Intrinsic value of SSR Mining - SSRM

Previous Close

$13.50

  Intrinsic Value

$2.42

stock screener

  Rating & Target

str. sell

-82%

Previous close

$13.50

 
Intrinsic value

$2.42

 
Up/down potential

-82%

 
Rating

str. sell

We calculate the intrinsic value of SSRM 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 1.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  676
  692
  710
  730
  752
  776
  802
  831
  862
  895
  930
  968
  1,008
  1,051
  1,096
  1,144
  1,195
  1,249
  1,306
  1,366
  1,429
  1,496
  1,566
  1,640
  1,718
  1,801
  1,887
  1,978
  2,074
  2,175
Variable operating expenses, $m
  805
  823
  844
  867
  894
  922
  953
  987
  1,024
  1,063
  1,098
  1,142
  1,190
  1,240
  1,293
  1,350
  1,410
  1,474
  1,541
  1,611
  1,686
  1,765
  1,848
  1,935
  2,028
  2,125
  2,227
  2,334
  2,447
  2,566
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
  805
  823
  844
  867
  894
  922
  953
  987
  1,024
  1,063
  1,098
  1,142
  1,190
  1,240
  1,293
  1,350
  1,410
  1,474
  1,541
  1,611
  1,686
  1,765
  1,848
  1,935
  2,028
  2,125
  2,227
  2,334
  2,447
  2,566
Operating income, $m
  -128
  -131
  -134
  -138
  -142
  -146
  -151
  -156
  -162
  -168
  -167
  -174
  -181
  -189
  -197
  -206
  -215
  -225
  -235
  -246
  -257
  -269
  -282
  -295
  -309
  -324
  -339
  -356
  -373
  -391
EBITDA, $m
  -22
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -71
Interest expense (income), $m
  11
  11
  12
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  26
  27
  29
  31
  33
  36
  38
  40
  43
  46
  49
  52
  55
  58
  62
  66
  70
Earnings before tax, $m
  -140
  -143
  -147
  -151
  -156
  -161
  -167
  -173
  -180
  -187
  -188
  -196
  -205
  -215
  -225
  -235
  -246
  -258
  -270
  -284
  -297
  -312
  -328
  -344
  -361
  -379
  -398
  -418
  -439
  -461
Tax expense, $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
Net income, $m
  -140
  -143
  -147
  -151
  -156
  -161
  -167
  -173
  -180
  -187
  -188
  -196
  -205
  -215
  -225
  -235
  -246
  -258
  -270
  -284
  -297
  -312
  -328
  -344
  -361
  -379
  -398
  -418
  -439
  -461

