TABLE TRAC INC (TBTC) stock intrinsic value fair value estimate & owner earnings analysis

Table Trac (Minnetonka, Minnesota) sells and supports casino management systems: CasinoTrac and its table-games, player-loyalty, kiosk (KioskTrac, KioskTrac Mobile), DataTrac, SlotSUITE and RePrintEnroll add-ons. A casino buys the system once (system sales), then pays for support under maintenance contracts that average about five years, plus services. At the end of 2025 the company had systems installed with over 115 casino operators in over 300 casinos; 93.7% of 2025 revenue came from the United States, with the rest from the Caribbean, Central and South America, Australia and Japan. It holds gaming licenses in California, Iowa, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Nevada, West Virginia and Wisconsin and sells to tribal as well as commercial casinos, with a sales office in Oklahoma City. It has no borrowings (a $500,000 bank line has never been drawn) and held $8.15 million of cash at June 30, 2026. How we measure earnings. We use owner earnings: cash from operations with stock compensation, year-to-year working-capital swings and the capital spending needed to maintain the business taken out. Per diluted share this ran about 10 to 18 cents in 2016-2019, was negative in the 2020 casino shutdown, and 23 to 45 cents in 2021-2025 (2025: 39 cents). One adjustment matters here: a growing share of recent profit is interest earned on the company's cash pile ($478,000 in 2025, up from $83,000 in 2021). Because we count that cash separately as money owners already have, we strip the after-tax interest it earns out of the operating earnings so it is not counted twice. On that basis the operating business earned 23, 44, 31, 27 and 32 cents a share in 2021-2025. We use the median of those five years, about 31 cents a share (roughly $1.45 million a year), as the starting level. We start at 2021 because the business is roughly twice the size it was before 2020 and the shutdown year describes nothing about today; we keep the full five years because system sales are lumpy (2022 was a big installation year, 2024 a weak one) and a shorter window would catch only a peak or a trough. What the recent numbers say. Operating earnings rose about 18% in 2025, but not from more installations: system sales fell 28.5% while maintenance revenue rose 14.4% to $6.15 million, and lower stock compensation and working-capital drag did the rest. The first half of 2026 was very strong (revenue $8.16 million vs $5.87 million, net income $1.98 million vs $0.93 million), but that came almost entirely from system sales, which doubled to $3.70 million, and a single customer accounted for 47.5% of first-half revenue. Maintenance revenue, the recurring part, was flat at $3.11 million versus $3.09 million a year earlier and has now been flat for three half-years. We therefore do not raise the starting level on two strong quarters driven by one customer's installation. Our base case assumes 5% growth in the first year, well below the 18% the business actually produced in 2025, because the 2025 gain did not come from a repeatable source. What growth we credit. The one growth engine we treat as proven is the company's steady addition of casinos to its installed base: it delivered eight new systems in 2024, eight plus five expansions in 2025, and six in the second quarter of 2026 alone, and revenue compounded about 7% a year from 2016 to 2025, all funded from its own cash. Each new casino brings a multi-year maintenance contract. We credit that engine below its demonstrated pace and taper it. We do not credit expansion into new states, larger casino chains, or any repeat of this year's large single-customer order, since no such order or expansion is contracted. Base case ($7.53 a share): owner earnings grow 5% a year for three years, 4% for three, and 3% for four as new installations add maintenance contracts, reaching about 46 cents a share in year ten. Earnings then hold flat for twenty years and fade to zero over the following ten. The long hold rests on the company's thirty-year record (it was formed in 1995) of keeping and growing an installed base whose product development is already paid for out of earnings; the fade reflects that a small vendor competing against far larger, better-funded suppliers cannot be assumed to last forever. The operating business is worth about $6.11 a share ($28.6 million); it owes nothing and holds about $6.65 million ($1.42 a share) of cash beyond the roughly $1.5 million we assume it needs to operate, so the shares are worth about $7.53. Bear case ($3.63 a share): the dependence on one large customer (19% of 2025 revenue, 34% of 2024 revenue and 47.5% of the first half of 2026) and the competition the company itself describes from larger suppliers cut installations back, pulling operating earnings down to the roughly 23 cents a share the business earned in 2021. They hold there for ten years and then fade to zero over the next ten as the installed base erodes. The operating business is worth about $2.21 a share ($10.3 million); with no debt and $1.42 a share of surplus cash, the shares are worth about $3.63. Bull case ($10.17 a share): the installation pace of recent years carries on, with this year's surge in deliveries feeding the maintenance base, so owner earnings grow 10% a year for five years (below the roughly 17% a year per-share growth from the 2016-2019 level to the 2021-2025 level) and 5% for five more, reaching about 64 cents a share in year ten, then hold flat for thirty years before fading over ten. The operating business is worth about $8.75 a share ($41.0 million); adding $1.42 a share of surplus cash gives about $10.17. How this differs from our previous estimate. We previously put the shares at $3.97, $11.05 and $16.32 in the three cases. That estimate valued the earnings including the interest on the cash but never added the cash itself, and it assumed the earnings would last forever with no end. It also started from a higher level (35 cents) that included the interest income. We now value the operating business on its own, add the surplus cash separately, and let the earnings stream end rather than run in perpetuity. Adding the cash raises the value by about $1.42 a share in every case; the lower starting level and the finite life lower it by more, especially in the base and bull cases. New evidence also cuts both ways: first-half 2026 installations were strong, but recurring maintenance revenue stopped growing and customer concentration rose sharply. What would make this wrong. On the upside, if maintenance revenue resumes double-digit growth as this year's installations go live, the base case is too low. On the downside, if the large customer's current project ends and no comparable orders follow, or a larger competitor displaces Table Trac at several existing casinos, earnings could fall toward the bear case. The company pays a regular 2-cent quarterly dividend and paid a 10-cent special dividend in January 2026; paying out more cash would not change the value, only who holds it.