Intrinsic value of Badger Daylighting Ltd. - BAD

Previous Close

$28.10

  Intrinsic Value

$1.86

stock screener

  Rating & Target

str. sell

-93%

Previous close

$28.10

 
Intrinsic value

$1.86

 
Up/down potential

-93%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BAD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -0.25
  33.70
  30.83
  28.25
  25.92
  23.83
  21.95
  20.25
  18.73
  17.35
  16.12
  15.01
  14.01
  13.11
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
Revenue, $m
  404
  540
  707
  906
  1,141
  1,413
  1,723
  2,072
  2,460
  2,887
  3,353
  3,856
  4,396
  4,972
  5,584
  6,229
  6,909
  7,622
  8,368
  9,147
  9,958
  10,804
  11,683
  12,598
  13,548
  14,536
  15,562
  16,629
  17,737
  18,891
  20,091
Variable operating expenses, $m
 
  477
  625
  801
  1,008
  1,249
  1,523
  1,831
  2,174
  2,551
  2,962
  3,407
  3,884
  4,393
  4,933
  5,504
  6,104
  6,734
  7,393
  8,081
  8,798
  9,545
  10,322
  11,130
  11,970
  12,842
  13,749
  14,691
  15,671
  16,690
  17,750
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  350
  477
  625
  801
  1,008
  1,249
  1,523
  1,831
  2,174
  2,551
  2,962
  3,407
  3,884
  4,393
  4,933
  5,504
  6,104
  6,734
  7,393
  8,081
  8,798
  9,545
  10,322
  11,130
  11,970
  12,842
  13,749
  14,691
  15,671
  16,690
  17,750
Operating income, $m
  54
  63
  82
  105
  133
  164
  201
  241
  286
  336
  390
  449
  512
  579
  650
  726
  805
  888
  975
  1,066
  1,160
  1,259
  1,361
  1,468
  1,578
  1,693
  1,813
  1,937
  2,066
  2,201
  2,340
EBITDA, $m
  97
  120
  157
  201
  253
  313
  382
  459
  545
  640
  743
  855
  974
  1,102
  1,238
  1,381
  1,531
  1,689
  1,855
  2,027
  2,207
  2,395
  2,589
  2,792
  3,003
  3,222
  3,449
  3,685
  3,931
  4,187
  4,453
Interest expense (income), $m
  5
  5
  8
  12
  16
  21
  27
  34
  41
  50
  59
  69
  80
  92
  104
  117
  131
  146
  162
  178
  195
  212
  231
  250
  270
  290
  312
  334
  357
  381
  406
Earnings before tax, $m
  47
  58
  74
  94
  117
  143
  174
  208
  245
  287
  332
  380
  432
  488
  546
  608
  674
  742
  813
  888
  965
  1,046
  1,130
  1,218
  1,309
  1,403
  1,501
  1,603
  1,709
  1,820
  1,934
Tax expense, $m
  18
  16
  20
  25
  32
  39
  47
  56
  66
  77
  90
  103
  117
  132
  148
  164
  182
  200
  220
  240
  261
  283
  305
  329
  353
  379
  405
  433
  462
  491
  522
Net income, $m
  29
  42
  54
  69
  85
  105
  127
  152
  179
  209
  242
  278
  316
  356
  399
  444
  492
  542
  594
  648
  705
  764
  825
  889
  955
  1,024
  1,096
  1,170
  1,248
  1,328
  1,412

