Intrinsic value of USA Technologies, Inc. - USAT

Previous Close

$7.45

  Intrinsic Value

$2.35

stock screener

  Rating & Target

str. sell

-69%

Previous close

$7.45

 
Intrinsic value

$2.35

 
Up/down potential

-69%

 
Rating

str. sell

We calculate the intrinsic value of USAT 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, %
  35.40
  32.36
  29.62
  27.16
  24.95
  22.95
  21.16
  19.54
  18.09
  16.78
  15.60
  14.54
  13.59
  12.73
  11.95
  11.26
  10.63
  10.07
  9.56
  9.11
  8.70
  8.33
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
  6.59
  6.43
Revenue, $m
  141
  186
  242
  307
  384
  472
  572
  684
  807
  943
  1,090
  1,248
  1,418
  1,598
  1,789
  1,991
  2,202
  2,424
  2,656
  2,898
  3,150
  3,412
  3,684
  3,968
  4,263
  4,569
  4,887
  5,218
  5,562
  5,919
Variable operating expenses, $m
  132
  175
  226
  287
  358
  440
  533
  637
  752
  878
  1,014
  1,161
  1,319
  1,487
  1,665
  1,852
  2,049
  2,255
  2,471
  2,696
  2,931
  3,175
  3,428
  3,692
  3,966
  4,251
  4,547
  4,855
  5,175
  5,508
Fixed operating expenses, $m
  6
  6
  6
  7
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
Total operating expenses, $m
  138
  181
  232
  294
  365
  447
  540
  644
  759
  885
  1,022
  1,169
  1,327
  1,495
  1,673
  1,860
  2,058
  2,264
  2,480
  2,705
  2,940
  3,185
  3,438
  3,702
  3,976
  4,262
  4,558
  4,866
  5,186
  5,520
Operating income, $m
  2
  5
  9
  14
  19
  25
  32
  39
  48
  57
  68
  79
  91
  103
  116
  130
  144
  160
  176
  192
  210
  228
  246
  266
  286
  307
  329
  352
  375
  400
EBITDA, $m
  8
  13
  18
  25
  33
  41
  52
  63
  75
  89
  104
  120
  137
  155
  175
  195
  217
  239
  263
  287
  313
  339
  367
  396
  426
  457
  489
  523
  558
  594
Interest expense (income), $m
  1
  1
  2
  3
  5
  6
  8
  11
  13
  16
  20
  23
  27
  31
  36
  40
  45
  51
  56
  62
  68
  75
  81
  88
  96
  103
  111
  119
  127
  136
  145
Earnings before tax, $m
  1
  4
  6
  9
  12
  16
  21
  26
  31
  37
  45
  52
  59
  67
  76
  84
  94
  103
  113
  124
  135
  146
  158
  170
  183
  196
  210
  225
  239
  255
Tax expense, $m
  0
  1
  2
  2
  3
  4
  6
  7
  8
  10
  12
  14
  16
  18
  20
  23
  25
  28
  31
  33
  36
  39
  43
  46
  49
  53
  57
  61
  65
  69
Net income, $m
  1
  3
  4
  7
  9
  12
  15
  19
  23
  27
  33
  38
  43
  49
  55
  62
  68
  75
  83
  90
  98
  107
  115
  124
  134
  143
  153
  164
  175
  186

