Intrinsic value of WSP Global Inc. - WSP

Previous Close

$61.71

  Intrinsic Value

$62.83

stock screener

  Rating & Target

hold

+2%

Previous close

$61.71

 
Intrinsic value

$62.83

 
Up/down potential

+2%

 
Rating

hold

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

We calculate the intrinsic value of WSP 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  5.21
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.15
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
Revenue, $m
  6,380
  6,725
  7,085
  7,462
  7,857
  8,270
  8,704
  9,157
  9,633
  10,131
  10,653
  11,201
  11,775
  12,377
  13,008
  13,670
  14,365
  15,094
  15,859
  16,661
  17,503
  18,387
  19,315
  20,288
  21,309
  22,382
  23,507
  24,689
  25,929
  27,231
  28,597
Variable operating expenses, $m
 
  6,387
  6,714
  7,057
  7,415
  7,791
  8,184
  8,596
  9,028
  9,481
  9,955
  10,174
  10,696
  11,243
  11,816
  12,418
  13,049
  13,711
  14,406
  15,135
  15,899
  16,702
  17,545
  18,429
  19,357
  20,331
  21,353
  22,426
  23,553
  24,735
  25,977
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
  6,077
  6,387
  6,714
  7,057
  7,415
  7,791
  8,184
  8,596
  9,028
  9,481
  9,955
  10,174
  10,696
  11,243
  11,816
  12,418
  13,049
  13,711
  14,406
  15,135
  15,899
  16,702
  17,545
  18,429
  19,357
  20,331
  21,353
  22,426
  23,553
  24,735
  25,977
Operating income, $m
  303
  338
  371
  405
  442
  479
  519
  561
  604
  650
  698
  1,026
  1,079
  1,134
  1,192
  1,253
  1,316
  1,383
  1,453
  1,527
  1,604
  1,685
  1,770
  1,859
  1,953
  2,051
  2,154
  2,262
  2,376
  2,495
  2,621
EBITDA, $m
  463
  643
  677
  713
  751
  791
  832
  875
  921
  968
  1,018
  1,071
  1,126
  1,183
  1,243
  1,307
  1,373
  1,443
  1,516
  1,593
  1,673
  1,758
  1,846
  1,939
  2,037
  2,139
  2,247
  2,360
  2,478
  2,603
  2,734
Interest expense (income), $m
  36
  32
  38
  44
  51
  58
  65
  72
  80
  88
  96
  105
  115
  125
  135
  146
  157
  169
  181
  194
  208
  222
  237
  253
  270
  287
  306
  325
  345
  366
  389
Earnings before tax, $m
  266
  305
  333
  361
  391
  422
  454
  489
  524
  562
  601
  921
  964
  1,010
  1,057
  1,107
  1,159
  1,214
  1,272
  1,332
  1,396
  1,463
  1,532
  1,606
  1,683
  1,764
  1,848
  1,937
  2,031
  2,129
  2,232
Tax expense, $m
  67
  82
  90
  97
  105
  114
  123
  132
  142
  152
  162
  249
  260
  273
  285
  299
  313
  328
  343
  360
  377
  395
  414
  434
  454
  476
  499
  523
  548
  575
  603
Net income, $m
  199
  223
  243
  263
  285
  308
  332
  357
  383
  410
  439
  672
  704
  737
  772
  808
  846
  886
  929
  973
  1,019
  1,068
  1,119
  1,172
  1,228
  1,287
  1,349
  1,414
  1,483
  1,554
  1,629

