Intrinsic value of CES Energy Solutions Corp. - CEU

Previous Close

$5.64

  Intrinsic Value

$0.28

stock screener

  Rating & Target

str. sell

-95%

Previous close

$5.64

 
Intrinsic value

$0.28

 
Up/down potential

-95%

 
Rating

str. sell

We calculate the intrinsic value of CEU 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 1.5

 

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, %
  -24.27
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  568
  909
  1,404
  2,100
  3,047
  4,299
  5,909
  7,932
  10,416
  13,402
  16,928
  21,021
  25,700
  30,977
  36,857
  43,337
  50,411
  58,070
  66,299
  75,088
  84,421
  94,287
  104,675
  115,579
  126,992
  138,912
  151,343
  164,288
  177,757
  191,761
  206,317
Variable operating expenses, $m
 
  1,070
  1,637
  2,435
  3,521
  4,956
  6,803
  9,122
  11,970
  15,394
  19,437
  24,102
  29,467
  35,518
  42,259
  49,690
  57,801
  66,582
  76,018
  86,094
  96,796
  108,108
  120,019
  132,521
  145,607
  159,275
  173,527
  188,370
  203,813
  219,871
  236,560
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
  600
  1,070
  1,637
  2,435
  3,521
  4,956
  6,803
  9,122
  11,970
  15,394
  19,437
  24,102
  29,467
  35,518
  42,259
  49,690
  57,801
  66,582
  76,018
  86,094
  96,796
  108,108
  120,019
  132,521
  145,607
  159,275
  173,527
  188,370
  203,813
  219,871
  236,560
Operating income, $m
  -32
  -161
  -233
  -335
  -474
  -658
  -894
  -1,190
  -1,554
  -1,992
  -2,509
  -3,081
  -3,767
  -4,541
  -5,403
  -6,353
  -7,390
  -8,512
  -9,718
  -11,007
  -12,375
  -13,821
  -15,344
  -16,942
  -18,615
  -20,362
  -22,185
  -24,082
  -26,056
  -28,109
  -30,243
EBITDA, $m
  29
  -76
  -117
  -175
  -253
  -357
  -491
  -660
  -866
  -1,114
  -1,408
  -1,748
  -2,137
  -2,576
  -3,065
  -3,604
  -4,192
  -4,829
  -5,513
  -6,244
  -7,020
  -7,840
  -8,704
  -9,611
  -10,560
  -11,551
  -12,585
  -13,661
  -14,781
  -15,946
  -17,156
Interest expense (income), $m
  23
  22
  40
  66
  102
  151
  215
  299
  404
  532
  687
  869
  1,081
  1,323
  1,597
  1,901
  2,236
  2,603
  2,999
  3,425
  3,880
  4,363
  4,874
  5,412
  5,976
  6,567
  7,184
  7,828
  8,498
  9,195
  9,920
Earnings before tax, $m
  -59
  -183
  -273
  -401
  -576
  -808
  -1,109
  -1,489
  -1,958
  -2,524
  -3,196
  -3,951
  -4,848
  -5,864
  -6,999
  -8,254
  -9,626
  -11,115
  -12,718
  -14,432
  -16,255
  -18,184
  -20,218
  -22,354
  -24,591
  -26,930
  -29,369
  -31,910
  -34,555
  -37,305
  -40,163
Tax expense, $m
  6
  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
  -65
  -183
  -273
  -401
  -576
  -808
  -1,109
  -1,489
  -1,958
  -2,524
  -3,196
  -3,951
  -4,848
  -5,864
  -6,999
  -8,254
  -9,626
  -11,115
  -12,718
  -14,432
  -16,255
  -18,184
  -20,218
  -22,354
  -24,591
  -26,930
  -29,369
  -31,910
  -34,555
  -37,305
  -40,163

