Intrinsic value of Superior Plus Corp. - SPB

Previous Close

$11.85

  Intrinsic Value

$1.28

stock screener

  Rating & Target

str. sell

-89%

Previous close

$11.85

 
Intrinsic value

$1.28

 
Up/down potential

-89%

 
Rating

str. sell

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

We calculate the intrinsic value of SPB 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 1.7

 

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, %
  -10.16
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  2,024
  2,145
  2,272
  2,404
  2,542
  2,686
  2,836
  2,993
  3,156
  3,328
  3,507
  3,695
  3,891
  4,097
  4,312
  4,537
  4,773
  5,021
  5,280
  5,552
  5,838
  6,136
  6,450
  6,779
  7,124
  7,486
  7,865
  8,264
  8,682
  9,120
  9,581
Variable operating expenses, $m
 
  2,153
  2,279
  2,410
  2,547
  2,690
  2,839
  2,995
  3,158
  3,328
  3,507
  3,673
  3,868
  4,073
  4,287
  4,511
  4,746
  4,992
  5,250
  5,520
  5,803
  6,101
  6,412
  6,739
  7,082
  7,442
  7,819
  8,216
  8,631
  9,067
  9,525
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
  1,873
  2,153
  2,279
  2,410
  2,547
  2,690
  2,839
  2,995
  3,158
  3,328
  3,507
  3,673
  3,868
  4,073
  4,287
  4,511
  4,746
  4,992
  5,250
  5,520
  5,803
  6,101
  6,412
  6,739
  7,082
  7,442
  7,819
  8,216
  8,631
  9,067
  9,525
Operating income, $m
  151
  -7
  -7
  -6
  -5
  -4
  -3
  -2
  -1
  0
  1
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
EBITDA, $m
  272
  120
  127
  134
  142
  150
  158
  167
  176
  186
  196
  206
  217
  229
  241
  253
  267
  280
  295
  310
  326
  343
  360
  378
  398
  418
  439
  461
  485
  509
  535
Interest expense (income), $m
  34
  26
  28
  31
  34
  37
  40
  44
  47
  51
  55
  59
  63
  67
  72
  76
  81
  87
  92
  98
  104
  110
  117
  124
  131
  139
  147
  155
  164
  173
  183
Earnings before tax, $m
  151
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -70
  -74
  -79
  -84
  -89
  -95
  -101
  -107
  -113
  -120
  -127
Tax expense, $m
  37
  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
Net income, $m
  295
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -70
  -74
  -79
  -84
  -89
  -95
  -101
  -107
  -113
  -120
  -127