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,326
  1,356
  1,391
  1,430
  1,474
  1,521
  1,573
  1,629
  1,690
  1,755
  1,824
  1,898
  1,977
  2,061
  2,150
  2,244
  2,343
  2,449
  2,560
  2,678
  2,802
  2,933
  3,071
  3,216
  3,369
  3,531
  3,700
  3,879
  4,067
  4,264
Adjusted assets (=assets-cash), $m
  1,326
  1,356
  1,391
  1,430
  1,474
  1,521
  1,573
  1,629
  1,690
  1,755
  1,824
  1,898
  1,977
  2,061
  2,150
  2,244
  2,343
  2,449
  2,560
  2,678
  2,802
  2,933
  3,071
  3,216
  3,369
  3,531
  3,700
  3,879
  4,067
  4,264
Revenue / Adjusted assets
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
Average production assets, $m
  698
  714
  732
  753
  776
  801
  828
  858
  889
  923
  960
  999
  1,040
  1,085
  1,131
  1,181
  1,233
  1,289
  1,348
  1,409
  1,475
  1,544
  1,616
  1,693
  1,773
  1,858
  1,948
  2,042
  2,140
  2,244
Working capital, $m
  115
  118
  121
  124
  128
  132
  136
  141
  147
  152
  158
  165
  171
  179
  186
  195
  203
  212
  222
  232
  243
  254
  266
  279
  292
  306
  321
  336
  353
  370
Total debt, $m
  311
  328
  347
  369
  393
  419
  448
  480
  513
  549
  588
  629
  673
  720
  769
  822
  877
  936
  998
  1,064
  1,133
  1,206
  1,283
  1,363
  1,449
  1,539
  1,633
  1,733
  1,837
  1,947
Total liabilities, $m
  739
  756
  775
  797
  821
  847
  876
  908
  941
  977
  1,016
  1,057
  1,101
  1,148
  1,197
  1,250
  1,305
  1,364
  1,426
  1,492
  1,561
  1,634
  1,711
  1,791
  1,877
  1,967
  2,061
  2,161
  2,265
  2,375
Total equity, $m
  587
  601
  616
  634
  653
  674
  697
  722
  749
  777
  808
  841
  876
  913
  952
  994
  1,038
  1,085
  1,134
  1,186
  1,241
  1,299
  1,360
  1,425
  1,493
  1,564
  1,639
  1,718
  1,802
  1,889
Total liabilities and equity, $m
  1,326
  1,357
  1,391
  1,431
  1,474
  1,521
  1,573
  1,630
  1,690
  1,754
  1,824
  1,898
  1,977
  2,061
  2,149
  2,244
  2,343
  2,449
  2,560
  2,678
  2,802
  2,933
  3,071
  3,216
  3,370
  3,531
  3,700
  3,879
  4,067
  4,264
Debt-to-equity ratio
  0.530
  0.550
  0.560
  0.580
  0.600
  0.620
  0.640
  0.660
  0.690
  0.710
  0.730
  0.750
  0.770
  0.790
  0.810
  0.830
  0.850
  0.860
  0.880
  0.900
  0.910
  0.930
  0.940
  0.960
  0.970
  0.980
  1.000
  1.010
  1.020
  1.030
Adjusted equity ratio
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -140
  -143
  -147
  -151
  -156
  -161
  -167
  -173
  -180
  -187
  -188
  -196
  -205
  -215
  -225
  -235
  -246
  -258
  -270
  -284
  -297
  -312
  -328
  -344
  -361
  -379
  -398
  -418
  -439
  -461
Depreciation, amort., depletion, $m
  106
  109
  111
  114
  118
  121
  125
  129
  134
  139
  137
  143
  149
  155
  162
  169
  176
  184
  193
  201
  211
  221
  231
  242
  253
  265
  278
  292
  306
  321
Funds from operations, $m
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -74
  -78
  -82
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -140
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
Cash from operations, $m
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -92
  -98
  -103
  -109
  -115
  -121
  -127
  -134
  -142
  -149
  -158
Maintenance CAPEX, $m
  -98
  -100
  -102
  -105
  -108
  -111
  -114
  -118
  -123
  -127
  -132
  -137
  -143
  -149
  -155
  -162
  -169
  -176
  -184
  -193
  -201
  -211
  -221
  -231
  -242
  -253
  -265
  -278
  -292
  -306
New CAPEX, $m
  -14
  -16
  -18
  -21
  -23
  -25
  -27
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -47
  -50
  -52
  -55
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -99
  -104
Cash from investing activities, $m
  -112
  -116
  -120
  -126
  -131
  -136
  -141
  -148
  -155
  -161
  -169
  -176
  -184
  -193
  -202
  -212
  -221
  -231
  -243
  -255
  -266
  -280
  -294
  -308
  -323
  -338
  -354
  -372
  -391
  -410
Free cash flow, $m
  -147
  -153
  -159
  -165
  -173
  -180
  -188
  -197
  -206
  -215
  -226
  -236
  -248
  -260
  -272
  -286
  -300
  -315
  -330
  -347
  -364
  -383
  -402
  -422
  -443
  -466
  -489
  -514
  -540
  -567
Issuance/(repayment) of debt, $m
  14
  17
  19
  22
  24
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  52
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  99
  105
  110
Issuance/(repurchase) of shares, $m
  151
  156
  162
  168
  175
  182
  190
  198
  207
  216
  219
  229
  240
  252
  264
  277
  290
  305
  320
  336
  352
  370
  389
  408
  429
  450
  473
  497
  522
  549
Cash from financing (excl. dividends), $m  
  165
  173
  181
  190
  199
  209
  219
  229
  241
  252
  258
  270
  284
  299
  314
  329
  346
  364
  382
  402
  421
  443
  466
  489
  514
  540
  568
  596
  627
  659
Total cash flow (excl. dividends), $m
  18
  21
  23
  25
  27
  29
  31
  33
  35
  37
  32
  34
  36
  39
  41
  44
  46
  49
  51
  54
  57
  61
  64
  67
  71
  75
  78
  83
  87
  91
Retained Cash Flow (-), $m
  -151
  -156
  -162
  -168
  -175
  -182
  -190
  -198
  -207
  -216
  -219
  -229
  -240
  -252
  -264
  -277
  -290
  -305
  -320
  -336
  -352
  -370
  -389
  -408
  -429
  -450
  -473
  -497
  -522
  -549
Prev. year cash balance distribution, $m
  643
  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
  509
  -136
  -139
  -144
  -148
  -154
  -159
  -165
  -172
  -179
  -187
  -195
  -204
  -213
  -223
  -233
  -244
  -256
  -268
  -281
  -295
  -310
  -325
  -341
  -358
  -376
  -395
  -415
  -435
  -457
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
  488
  -124
  -121
  -118
  -115
  -111
  -108
  -103
  -99
  -94
  -89
  -83
  -77
  -72
  -65
  -59
  -53
  -47
  -41
  -36
  -31
  -26
  -21
  -17
  -14
  -11
  -8
  -6
  -5
  -3
Current shareholders' claim on cash, %
  83.4
  69.4
  57.6
  47.8
  39.5
  32.6
  26.9
  22.1
  18.2
  14.9
  12.3
  10.1
  8.3
  6.8
  5.6
  4.6
  3.8
  3.1
  2.5
  2.1
  1.7
  1.4
  1.1
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3

