Paysign Inc (PAYS)

[ebrie014]

Updated 2018FY Target Valuation - May 2018:

Q1-18 Overview:
Q1-18 was off to a great start (typically a slower quarter), the Company came out with a bang with revenue growing 46% over Q1-17 and I was especially happy to see gross margins substantially increase to 48% from 43% in Q1-17. The margin increase and sales increase ended up making up for a large portion of the SG&A bump up and kept the company increasing its net income over Q1-17 (and positioning it with some pretty substantial hires to help build the momentum over the remainder of the year). I expect the Company to continue this momentum going into the second half of the year and to start attracting more investors as people start noticing the high growth and up-listing prospects. (people will pay for growth and an acquirer would pay up for 3Pea's fully integrated payment processing capabilities so things are looking quite bright going forward).


You will find below my updated forecast for 3Pea's 2018FYE and the assigned valuation based on 3 different types of multiples.

2018 Financial Forecast:

Revenue: (46% growth) ~22.24M ** Increased to 46% based on Q1
Gross margins: 49% ~11.34M ** Increased to 49% as Q1 was 48% with expectation for more higher margin products to come in later in the year.
SG&A as a % of revenue 30% ~ 6.67M **increased from 26% to 30% as higher personnel costs have hit the books in Q1 but should stabilize over the rest of the year.
D&A and other: ~1M
EBITDA:4.22M
NI: 3.22M
F.d. share Count: ~47M
EPS: 0.07
Cash balance: ~5M (assumes we add another 2.9M this year)
LT debt:0$
**all multiples come from S&P capital IQ from companies in a similar industry - excluded larger entities that skew results to remain conservative.

Method 1 - EV/Sales:

EV/Sales Multiple:5.7x
Equity Value of ~131M
Share Value: 2.80$


Method 2 - EV/EBITDA:

EV/EBITDA Multiple:17.5x

Equity Value of 73.85M - Share Value: 1.68$


Method 3 - P/E:

P/E Multiple: 31.9x

Share Value: 2.19$

The average of the above methods gives us 2.22$/share.

Based on my analysis, it is well within reach for the Company to trade upwards of 2$/share. This is especially true with their new board members, and the potential uplist which should attract more investors and increase liquidity.



Best of luck!

E.