Intrinsic value of TechTarget, Inc. - TTGT

Previous Close

$20.32

  Intrinsic Value

$11.45

stock screener

  Rating & Target

sell

-44%

Previous close

$20.32

 
Intrinsic value

$11.45

 
Up/down potential

-44%

 
Rating

sell

We calculate the intrinsic value of TTGT 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 0.6

 

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, %
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  127
  133
  140
  147
  154
  162
  170
  179
  188
  197
  207
  217
  228
  240
  252
  264
  277
  291
  306
  321
  337
  354
  372
  390
  410
  430
  452
  474
  498
  523
Variable operating expenses, $m
  67
  70
  73
  76
  79
  83
  86
  90
  94
  98
  93
  98
  103
  108
  113
  119
  125
  131
  138
  145
  152
  159
  167
  176
  185
  194
  204
  214
  224
  236
Fixed operating expenses, $m
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  59
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
Total operating expenses, $m
  110
  114
  118
  122
  126
  131
  135
  140
  145
  150
  146
  153
  159
  165
  171
  178
  186
  193
  202
  210
  218
  227
  236
  247
  257
  268
  280
  291
  303
  317
Operating income, $m
  17
  20
  23
  26
  29
  32
  35
  39
  43
  47
  60
  65
  70
  75
  80
  86
  92
  98
  105
  112
  119
  127
  135
  144
  153
  162
  173
  183
  195
  207
EBITDA, $m
  30
  32
  35
  38
  41
  45
  48
  52
  56
  60
  65
  69
  74
  80
  85
  91
  97
  104
  111
  118
  126
  134
  143
  152
  161
  171
  182
  193
  205
  218
Interest expense (income), $m
  1
  2
  2
  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
  10
Earnings before tax, $m
  16
  18
  21
  24
  26
  29
  33
  36
  40
  44
  57
  61
  66
  71
  76
  81
  87
  93
  99
  106
  113
  120
  128
  137
  145
  155
  164
  175
  185
  197
Tax expense, $m
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  15
  17
  18
  19
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  53
Net income, $m
  12
  13
  15
  17
  19
  22
  24
  26
  29
  32
  42
  45
  48
  52
  55
  59
  63
  68
  72
  77
  82
  88
  94
  100
  106
  113
  120
  127
  135
  144

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
  162
  170
  179
  188
  197
  207
  217
  228
  240
  252
  264
  278
  291
  306
  321
  337
  354
  372
  390
  410
  431
  452
  475
  498
  523
  549
  577
  606
  636
  668
Adjusted assets (=assets-cash), $m
  162
  170
  179
  188
  197
  207
  217
  228
  240
  252
  264
  278
  291
  306
  321
  337
  354
  372
  390
  410
  431
  452
  475
  498
  523
  549
  577
  606
  636
  668
Revenue / Adjusted assets
  0.784
  0.782
  0.782
  0.782
  0.782
  0.783
  0.783
  0.785
  0.783
  0.782
  0.784
  0.781
  0.784
  0.784
  0.785
  0.783
  0.782
  0.782
  0.785
  0.783
  0.782
  0.783
  0.783
  0.783
  0.784
  0.783
  0.783
  0.782
  0.783
  0.783
Average production assets, $m
  60
  63
  67
  70
  74
  77
  81
  85
  89
  94
  99
  103
  109
  114
  120
  126
  132
  139
  146
  153
  160
  168
  177
  186
  195
  205
  215
  226
  237
  249
Working capital, $m
  23
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  67
  70
  73
  77
  81
  85
  89
  94
Total debt, $m
  27
  29
  32
  34
  37
  39
  42
  45
  48
  52
  55
  59
  63
  67
  71
  75
  80
  85
  90
  95
  101
  107
  113
  120
  127
  134
  142
  150
  158
  167
Total liabilities, $m
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  73
  77
  80
  84
  89
  93
  98
  103
  108
  113
  119
  125
  131
  138
  144
  152
  159
  167
  176
  184
Total equity, $m
  117
  123
  130
  136
  143
  150
  157
  165
  174
  182
  191
  201
  211
  222
  233
  244
  256
  269
  283
  297
  312
  327
  344
  361
  379
  398
  418
  439
  461
  484
Total liabilities and equity, $m
  162
  170
  179
  188
  197
  207
  217
  228
  240
  251
  264
  278
  291
  306
  322
  337
  354
  372
  391
  410
  431
  452
  475
  499
  523
  550
  577
  606
  637
  668
Debt-to-equity ratio
  0.230
  0.240
  0.240
  0.250
  0.260
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.340
Adjusted equity ratio
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724
  0.724

