Intrinsic value of CNX Coal Resources - CNXC

Previous Close

$14.90

  Intrinsic Value

$6.49

stock screener

  Rating & Target

str. sell

-56%

  Value-price divergence*

-83%

Previous close

$14.90

 
Intrinsic value

$6.49

 
Up/down potential

-56%

 
Rating

str. sell

 
Value-price divergence*

-83%

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

We calculate the intrinsic value of CNXC 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 0.4

 

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, %
  -14.07
  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
  281
  287
  293
  301
  309
  319
  329
  340
  352
  365
  379
  394
  410
  427
  445
  465
  485
  507
  529
  553
  579
  606
  634
  664
  695
  728
  763
  800
  838
  879
  922
Variable operating expenses, $m
 
  44
  45
  46
  47
  49
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
  102
  106
  111
  117
  122
  128
  134
  141
Fixed operating expenses, $m
 
  212
  217
  223
  228
  234
  240
  246
  252
  259
  265
  272
  278
  285
  292
  300
  307
  315
  323
  331
  339
  348
  356
  365
  374
  384
  393
  403
  413
  424
  434
Total operating expenses, $m
  247
  256
  262
  269
  275
  283
  290
  298
  306
  315
  323
  332
  341
  350
  360
  371
  381
  393
  404
  416
  428
  441
  453
  467
  480
  495
  510
  525
  541
  558
  575
Operating income, $m
  35
  31
  31
  32
  33
  36
  38
  42
  46
  51
  56
  62
  69
  77
  85
  94
  103
  114
  125
  138
  151
  165
  181
  197
  214
  233
  253
  274
  297
  321
  347
EBITDA, $m
  77
  73
  75
  77
  80
  83
  88
  93
  99
  106
  113
  121
  130
  141
  151
  163
  176
  190
  205
  221
  238
  256
  275
  296
  318
  342
  367
  394
  422
  452
  484
Interest expense (income), $m
  0
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
Earnings before tax, $m
  26
  24
  24
  24
  26
  28
  30
  33
  37
  41
  46
  52
  58
  65
  73
  81
  90
  100
  111
  122
  135
  148
  162
  178
  194
  212
  231
  251
  272
  295
  319
Tax expense, $m
  0
  6
  6
  7
  7
  7
  8
  9
  10
  11
  13
  14
  16
  18
  20
  22
  24
  27
  30
  33
  36
  40
  44
  48
  52
  57
  62
  68
  73
  80
  86
Net income, $m
  26
  17
  17
  18
  19
  20
  22
  24
  27
  30
  34
  38
  43
  48
  53
  59
  66
  73
  81
  89
  98
  108
  119
  130
  142
  155
  168
  183
  199
  215
  233

