Intrinsic value of Staffing 360 Solutions, Inc. - STAF

Previous Close

$1.47

  Intrinsic Value

$1.62

stock screener

  Rating & Target

hold

+10%

Previous close

$1.47

 
Intrinsic value

$1.62

 
Up/down potential

+10%

 
Rating

hold

We calculate the intrinsic value of STAF 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 0.0

 

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, %
  41.70
  38.03
  34.73
  31.75
  29.08
  26.67
  24.50
  22.55
  20.80
  19.22
  17.80
  16.52
  15.37
  14.33
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.61
  8.25
  7.93
  7.63
  7.37
  7.13
  6.92
  6.73
Revenue, $m
  273
  377
  509
  670
  865
  1,096
  1,364
  1,672
  2,019
  2,407
  2,836
  3,304
  3,812
  4,358
  4,942
  5,563
  6,219
  6,911
  7,637
  8,397
  9,192
  10,021
  10,884
  11,782
  12,716
  13,687
  14,696
  15,744
  16,834
  17,966
Variable operating expenses, $m
  274
  377
  506
  666
  858
  1,086
  1,351
  1,655
  1,998
  2,381
  2,800
  3,262
  3,763
  4,303
  4,879
  5,491
  6,139
  6,822
  7,539
  8,290
  9,074
  9,892
  10,744
  11,631
  12,553
  13,512
  14,508
  15,543
  16,618
  17,736
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
  277
  380
  509
  669
  861
  1,089
  1,354
  1,659
  2,002
  2,385
  2,804
  3,266
  3,767
  4,307
  4,883
  5,495
  6,143
  6,826
  7,544
  8,295
  9,079
  9,897
  10,749
  11,636
  12,558
  13,517
  14,513
  15,549
  16,624
  17,742
Operating income, $m
  -4
  -3
  -1
  1
  3
  6
  10
  13
  18
  23
  32
  38
  45
  52
  59
  67
  75
  84
  93
  103
  113
  123
  134
  146
  158
  170
  183
  196
  210
  224
EBITDA, $m
  3
  5
  8
  12
  16
  21
  27
  34
  41
  50
  59
  70
  81
  93
  106
  120
  134
  149
  165
  182
  200
  218
  237
  257
  278
  299
  322
  345
  369
  394
Interest expense (income), $m
  0
  7
  10
  17
  26
  37
  50
  66
  85
  106
  130
  157
  187
  219
  254
  292
  333
  375
  421
  469
  519
  572
  626
  684
  743
  806
  870
  937
  1,007
  1,080
  1,155
Earnings before tax, $m
  -11
  -12
  -18
  -25
  -34
  -44
  -57
  -72
  -89
  -108
  -125
  -148
  -174
  -203
  -233
  -266
  -300
  -337
  -375
  -416
  -459
  -503
  -549
  -598
  -648
  -700
  -755
  -811
  -870
  -931
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
  -11
  -12
  -18
  -25
  -34
  -44
  -57
  -72
  -89
  -108
  -125
  -148
  -174
  -203
  -233
  -266
  -300
  -337
  -375
  -416
  -459
  -503
  -549
  -598
  -648
  -700
  -755
  -811
  -870
  -931