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
  132
  175
  227
  288
  360
  443
  537
  642
  758
  885
  1,023
  1,172
  1,331
  1,501
  1,680
  1,869
  2,068
  2,276
  2,494
  2,721
  2,957
  3,204
  3,460
  3,726
  4,002
  4,290
  4,589
  4,899
  5,222
  5,558
Adjusted assets (=assets-cash), $m
  132
  175
  227
  288
  360
  443
  537
  642
  758
  885
  1,023
  1,172
  1,331
  1,501
  1,680
  1,869
  2,068
  2,276
  2,494
  2,721
  2,957
  3,204
  3,460
  3,726
  4,002
  4,290
  4,589
  4,899
  5,222
  5,558
Revenue / Adjusted assets
  1.068
  1.063
  1.066
  1.066
  1.067
  1.065
  1.065
  1.065
  1.065
  1.066
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
  1.065
Average production assets, $m
  23
  31
  40
  50
  63
  77
  94
  112
  132
  155
  179
  205
  232
  262
  293
  326
  361
  398
  436
  475
  517
  560
  604
  651
  699
  749
  801
  856
  912
  971
Working capital, $m
  5
  6
  8
  10
  12
  15
  18
  22
  26
  30
  35
  40
  45
  51
  57
  64
  70
  78
  85
  93
  101
  109
  118
  127
  136
  146
  156
  167
  178
  189
Total debt, $m
  23
  37
  54
  74
  97
  124
  155
  189
  227
  269
  314
  363
  415
  470
  529
  591
  656
  724
  795
  869
  946
  1,027
  1,111
  1,198
  1,288
  1,382
  1,480
  1,581
  1,687
  1,797
Total liabilities, $m
  43
  57
  74
  94
  118
  145
  176
  210
  248
  289
  335
  383
  435
  491
  549
  611
  676
  744
  815
  890
  967
  1,048
  1,131
  1,218
  1,309
  1,403
  1,500
  1,602
  1,708
  1,817
Total equity, $m
  89
  118
  153
  194
  243
  298
  361
  432
  510
  596
  689
  789
  896
  1,010
  1,131
  1,258
  1,392
  1,532
  1,678
  1,831
  1,990
  2,156
  2,328
  2,507
  2,694
  2,887
  3,088
  3,297
  3,514
  3,741
Total liabilities and equity, $m
  132
  175
  227
  288
  361
  443
  537
  642
  758
  885
  1,024
  1,172
  1,331
  1,501
  1,680
  1,869
  2,068
  2,276
  2,493
  2,721
  2,957
  3,204
  3,459
  3,725
  4,003
  4,290
  4,588
  4,899
  5,222
  5,558
Debt-to-equity ratio
  0.250
  0.310
  0.350
  0.380
  0.400
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
Adjusted equity ratio
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673
  0.673

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  3
  4
  7
  9
  12
  15
  19
  23
  27
  33
  38
  43
  49
  55
  62
  68
  75
  83
  90
  98
  107
  115
  124
  134
  143
  153
  164
  175
  186
Depreciation, amort., depletion, $m
  6
  7
  9
  11
  14
  17
  20
  24
  28
  32
  36
  41
  46
  52
  59
  65
  72
  80
  87
  95
  103
  112
  121
  130
  140
  150
  160
  171
  182
  194
Funds from operations, $m
  7
  10
  14
  18
  23
  29
  35
  42
  51
  59
  69
  79
  90
  102
  114
  127
  141
  155
  170
  185
  202
  219
  236
  254
  273
  293
  314
  335
  357
  380
Change in working capital, $m
  1
  1
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
Cash from operations, $m
  6
  8
  12
  16
  20
  26
  32
  39
  47
  55
  64
  74
  84
  96
  108
  120
  134
  148
  162
  178
  194
  210
  227
  245
  264
  283
  304
  324
  346
  369
Maintenance CAPEX, $m
  -3
  -5
  -6
  -8
  -10
  -13
  -15
  -19
  -22
  -26
  -31
  -36
  -41
  -46
  -52
  -59
  -65
  -72
  -80
  -87
  -95
  -103
  -112
  -121
  -130
  -140
  -150
  -160
  -171
  -182
New CAPEX, $m
  -6
  -7
  -9
  -11
  -13
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -59
Cash from investing activities, $m
  -9
  -12
  -15
  -19
  -23
  -27
  -31
  -37
  -42
  -48
  -55
  -62
  -69
  -76
  -83
  -92
  -100
  -108
  -118
  -127
  -136
  -146
  -157
  -167
  -178
  -190
  -202
  -214
  -227
  -241
Free cash flow, $m
  -4
  -4
  -3
  -3
  -2
  -1
  0
  2
  4
  6
  9
  12
  16
  20
  24
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  93
  101
  110
  119
  128
Issuance/(repayment) of debt, $m
  11
  14
  17
  20
  24
  27
  31
  34
  38
  42
  45
  49
  52
  55
  59
  62
  65
  68
  71
  74
  77
  81
  84
  87
  90
  94
  98
  102
  106
  110
Issuance/(repurchase) of shares, $m
  22
  26
  30
  35
  39
  44
  48
  52
  55
  58
  60
  62
  64
  65
  65
  66
  65
  65
  64
  62
  61
  59
  57
  55
  53
  50
  48
  45
  43
  40
Cash from financing (excl. dividends), $m  
  33
  40
  47
  55
  63
  71
  79
  86
  93
  100
  105
  111
  116
  120
  124
  128
  130
  133
  135
  136
  138
  140
  141
  142
  143
  144
  146
  147
  149
  150
Total cash flow (excl. dividends), $m
  30
  37
  44
  52
  61
  70
  79
  88
  97
  106
  114
  123
  132
  140
  148
  156
  164
  172
  180
  188
  195
  203
  212
  220
  229
  238
  247
  257
  267
  278
Retained Cash Flow (-), $m
  -23
  -29
  -35
  -41
  -48
  -56
  -63
  -71
  -78
  -86
  -93
  -100
  -107
  -114
  -121
  -127
  -134
  -140
  -146
  -153
  -159
  -166
  -172
  -179
  -186
  -193
  -201
  -209
  -217
  -226
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
  7
  8
  9
  11
  12
  14
  16
  17
  19
  21
  21
  23
  24
  26
  27
  29
  30
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  48
  49
  51
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
  6
  7
  8
  9
  9
  10
  11
  11
  11
  11
  10
  10
  9
  9
  8
  7
  7
  6
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
Current shareholders' claim on cash, %
  95.3
  91.3
  88.0
  85.1
  82.6
  80.5
  78.7
  77.0
  75.6
  74.4
  73.3
  72.3
  71.5
  70.7
  70.0
  69.4
  68.9
  68.5
  68.0
  67.7
  67.3
  67.0
  66.8
  66.6
  66.3
  66.2
  66.0
  65.9
  65.7
  65.6