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5
  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
  1,848
  1,954
  2,069
  2,189
  2,315
  2,446
  2,583
  2,725
  2,875
  3,031
  3,194
  3,365
  3,544
  3,731
  3,927
  4,132
  4,347
  4,573
  4,809
  5,057
  5,316
  5,589
  5,874
  6,174
  6,488
  6,818
  7,163
  7,526
  7,907
  8,306
  8,726
Adjusted assets (=assets-cash), $m
  1,843
  1,954
  2,069
  2,189
  2,315
  2,446
  2,583
  2,725
  2,875
  3,031
  3,194
  3,365
  3,544
  3,731
  3,927
  4,132
  4,347
  4,573
  4,809
  5,057
  5,316
  5,589
  5,874
  6,174
  6,488
  6,818
  7,163
  7,526
  7,907
  8,306
  8,726
Revenue / Adjusted assets
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
Average production assets, $m
  1,002
  1,062
  1,125
  1,190
  1,258
  1,329
  1,404
  1,481
  1,562
  1,647
  1,736
  1,829
  1,926
  2,028
  2,134
  2,246
  2,363
  2,485
  2,614
  2,748
  2,890
  3,038
  3,193
  3,356
  3,526
  3,705
  3,893
  4,091
  4,297
  4,515
  4,742
Working capital, $m
  105
  124
  132
  139
  147
  156
  164
  174
  183
  193
  203
  214
  226
  238
  250
  263
  277
  291
  306
  322
  339
  356
  374
  393
  413
  434
  456
  479
  504
  529
  556
Total debt, $m
  529
  579
  636
  696
  758
  823
  891
  962
  1,036
  1,113
  1,194
  1,279
  1,368
  1,461
  1,558
  1,660
  1,766
  1,878
  1,995
  2,118
  2,247
  2,382
  2,524
  2,672
  2,828
  2,992
  3,163
  3,343
  3,532
  3,730
  3,938
Total liabilities, $m
  919
  969
  1,026
  1,086
  1,148
  1,213
  1,281
  1,352
  1,426
  1,503
  1,584
  1,669
  1,758
  1,851
  1,948
  2,050
  2,156
  2,268
  2,385
  2,508
  2,637
  2,772
  2,914
  3,062
  3,218
  3,382
  3,553
  3,733
  3,922
  4,120
  4,328
Total equity, $m
  929
  985
  1,043
  1,103
  1,167
  1,233
  1,302
  1,374
  1,449
  1,528
  1,610
  1,696
  1,786
  1,880
  1,979
  2,083
  2,191
  2,305
  2,424
  2,549
  2,680
  2,817
  2,961
  3,112
  3,270
  3,436
  3,610
  3,793
  3,985
  4,186
  4,398
Total liabilities and equity, $m
  1,848
  1,954
  2,069
  2,189
  2,315
  2,446
  2,583
  2,726
  2,875
  3,031
  3,194
  3,365
  3,544
  3,731
  3,927
  4,133
  4,347
  4,573
  4,809
  5,057
  5,317
  5,589
  5,875
  6,174
  6,488
  6,818
  7,163
  7,526
  7,907
  8,306
  8,726
Debt-to-equity ratio
  0.569
  0.590
  0.610
  0.630
  0.650
  0.670
  0.680
  0.700
  0.710
  0.730
  0.740
  0.750
  0.770
  0.780
  0.790
  0.800
  0.810
  0.810
  0.820
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.870
  0.880
  0.880
  0.890
  0.890
  0.900
Adjusted equity ratio
  0.501
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  295
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -70
  -74
  -79
  -84
  -89
  -95
  -101
  -107
  -113
  -120
  -127
Depreciation, amort., depletion, $m
  121
  127
  134
  140
  147
  154
  162
  170
  178
  186
  195
  185
  195
  205
  216
  227
  239
  251
  264
  278
  292
  307
  323
  339
  356
  374
  393
  413
  434
  456
  479
Funds from operations, $m
  70
  94
  98
  103
  108
  113
  118
  123
  129
  135
  141
  148
  155
  162
  169
  177
  185
  194
  203
  212
  222
  233
  243
  255
  267
  279
  293
  306
  321
  336
  352
Change in working capital, $m
  -77
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
Cash from operations, $m
  147
  87
  91
  95
  100
  104
  109
  114
  120
  125
  131
  137
  143
  150
  157
  164
  171
  179
  188
  196
  206
  215
  225
  236
  247
  258
  271
  283
  297
  311
  325
Maintenance CAPEX, $m
  0
  -101
  -107
  -114
  -120
  -127
  -134
  -142
  -150
  -158
  -166
  -175
  -185
  -195
  -205
  -216
  -227
  -239
  -251
  -264
  -278
  -292
  -307
  -323
  -339
  -356
  -374
  -393
  -413
  -434
  -456
New CAPEX, $m
  -98
  -60
  -63
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -128
  -135
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -217
  -228
Cash from investing activities, $m
  292
  -161
  -170
  -179
  -188
  -198
  -208
  -220
  -231
  -243
  -255
  -268
  -282
  -297
  -312
  -328
  -344
  -362
  -379
  -399
  -419
  -440
  -462
  -486
  -510
  -535
  -562
  -590
  -620
  -651
  -684
Free cash flow, $m
  439
  -75
  -79
  -84
  -89
  -94
  -99
  -105
  -111
  -118
  -124
  -131
  -139
  -147
  -155
  -163
  -172
  -182
  -192
  -202
  -213
  -225
  -237
  -250
  -263
  -277
  -292
  -307
  -323
  -340
  -358
Issuance/(repayment) of debt, $m
  -319
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
  142
  149
  156
  163
  172
  180
  189
  198
  208
Issuance/(repurchase) of shares, $m
  0
  89
  93
  98
  102
  107
  113
  118
  124
  130
  136
  123
  130
  137
  145
  153
  162
  171
  180
  190
  201
  212
  223
  235
  248
  261
  275
  290
  305
  321
  338
Cash from financing (excl. dividends), $m  
  -331
  144
  150
  158
  164
  172
  181
  189
  198
  207
  217
  208
  219
  230
  242
  255
  269
  283
  297
  313
  330
  347
  365
  384
  404
  424
  447
  470
  494
  519
  546
Total cash flow (excl. dividends), $m
  107
  69
  72
  74
  76
  79
  81
  84
  87
  90
  93
  76
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
  128
  134
  141
  148
  155
  162
  170
  179
  188
Retained Cash Flow (-), $m
  -215
  -89
  -93
  -98
  -102
  -107
  -113
  -118
  -124
  -130
  -136
  -123
  -130
  -137
  -145
  -153
  -162
  -171
  -180
  -190
  -201
  -212
  -223
  -235
  -248
  -261
  -275
  -290
  -305
  -321
  -338
Prev. year cash balance distribution, $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 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
 