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
  123
  170
  229
  301
  389
  492
  613
  751
  908
  1,082
  1,275
  1,485
  1,713
  1,959
  2,221
  2,500
  2,795
  3,106
  3,432
  3,774
  4,131
  4,504
  4,892
  5,295
  5,715
  6,151
  6,605
  7,076
  7,566
  8,075
Adjusted assets (=assets-cash), $m
  123
  170
  229
  301
  389
  492
  613
  751
  908
  1,082
  1,275
  1,485
  1,713
  1,959
  2,221
  2,500
  2,795
  3,106
  3,432
  3,774
  4,131
  4,504
  4,892
  5,295
  5,715
  6,151
  6,605
  7,076
  7,566
  8,075
Revenue / Adjusted assets
  2.220
  2.218
  2.223
  2.226
  2.224
  2.228
  2.225
  2.226
  2.224
  2.225
  2.224
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
  2.225
Average production assets, $m
  24
  33
  44
  58
  75
  95
  119
  145
  176
  209
  247
  287
  332
  379
  430
  484
  541
  601
  664
  731
  800
  872
  947
  1,025
  1,106
  1,191
  1,279
  1,370
  1,465
  1,563
Working capital, $m
  -20
  -28
  -38
  -50
  -64
  -81
  -101
  -124
  -149
  -178
  -210
  -245
  -282
  -323
  -366
  -412
  -460
  -511
  -565
  -621
  -680
  -742
  -805
  -872
  -941
  -1,013
  -1,087
  -1,165
  -1,246
  -1,330
Total debt, $m
  56
  98
  151
  217
  295
  389
  497
  622
  762
  919
  1,093
  1,282
  1,487
  1,708
  1,945
  2,196
  2,461
  2,741
  3,035
  3,342
  3,664
  3,999
  4,348
  4,711
  5,089
  5,482
  5,890
  6,314
  6,755
  7,213
Total liabilities, $m
  111
  153
  206
  271
  350
  443
  552
  676
  817
  974
  1,147
  1,337
  1,542
  1,763
  1,999
  2,250
  2,516
  2,795
  3,089
  3,397
  3,718
  4,053
  4,402
  4,766
  5,144
  5,536
  5,944
  6,368
  6,809
  7,267
Total equity, $m
  12
  17
  23
  30
  39
  49
  61
  75
  91
  108
  127
  149
  171
  196
  222
  250
  280
  311
  343
  377
  413
  450
  489
  530
  572
  615
  660
  708
  757
  807
Total liabilities and equity, $m
  123
  170
  229
  301
  389
  492
  613
  751
  908
  1,082
  1,274
  1,486
  1,713
  1,959
  2,221
  2,500
  2,796
  3,106
  3,432
  3,774
  4,131
  4,503
  4,891
  5,296
  5,716
  6,151
  6,604
  7,076
  7,566
  8,074
Debt-to-equity ratio
  4.560
  5.790
  6.610
  7.190
  7.600
  7.890
  8.110
  8.270
  8.400
  8.500
  8.570
  8.630
  8.680
  8.720
  8.750
  8.780
  8.800
  8.820
  8.840
  8.860
  8.870
  8.880
  8.890
  8.900
  8.900
  8.910
  8.920
  8.920
  8.930
  8.930
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -11
  -12
  -18
  -25
  -34
  -44
  -57
  -72
  -89
  -108
  -125
  -148
  -174
  -203
  -233
  -266
  -300
  -337
  -375
  -416
  -459
  -503
  -549
  -598
  -648
  -700
  -755
  -811
  -870
  -931
Depreciation, amort., depletion, $m
  7
  8
  9
  11
  13
  15
  17
  20
  23
  27
  27
  31
  36
  41
  47
  53
  59
  65
  72
  79
  87
  95
  103
  111
  120
  129
  139
  149
  159
  170
Funds from operations, $m
  -4
  -4
  -9
  -14
  -21
  -30
  -40
  -51
  -65
  -81
  -98
  -117
  -138
  -161
  -186
  -213
  -241
  -271
  -303
  -337
  -372
  -408
  -447
  -486
  -528
  -571
  -616
  -662
  -711
  -761
Change in working capital, $m
  -6
  -8
  -10
  -12
  -14
  -17
  -20
  -23
  -26
  -29
  -32
  -35
  -38
  -40
  -43
  -46
  -49
  -51
  -54
  -56
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -84
Cash from operations, $m
  2
  3
  1
  -2
  -7
  -12
  -20
  -29
  -39
  -52
  -66
  -83
  -101
  -121
  -143
  -167
  -193
  -220
  -250
  -280
  -313
  -347
  -383
  -420
  -459
  -499
  -541
  -585
  -630
  -677
Maintenance CAPEX, $m
  -2
  -3
  -4
  -5
  -6
  -8
  -10
  -13
  -16
  -19
  -23
  -27
  -31
  -36
  -41
  -47
  -53
  -59
  -65
  -72
  -79
  -87
  -95
  -103
  -111
  -120
  -129
  -139
  -149
  -159
New CAPEX, $m
  -7
  -9
  -11
  -14
  -17
  -20
  -23
  -27
  -30
  -34
  -37
  -41
  -44
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
Cash from investing activities, $m
  -9
  -12
  -15
  -19
  -23
  -28
  -33
  -40
  -46
  -53
  -60
  -68
  -75
  -84
  -92
  -101
  -110
  -119
  -128
  -138
  -148
  -159
  -170
  -181
  -192
  -204
  -217
  -230
  -244
  -258
Free cash flow, $m
  -6
  -8
  -14
  -21
  -30
  -41
  -53
  -68
  -85
  -105
  -126
  -150
  -176
  -205
  -235
  -268
  -303
  -339
  -378
  -419
  -461
  -506
  -553
  -601
  -651
  -704
  -758
  -815
  -874
  -935
Issuance/(repayment) of debt, $m
  17
  42
  53
  65
  79
  93
  109
  124
  141
  157
  173
  189
  205
  221
  236
  251
  266
  280
  294
  308
  321
  335
  349
  363
  378
  393
  408
  424
  441
  458
Issuance/(repurchase) of shares, $m
  30
  17
  24
  32
  42
  55
  69
  85
  104
  125
  144
  169
  197
  227
  259
  293
  330
  368
  408
  450
  494
  540
  588
  638
  690
  744
  800
  858
  919
  982
Cash from financing (excl. dividends), $m  
  47
  59
  77
  97
  121
  148
  178
  209
  245
  282
  317
  358
  402
  448
  495
  544
  596
  648
  702
  758
  815
  875
  937
  1,001
  1,068
  1,137
  1,208
  1,282
  1,360
  1,440
Total cash flow (excl. dividends), $m
  40
  51
  63
  76
  91
  107
  124
  142
  159
  177
  191
  209
  226
  244
  260
  277
  293
  308
  324
  339
  354
  370
  385
  401
  416
  433
  450
  467
  486
  505
Retained Cash Flow (-), $m
  -30
  -17
  -24
  -32
  -42
  -55
  -69
  -85
  -104
  -125
  -144
  -169
  -197
  -227
  -259
  -293
  -330
  -368
  -408
  -450
  -494
  -540
  -588
  -638
  -690
  -744
  -800
  -858
  -919
  -982
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
  11
  34
  39
  44
  49
  53
  55
  56
  55
  52
  47
  39
  29
  16
  1
  -17
  -37
  -60
  -84
  -111
  -140
  -171
  -203
  -238
  -274
  -311
  -350
  -391
  -433
  -477
Discount rate, %
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
  32.85
  34.49
  36.21
  38.02
  39.93
  41.92
  44.02
  46.22
  48.53
  50.96
  53.50
  56.18
  58.99
  61.94
  65.03
PV of cash for distribution, $m
  9
  25
  24
  23
  20
  17
  14
  11
  8
  6
  4
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  21.0
  8.7
  3.6
  1.5
  0.6
  0.3
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Staffing 360 Solutions, Inc. operates in the staffing sector. The Company is engaged in the execution of a global buy-and-build strategy through the acquisition of domestic and international staffing organizations in the United States and the United Kingdom. Its targeted consolidation model is focused on the finance and accounting, administrative, engineering and information technology (IT) staffing space.

