SEACOR Holdings Inc. owns, operates, invests, and markets equipment in the offshore oil and gas, shipping, and logistics industries worldwide. The companys Offshore Marine Services segment operates support vessels to deliver cargo and personnel to offshore installations; handles anchors and mooring equipment; and carries and launches remote operated vehicles, as well as provides tow rigs. This segment also provides accommodations for technicians and specialists, as well as standby safety support and emergency response services; and operates lift boats supporting well intervention, work-over, decommissioning, and diving operations, as well as operates vessels used to move personnel and supplies to offshore wind farms. Its Inland River Services segment operates river transportation equipment for moving agricultural and industrial commodities, and petroleum products; and operates and invests in multi-modal terminal facilities, as well as operates barge fleeting locations, service facilities, and transshipment terminal. The companys Shipping Services segment owns product tankers for the United States coastwise trade of crude oil, petroleum, and chemical products, as well as provides harbor tugs servicing vessels docking; and offers liner and short-sea transportation services. This segment is also involved in the terminal support and bunkering, and articulated tug and dry-bulk barge operations, as well as offers offshore tug and technical ship management services. Its Illinois Corn Processing segment produces alcohol used in the food, beverage, industrial, and petrochemical markets; dried distillers grains with solubles; and non-food grade corn oil for feedstock in biodiesel production. The companys Other segment engages in emergency and crisis, agricultural commodity trading and logistics, and lending and leasing activities, as well as provides industrial aviation services. SEACOR Holdings Inc. was founded in 1989 and is based in Fort Lauderdale, Florida.
FINANCIAL RATIOS of SEACOR Holdings (CKH)
|Price to Sales||0.8|
|Price to Book||0.6|
|Price to Tangible Book|
|Price to Cash Flow||12.3|
|Price to Free Cash Flow||-2|
|Sales Growth Rate||-21.2%|
|Sales - 3 Yr. Growth Rate||%|
|EPS Growth Rate||%|
|EPS - 3 Yr. Growth Rate||%|
|Capital Spending Gr. Rate||20.9%|
|Cap. Spend. - 3 Yr. Gr. Rate||12.8%|
|LT Debt to Equity||81.8%|
|Total Debt to Equity||99.2%|
|Return On Assets||-6.6%|
|Ret/ On Assets - 3 Yr. Avg.||-1.5%|
|Return On Total Capital||-9.7%|
|Ret/ On T. Cap. - 3 Yr. Avg.||-2.8%|
|Return On Equity||-18.5%|
|Return On Equity - 3 Yr. Avg.||-5.5%|
|Gross Margin - 3 Yr. Avg.||29.4%|
|EBITDA Margin - 3 Yr. Avg.||7.4%|
|Oper. Margin - 3 Yr. Avg.||-2.4%|
|Pre-Tax Margin - 3 Yr. Avg.||-7.4%|
|Net Profit Margin||-26%|
|Net Profit Margin - 3 Yr. Avg.||-8.3%|
|Effective Tax Rate||35.9%|
|Eff/ Tax Rate - 3 Yr. Avg.||36.1%|
CKH stock valuation input parameters
Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CKH stock intrinsic value calculation we used $831 million for the last fiscal year's total revenue generated by SEACOR Holdings. The default revenue input number comes from 2016 income statement of SEACOR Holdings. 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 CKH 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 6.6%, whose default value for CKH is calculated based on our internal credit rating of SEACOR Holdings, 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 SEACOR Holdings.
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 CKH stock the variable cost ratio is equal to 30.3%.
Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $759 million in the base year in the intrinsic value calculation for CKH 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 SEACOR Holdings.
Corporate tax rate of 27% is the nominal tax rate for SEACOR Holdings. 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 CKH 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 CKH are equal to 191.7%.
Life of production assets of 13.1 years is the average useful life of capital assets used in SEACOR Holdings 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 CKH is equal to 7.3%. 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 - $1061 million for SEACOR Holdings - 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 17.027 million for SEACOR Holdings 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 SEACOR Holdings at the current share price and the inputted number of shares is $0.6 billion.