ReposiTrak, Inc. (TRAK) stock intrinsic value fair value estimate & owner earnings analysis

ReposiTrak (formerly Park City Group) runs a subscription software network for the U.S. food industry. Grocery retailers and wholesalers use it to require their suppliers to file food-safety and regulatory compliance documents and, increasingly, to share lot-level traceability data; suppliers pay recurring fees to stay in good standing with their customers. Revenue has stayed between about $18 million and $23 million for a decade: it fell from $22.0 million in fiscal 2018 to $18.0 million in fiscal 2022 as legacy services were wound down, then grew every year to $23.3 million in fiscal 2026 (year ended June 30, 2026), when recurring revenue grew 4%. How we measure earnings. We value the cash the business produces for its owners: operating cash flow with working-capital swings removed, with stock compensation and a normal level of capital spending charged as costs. Two judgements matter. First, ReposiTrak books a bad-debt charge every year ($0.35 million to $1.3 million over the past decade, $0.95 million in fiscal 2026); we treat it as a real cost, because these are fees that are never collected. Second, in May 2026 SPAR Group, a retail merchandising company, paid a $2.3 million bill to ReposiTrak in SPAR shares instead of cash; we count the revenue as earned but treat the shares as an investment rather than cash. On this basis owner earnings rose from $0.25 a share in fiscal 2022 to $0.31, $0.38 and $0.43 in fiscal 2023 to 2025, then fell to $0.36 in fiscal 2026, because the company began capitalizing about $1.0 million a year of software spending to rewrite its technology stack and bad debts rose. We anchor on the median of fiscal 2022 to 2026, about $0.36 a share (roughly $6.9 million a year): that is the period since the business became a pure subscription network, and earlier years describe a different, lumpier business. Interest costs are negligible, so cash flow before lenders is essentially the same figure. Owner earnings fell about 15% in fiscal 2026. The base case holds year one flat at the fiscal 2026 level rather than assuming a rebound: revenue and recurring revenue still grew and operating costs fell 6%, while the two items behind the drop, the software spending and the higher bad-debt charge, remain fully charged in that level. The cases, all discounted at 6%: Base case, $6.88 a share. Earnings are flat in year one, then grow about 4% a year, the pace recurring revenue actually grew in fiscal 2026 and below the 6.6% annual revenue growth since fiscal 2022, tapering to 2% by year ten. Earnings then hold flat through year twenty, supported by a supplier network that retailers require their vendors to use, and fade to zero over the following decade, because nothing in the filings shows the platform protected beyond that. We give no credit for a surge of new customers from the FDA food traceability rule (Section 204 of the Food Safety Modernization Act), or for the new touchless-merchandising offering with SPAR, because neither has yet shown up in results. On this path the operating business is worth about $5.56 a share ($106 million). Bear case, $3.80 a share. Earnings drop 10% in year one as the software rewrite and elevated bad debts continue, then decline 3% a year as traceability demand stalls, as it did in the fourth quarter of fiscal 2026, when revenue fell 3% after the original January 2026 compliance date was pushed back, and as revenue did from fiscal 2018 to 2022. Earnings fade to zero over years eleven to twenty. The operating business is worth about $2.63 a share ($50 million), and the SPAR shares and loan are written to zero. Bull case, $10.20 a share. Earnings per share grow 9% a year for five years, matching the fiscal 2022 to 2026 record, as suppliers adopt traceability ahead of the July 20, 2028 compliance date, tapering to 4% by year ten; earnings then hold flat through year twenty-five and fade over the following ten years. The operating business is worth about $8.74 a share ($166 million). What it owns and owes. At June 30, 2026 ReposiTrak held $27.3 million of cash and owed only $0.3 million of notes and finance leases. Its remaining Series B preferred stock, 160,865 shares or about $1.7 million at the recent $10.70 redemption price, ranks ahead of the common; management aims to redeem it by December 2026. We set aside about $3 million of cash as needed to run the business. ReposiTrak has also lent SPAR Group $3.0 million under a $4.0 million credit line and holds the SPAR shares it received (carried at about $2.5 million); SPAR's shares were priced near $0.73 when issued, so we count these assets at full value in the bull case, half in the base case and zero in the bear case. After subtracting what it owes, the company holds surplus assets of about $1.17 a share in the bear case ($22.2 million), $1.32 in the base case ($25.0 million) and $1.46 in the bull case ($27.8 million), added to the operating values above. No debt maturity or covenant affects the outcome. What changed. Our previous estimate (base case $11.36) assumed earnings would compound at about 9% and keep growing forever after year ten. We now credit only growth the business has already demonstrated, and earning power only for as long as we can name what sustains it; we also count the recurring bad-debt charge as a cost, and fiscal 2026 owner earnings came in below fiscal 2025. Partly offsetting this, the traceability deadline is firmer than before: Congress has directed the FDA not to enforce the rule before July 20, 2028, and the FDA has said it does not intend a further delay. The SPAR loan and shares also add assets. What would make this wrong. On the upside, the 2028 deadline could pull a wave of suppliers onto the traceability network, or SPAR-related merchandising revenue could become large, as management expects; neither is in our base case. On the downside, retailers could drop or weaken their supplier compliance mandates, the traceability rule could be delayed again or rolled back, bad debts could rise further, or SPAR could fail to repay its loan. The fiscal 2026 annual report was not yet available to us; fiscal 2026 figures come from the company's audited year-end results release.