  -19
  -22
  -24
  -26
  -29
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -57
  -61
  -66
  -70
  -75
  -79
  -84
  -90
  -95
  -101
  -107
  -113
  -120
  -127
  -135
  -142
  -150
Discount rate, %
 
  5.50
  5.78
  6.06
  6.37
  6.69
  7.02
  7.37
  7.74
  8.13
  8.53
  8.96
  9.41
  9.88
  10.37
  10.89
  11.43
  12.01
  12.61
  13.24
  13.90
  14.59
  15.32
  16.09
  16.89
  17.74
  18.62
  19.56
  20.53
  21.56
  22.64
PV of cash for distribution, $m
 
  -18
  -19
  -20
  -21
  -21
  -21
  -21
  -20
  -20
  -19
  -18
  -17
  -16
  -14
  -13
  -12
  -10
  -9
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -1
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  100
  95.0
  90.3
  85.9
  81.7
  77.8
  74.1
  70.5
  67.2
  64.0
  61.0
  58.6
  56.2
  53.9
  51.7
  49.6
  47.6
  45.6
  43.7
  41.9
  40.2
  38.5
  36.9
  35.4
  33.9
  32.5
  31.1
  29.8
  28.5
  27.3
  26.1

Superior Plus Corp. (Superior) is a Canada-based diversified business company. The Company operates through two segment: Energy Distribution and Specialty Chemicals. The Company's Energy Distribution operating segment provides distribution, wholesale procurement and related services in relation to propane, heating oil and other refined fuels under Canadian propane division and the United States refined fuels division. The Company's Specialty Chemicals segment is a supplier of sodium chlorate and technology to the pulp and paper industry and a regional supplier of potassium and chlor-alkali products in the United States Midwest. Superior holds over 100% of Superior Plus LP (Superior LP). Superior's investments in Superior LP are financed by share capital and debentures. The Company operates Yankee Propane Inc and Virginia Propane Inc as subsidiaries.

FINANCIAL RATIOS  of  Superior Plus Corp. (SPB)

Valuation Ratios
P/E Ratio 5.7
Price to Sales 0.8
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 34.5
Growth Rates
Sales Growth Rate -10.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 3.2%
Cap. Spend. - 3 Yr. Gr. Rate 4.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 55%
Total Debt to Equity 56.9%
Interest Coverage 5
Management Effectiveness
Return On Assets 16.1%
Ret/ On Assets - 3 Yr. Avg. 8.1%
Return On Total Capital 19.5%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 35.9%
Return On Equity - 3 Yr. Avg. 16.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 32.5%
Gross Margin - 3 Yr. Avg. 28.3%
EBITDA Margin 15.1%
EBITDA Margin - 3 Yr. Avg. 9.5%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 3%
Pre-Tax Margin 7.5%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin 14.6%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 24.5%
Eff/ Tax Rate - 3 Yr. Avg. 18.8%
Payout Ratio 34.6%

SPB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPB stock intrinsic value calculation we used $2024 million for the last fiscal year's total revenue generated by Superior Plus Corp.. The default revenue input number comes from 2016 income statement of Superior Plus Corp.. 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 SPB stock valuation model: a) initial revenue growth rate of 6% 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 5.5%, whose default value for SPB is calculated based on our internal credit rating of Superior Plus Corp., 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 Superior Plus Corp..
    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 SPB stock the variable cost ratio is equal to 100.4%.

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 SPB 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 Superior Plus Corp..

Corporate tax rate of 27% is the nominal tax rate for Superior Plus Corp.. 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 SPB 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 SPB are equal to 49.5%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Superior Plus Corp. 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 SPB is equal to 5.8%. 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 - $929 million for Superior Plus Corp. - 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 142.527 million for Superior Plus Corp. 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 Superior Plus Corp. at the current share price and the inputted number of shares is $1.7 billion.

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Financial statements of SPB
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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