Intrinsic value of TechTarget - TTGT

Previous Close

$15.62

  Intrinsic Value

$0.98

stock screener

  Rating & Target

str. sell

-94%

Previous close

$15.62

 
Intrinsic value

$0.98

 
Up/down potential

-94%

 
Rating

str. 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 0.4

 

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, %
  18.00
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
Revenue, $m
  128
  149
  173
  198
  224
  253
  283
  315
  348
  383
  420
  458
  497
  539
  582
  626
  673
  721
  771
  823
  877
  934
  992
  1,053
  1,117
  1,183
  1,252
  1,324
  1,400
  1,478
Variable operating expenses, $m
  118
  136
  156
  177
  200
  224
  250
  277
  305
  335
  356
  389
  422
  457
  494
  532
  571
  612
  655
  699
  745
  793
  843
  894
  948
  1,005
  1,063
  1,125
  1,188
  1,255
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
  118
  136
  156
  177
  200
  224
  250
  277
  305
  335
  356
  389
  422
  457
  494
  532
  571
  612
  655
  699
  745
  793
  843
  894
  948
  1,005
  1,063
  1,125
  1,188
  1,255
Operating income, $m
  10
  13
  17
  20
  24
  29
  33
  38
  43
  48
  63
  69
  75
  81
  88
  94
  101
  109
  116
  124
  132
  141
  150
  159
  168
  178
  189
  200
  211
  223
EBITDA, $m
  22
  26
  30
  34
  39
  44
  49
  55
  61
  67
  73
  80
  87
  94
  101
  109
  117
  125
  134
  143
  153
  162
  173
  183
  194
  206
  218
  230
  244
  257
Interest expense (income), $m
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
Earnings before tax, $m
  8
  11
  14
  17
  21
  25
  28
  33
  37
  42
  56
  61
  66
  71
  77
  83
  89
  95
  102
  108
  116
  123
  131
  139
  147
  155
  165
  174
  184
  194
Tax expense, $m
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  15
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  40
  42
  44
  47
  50
  52
Net income, $m
  6
  8
  10
  13
  15
  18
  21
  24
  27
  30
  41
  44
  48
  52
  56
  60
  65
  69
  74
  79
  84
  90
  95
  101
  107
  114
  120
  127
  134
  142

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
  181
  211
  244
  279
  317
  357
  399
  444
  491
  540
  592
  646
  702
  760
  820
  883
  949
  1,017
  1,087
  1,161
  1,237
  1,317
  1,399
  1,486
  1,575
  1,669
  1,766
  1,868
  1,974
  2,085
Adjusted assets (=assets-cash), $m
  181
  211
  244
  279
  317
  357
  399
  444
  491
  540
  592
  646
  702
  760
  820
  883
  949
  1,017
  1,087
  1,161
  1,237
  1,317
  1,399
  1,486
  1,575
  1,669
  1,766
  1,868
  1,974
  2,085
Revenue / Adjusted assets
  0.707
  0.706
  0.709
  0.710
  0.707
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.708
  0.709
  0.710
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
  0.709
Average production assets, $m
  66
  78
  90
  103
  116
  131
  147
  163
  181
  199
  218
  238
  258
  280
  302
  325
  349
  374
  400
  427
  455
  485
  515
  547
  580
  614
  650
  687
  726
  767
Working capital, $m
  23
  27
  32
  36
  41
  46
  52
  58
  64
  70
  77
  84
  91
  99
  106
  115
  123
  132
  141
  151
  161
  171
  182
  193
  204
  217
  229
  242
  256
  270
Total debt, $m
  40
  48
  57
  67
  77
  89
  100
  113
  126
  139
  154
  169
  184
  200
  217
  234
  253
  271
  291
  311
  332
  354
  377
  401
  426
  452
  479
  507
  536
  567
Total liabilities, $m
  50
  58
  67
  77
  88
  99
  111
  123
  136
  150
  164
  179
  194
  210
  227
  245
  263
  282
  301
  322
  343
  365
  388
  412
  436
  462
  489
  517
  547
  577
Total equity, $m
  131
  152
  176
  202
  229
  258
  289
  321
  355
  391
  428
  467
  507
  549
  593
  639
  686
  735
  786
  839
  895
  952
  1,012
  1,074
  1,139
  1,206
  1,277
  1,350
  1,427
  1,507
Total liabilities and equity, $m
  181
  210
  243
  279
  317
  357
  400
  444
  491
  541
  592
  646
  701
  759
  820
  884
  949
  1,017
  1,087
  1,161
  1,238
  1,317
  1,400
  1,486
  1,575
  1,668
  1,766
  1,867
  1,974
  2,084
Debt-to-equity ratio
  0.300
  0.320
  0.320
  0.330
  0.340
  0.340
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.380
  0.380
  0.380
  0.380
Adjusted equity ratio
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  8
  10
  13
  15
  18
  21
  24
  27
  30
  41
  44
  48
  52
  56
  60
  65
  69
  74
  79
  84
  90
  95
  101
  107
  114
  120
  127
  134
  142
Depreciation, amort., depletion, $m
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  10
  11
  12
  12
  13
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
Funds from operations, $m
  18
  21
  24
  27
  30
  33
  37
  41
  45
  49
  50
  55
  60
  65
  70
  75
  80
  86
  92
  98
  105
  111
  118
  126
  133
  141
  149
  158
  167
  176
Change in working capital, $m
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
Cash from operations, $m
  15
  17
  19
  22
  25
  28
  31
  35
  38
  42
  44
  48
  52
  57
  62
  67
  72
  77
  83
  89
  95
  101
  108
  114
  121
  129
  136
  144
  153
  162
Maintenance CAPEX, $m
  -3
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
New CAPEX, $m
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -41
Cash from investing activities, $m
  -13
  -14
  -15
  -17
  -19
  -20
  -22
  -23
  -24
  -26
  -28
  -30
  -32
  -33
  -34
  -36
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -55
  -57
  -60
  -63
  -66
  -70
  -73
Free cash flow, $m
  2
  3
  4
  5
  6
  8
  10
  12
  14
  16
  16
  18
  21
  24
  27
  30
  33
  37
  40
  44
  48
  51
  56
  60
  64
  69
  73
  78
  83
  88
Issuance/(repayment) of debt, $m
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
Issuance/(repurchase) of shares, $m
  14
  14
  13
  13
  12
  11
  10
  9
  7
  5
  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  
  22
  22
  22
  23
  22
  22
  22
  21
  20
  19
  14
  15
  16
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
Total cash flow (excl. dividends), $m
  23
  25
  26
  28
  29
  30
  31
  33
  34
  35
  30
  33
  37
  40
  44
  48
  51
  56
  60
  64
  69
  73
  78
  84
  89
  94
  100
  106
  112
  119
Retained Cash Flow (-), $m
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -70
  -74
  -77
  -80
Prev. year cash balance distribution, $m
  10
  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
  14
  3
  3
  2
  2
  1
  1
  0
  0
  -1
  -7
  -5
  -4
  -2
  0
  2
  4
  6
  9
  11
  14
  16
  19
  21
  24
  27
  30
  33
  36
  39
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
  13
  3
  2
  2
  1
  1
  1
  0
  0
  0
  -3
  -2
  -1
  -1
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  96.7
  93.9
  91.6
  89.8
  88.3
  87.1
  86.2
  85.5
  85.0
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6
  84.6