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  504
  504
  515
  529
  543
  560
  578
  598
  619
  642
  667
  693
  721
  751
  783
  817
  852
  890
  930
  973
  1,017
  1,064
  1,114
  1,167
  1,222
  1,280
  1,341
  1,406
  1,474
  1,545
  1,620
Adjusted assets (=assets-cash), $m
  494
  504
  515
  529
  543
  560
  578
  598
  619
  642
  667
  693
  721
  751
  783
  817
  852
  890
  930
  973
  1,017
  1,064
  1,114
  1,167
  1,222
  1,280
  1,341
  1,406
  1,474
  1,545
  1,620
Revenue / Adjusted assets
  0.569
  0.569
  0.569
  0.569
  0.569
  0.570
  0.569
  0.569
  0.569
  0.569
  0.568
  0.569
  0.569
  0.569
  0.568
  0.569
  0.569
  0.570
  0.569
  0.568
  0.569
  0.570
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
Average production assets, $m
  450
  459
  469
  481
  495
  510
  527
  544
  564
  585
  607
  631
  657
  684
  713
  744
  776
  811
  847
  886
  927
  970
  1,015
  1,063
  1,113
  1,166
  1,222
  1,281
  1,342
  1,407
  1,476
Working capital, $m
  -16
  -27
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
Total debt, $m
  198
  204
  210
  218
  226
  235
  245
  256
  268
  281
  295
  310
  325
  342
  360
  379
  399
  420
  443
  467
  492
  518
  546
  575
  606
  639
  673
  710
  748
  788
  830
Total liabilities, $m
  278
  283
  289
  297
  305
  314
  324
  335
  347
  360
  374
  389
  404
  421
  439
  458
  478
  499
  522
  546
  571
  597
  625
  654
  685
  718
  752
  789
  827
  867
  909
Total equity, $m
  227
  221
  226
  232
  239
  246
  254
  262
  272
  282
  293
  304
  317
  330
  344
  358
  374
  391
  408
  427
  447
  467
  489
  512
  536
  562
  589
  617
  647
  678
  711
Total liabilities and equity, $m
  505
  504
  515
  529
  544
  560
  578
  597
  619
  642
  667
  693
  721
  751
  783
  816
  852
  890
  930
  973
  1,018
  1,064
  1,114
  1,166
  1,221
  1,280
  1,341
  1,406
  1,474
  1,545
  1,620
Debt-to-equity ratio
  0.872
  0.920
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.060
  1.070
  1.080
  1.080
  1.090
  1.100
  1.110
  1.120
  1.120
  1.130
  1.140
  1.140
  1.150
  1.160
  1.160
  1.170
Adjusted equity ratio
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  26
  17
  17
  18
  19
  20
  22
  24
  27
  30
  34
  38
  43
  48
  53
  59
  66
  73
  81
  89
  98
  108
  119
  130
  142
  155
  168
  183
  199
  215
  233
Depreciation, amort., depletion, $m
  42
  43
  44
  45
  46
  48
  49
  51
  53
  55
  57
  59
  61
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  120
  125
  132
  138
Funds from operations, $m
  76
  60
  61
  63
  65
  68
  71
  75
  80
  85
  91
  97
  104
  112
  120
  129
  138
  149
  160
  172
  185
  199
  213
  229
  246
  264
  283
  303
  324
  347
  371
Change in working capital, $m
  3
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from operations, $m
  73
  61
  62
  64
  66
  69
  72
  76
  81
  86
  92
  98
  105
  113
  121
  131
  140
  151
  162
  174
  187
  201
  216
  232
  249
  267
  286
  306
  328
  350
  375
Maintenance CAPEX, $m
  0
  -42
  -43
  -44
  -45
  -46
  -48
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -120
  -125
  -132
New CAPEX, $m
  -13
  -9
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -36
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -68
Cash from investing activities, $m
  -34
  -51
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -88
  -93
  -98
  -103
  -108
  -112
  -118
  -124
  -130
  -136
  -143
  -149
  -157
  -165
  -173
  -182
  -190
  -200
Free cash flow, $m
  39
  10
  8
  8
  7
  8
  8
  9
  11
  13
  15
  18
  21
  24
  29
  33
  38
  44
  50
  57
  64
  72
  80
  89
  99
  110
  121
  133
  146
  160
  175
Issuance/(repayment) of debt, $m
  16
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
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  
  7
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
Total cash flow (excl. dividends), $m
  46
  15
  15
  15
  16
  17
  18
  20
  23
  25
  29
  32
  37
  41
  46
  52
  58
  65
  72
  80
  89
  98
  108
  119
  130
  142
  155
  169
  184
  200
  217
Retained Cash Flow (-), $m
  45
  -4
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
Prev. year cash balance distribution, $m
 
  10
  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
 
  21
  10
  9
  9
  10
  10
  12
  13
  15
  18
  21
  24
  28
  32
  37
  43
  48
  55
  62
  69
  77
  86
  96
  106
  117
  129
  141
  154
  169
  184
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  20
  9
  8
  7
  7
  6
  7
  7
  7
  7
  7
  7
  7
  7
  6
  6
  5
  5
  4
  4
  3
  2
  2
  2
  1
  1
  1
  0
  0
  0
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

CNX Coal Resources LP is a producer of high-British thermal units (Btu) thermal coal in the Northern Appalachian Basin and the eastern United States. It is engaged in the management and development of coal operations of CONSOL Energy Inc. (CONSOL Energy) in Pennsylvania. It holds interest in, and operational control over, CONSOL Energy's Pennsylvania Mining Complex, which consists of three underground mines and related infrastructure that produce high-Btu bituminous thermal coal that is sold primarily to electric utilities in the eastern United States. The Pennsylvania Mining Complex includes the Bailey Mine, the Enlow Fork Mine and the Harvey Mine. It mines its reserves from the Pittsburgh Number eight Coal Seam, which is a contiguous formation of uniform, Btu thermal coal. Its Bailey Mine is located in Enon, Pennsylvania. Its Enlow Fork Mine is located directly north of the Bailey Mine. Its Harvey Mine is located directly east of the Bailey and Enlow Fork Mines.

