Intrinsic value of Aspen Aerogels - ASPN

Previous Close

$4.25

  Intrinsic Value

$1.22

stock screener

  Rating & Target

str. sell

-71%

  Value-price divergence*

-19%

Previous close

$4.25

 
Intrinsic value

$1.22

 
Up/down potential

-71%

 
Rating

str. sell

 
Value-price divergence*

-19%

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

We calculate the intrinsic value of ASPN 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 0.1

 

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, %
  -4.07
  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
  118
  120
  123
  126
  130
  134
  138
  143
  148
  153
  159
  166
  172
  179
  187
  195
  204
  213
  222
  232
  243
  254
  266
  279
  292
  306
  320
  336
  352
  369
  387
Variable operating expenses, $m
 
  26
  26
  27
  28
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
Fixed operating expenses, $m
 
  109
  111
  114
  117
  120
  123
  126
  129
  132
  136
  139
  143
  146
  150
  154
  157
  161
  165
  169
  174
  178
  182
  187
  192
  197
  201
  206
  212
  217
  222
Total operating expenses, $m
  129
  135
  137
  141
  145
  148
  152
  156
  160
  165
  170
  174
  180
  184
  190
  195
  200
  206
  212
  218
  226
  232
  238
  246
  254
  262
  269
  277
  287
  295
  304
Operating income, $m
  -11
  -14
  -14
  -15
  -15
  -15
  -14
  -13
  -13
  -12
  -10
  -9
  -7
  -5
  -2
  0
  3
  6
  10
  14
  18
  22
  27
  33
  38
  44
  51
  58
  66
  74
  83
EBITDA, $m
  -1
  -5
  -6
  -6
  -6
  -5
  -5
  -4
  -2
  -1
  1
  3
  5
  8
  11
  14
  17
  21
  25
  30
  35
  40
  46
  52
  58
  66
  73
  81
  90
  99
  109
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Earnings before tax, $m
  -12
  -14
  -14
  -15
  -15
  -15
  -14
  -14
  -13
  -12
  -10
  -9
  -7
  -5
  -3
  0
  3
  6
  9
  13
  17
  22
  27
  32
  37
  44
  50
  57
  65
  73
  81
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  15
  17
  20
  22
Net income, $m
  -12
  -14
  -14
  -15
  -15
  -15
  -14
  -14
  -13
  -12
  -10
  -9
  -7
  -5
  -3
  0
  2
  4
  7
  10
  13
  16
  19
  23
  27
  32
  37
  42
  47
  53
  59

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  18
  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
  135
  119
  122
  125
  129
  133
  137
  142
  147
  152
  158
  164
  171
  178
  185
  193
  202
  211
  220
  230
  241
  252
  264
  276
  289
  303
  318
  333
  349
  366
  384
Adjusted assets (=assets-cash), $m
  117
  119
  122
  125
  129
  133
  137
  142
  147
  152
  158
  164
  171
  178
  185
  193
  202
  211
  220
  230
  241
  252
  264
  276
  289
  303
  318
  333
  349
  366
  384
Revenue / Adjusted assets
  1.009
  1.008
  1.008
  1.008
  1.008
  1.008
  1.007
  1.007
  1.007
  1.007
  1.006
  1.012
  1.006
  1.006
  1.011
  1.010
  1.010
  1.009
  1.009
  1.009
  1.008
  1.008
  1.008
  1.011
  1.010
  1.010
  1.006
  1.009
  1.009
  1.008
  1.008
Average production assets, $m
  82
  83
  85
  87
  90
  92
  95
  99
  102
  106
  110
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  211
  221
  232
  243
  255
  267
Working capital, $m
  32
  14
  15
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
Total debt, $m
  0
  0
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  38
  40
  43
Total liabilities, $m
  19
  19
  20
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
Total equity, $m
  116
  100
  102
  105
  108
  111
  115
  119
  123
  127
  132
  138
  143
  149
  155
  162
  169
  177
  185
  193
  202
  211
  221
  232
  242
  254
  266
  279
  292
  307
  321
Total liabilities and equity, $m
  135
  119
  122
  125
  129
  132
  137
  142
  147
  152
  158
  165
  171
  178
  185
  193
  202
  211
  221
  230
  241
  252
  264
  277
  289
  303
  317
  333
  349
  366
  383
Debt-to-equity ratio
  0.000
  0.000
  0.010
  0.010
  0.020
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.060
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
Adjusted equity ratio
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -12
  -14
  -14
  -15
  -15
  -15
  -14
  -14
  -13
  -12
  -10
  -9
  -7
  -5
  -3
  0
  2
  4
  7
  10
  13
  16
  19
  23
  27
  32
  37
  42
  47
  53
  59
Depreciation, amort., depletion, $m
  10
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
Funds from operations, $m
  -5
  -5
  -6
  -6
  -6
  -5
  -5
  -4
  -3
  -1
  1
  3
  5
  7
  10
  13
  16
  19
  22
  26
  29
  33
  38
  42
  47
  53
  59
  65
  71
  79
  86
Change in working capital, $m
  -4
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  -1
  -6
  -6
  -6
  -6
  -6
  -5
  -4
  -3
  -2
  0
  2
  4
  7
  9
  12
  15
  18
  21
  24
  28
  32
  36
  41
  46
  51
  57
  63
  70
  77
  84
Maintenance CAPEX, $m
  0
  -8
  -8
  -9
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
New CAPEX, $m
  -13
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from investing activities, $m
  -13
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -19
  -20
  -22
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
Free cash flow, $m
  -14
  -16
  -16
  -17
  -17
  -17
  -17
  -17
  -17
  -16
  -15
  -14
  -12
  -10
  -8
  -6
  -4
  -2
  0
  2
  5
  7
  11
  14
  18
  21
  26
  30
  35
  40
  46
Issuance/(repayment) of debt, $m
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
Issuance/(repurchase) of shares, $m
  0
  16
  17
  17
  18
  18
  18
  17
  17
  16
  15
  14
  13
  11
  9
  7
  5
  3
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1
  16
  17
  18
  19
  19
  19
  18
  18
  17
  16
  15
  14
  12
  10
  8
  6
  4
  3
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
Total cash flow (excl. dividends), $m
  -15
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  4
  6
  9
  12
  16
  20
  24
  28
  33
  38
  43
  49
Retained Cash Flow (-), $m
  6
  -16
  -17
  -17
  -18
  -18
  -18
  -17
  -17
  -16
  -15
  -14
  -13
  -11
  -9
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
Prev. year cash balance distribution, $m
 
