Intrinsic value of Badger Daylighting Ltd. - BAD

Previous Close

$27.25

  Intrinsic Value

$1.86

stock screener

  Rating & Target

str. sell

-93%

Previous close

$27.25

 
Intrinsic value

$1.86

 
Up/down potential

-93%

 
Rating

str. sell

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

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, %
  -0.25
  24.80
  22.82
  21.04
  19.43
  17.99
  16.69
  15.52
  14.47
  13.52
  12.67
  11.90
  11.21
  10.59
  10.03
  9.53
  9.08
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
Revenue, $m
  404
  504
  619
  750
  895
  1,056
  1,233
  1,424
  1,630
  1,850
  2,085
  2,333
  2,595
  2,869
  3,157
  3,458
  3,772
  4,099
  4,439
  4,793
  5,161
  5,543
  5,941
  6,353
  6,783
  7,229
  7,693
  8,176
  8,679
  9,203
  9,749
Variable operating expenses, $m
 
  446
  547
  662
  791
  933
  1,089
  1,258
  1,440
  1,635
  1,842
  2,061
  2,292
  2,535
  2,789
  3,055
  3,333
  3,621
  3,922
  4,235
  4,560
  4,898
  5,249
  5,613
  5,992
  6,387
  6,797
  7,224
  7,668
  8,131
  8,613
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
  446
  547
  662
  791
  933
  1,089
  1,258
  1,440
  1,635
  1,842
  2,061
  2,292
  2,535
  2,789
  3,055
  3,333
  3,621
  3,922
  4,235
  4,560
  4,898
  5,249
  5,613
  5,992
  6,387
  6,797
  7,224
  7,668
  8,131
  8,613
Operating income, $m
  54
  59
  72
  87
  104
  123
  143
  166
  190
  215
  243
  272
  302
  334
  368
  403
  439
  478
  517
  558
  601
  646
  692
  740
  790
  842
  896
  952
  1,011
  1,072
  1,136
EBITDA, $m
  97
  112
  137
  166
  198
  234
  273
  316
  361
  410
  462
  517
  575
  636
  700
  766
  836
  908
  984
  1,062
  1,144
  1,229
  1,317
  1,408
  1,503
  1,602
  1,705
  1,812
  1,924
  2,040
  2,161
Interest expense (income), $m
  5
  5
  7
  10
  12
  16
  19
  23
  27
  32
  36
  41
  47
  52
  58
  65
  71
  78
  85
  93
  100
  108
  116
  125
  134
  143
  153
  163
  174
  184
  196
Earnings before tax, $m
  47
  54
  65
  78
  92
  107
  124
  143
  163
  184
  206
  230
  255
  282
  309
  338
  368
  399
  432
  466
  501
  538
  576
  615
  656
  699
  743
  789
  837
  888
  940
Tax expense, $m
  18
  14
  18
  21
  25
  29
  34
  39
  44
  50
  56
  62
  69
  76
  84
  91
  99
  108
  117
  126
  135
  145
  155
  166
  177
  189
  201
  213
  226
  240
  254
Net income, $m
  29
  39
  47
  57
  67
  78
  91
  104
  119
  134
  151
  168
  186
  206
  226
  247
  269
  292
  315
  340
  366
  392
  420
  449
  479
  510
  543
  576
  611
  648
  686