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 (TTGT)

Valuation Ratios
P/E Ratio 214.8
Price to Sales 4
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 23.9
Price to Free Cash Flow 30.7
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 $108.556 million for the last fiscal year's total revenue generated by TechTarget. The default revenue input number comes from 0001 income statement of TechTarget. 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 18% 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, 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.
    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 93.6%.

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 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 5.4% for TechTarget.

Corporate tax rate of 27% is the nominal tax rate for TechTarget. 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 51.9%.

Life of production assets of 22.4 years is the average useful life of capital assets used in TechTarget 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 18.3%. 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 - $120.747 million for TechTarget - 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 27.581 million for TechTarget 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 at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ TechTarget: 3Q Earnings Snapshot   [05:12AM  Associated Press]
▶ Yelp (YELP) Catches Eye: Stock Jumps 6.8%   [Sep-21-18 08:53AM  Zacks]
▶ TechTarget (TTGT) Enters Oversold Territory   [Sep-13-18 06:35AM  Zacks]
▶ Is TechTarget Inc (NASDAQ:TTGT) Potentially Underrated?   [Sep-06-18 02:17PM  Simply Wall St.]
▶ 3 Top Small-Cap Stocks to Buy Right Now   [Aug-23-18 03:21PM  Motley Fool]
▶ Why TechTarget Inc. Shares Are 18% Lower Today   [Aug-09-18 01:08PM  Motley Fool]
▶ TechTarget: 2Q Earnings Snapshot   [05:09AM  Associated Press]
▶ TechTarget, Inc. to Host Earnings Call   [03:00PM  ACCESSWIRE]
▶ The 5 Best Tech Stocks of 2018 (So Far)   [Jul-26-18 05:45AM  Motley Fool]
▶ TechTarget: 1Q Earnings Snapshot   [05:12AM  Associated Press]
▶ 4 Top-Ranked Tech Stocks Under $20 With Room to Run   [Mar-22-18 01:20PM  InvestorPlace]
▶ 5 Cheap Breakout Stocks for Explosive Returns   [Mar-09-18 06:32AM  Zacks]
▶ TechTarget posts 4Q profit   [05:02AM  Associated Press]
▶ TechTarget, Inc. to Host Earnings Call   [12:45PM  ACCESSWIRE]
▶ TechTarget posts 3Q profit   [Nov-09-17 05:02AM  Associated Press]
▶ TechTarget, Inc. to Host Earnings Call   [02:10PM  ACCESSWIRE]
▶ The Market In 5 Minutes   [Aug-17-17 08:33AM  Benzinga]
▶ ETFs with exposure to TechTarget, Inc. : June 27, 2017   [Jun-27-17 03:54PM  Capital Cube]
▶ TechTarget posts 1Q loss   [May-10-17 06:38PM  Associated Press]

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