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  63
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  458
  528
  691
  886
  1,116
  1,381
  1,685
  2,026
  2,405
  2,823
  3,277
  3,769
  4,297
  4,860
  5,458
  6,089
  6,754
  7,450
  8,180
  8,941
  9,735
  10,561
  11,421
  12,314
  13,243
  14,209
  15,212
  16,255
  17,339
  18,466
  19,639
Adjusted assets (=assets-cash), $m
  395
  528
  691
  886
  1,116
  1,381
  1,685
  2,026
  2,405
  2,823
  3,277
  3,769
  4,297
  4,860
  5,458
  6,089
  6,754
  7,450
  8,180
  8,941
  9,735
  10,561
  11,421
  12,314
  13,243
  14,209
  15,212
  16,255
  17,339
  18,466
  19,639
Revenue / Adjusted assets
  1.023
  1.023
  1.023
  1.023
  1.022
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
  1.023
Average production assets, $m
  306
  409
  535
  686
  864
  1,070
  1,305
  1,569
  1,863
  2,186
  2,538
  2,919
  3,328
  3,764
  4,227
  4,716
  5,230
  5,770
  6,334
  6,924
  7,539
  8,179
  8,844
  9,536
  10,256
  11,003
  11,780
  12,588
  13,427
  14,300
  15,209
Working capital, $m
  121
  78
  102
  131
  164
  203
  248
  298
  354
  416
  483
  555
  633
  716
  804
  897
  995
  1,098
  1,205
  1,317
  1,434
  1,556
  1,682
  1,814
  1,951
  2,093
  2,241
  2,395
  2,554
  2,720
  2,893
Total debt, $m
  101
  161
  235
  323
  427
  548
  685
  840
  1,012
  1,201
  1,407
  1,629
  1,869
  2,124
  2,394
  2,680
  2,981
  3,297
  3,627
  3,972
  4,332
  4,706
  5,096
  5,500
  5,921
  6,359
  6,813
  7,285
  7,776
  8,287
  8,818
Total liabilities, $m
  179
  239
  313
  401
  505
  626
  763
  918
  1,090
  1,279
  1,485
  1,707
  1,947
  2,202
  2,472
  2,758
  3,059
  3,375
  3,705
  4,050
  4,410
  4,784
  5,174
  5,578
  5,999
  6,437
  6,891
  7,363
  7,854
  8,365
  8,896
Total equity, $m
  279
  289
  378
  485
  610
  756
  921
  1,108
  1,316
  1,544
  1,793
  2,062
  2,351
  2,659
  2,986
  3,331
  3,694
  4,075
  4,474
  4,891
  5,325
  5,777
  6,247
  6,736
  7,244
  7,772
  8,321
  8,891
  9,484
  10,101
  10,743
Total liabilities and equity, $m
  458
  528
  691
  886
  1,115
  1,382
  1,684
  2,026
  2,406
  2,823
  3,278
  3,769
  4,298
  4,861
  5,458
  6,089
  6,753
  7,450
  8,179
  8,941
  9,735
  10,561
  11,421
  12,314
  13,243
  14,209
  15,212
  16,254
  17,338
  18,466
  19,639
Debt-to-equity ratio
  0.362
  0.560
  0.620
  0.670
  0.700
  0.720
  0.740
  0.760
  0.770
  0.780
  0.780
  0.790
  0.790
  0.800
  0.800
  0.800
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
Adjusted equity ratio
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  29
  42
  54
  69
  85
  105
  127
  152
  179
  209
  242
  278
  316
  356
  399
  444
  492
  542
  594
  648
  705
  764
  825
  889
  955
  1,024
  1,096
  1,170
  1,248
  1,328
  1,412
Depreciation, amort., depletion, $m
  43
  57
  74
  95
  120
  149
  181
  218
  259
  304
  353
  405
  462
  523
  587
  655
  726
  801
  880
  962
  1,047
  1,136
  1,228
  1,325
  1,424
  1,528
  1,636
  1,748
  1,865
  1,986
  2,112
Funds from operations, $m
  56
  99
  129
  164
  206
  254
  308
  370
  438
  513
  595
  683
  778
  879
  986
  1,099
  1,218
  1,343
  1,473
  1,610
  1,752
  1,900
  2,054
  2,214
  2,380
  2,553
  2,732
  2,919
  3,113
  3,314
  3,524
Change in working capital, $m
  -23
  20
  24
  29
  34
  39
  45
  50
  56
  61
  67
  72
  78
  83
  88
  93
  98
  103
  107
  112
  117
  122
  127
  132
  137
  142
  148
  154
  160
  166
  173
Cash from operations, $m
  79
  80
  105
  135
  172
  214
  264
  319
  382
  452
  528
  611
  700
  796
  898
  1,006
  1,120
  1,240
  1,366
  1,498
  1,635
  1,778
  1,927
  2,082
  2,243
  2,410
  2,584
  2,765
  2,953
  3,148
  3,352
Maintenance CAPEX, $m
  0
  -43
  -57
  -74
  -95
  -120
  -149
  -181
  -218
  -259
  -304
  -353
  -405
  -462
  -523
  -587
  -655
  -726
  -801
  -880
  -962
  -1,047
  -1,136
  -1,228
  -1,325
  -1,424
  -1,528
  -1,636
  -1,748
  -1,865
  -1,986
New CAPEX, $m
  -23
  -103
  -126
  -151
  -178
  -206
  -235
  -264
  -294
  -323
  -352
  -381
  -409
  -436
  -463
  -489
  -514
  -540
  -565
  -590
  -615
  -640
  -666
  -692
  -719
  -748
  -777
  -807
  -839
  -873
  -908
Cash from investing activities, $m
  -22
  -146
  -183
  -225
  -273
  -326
  -384
  -445
  -512
  -582
  -656
  -734
  -814
  -898
  -986
  -1,076
  -1,169
  -1,266
  -1,366
  -1,470
  -1,577
  -1,687
  -1,802
  -1,920
  -2,044
  -2,172
  -2,305
  -2,443
  -2,587
  -2,738
  -2,894
Free cash flow, $m
  57
  -66
  -78
  -90
  -101
  -111
  -120
  -126
  -130
  -130
  -128
  -123
  -114
  -103
  -88
  -70
  -49
  -26
  0
  28
  59
  91
  125
  161
  199
  238
  279
  321
  365
  410
  457
Issuance/(repayment) of debt, $m
  0
  60
  74
  88
  104
  120
  137
  155
  172
  189
  206
  223
  239
  255
  271
  286
  301
  316
  330
  345
  360
  374
  389
  405
  421
  437
  454
  472
  491
  511
  531
Issuance/(repurchase) of shares, $m
  0
  31
  35
  38
  40
  41
  39
  35
  28
  19
  7
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -5
  91
  109
  126
  144
  161
  176
  190
  200
  208
  213
  223
  239
  255
  271
  286
  301
  316
  330
  345
  360
  374
  389
  405
  421
  437
  454
  472
  491
  511
  531
Total cash flow (excl. dividends), $m
  52
  25
  30
  36
  43
  50
  57
  64
  71
  78
  85
  100
  125
  153
  183
  216
  252
  290
  330
  373
  418
  465
  515
  566
  620
  676
  734
  794
  856
  921
  988
Retained Cash Flow (-), $m
  -11
  -73
  -89
  -107
  -126
  -145
  -166
  -187
  -208
  -228
  -249
  -269
  -289
  -308
  -327
  -345
  -363
  -381
  -399
  -416
  -434
  -452
  -470
  -489
  -508
  -528
  -549
  -570
  -593
  -617
  -642
Prev. year cash balance distribution, $m
 
