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Safeguard Scientifics (Safeguard Scientifics) Intrinsic Value: DCF (FCF Based) : $-4.71 (As of Apr. 27, 2024)


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What is Safeguard Scientifics Intrinsic Value: DCF (FCF Based)?

As of today (2024-04-27), Safeguard Scientifics's intrinsic value calculated from the Discounted Cash Flow model is $-4.71.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Safeguard Scientifics's Predictability Rank is 1-Star. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Safeguard Scientifics is N/A.

The industry rank for Safeguard Scientifics's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

SFES's Price-to-DCF (FCF Based) is not ranked *
in the Asset Management industry.
Industry Median: 1
* Ranked among companies with meaningful Price-to-DCF (FCF Based) only.

Safeguard Scientifics Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Safeguard Scientifics's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Safeguard Scientifics Intrinsic Value: DCF (FCF Based) Chart

Safeguard Scientifics Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Intrinsic Value: DCF (FCF Based)
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Safeguard Scientifics Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
Intrinsic Value: DCF (FCF Based) Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - - - - -

Competitive Comparison of Safeguard Scientifics's Intrinsic Value: DCF (FCF Based)

For the Asset Management subindustry, Safeguard Scientifics's Price-to-DCF (FCF Based), along with its competitors' market caps and Price-to-DCF (FCF Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Safeguard Scientifics's Price-to-DCF (FCF Based) Distribution in the Asset Management Industry

For the Asset Management industry and Financial Services sector, Safeguard Scientifics's Price-to-DCF (FCF Based) distribution charts can be found below:

* The bar in red indicates where Safeguard Scientifics's Price-to-DCF (FCF Based) falls into.



Safeguard Scientifics Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.66%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 15.50%
The Growth Rate in the growth stage is initially set as the default 10-Year FCF Growth Rate (Per Share). In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year FCF Growth Rate (Per Share). If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year FCF Growth Rate (Per Share).
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Safeguard Scientifics's average Free Cash Flow Growth Rate in the past 10 years was 15.50%, which is between 5% and 20%. => GuruFocus defaults => Growth Rate: 15.50%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $-0.204.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Safeguard Scientifics's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.155)/(1+0.11) = 1.0405405405405
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Free Cash Flow per Share*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=-0.204*23.1063
=-4.71

Margin of Safety (FCF Based)=(Intrinsic Value: DCF (FCF Based)-Current Price)/Intrinsic Value: DCF (FCF Based)
=(-4.71-0.8001)/-4.71
=N/A

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Safeguard Scientifics  (OTCPK:SFES) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


Safeguard Scientifics Intrinsic Value: DCF (FCF Based) Related Terms

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Safeguard Scientifics (Safeguard Scientifics) Business Description

Traded in Other Exchanges
Address
150 N. Radnor Chester Road, Suite F-200, Radnor, PA, USA, 19087
Safeguard Scientifics Inc is engaged in the development of early- and growth-stage businesses by providing capital and relevant expertise to fuel the growth of an attractive portfolio of technology-enabled healthcare, digital media, and other companies. Safeguard generally promotes the growth and development of these companies through Board representation and minority equity ownership. In addition to supporting the companies, Safeguard's strategy focuses on pursuing monetization opportunities in order to return value to shareholders.
Executives
Satterfield Thomas A Jr 10 percent owner 2609 CALDWELL MILL LN, BIRMINGHAM AL 35243
Beth Michelson director C/O CARTESIAN GROWTH CORPORATION II, 505 FIFTH AVENUE, 15TH FLOOR, NEW YORK NY 10017
Ross D Demont director 51 PICKWICK ROAD, NEWTON MA 02465
Manko Joseph M. Jr. director 1717 ARCH STREET, 37TH FLOOR, PHILADELPHIA PA 19103
Bob Rosenthal director 20 NEWBURY ST, BOSTON MA 02116
Mark Herndon officer: SVP & Chief Financial Officer C/O SAFEGUARD SCIENTIFICS, INC., 170 N. RADNOR-CHESTER ROAD, SUITE 200, RADNOR PA 19087
Eric Salzman officer: Chief Restructuring Officer C/O 8X8 INC., 675 CREEKSIDE WAY, CAMPCALL CA 95008
Ira M Lubert director C/O PENN. REAL ESTATE INVESTMENT TRUST, 200 S. BROAD ST., THE BELLEVUE, PHILADEPHIA PA 19102
John Joseph Roberts director 1007 CANTERBURY LANE, VILLANOVA PA 19085
Brian J Sisko officer: Senior V.P. & General Counsel 435 DEVON PARK DRIVE, BUILDING 800, WAYNE PA 19087
Russell D Glass director 170 N. RADNOR-CHESTER ROAD, SUITE 200, RADNOR PA 19087
David A Kille officer: Senior VP & CFO C/O SAFEGUARD SCIENTIFICS, INC., 170 N. RADNOR-CHESTER ROAD, SUITE 200, RADNOR PA 19087
Maureen F Morrison director C/O ASBURY AUTOMOTIVE GROUP, 2905 PREMIERE PKWY, STE 300, DULUTH GA 30097
Stephen T Zarrilli officer: Acting Sr VP & Acting CFO FIBERLINK COMMUNICATIONS CORP., 794 PENLLYN PIKE, BLUE BELL PA 19422
Andrew E Lietz director P O BOX 738, RYE NH 03870