StarTek, Inc. provides business process outsourcing services in the United States, Canada, Honduras, Jamaica, and the Philippines. It operates in three segments: Domestic, Nearshore, and Offshore. The companys service offerings include customer care, sales support, inbound sales, complex order processing, accounts receivable management, technical and product support, up-sell and cross-sell opportunities, and other industry-specific processes. The company was founded in 1987 and is based in Greenwood Village, Colorado.
SRT Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for SRT, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that StarTek Inc ranked in the 95th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 6065% on a DCF basis. The most interesting components of our discounted cash flow analysis for StarTek Inc ended up being:
The compound growth rate in the free cash flow of StarTek Inc over the past 4.25 years is 1.33%; that's higher than 93.87% of free cash flow generating stocks in the Industrials sector.
StarTek Inc's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than just 0% of US stocks with positive free cash flow.
StarTek Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -1.09. This coverage rate is greater than that of merely 20.13% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Industrials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as SRT, try NVEE, SGRP, POWL, SNDR, and CAR.
StarTek, Inc. (SRT) Q2 2020 Earnings Conference Call August 10, 2020 5:00 PM ET Company Participants Aparup Sengupta – Chairman and Chief Executive Officer Ramesh Kamath – Chief Financial Officer Rajiv Ahuja – President Conference Call Participants Dave Koning – Baird Mark Argento – Lake Street Capital Markets Zach Cummins...
Good afternoon, everyone, and thank you for participating in today's conference call to discuss StarTek's financial results for the quarter ended March 31, 2020. Joining us today are StarTek's chairman and CEO, Aparup Sengupta; the company's president, Rajiv Ahuja; and the company's CFO, Ramesh Kamath. StarTek advises all those listening to this call to review the latest 10-Q and 10-K posted on its website for a summary of these risks and uncertainties.