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  231
  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
  6,129
  6,215
  6,548
  6,897
  7,262
  7,644
  8,044
  8,463
  8,903
  9,363
  9,846
  10,352
  10,882
  11,439
  12,022
  12,634
  13,277
  13,950
  14,657
  15,399
  16,177
  16,994
  17,851
  18,750
  19,695
  20,686
  21,726
  22,818
  23,964
  25,167
  26,430
Adjusted assets (=assets-cash), $m
  5,898
  6,215
  6,548
  6,897
  7,262
  7,644
  8,044
  8,463
  8,903
  9,363
  9,846
  10,352
  10,882
  11,439
  12,022
  12,634
  13,277
  13,950
  14,657
  15,399
  16,177
  16,994
  17,851
  18,750
  19,695
  20,686
  21,726
  22,818
  23,964
  25,167
  26,430
Revenue / Adjusted assets
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
  1.082
Average production assets, $m
  516
  545
  574
  604
  636
  670
  705
  742
  780
  821
  863
  907
  954
  1,003
  1,054
  1,107
  1,164
  1,223
  1,285
  1,350
  1,418
  1,489
  1,564
  1,643
  1,726
  1,813
  1,904
  2,000
  2,100
  2,206
  2,316
Working capital, $m
  579
  531
  560
  590
  621
  653
  688
  723
  761
  800
  842
  885
  930
  978
  1,028
  1,080
  1,135
  1,192
  1,253
  1,316
  1,383
  1,453
  1,526
  1,603
  1,683
  1,768
  1,857
  1,950
  2,048
  2,151
  2,259
Total debt, $m
  1,082
  1,094
  1,270
  1,454
  1,647
  1,849
  2,060
  2,282
  2,514
  2,757
  3,012
  3,279
  3,559
  3,853
  4,161
  4,484
  4,823
  5,179
  5,552
  5,944
  6,354
  6,786
  7,238
  7,713
  8,212
  8,735
  9,284
  9,861
  10,466
  11,101
  11,768
Total liabilities, $m
  3,269
  3,281
  3,457
  3,641
  3,834
  4,036
  4,247
  4,469
  4,701
  4,944
  5,199
  5,466
  5,746
  6,040
  6,348
  6,671
  7,010
  7,366
  7,739
  8,131
  8,541
  8,973
  9,425
  9,900
  10,399
  10,922
  11,471
  12,048
  12,653
  13,288
  13,955
Total equity, $m
  2,860
  2,933
  3,091
  3,255
  3,427
  3,608
  3,797
  3,995
  4,202
  4,419
  4,647
  4,886
  5,136
  5,399
  5,675
  5,963
  6,267
  6,584
  6,918
  7,268
  7,636
  8,021
  8,426
  8,850
  9,296
  9,764
  10,255
  10,770
  11,311
  11,879
  12,475
Total liabilities and equity, $m
  6,129
  6,214
  6,548
  6,896
  7,261
  7,644
  8,044
  8,464
  8,903
  9,363
  9,846
  10,352
  10,882
  11,439
  12,023
  12,634
  13,277
  13,950
  14,657
  15,399
  16,177
  16,994
  17,851
  18,750
  19,695
  20,686
  21,726
  22,818
  23,964
  25,167
  26,430
Debt-to-equity ratio
  0.378
  0.370
  0.410
  0.450
  0.480
  0.510
  0.540
  0.570
  0.600
  0.620
  0.650
  0.670
  0.690
  0.710
  0.730
  0.750
  0.770
  0.790
  0.800
  0.820
  0.830
  0.850
  0.860
  0.870
  0.880
  0.890
  0.910
  0.920
  0.930
  0.930
  0.940
Adjusted equity ratio
  0.446
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  199
  223
  243
  263
  285
  308
  332
  357
  383
  410
  439
  672
  704
  737
  772
  808
  846
  886
  929
  973
  1,019
  1,068
  1,119
  1,172
  1,228
  1,287
  1,349
  1,414
  1,483
  1,554
  1,629
Depreciation, amort., depletion, $m
  160
  305
  306
  308
  309
  311
  313
  315
  316
  318
  320
  44
  47
  49
  51
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  98
  102
  108
  113
Funds from operations, $m
  338
  528
  549
  571
  595
  619
  645
  671
  699
  729
  759
  717
  750
  786
  823
  862
  903
  946
  991
  1,039
  1,088
  1,140
  1,195
  1,252
  1,313
  1,376
  1,442
  1,512
  1,585
  1,662
  1,742
Change in working capital, $m
  -49
  27
  28
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
  52
  55
  58
  60
  63
  67
  70
  73
  77
  81
  85
  89
  93
  98
  103
  108
Cash from operations, $m
  387
  501
  521
  542
  563
  586
  610
  635
  662
  689
  718
  673
  705
  738
  773
  810
  848
  889
  931
  975
  1,022
  1,070
  1,122
  1,175
  1,232
  1,291
  1,353
  1,419
  1,487
  1,559
  1,634
Maintenance CAPEX, $m
  0
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -98
  -102
  -108
New CAPEX, $m
  -144
  -29
  -29
  -31
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -111
Cash from investing activities, $m
  -309
  -54
  -56
  -59
  -61
  -64
  -68
  -71
  -75
  -78
  -82
  -86
  -91
  -96
  -100
  -105
  -110
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -163
  -171
  -179
  -189
  -198
  -207
  -219
Free cash flow, $m
  78
  447
  465
  483
  502
  522
  543
  564
  587
  611
  636
  587
  614
  643
  673
  705
  738
  773
  809
  847
  888
  930
  974
  1,020
  1,069
  1,120
  1,174
  1,230
  1,289
  1,351
  1,416
Issuance/(repayment) of debt, $m
  81
  166
  176
  184
  193
  202
  211
  221
  232
  243
  255
  267
  280
  294
  308
  323
  339
  356
  373
  392
  411
  431
  453
  475
  499
  523
  549
  577
  605
  635
  667
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  41
  166
  176
  184
  193
  202
  211
  221
  232
  243
  255
  267
  280
  294
  308
  323
  339
  356
  373
  392
  411
  431
  453
  475
  499
  523
  549
  577
  605
  635
  667
Total cash flow (excl. dividends), $m
  96
  613
  641
  667
  695
  724
  754
  786
  819
  854
  891
  854
  894
  937
  981
  1,028
  1,077
  1,128
  1,182
  1,239
  1,299
  1,361
  1,427
  1,495
  1,568
  1,643
  1,723
  1,806
  1,894
  1,986
  2,083
Retained Cash Flow (-), $m
  56
  -150
  -157
  -165
  -172
  -180
  -189
  -198
  -207
  -217
  -228
  -239
  -250
  -263
  -275
  -289
  -303
  -318
  -334
  -350
  -367
  -385
  -405
  -425
  -446
  -468
  -491
  -515
  -541
  -568
  -596
Prev. year cash balance distribution, $m
 