FINANCIAL RATIOS  of  Staffing 360 Solutions, Inc. (STAF)

Valuation Ratios
P/E Ratio -3.4
Price to Sales 0.1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow -13.4
Price to Free Cash Flow -13.4
Growth Rates
Sales Growth Rate -34.3%
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 0
Current Ratio 0
LT Debt to Equity 50%
Total Debt to Equity 100%
Interest Coverage 0
Management Effectiveness
Return On Assets -7.4%
Ret/ On Assets - 3 Yr. Avg. -23.5%
Return On Total Capital -22.9%
Ret/ On T. Cap. - 3 Yr. Avg. -59.1%
Return On Equity -50%
Return On Equity - 3 Yr. Avg. -125%
Asset Turnover 2
Profitability Ratios
Gross Margin 17.4%
Gross Margin - 3 Yr. Avg. 17.6%
EBITDA Margin -1.8%
EBITDA Margin - 3 Yr. Avg. -5.7%
Operating Margin -0.9%
Oper. Margin - 3 Yr. Avg. -4.2%
Pre-Tax Margin -3.7%
Pre-Tax Margin - 3 Yr. Avg. -7.7%
Net Profit Margin -3.7%
Net Profit Margin - 3 Yr. Avg. -7.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

STAF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STAF stock intrinsic value calculation we used $193 million for the last fiscal year's total revenue generated by Staffing 360 Solutions, Inc.. The default revenue input number comes from 0001 income statement of Staffing 360 Solutions, 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 STAF stock valuation model: a) initial revenue growth rate of 41.7% 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 15.8%, whose default value for STAF is calculated based on our internal credit rating of Staffing 360 Solutions, 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 Staffing 360 Solutions, 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 STAF stock the variable cost ratio is equal to 101%.

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 STAF 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 17.1% for Staffing 360 Solutions, Inc..

Corporate tax rate of 27% is the nominal tax rate for Staffing 360 Solutions, 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 STAF 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 STAF are equal to 8.7%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Staffing 360 Solutions, 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 STAF is equal to -7.4%. 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 - $-6.785 million for Staffing 360 Solutions, 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 8.145 million for Staffing 360 Solutions, 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 Staffing 360 Solutions, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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