SSR Mining Inc, formerly Silver Standard Resources Inc, is a Canada-based resource company. The Company is engaged in the operation, acquisition, exploration and development of precious metal resource properties located in the Americas. The Company's segments include Pirquitas mine, Marigold mine, Seabee Gold Operation, and Exploration and evaluation properties. The Company has three producing mines and a portfolio of silver resource dominant projects located throughout the Americas. The Company is focused on silver production from the Pirquitas mine in Argentina and gold production from the Marigold mine in Nevada, the United States. The Company's other projects include Seabee Gold Operation in Saskatchewan, Canada and Pirquitas mine in Jujuy, Argentina. The Marigold mine produced approximately 205,116 ounces of gold. The Seabee Gold Operation produced approximately 77,640 ounces of gold. The Pirquitas mine produced approximately 10.4 million ounces of silver.

FINANCIAL RATIOS  of  SSR Mining (SSRM)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 2.4
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7
Price to Free Cash Flow 9.7
Growth Rates
Sales Growth Rate 30.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3%
Cap. Spend. - 3 Yr. Gr. Rate 5.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 24.4%
Total Debt to Equity 24.4%
Interest Coverage 11
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. -5.9%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. -8.4%
Return On Equity 9.7%
Return On Equity - 3 Yr. Avg. -11.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 32.6%
Gross Margin - 3 Yr. Avg. 17%
EBITDA Margin 33.6%
EBITDA Margin - 3 Yr. Avg. 3.9%
Operating Margin 22.3%
Oper. Margin - 3 Yr. Avg. -5.4%
Pre-Tax Margin 16.4%
Pre-Tax Margin - 3 Yr. Avg. -15.3%
Net Profit Margin 13.3%
Net Profit Margin - 3 Yr. Avg. -20.7%
Effective Tax Rate 19.3%
Eff/ Tax Rate - 3 Yr. Avg. -7.5%
Payout Ratio 0%

SSRM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SSRM stock intrinsic value calculation we used $663 million for the last fiscal year's total revenue generated by SSR Mining. The default revenue input number comes from 2016 income statement of SSR Mining. 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 SSRM stock valuation model: a) initial revenue growth rate of 2% 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 SSRM is calculated based on our internal credit rating of SSR Mining, 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 SSR Mining.
    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 SSRM stock the variable cost ratio is equal to 119%.

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 SSRM 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 3.8% for SSR Mining.

Corporate tax rate of 27% is the nominal tax rate for SSR Mining. 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 SSRM 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 SSRM are equal to 103.2%.

Life of production assets of 7 years is the average useful life of capital assets used in SSR Mining 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 SSRM is equal to 17%. 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 - $1219 million for SSR Mining - 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 119.241 million for SSR Mining 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 SSR Mining at the current share price and the inputted number of shares is $1.6 billion.

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.