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  13
  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
  979
  1,546
  2,388
  3,571
  5,182
  7,310
  10,050
  13,490
  17,713
  22,793
  28,789
  35,750
  43,708
  52,682
  62,682
  73,702
  85,734
  98,758
  112,754
  127,700
  143,573
  160,352
  178,019
  196,562
  215,972
  236,246
  257,386
  279,402
  302,308
  326,125
  350,879
Adjusted assets (=assets-cash), $m
  966
  1,546
  2,388
  3,571
  5,182
  7,310
  10,050
  13,490
  17,713
  22,793
  28,789
  35,750
  43,708
  52,682
  62,682
  73,702
  85,734
  98,758
  112,754
  127,700
  143,573
  160,352
  178,019
  196,562
  215,972
  236,246
  257,386
  279,402
  302,308
  326,125
  350,879
Revenue / Adjusted assets
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
Average production assets, $m
  368
  588
  908
  1,359
  1,971
  2,781
  3,823
  5,132
  6,739
  8,671
  10,952
  13,601
  16,628
  20,042
  23,846
  28,039
  32,616
  37,571
  42,896
  48,582
  54,620
  61,004
  67,725
  74,779
  82,164
  89,876
  97,919
  106,294
  115,009
  124,070
  133,487
Working capital, $m
  222
  345
  534
  798
  1,158
  1,633
  2,246
  3,014
  3,958
  5,093
  6,433
  7,988
  9,766
  11,771
  14,006
  16,468
  19,156
  22,066
  25,194
  28,533
  32,080
  35,829
  39,777
  43,920
  48,257
  52,787
  57,510
  62,430
  67,548
  72,869
  78,400
Total debt, $m
  313
  548
  899
  1,392
  2,064
  2,951
  4,094
  5,528
  7,290
  9,408
  11,908
  14,811
  18,129
  21,872
  26,041
  30,637
  35,654
  41,085
  46,922
  53,154
  59,773
  66,770
  74,137
  81,869
  89,963
  98,417
  107,233
  116,413
  125,965
  135,897
  146,220
Total liabilities, $m
  410
  645
  996
  1,489
  2,161
  3,048
  4,191
  5,625
  7,387
  9,505
  12,005
  14,908
  18,226
  21,969
  26,138
  30,734
  35,751
  41,182
  47,019
  53,251
  59,870
  66,867
  74,234
  81,966
  90,060
  98,514
  107,330
  116,510
  126,062
  135,994
  146,317
Total equity, $m
  569
  901
  1,392
  2,082
  3,021
  4,262
  5,859
  7,865
  10,327
  13,288
  16,784
  20,842
  25,482
  30,714
  36,543
  42,968
  49,983
  57,576
  65,736
  74,449
  83,703
  93,485
  103,785
  114,596
  125,912
  137,731
  150,056
  162,891
  176,245
  190,131
  204,563
Total liabilities and equity, $m
  979
  1,546
  2,388
  3,571
  5,182
  7,310
  10,050
  13,490
  17,714
  22,793
  28,789
  35,750
  43,708
  52,683
  62,681
  73,702
  85,734
  98,758
  112,755
  127,700
  143,573
  160,352
  178,019
  196,562
  215,972
  236,245
  257,386
  279,401
  302,307
  326,125
  350,880
Debt-to-equity ratio
  0.550
  0.610
  0.650
  0.670
  0.680
  0.690
  0.700
  0.700
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
Adjusted equity ratio
  0.576
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -65
  -183
  -273
  -401
  -576
  -808
  -1,109
  -1,489
  -1,958
  -2,524
  -3,196
  -3,951
  -4,848
  -5,864
  -6,999
  -8,254
  -9,626
  -11,115
  -12,718
  -14,432
  -16,255
  -18,184
  -20,218
  -22,354
  -24,591
  -26,930
  -29,369
  -31,910
  -34,555
  -37,305
  -40,163
Depreciation, amort., depletion, $m
  61
  85
  117
  161
  221
  300
  402
  531
  688
  878
  1,101
  1,333
  1,630
  1,965
  2,338
  2,749
  3,198
  3,683
  4,205
  4,763
  5,355
  5,981
  6,640
  7,331
  8,055
  8,811
  9,600
  10,421
  11,275
  12,164
  13,087
Funds from operations, $m
  94
  -98
  -157
  -240
  -355
  -508
  -707
  -958
  -1,270
  -1,647
  -2,094
  -2,617