  18
  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
 
  3
  -16
  -16
  -17
  -17
  -17
  -16
  -16
  -15
  -14
  -13
  -11
  -9
  -7
  -5
  -5
  -5
  -6
  -5
  -3
  0
  3
  6
  9
  12
  16
  20
  24
  29
  34
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
 
  3
  -15
  -14
  -14
  -13
  -12
  -11
  -10
  -9
  -7
  -6
  -5
  -3
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  84.4
  70.9
  59.4
  49.8
  41.9
  35.4
  30.1
  25.9
  22.5
  19.8
  17.6
  15.9
  14.6
  13.7
  13.0
  12.6
  12.3
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2
  12.2

Aspen Aerogels, Inc., an energy technology company, designs, develops, manufactures, and sells aerogel insulation products used primarily in energy infrastructure facilities worldwide. The company provides Pyrogel XT/XT-E that reduces the risk of corrosion under insulation in high temperature operating systems; Pyrogel XTF, which provides strong protection against fire; Cryogel Z for sub-ambient and cryogenic applications in the energy infrastructure market; and Spaceloft Subsea used in pipe-in-pipe applications in offshore oil production. It also offers Spaceloft for use in building and construction market; and Cryogel X201, which is used in cold system designs consisting of refrigerated appliances, cold storage equipment, and aerospace systems where space is at a premium. In addition, the company provides contract research services for various federal and non-federal government agencies comprising the Department of Defense, the Department of Energy, and other institutions. Aspen Aerogels, Inc. was founded in 2001 and is headquartered in Northborough, Massachusetts.

FINANCIAL RATIOS  of  Aspen Aerogels (ASPN)

Valuation Ratios
P/E Ratio -8.3
Price to Sales 0.8
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow -99.3
Price to Free Cash Flow -7.1
Growth Rates
Sales Growth Rate -4.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -40.9%
Cap. Spend. - 3 Yr. Gr. Rate 34.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -8.7%
Ret/ On Assets - 3 Yr. Avg. -23%
Return On Total Capital -10.1%
Ret/ On T. Cap. - 3 Yr. Avg. -26.9%
Return On Equity -10.1%
Return On Equity - 3 Yr. Avg. -76%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 19.5%
Gross Margin - 3 Yr. Avg. 18.8%
EBITDA Margin -1.7%
EBITDA Margin - 3 Yr. Avg. -17.8%
Operating Margin -9.3%
Oper. Margin - 3 Yr. Avg. -10%
Pre-Tax Margin -10.2%
Pre-Tax Margin - 3 Yr. Avg. -26.6%
Net Profit Margin -10.2%
Net Profit Margin - 3 Yr. Avg. -26.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ASPN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASPN stock intrinsic value calculation we used $118 million for the last fiscal year's total revenue generated by Aspen Aerogels. The default revenue input number comes from 2016 income statement of Aspen Aerogels. 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 ASPN 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 ASPN is calculated based on our internal credit rating of Aspen Aerogels, 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 Aspen Aerogels.
    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 ASPN stock the variable cost ratio is equal to 21.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $106 million in the base year in the intrinsic value calculation for ASPN 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 Aspen Aerogels.

Corporate tax rate of 27% is the nominal tax rate for Aspen Aerogels. 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 ASPN 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 ASPN are equal to 69.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Aspen Aerogels 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 ASPN is equal to 11.9%. 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 - $116 million for Aspen Aerogels - 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 23.828 million for Aspen Aerogels 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 Aspen Aerogels at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Aspen Aerogels reports 2Q loss   [Aug-04-17 01:09AM  Associated Press]
▶ Aspen Aerogels Introduces Pyrogel® HPS   [Jul-17-17 04:36PM  PR Newswire]
▶ ETFs with exposure to Aspen Aerogels, Inc. : May 22, 2017   [May-22-17 01:22PM  Capital Cube]
▶ ETFs with exposure to Aspen Aerogels, Inc. : May 11, 2017   [May-11-17 04:10PM  Capital Cube]
▶ Aspen Aerogels reports 1Q loss   [May-04-17 07:16PM  Associated Press]
▶ Aspen Aerogels reports 4Q loss   [Feb-23-17 06:17PM  Associated Press]
▶ 3 Small Cap-Growth Stocks for a Trump Economy   [Feb-03-17 03:01PM  TheStreet.com]
▶ Hedge Funds Are Betting On Radiant Logistics Inc (RLGT)   [Dec-14-16 01:01PM  at Insider Monkey]
▶ Hedge Funds Are Crazy About Aspen Aerogels Inc (ASPN)   [Nov-30  02:08AM  at Insider Monkey]
▶ What Do Hedge Funds Think of Monroe Capital Corp (MRCC)?   [Nov-27  10:33AM  at Insider Monkey]
Stock chart of ASPN Financial statements of ASPN
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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