134
  153
  174
  195
  218
  241
  266
  293
  320
  348
  378
  408
  440
  473
  508
  544
Issuance/(repayment) of debt, $m
  15
  20
  26
  34
  42
  51
  62
  73
  84
  96
  108
  120
  132
  144
  156
  167
  178
  189
  200
  211
  221
  231
  241
  252
  262
  273
  283
  295
  306
  318
Issuance/(repurchase) of shares, $m
  8
  8
  9
  9
  9
  9
  8
  5
  2
  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  
  23
  28
  35
  43
  51
  60
  70
  78
  86
  96
  108
  120
  132
  144
  156
  167
  178
  189
  200
  211
  221
  231
  241
  252
  262
  273
  283
  295
  306
  318
Total cash flow (excl. dividends), $m
  23
  32
  42
  53
  67
  82
  98
  115
  134
  154
  179
  205
  232
  260
  290
  321
  352
  384
  418
  452
  487
  524
  561
  600
  640
  681
  724
  768
  814
  862
Retained Cash Flow (-), $m
  -8
  -11
  -15
  -19
  -24
  -29
  -35
  -42
  -48
  -55
  -62
  -69
  -76
  -82
  -89
  -96
  -102
  -108
  -115
  -121
  -126
  -132
  -138
  -144
  -150
  -156
  -162
  -169
  -175
  -182
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
  15
  20
  27
  34
  43
  52
  63
  74
  85
  99
  117
  136
  156
  178
  201
  225
  250
  276
  303
  332
  361
  391
  423
  456
  490
  525
  561
  599
  639
  680
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
  14
  19
  23
  28
  33
  38
  42
  46
  49
  52
  56
  58
  59
  60
  59
  57
  54
  51
  47
  42
  37
  32
  28
  23
  19
  15
  12
  9
  7
  5
Current shareholders' claim on cash, %
  95.7
  92.6
  90.4
  88.8
  87.6
  86.8
  86.3
  86.0
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9
  85.9

ShotSpotter, Inc. is engaged in designing and delivering gunfire alert and analysis solutions. The Company offers its software solutions on a SaaS-based subscription model. It has one operating segment with one business activity, providing gunshot detection systems. Its safety solutions include ShotSpotter Flex, ShotSpotter (SST) SecureCampus and ShotSpotter SiteSecure. ShotSpotter Flex is an outdoor public safety solution, serves cities and municipalities seeking to identify, locate and deter persistent a real-time gunshot detection system into their policing systems. SST SecureCampus is integrates its indoor and outdoor solutions in order to help the law enforcement and security personnel serving universities, colleges and other educational institutions. ShotSpotter SiteSecure is integrates its indoor and outdoor solutions for customers such as corporations trying to safeguard their facilities and public agencies focused on protecting critical infrastructure.

FINANCIAL RATIOS  of  ShotSpotter, Inc. (SSTI)

Valuation Ratios
P/E Ratio -35.2
Price to Sales 15.4
Price to Book -16.4
Price to Tangible Book
Price to Cash Flow 123.3
Price to Free Cash Flow -82.2
Growth Rates
Sales Growth Rate 33.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 150%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity -73.3%
Total Debt to Equity -80%
Interest Coverage -6
Management Effectiveness
Return On Assets -38.7%
Ret/ On Assets - 3 Yr. Avg. -39.6%
Return On Total Capital 1400%
Ret/ On T. Cap. - 3 Yr. Avg. 266.7%
Return On Equity 60.9%
Return On Equity - 3 Yr. Avg. 70.3%
Asset Turnover 1
Profitability Ratios
Gross Margin 37.5%
Gross Margin - 3 Yr. Avg. 20.8%
EBITDA Margin -18.8%
EBITDA Margin - 3 Yr. Avg. -17.4%
Operating Margin -25%
Oper. Margin - 3 Yr. Avg. -22.2%
Pre-Tax Margin -43.8%
Pre-Tax Margin - 3 Yr. Avg. -31.3%
Net Profit Margin -43.8%
Net Profit Margin - 3 Yr. Avg. -31.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SSTI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SSTI stock intrinsic value calculation we used $35 million for the last fiscal year's total revenue generated by ShotSpotter, Inc.. The default revenue input number comes from 0001 income statement of ShotSpotter, 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 SSTI stock valuation model: a) initial revenue growth rate of 48.9% 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 SSTI is calculated based on our internal credit rating of ShotSpotter, 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 ShotSpotter, 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 SSTI stock the variable cost ratio is equal to 82.9%.

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 SSTI 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 ShotSpotter, Inc..

Corporate tax rate of 27% is the nominal tax rate for ShotSpotter, 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 SSTI 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 SSTI are equal to 41.4%.

Life of production assets of 3.8 years is the average useful life of capital assets used in ShotSpotter, 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 SSTI is equal to -34.4%. 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 - $17.147 million for ShotSpotter, 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 10.912 million for ShotSpotter, 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 ShotSpotter, Inc. at the current share price and the inputted number of shares is $0.3 billion.

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.