FINANCIAL RATIOS  of  CNX Coal Resources (CNXC)

Valuation Ratios
P/E Ratio 13.3
Price to Sales 1.2
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 4.7
Price to Free Cash Flow 5.8
Growth Rates
Sales Growth Rate -14.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -61.8%
Cap. Spend. - 3 Yr. Gr. Rate -30.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 87.2%
Total Debt to Equity 87.2%
Interest Coverage 0
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 14.9%
Return On Total Capital 5.9%
Ret/ On T. Cap. - 3 Yr. Avg. 18.3%
Return On Equity 10.4%
Return On Equity - 3 Yr. Avg. 37.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 24.2%
EBITDA Margin - 3 Yr. Avg. 31%
Operating Margin 12.1%
Oper. Margin - 3 Yr. Avg. 20.7%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 18.1%
Net Profit Margin 9.3%
Net Profit Margin - 3 Yr. Avg. 18.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 165.4%

CNXC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNXC stock intrinsic value calculation we used $281 million for the last fiscal year's total revenue generated by CNX Coal Resources. The default revenue input number comes from 2016 income statement of CNX Coal Resources. 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 CNXC 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 6.3%, whose default value for CNXC is calculated based on our internal credit rating of CNX Coal Resources, 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 CNX Coal Resources.
    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 CNXC stock the variable cost ratio is equal to 15.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $207 million in the base year in the intrinsic value calculation for CNXC 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 CNX Coal Resources.

Corporate tax rate of 27% is the nominal tax rate for CNX Coal Resources. 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 CNXC 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 CNXC are equal to 160.1%.

Life of production assets of 10.7 years is the average useful life of capital assets used in CNX Coal Resources 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 CNXC is equal to -9.3%. 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 - $227 million for CNX Coal Resources - 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 23.79 million for CNX Coal Resources 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 CNX Coal Resources at the current share price and the inputted number of shares is $0.4 billion.

RELATED COMPANIES Price Int.Val. Rating
ARLP Alliance Resou 18.55 19.00  hold
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AHGP Alliance Holdi 26.71 49.64  str.buy

COMPANY NEWS

▶ Clean coal refining plant to be built in southwestern Pennsylvania   [Sep-06-17 09:46AM  American City Business Journals]
▶ CNX Coal Resources Updates 2017 Outlook   [Sep-05-17 06:45AM  PR Newswire]
▶ Your MLP Ratings Updates from Last Week   [Aug-22-17 12:10PM  Market Realist]
▶ CNX Coal Resources misses 2Q profit forecasts   [Jul-31-17 09:36PM  Associated Press]
▶ Consol files plans to spin off coal operations and rename gas company   [Jul-13-17 03:35PM  American City Business Journals]
▶ CNX Coal Resources misses 1Q profit forecasts   [05:01AM  Associated Press]
▶ Danger Lurks for These 2 High-Yield Dividend Stocks   [Apr-21-17 01:15PM  Motley Fool]
▶ Peabody Energy: Just Too Darn Cheap?   [Apr-18-17 02:40PM  Barrons.com]
▶ [$$] EPA Head Tells Coal Miners 'Regulatory Assault Is Over'   [Apr-14-17 09:12AM  The Wall Street Journal]
▶ Uncertainty Burns Hot For US Coal   [Mar-01-17 09:55AM  Forbes]
▶ Uncertainty Burns Hot For US Coal   [09:55AM  at Forbes]
▶ Consol Directors Double Down On Open Market Share Buys   [Feb-07-17 02:26PM  TheStreet.com]
▶ How CNX Coal Resources LP (CNXC) Stacks Up Against Its Peers   [Dec-14-16 05:02AM  at Insider Monkey]
▶ The Best High-Yield Dividend Stocks of 2016   [Nov-18-16 10:18AM  at Motley Fool]
▶ Coal company sees improvement in market   [Nov-01-16 12:05PM  at bizjournals.com]
Financial statements of CNXC
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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