USA Technologies, Inc. provides technology-enabled solutions and value-added services that facilitate electronic payment transactions within the unattended point of sale (POS) market. The Company is a provider in the small ticket, beverage and food vending industry and is also engaged in offering solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others. It has designed and marketed systems and solutions that facilitate electronic payment options, as well as telemetry and machine-to-machine (M2M) services, which include the ability to remotely monitor, control and report on the results of distributed assets containing its electronic payment solutions. The Company derives its revenues from license and transaction fees resulting from connections to, as well as services provided by, its ePort Connect service.

FINANCIAL RATIOS  of  USA Technologies, Inc. (USAT)

Valuation Ratios
P/E Ratio -150.2
Price to Sales 2.9
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow -42.9
Price to Free Cash Flow -27.3
Growth Rates
Sales Growth Rate 35.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -18.3%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 1.5%
Total Debt to Equity 16.7%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.1%
Ret/ On Assets - 3 Yr. Avg. -3.3%
Return On Total Capital -2.8%
Ret/ On T. Cap. - 3 Yr. Avg. -5.3%
Return On Equity -3.3%
Return On Equity - 3 Yr. Avg. -6%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 26%
Gross Margin - 3 Yr. Avg. 27.9%
EBITDA Margin 4.8%
EBITDA Margin - 3 Yr. Avg. 4%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -0.9%
Pre-Tax Margin -1.9%
Pre-Tax Margin - 3 Yr. Avg. -4.2%
Net Profit Margin -1.9%
Net Profit Margin - 3 Yr. Avg. -4.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

USAT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the USAT stock intrinsic value calculation we used $104 million for the last fiscal year's total revenue generated by USA Technologies, Inc.. The default revenue input number comes from 0001 income statement of USA Technologies, 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 USAT stock valuation model: a) initial revenue growth rate of 35.4% 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 USAT is calculated based on our internal credit rating of USA Technologies, 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 USA Technologies, 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 USAT stock the variable cost ratio is equal to 94.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6 million in the base year in the intrinsic value calculation for USAT 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 8.6% for USA Technologies, Inc..

Corporate tax rate of 27% is the nominal tax rate for USA Technologies, 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 USAT 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 USAT are equal to 16.4%.

Life of production assets of 4.2 years is the average useful life of capital assets used in USA Technologies, 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 USAT is equal to 3.2%. 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 - $65.778 million for USA Technologies, 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 60.000 million for USA Technologies, 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 USA Technologies, Inc. at the current share price and the inputted number of shares is $0.4 billion.

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