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  13
  15
  17
  19
  22
  24
  26
  29
  32
  42
  45
  48
  52
  55
  59
  63
  68
  72
  77
  82
  88
  94
  100
  106
  113
  120
  127
  135
  144
Depreciation, amort., depletion, $m
  12
  12
  12
  13
  13
  13
  13
  13
  13
  14
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
Funds from operations, $m
  24
  26
  28
  30
  32
  34
  37
  40
  42
  45
  46
  49
  53
  57
  61
  65
  69
  74
  79
  84
  89
  95
  101
  108
  115
  122
  129
  137
  146
  155
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Cash from operations, $m
  23
  24
  26
  28
  31
  33
  35
  38
  41
  44
  44
  48
  51
  55
  58
  63
  67
  71
  76
  81
  87
  92
  98
  104
  111
  118
  125
  133
  141
  150
Maintenance CAPEX, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
New CAPEX, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Cash from investing activities, $m
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -11
  -11
  -11
  -13
  -13
  -13
  -15
  -15
  -15
  -17
  -17
  -18
  -19
  -20
  -21
  -22
Free cash flow, $m
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  35
  38
  41
  44
  48
  51
  55
  59
  63
  68
  72
  77
  82
  88
  94
  100
  106
  113
  120
  128
Issuance/(repayment) of debt, $m
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
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  
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Total cash flow (excl. dividends), $m
  19
  21
  23
  25
  27
  29
  31
  33
  36
  39
  39
  42
  45
  48
  52
  56
  60
  64
  68
  73
  78
  83
  89
  94
  101
  107
  114
  121
  129
  137
Retained Cash Flow (-), $m
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Prev. year cash balance distribution, $m
  21
  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
  34
  15
  17
  18
  20
  22
  24
  26
  28
  30
  30
  32
  35
  38
  41
  44
  48
  51
  55
  59
  63
  68
  72
  77
  83
  88
  94
  100
  107
  114
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
  33
  14
  14
  15
  15
  16
  16
  16
  16
  16
  14
  14
  13
  13
  12
  11
  10
  9
  8
  7
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
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

TechTarget, Inc. provides online content that helps buyers and sellers of corporate information technology (IT) products and services. The Company's offerings enable IT vendors to identify, reach and influence corporate IT decision makers researching specific IT purchases through customized marketing programs that include data analytics-driven intelligence solutions, demand generation and brand advertising. Its Websites focuses on IT sectors, such as storage, security or networking and for decision support information. Its content enables IT professionals to navigate the IT landscape where purchasing decisions can have financial and operational consequences. Its marketing opportunities and audience extensions are addressed using approximately nine distinct media groups, including Application Architecture and Development; Channel; CIO/IT Strategy; Data Center and Virtualization Technologies; Business Applications and Analytics; Networking; Security; Storage and TechnologyGuide.

FINANCIAL RATIOS  of  TechTarget, Inc. (TTGT)

Valuation Ratios
P/E Ratio 279.4
Price to Sales 5.2
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 31
Price to Free Cash Flow 39.9
Growth Rates
Sales Growth Rate -4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 27.1%
Total Debt to Equity 32.2%
Interest Coverage 6
Management Effectiveness
Return On Assets 1.4%
Ret/ On Assets - 3 Yr. Avg. 2.5%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 1.4%
Return On Equity - 3 Yr. Avg. 2.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 71%
Gross Margin - 3 Yr. Avg. 72.6%
EBITDA Margin 10.3%
EBITDA Margin - 3 Yr. Avg. 12.6%
Operating Margin 6.5%
Oper. Margin - 3 Yr. Avg. 8%
Pre-Tax Margin 4.7%
Pre-Tax Margin - 3 Yr. Avg. 7.3%
Net Profit Margin 1.9%
Net Profit Margin - 3 Yr. Avg. 4%
Effective Tax Rate 60%
Eff/ Tax Rate - 3 Yr. Avg. 48.2%
Payout Ratio 0%

TTGT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TTGT stock intrinsic value calculation we used $121 million for the last fiscal year's total revenue generated by TechTarget, Inc.. The default revenue input number comes from 0001 income statement of TechTarget, 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 TTGT stock valuation model: a) initial revenue growth rate of 5% 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 TTGT is calculated based on our internal credit rating of TechTarget, 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 TechTarget, 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 TTGT stock the variable cost ratio is equal to 52.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $42 million in the base year in the intrinsic value calculation for TTGT 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 6.2% for TechTarget, Inc..

Corporate tax rate of 27% is the nominal tax rate for TechTarget, 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 TTGT 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 TTGT are equal to 47.6%.

Life of production assets of 23 years is the average useful life of capital assets used in TechTarget, 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 TTGT is equal to 17.9%. 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 - $132.585 million for TechTarget, 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 27.791 million for TechTarget, 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 TechTarget, Inc. at the current share price and the inputted number of shares is $0.6 billion.

RELATED COMPANIES Price Int.Val. Rating
GOOGL Alphabet Inc. 1,125.37 985.65  hold
MSFT Microsoft Corp 136.97 135.87  hold
IT Gartner, Inc. 161.47 98.12  sell
CBS CBS Corporatio 50.47 55.79  hold
QNST QuinStreet, In 16.19 37.02  str.buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

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