  -3,218
  -3,899
  -4,661
  -5,505
  -6,428
  -7,431
  -8,512
  -9,669
  -10,900
  -12,204
  -13,578
  -15,023
  -16,536
  -18,118
  -19,769
  -21,489
  -23,279
  -25,141
  -27,076
Change in working capital, $m
  37
  130
  188
  264
  360
  476
  612
  769
  944
  1,135
  1,340
  1,555
  1,778
  2,005
  2,234
  2,462
  2,688
  2,910
  3,127
  3,339
  3,547
  3,749
  3,948
  4,143
  4,337
  4,530
  4,724
  4,919
  5,118
  5,322
  5,531
Cash from operations, $m
  57
  -227
  -345
  -505
  -715
  -984
  -1,319
  -1,727
  -2,213
  -2,782
  -3,434
  -4,172
  -4,996
  -5,905
  -6,896
  -7,967
  -9,117
  -10,342
  -11,640
  -13,009
  -14,447
  -15,953
  -17,526
  -19,166
  -20,873
  -22,648
  -24,493
  -26,408
  -28,397
  -30,463
  -32,608
Maintenance CAPEX, $m
  0
  -36
  -58
  -89
  -133
  -193
  -273
  -375
  -503
  -661
  -850
  -1,074
  -1,333
  -1,630
  -1,965
  -2,338
  -2,749
  -3,198
  -3,683
  -4,205
  -4,763
  -5,355
  -5,981
  -6,640
  -7,331
  -8,055
  -8,811
  -9,600
  -10,421
  -11,275
  -12,164
New CAPEX, $m
  -38
  -220
  -320
  -450
  -613
  -810
  -1,042
  -1,309
  -1,607
  -1,932
  -2,281
  -2,648
  -3,027
  -3,414
  -3,804
  -4,193
  -4,577
  -4,955
  -5,325
  -5,686
  -6,039
  -6,383
  -6,721
  -7,054
  -7,384
  -7,713
  -8,043
  -8,376
  -8,714
  -9,061
  -9,418
Cash from investing activities, $m
  -106
  -256
  -378
  -539
  -746
  -1,003
  -1,315
  -1,684
  -2,110
  -2,593
  -3,131
  -3,722
  -4,360
  -5,044
  -5,769
  -6,531
  -7,326
  -8,153
  -9,008
  -9,891
  -10,802
  -11,738
  -12,702
  -13,694
  -14,715
  -15,768
  -16,854
  -17,976
  -19,135
  -20,336
  -21,582
Free cash flow, $m
  -49
  -484
  -723
  -1,044
  -1,461
  -1,987
  -2,634
  -3,411
  -4,323
  -5,375
  -6,566
  -7,894
  -9,357
  -10,949
  -12,665
  -14,498
  -16,443
  -18,494
  -20,648
  -22,900
  -25,248
  -27,691
  -30,228
  -32,860
  -35,589
  -38,416
  -41,347
  -44,384
  -47,533
  -50,799
  -54,189
Issuance/(repayment) of debt, $m
  -10
  242
  351
  493
  672
  888
  1,142
  1,435
  1,761
  2,118
  2,500
  2,903
  3,318
  3,742
  4,170
  4,596
  5,017
  5,431
  5,837
  6,232
  6,619
  6,997
  7,367
  7,732
  8,094
  8,454
  8,816
  9,181
  9,552
  9,932
  10,323
Issuance/(repurchase) of shares, $m
  90
  521
  764
  1,091
  1,515
  2,049
  2,706
  3,495
  4,420
  5,486
  6,692
  8,009
  9,488
  11,096
  12,829
  14,679
  16,640
  18,708
  20,878
  23,145
  25,509
  27,967
  30,518
  33,165
  35,907
  38,749
  41,694
  44,745
  47,909
  51,190
  54,595
Cash from financing (excl. dividends), $m  
  80
  763
  1,115
  1,584
  2,187
  2,937
  3,848
  4,930
  6,181
  7,604
  9,192
  10,912
  12,806
  14,838
  16,999
  19,275
  21,657
  24,139
  26,715
  29,377
  32,128
  34,964
  37,885
  40,897
  44,001
  47,203
  50,510
  53,926
  57,461
  61,122
  64,918
Total cash flow (excl. dividends), $m
  27
  279
  393
  540
  725
  950
  1,215
  1,519
  1,858
  2,229
  2,626
  3,017
  3,449
  3,890
  4,334
  4,777
  5,215
  5,645
  6,066
  6,478
  6,880
  7,272
  7,658
  8,037
  8,413
  8,787
  9,163
  9,542
  9,928
  10,323
  10,729
Retained Cash Flow (-), $m
  -37
  -521
  -764
  -1,091
  -1,515
  -2,049
  -2,706
  -3,495
  -4,420
  -5,486
  -6,692
  -8,009
  -9,488
  -11,096
  -12,829
  -14,679
  -16,640
  -18,708
  -20,878
  -23,145
  -25,509
  -27,967
  -30,518
  -33,165
  -35,907
  -38,749
  -41,694
  -44,745
  -47,909
  -51,190
  -54,595
Prev. year cash balance distribution, $m
 