  77
  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
 
  540
  484
  503
  522
  543
  565
  588
  612
  637
  663
  615
  644
  674
  706
  739
  774
  810
  849
  889
  931
  975
  1,022
  1,071
  1,122
  1,176
  1,232
  1,291
  1,353
  1,418
  1,487
Discount rate, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
 
  517
  441
  435
  426
  416
  404
  390
  374
  357
  338
  283
  265
  245
  226
  205
  185
  165
  145
  126
  108
  91
  76
  62
  50
  40
  31
  23
  17
  13
  9
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Wsp Global Inc is a Canada-based professional services company. The Company's segments are Canada, Americas, EMEIA (Europe, Middle East, India and Africa) and APAC (Asia Pacific, including primarily Asia and Australia). It offers services in project delivery and consulting. It offers various project services throughout the project execution phases. It operates in sectors, such as property and buildings, including services, such as disciplines of structural and mechanical, electrical and plumbing engineering; transportation and infrastructure, which includes planning, analyzing, designing and managing projects for rail, transit, aviation, bridges, tunnels, highways, ports, roads and urban infrastructure; environment, including services covering air, land, water and health on environmental matters, such as risk management and permitting authorizations; industry, including consulting and engineering services; resources (including mining and oil and gas), and power and energy.

FINANCIAL RATIOS  of  WSP Global Inc. (WSP)

Valuation Ratios
P/E Ratio 31.4
Price to Sales 1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 16.2
Price to Free Cash Flow 25.7
Growth Rates
Sales Growth Rate 5.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 37.1%
Cap. Spend. - 3 Yr. Gr. Rate 37.8%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 32.4%
Total Debt to Equity 37.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 5.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 6.9%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 1
Profitability Ratios
Gross Margin 76.7%
Gross Margin - 3 Yr. Avg. 77.2%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 6.8%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 4.3%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. 3.8%
Net Profit Margin 3.1%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 25.2%
Eff/ Tax Rate - 3 Yr. Avg. 27.3%
Payout Ratio 34.2%

WSP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WSP stock intrinsic value calculation we used $6380 million for the last fiscal year's total revenue generated by WSP Global Inc.. The default revenue input number comes from 2016 income statement of WSP Global Inc.. 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 WSP stock valuation model: a) initial revenue growth rate of 5.4% 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 4.5%, whose default value for WSP is calculated based on our internal credit rating of WSP Global Inc., 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 WSP Global Inc..
    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 WSP stock the variable cost ratio is equal to 95.2%.

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 WSP 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 3.5% for WSP Global Inc..

Corporate tax rate of 27% is the nominal tax rate for WSP Global Inc.. 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 WSP 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 WSP are equal to 8.1%.

Life of production assets of 20.5 years is the average useful life of capital assets used in WSP Global Inc. 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 WSP is equal to 7.9%. 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 - $2860 million for WSP Global Inc. - 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 103.155 million for WSP Global Inc. 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 WSP Global Inc. at the current share price and the inputted number of shares is $6.4 billion.

RELATED COMPANIES Price Int.Val. Rating
STN Stantec Inc. 35.25 43.49  buy
SNC SNC-Lavalin Gr 56.99 291.56  str.buy
ECI EnerCare Inc. 19.74 6.39  str.sell
Financial statements of WSP
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.