  63
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  15
  -59
  -70
  -83
  -96
  -109
  -123
  -137
  -151
  -164
  -169
  -164
  -155
  -144
  -129
  -112
  -91
  -69
  -43
  -16
  13
  44
  77
  112
  148
  185
  223
  263
  305
  347
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  15
  -54
  -61
  -68
  -74
  -79
  -83
  -86
  -86
  -86
  -80
  -70
  -59
  -48
  -38
  -28
  -20
  -13
  -7
  -2
  1
  4
  5
  6
  6
  5
  5
  4
  3
  3
Current shareholders' claim on cash, %
  100
  96.4
  93.4
  90.9
  88.9
  87.4
  86.2
  85.3
  84.8
  84.4
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3
  84.3

Badger Daylighting Ltd. (Badger) is a provider of non-destructive excavating services. The Company works for contractors and facility owners in the utility and petroleum industries. The Company operates in three divisions: rents and sells various lines of trench shielding used to shore and strengthen trenches dug for a range of purposes; provides sewer inspection services and limited sewer flush services, and provides general vacuum truck and auxiliary services to the oil and gas industry, focusing primarily on production tank cleaning and removal of waste oil and sand. Badger's technology, Badger Hydrovac, is used for digging in congested grounds and challenging conditions. The Badger Hydrovac uses a pressurized water stream to liquefy the soil cover, which is then removed with a vacuum system and deposited into a storage tank. Badger manufactures its truck-mounted hydrovac units. The Company provides hydrovac services to various clients in Canada and the United States.

FINANCIAL RATIOS  of  Badger Daylighting Ltd. (BAD)

Valuation Ratios
P/E Ratio 35.9
Price to Sales 2.6
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow 18.6
Growth Rates
Sales Growth Rate -0.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -41%
Cap. Spend. - 3 Yr. Gr. Rate -20.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 36.2%
Total Debt to Equity 36.2%
Interest Coverage 10
Management Effectiveness
Return On Assets 7.1%
Ret/ On Assets - 3 Yr. Avg. 10.5%
Return On Total Capital 7.7%
Ret/ On T. Cap. - 3 Yr. Avg. 12%
Return On Equity 10.6%
Return On Equity - 3 Yr. Avg. 17.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 29.7%
Gross Margin - 3 Yr. Avg. 30.4%
EBITDA Margin 23.5%
EBITDA Margin - 3 Yr. Avg. 24.3%
Operating Margin 13.4%
Oper. Margin - 3 Yr. Avg. 14.9%
Pre-Tax Margin 11.6%
Pre-Tax Margin - 3 Yr. Avg. 13.1%
Net Profit Margin 7.2%
Net Profit Margin - 3 Yr. Avg. 9.7%
Effective Tax Rate 38.3%
Eff/ Tax Rate - 3 Yr. Avg. 24.7%
Payout Ratio 48.3%

BAD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BAD stock intrinsic value calculation we used $404 million for the last fiscal year's total revenue generated by Badger Daylighting Ltd.. The default revenue input number comes from 2016 income statement of Badger Daylighting Ltd.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BAD stock valuation model: a) initial revenue growth rate of 33.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BAD is calculated based on our internal credit rating of Badger Daylighting Ltd., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Badger Daylighting Ltd..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BAD stock the variable cost ratio is equal to 88.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BAD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.9% for Badger Daylighting Ltd..

Corporate tax rate of 27% is the nominal tax rate for Badger Daylighting Ltd.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BAD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BAD are equal to 75.7%.

Life of production assets of 7.2 years is the average useful life of capital assets used in Badger Daylighting Ltd. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BAD is equal to 14.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $279 million for Badger Daylighting Ltd. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 37.265 million for Badger Daylighting Ltd. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Badger Daylighting Ltd. at the current share price and the inputted number of shares is $1.0 billion.

RELATED COMPANIES Price Int.Val. Rating
Financial statements of BAD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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