  6
  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
 
  -236
  -372
  -550
  -789
  -1,099
  -1,491
  -1,976
  -2,562
  -3,256
  -4,065
  -4,992
  -6,039
  -7,207
  -8,495
  -9,902
  -11,426
  -13,063
  -14,811
  -16,668
  -18,629
  -20,694
  -22,861
  -25,128
  -27,495
  -29,962
  -32,531
  -35,203
  -37,981
  -40,867
  -43,866
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  -219
  -318
  -430
  -558
  -699
  -844
  -985
  -1,114
  -1,220
  -1,297
  -1,339
  -1,344
  -1,311
  -1,244
  -1,149
  -1,032
  -902
  -767
  -634
  -510
  -398
  -302
  -222
  -159
  -110
  -73
  -47
  -30
  -18
  -10
Current shareholders' claim on cash, %
  100
  74.0
  56.0
  43.2
  33.8
  26.9
  21.7
  17.7
  14.6
  12.1
  10.2
  8.6
  7.4
  6.3
  5.5
  4.7
  4.1
  3.6
  3.2
  2.8
  2.5
  2.2
  2.0
  1.7
  1.6
  1.4
  1.3
  1.1
  1.0
  0.9
  0.8

CES Energy Solutions Corp, formerly Canadian Energy Services & Technology Corp, is a Canada-based provider of technically advanced consumable chemical solutions throughout the lifecycle of the oilfield. The Company offers total solutions at the drill-bit, at the point of completion and stimulation, at the wellhead and pump-jack, and through to the pipeline and midstream market. Its solutions include corrosion inhibitors, demulsifiers, hydrogen sulfide scavengers, paraffin control products, surfactants, scale inhibitors, biocides and other specialty products. It operates in the Western Canadian Sedimentary Basin and in several basins throughout the United States. In Canada, the Company operates under the trade names Canadian Energy Services, PureChem Services, Sialco Materials Ltd, Clear Environmental Solutions and EQUAL Transport. In the United States, the Company operates under the trade names AES Drilling Fluids, AES Frac Fluids, Superior Weighting Products and JACAM Chemicals.

FINANCIAL RATIOS  of  CES Energy Solutions Corp. (CEU)

Valuation Ratios
P/E Ratio -22.8
Price to Sales 2.6
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 26
Price to Free Cash Flow 77.9
Growth Rates
Sales Growth Rate -24.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -29.6%
Cap. Spend. - 3 Yr. Gr. Rate -2.9%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 53.8%
Total Debt to Equity 55%
Interest Coverage -2
Management Effectiveness
Return On Assets -4.2%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital -7.5%
Ret/ On T. Cap. - 3 Yr. Avg. -3.1%
Return On Equity -11.8%
Return On Equity - 3 Yr. Avg. -4.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 19.4%
Gross Margin - 3 Yr. Avg. 22.6%
EBITDA Margin 4.4%
EBITDA Margin - 3 Yr. Avg. 3.6%
Operating Margin -5.6%
Oper. Margin - 3 Yr. Avg. -4.4%
Pre-Tax Margin -10.4%
Pre-Tax Margin - 3 Yr. Avg. -7%
Net Profit Margin -11.4%
Net Profit Margin - 3 Yr. Avg. -5.6%
Effective Tax Rate -10.2%
Eff/ Tax Rate - 3 Yr. Avg. 18.7%
Payout Ratio -21.5%

CEU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CEU stock intrinsic value calculation we used $568 million for the last fiscal year's total revenue generated by CES Energy Solutions Corp.. The default revenue input number comes from 2016 income statement of CES Energy Solutions 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 CEU stock valuation model: a) initial revenue growth rate of 60% 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 7.8%, whose default value for CEU is calculated based on our internal credit rating of CES Energy Solutions 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 CES Energy Solutions 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 CEU stock the variable cost ratio is equal to 119.5%.

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 CEU 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 7.3% for CES Energy Solutions Corp..

Corporate tax rate of 27% is the nominal tax rate for CES Energy Solutions 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 CEU 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 CEU are equal to 64.7%.

Life of production assets of 10.2 years is the average useful life of capital assets used in CES Energy Solutions 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 CEU is equal to 38%. 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 - $569 million for CES Energy Solutions 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 266.017 million for CES Energy Solutions 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 CES Energy Solutions Corp. at the current share price and the inputted number of shares is $1.5 billion.

RELATED COMPANIES Price Int.Val. Rating
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Financial statements of CEU
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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