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
  493
  605
  733
  875
  1,032
  1,205
  1,392
  1,593
  1,809
  2,038
  2,280
  2,536
  2,805
  3,086
  3,380
  3,687
  4,007
  4,339
  4,685
  5,045
  5,419
  5,807
  6,211
  6,630
  7,066
  7,520
  7,992
  8,484
  8,996
  9,530
Adjusted assets (=assets-cash), $m
  395
  493
  605
  733
  875
  1,032
  1,205
  1,392
  1,593
  1,809
  2,038
  2,280
  2,536
  2,805
  3,086
  3,380
  3,687
  4,007
  4,339
  4,685
  5,045
  5,419
  5,807
  6,211
  6,630
  7,066
  7,520
  7,992
  8,484
  8,996
  9,530
Revenue / Adjusted assets
  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
  1.023
  1.023
  1.023
Average production assets, $m
  306
  382
  469
  567
  678
  800
  933
  1,078
  1,234
  1,401
  1,578
  1,766
  1,964
  2,172
  2,390
  2,618
  2,855
  3,103
  3,361
  3,628
  3,907
  4,196
  4,497
  4,810
  5,134
  5,472
  5,824
  6,189
  6,570
  6,967
  7,380
Working capital, $m
  121
  73
  89
  108
  129
  152
  177
  205
  235
  266
  300
  336
  374
  413
  455
  498
  543
  590
  639
  690
  743
  798
  855
  915
  977
  1,041
  1,108
  1,177
  1,250
  1,325
  1,404
Total debt, $m
  101
  145
  196
  254
  318
  390
  468
  553
  644
  741
  845
  955
  1,071
  1,193
  1,320
  1,453
  1,592
  1,737
  1,888
  2,044
  2,207
  2,377
  2,553
  2,735
  2,925
  3,123
  3,329
  3,543
  3,765
  3,997
  4,239
Total liabilities, $m
  179
  223
  274
  332
  396
  468
  546
  631
  722
  819
  923
  1,033
  1,149
  1,271
  1,398
  1,531
  1,670
  1,815
  1,966
  2,122
  2,285
  2,455
  2,631
  2,813
  3,003
  3,201
  3,407
  3,621
  3,843
  4,075
  4,317
Total equity, $m
  279
  270
  331
  401
  479
  565
  659
  761
  872
  989
  1,115
  1,247
  1,387
  1,534
  1,688
  1,849
  2,017
  2,192
  2,374
  2,563
  2,760
  2,964
  3,176
  3,397
  3,627
  3,865
  4,114
  4,372
  4,641
  4,921
  5,213
Total liabilities and equity, $m
  458
  493
  605
  733
  875
  1,033
  1,205
  1,392
  1,594
  1,808
  2,038
  2,280
  2,536
  2,805
  3,086
  3,380
  3,687
  4,007
  4,340
  4,685
  5,045
  5,419
  5,807
  6,210
  6,630
  7,066
  7,521
  7,993
  8,484
  8,996
  9,530
Debt-to-equity ratio
  0.362
  0.540
  0.590
  0.630
  0.670
  0.690
  0.710
  0.730
  0.740
  0.750
  0.760
  0.770
  0.770
  0.780
  0.780
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
  0.800
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
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
  39
  47
  57
  67
  78
  91
  104
  119
  134
  151
  168
  186
  206
  226
  247
  269
  292
  315
  340
  366
  392
  420
  449
  479
  510
  543
  576
  611
  648
  686
Depreciation, amort., depletion, $m
  43
  53
  65
  79
  94
  111
  130
  150
  172
  195
  219
  245
  273
  302
  332
  364
  397
  431
  467
  504
  543
  583
  625
  668
  713
  760
  809
  860
  913
  968
  1,025
Funds from operations, $m
  56
  92
  113
  136
  161
  190
  221
  254
  290
  329
  370
  413
  459
  507
  558
  610
  665
  723
  782
  844
  908
  975
  1,045
  1,117
  1,192
  1,270
  1,351
  1,436
  1,524
  1,616
  1,711
Change in working capital, $m
  -23
  14
  17
  19
  21
  23
  25
  28
  30
  32
  34
  36
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  72
  75
  79
Cash from operations, $m
  79
  78
  96
  117
  140
  166
  195
  227
  261
  297
  336
  378
  422
  468
  516
  567
  620
  676
  733
  793
  855
  920
  988
  1,058
  1,130
  1,206
  1,285
  1,366
  1,451
  1,540
  1,632
Maintenance CAPEX, $m
  0
  -43
  -53
  -65
  -79
  -94
  -111
  -130
  -150
  -171
  -195
  -219
  -245
  -273
  -302
  -332
  -364
  -397
  -431
  -467
  -504
  -543
  -583
  -625
  -668
  -713
  -760
  -809
  -860
  -913
  -968
New CAPEX, $m
  -23
  -76
  -87
  -99
  -110
  -122
  -133
  -145
  -156
  -167
  -177
  -188
  -198
  -208
  -218
  -228
  -238
  -248
  -258
  -268
  -278
  -289
  -301
  -313
  -325
  -338
  -351
  -366
  -381
  -397
  -413
Cash from investing activities, $m
  -22
  -119
  -140
  -164
  -189
  -216
  -244
  -275
  -306
  -338
  -372
  -407
  -443
  -481
  -520
  -560
  -602
  -645
  -689
  -735
  -782
  -832
  -884
  -938
  -993
  -1,051
  -1,111
  -1,175
  -1,241
  -1,310
  -1,381
Free cash flow, $m
  57
  -40
  -44
  -47
  -49
  -50
  -49
  -48
  -45
  -41
  -36
  -29
  -22
  -13
  -3
  7
  19
  31
  45
  58
  73
  88
  104
  120
  137
  155
  173
  192
  211
  231
  252
Issuance/(repayment) of debt, $m
  0
  44
  51
  58
  65
  71
  78
  85
  91
  98
  104
  110
  116
  122
  127
  133
  139
  145
  151
  157
  163
  169
  176
  183
  190
  198
  206
  214
  223
  232
  242
Issuance/(repurchase) of shares, $m
  0
  14
  14
  13
  11
  8
  4
  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  
  -5
  58
  65
  71
  76
  79
  82
  85
  91
  98
  104
  110
  116
  122
  127
  133
  139
  145
  151
  157
  163
  169
  176
  183
  190
  198
  206
  214
  223
  232
  242
Total cash flow (excl. dividends), $m
  52
  18
  21
  24
  27
  29
  32
  37
  46
  57
  68
  81
  94
  109
  124
  141
  158
  176
  195
  215
  236
  257
  280
  303
  327
  353
  379
  406
  434
  463
  493
Retained Cash Flow (-), $m
  -11
  -54
  -62
  -70
  -78
  -86
  -94
  -102
  -110
  -118
  -125
  -133
  -140
  -147
  -154
  -161
  -168
  -175
  -182
  -189
  -197
  -204
  -212
  -221
  -229
  -239
  -248
  -258
  -269
  -280
  -292
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
 
  28
  -40
  -46
  -51
  -57
  -62
  -65
  -64
  -61
  -57
  -52
  -46
  -38
  -30
  -20
  -10
  1
  13
  26
  39
  53
  68
  82
  98
  114
  130
  147
  165
  183
  201
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
 
  27
  -37
  -40
  -42
  -44
  -45
  -44
  -40
  -35
  -30
  -25
  -20
  -15
  -10
  -6
  -3
  0
  2
  4
  5
  5
  6
  5
  5
  4
  4
  3
  3
  2
  2
Current shareholders' claim on cash, %
  100
  98.2
  96.8
  95.7
  95.0
  94.6
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4
  94.4

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 34.9
Price to Sales 2.5
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow 18.1
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 24.8% 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 37.16 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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