Intrinsic value of Exterran - EXTN

Previous Close

$29.91

  Intrinsic Value

$3.89

stock screener

  Rating & Target

str. sell

-87%

Previous close

$29.91

 
Intrinsic value

$3.89

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of EXTN 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 1.1

 

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, %
  -42.51
  26.30
  24.17
  22.25
  20.53
  18.97
  17.58
  16.32
  15.19
  14.17
  13.25
  12.43
  11.68
  11.02
  10.41
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.11
  6.00
Revenue, $m
  1,029
  1,300
  1,614
  1,973
  2,378
  2,829
  3,326
  3,869
  4,457
  5,088
  5,763
  6,479
  7,236
  8,033
  8,869
  9,745
  10,659
  11,613
  12,606
  13,640
  14,714
  15,831
  16,991
  18,197
  19,451
  20,754
  22,109
  23,519
  24,986
  26,514
  28,105
Variable operating expenses, $m
 
  1,135
  1,409
  1,722
  2,076
  2,470
  2,904
  3,378
  3,891
  4,442
  5,031
  5,656
  6,317
  7,013
  7,743
  8,507
  9,306
  10,138
  11,005
  11,907
  12,845
  13,820
  14,833
  15,886
  16,981
  18,118
  19,301
  20,532
  21,813
  23,146
  24,536
Fixed operating expenses, $m
 
  200
  205
  210
  215
  221
  226
  232
  238
  244
  250
  256
  262
  269
  276
  282
  289
  297
  304
  312
  320
  328
  336
  344
  353
  362
  371
  380
  389
  399
  409
Total operating expenses, $m
  1,088
  1,335
  1,614
  1,932
  2,291
  2,691
  3,130
  3,610
  4,129
  4,686
  5,281
  5,912
  6,579
  7,282
  8,019
  8,789
  9,595
  10,435
  11,309
  12,219
  13,165
  14,148
  15,169
  16,230
  17,334
  18,480
  19,672
  20,912
  22,202
  23,545
  24,945
Operating income, $m
  -59
  -35
  0
  41
  87
  139
  196
  260
  328
  403
  482
  567
  657
  751
  851
  955
  1,064
  1,178
  1,297
  1,421
  1,549
  1,683
  1,822
  1,967
  2,118
  2,274
  2,437
  2,607
  2,784
  2,968
  3,160
EBITDA, $m
  79
  140
  217
  306
  406
  519
  643
  780
  928
  1,087
  1,257
  1,438
  1,629
  1,831
  2,043
  2,265
  2,497
  2,739
  2,991
  3,254
  3,527
  3,811
  4,106
  4,413
  4,732
  5,064
  5,409
  5,769
  6,143
  6,532
  6,938
Interest expense (income), $m
  29
  23
  37
  54
  73
  94
  118
  144
  172
  203
  236
  272
  309
  349
  391
  435
  481
  529
  579
  631
  685
  742
  800
  861
  925
  990
  1,059
  1,130
  1,204
  1,281
  1,361
Earnings before tax, $m
  -70
  -58
  -37
  -13
  14
  45
  79
  116
  156
  200
  246
  295
  347
  402
  460
  520
  584
  649
  718
  790
  864
  941
  1,022
  1,106
  1,193
  1,284
  1,378
  1,477
  1,580
  1,687
  1,799
Tax expense, $m
  124
  0
  0
  0
  4
  12
  21
  31
  42
  54
  66
  80
  94
  109
  124
  141
  158
  175
  194
  213
  233
  254
  276
  299
  322
  347
  372
  399
  427
  456
  486
Net income, $m
  -228
  -58
  -37
  -13
  10
  33
  57
  85
  114
  146
  180
  216
  254
  294
  336
  380
  426
  474
  524
  576
  631
  687
  746
  807
  871
  937
  1,006
  1,078
  1,153
  1,232
  1,313

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  36
  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
  1,375
  1,692
  2,101
  2,569
  3,096
  3,684
  4,331
  5,038
  5,803
  6,625
  7,503
  8,436
  9,421
  10,459
  11,548
  12,689
  13,880
  15,121
  16,415
  17,760
  19,159
  20,613
  22,124
  23,694
  25,327
  27,023
  28,788
  30,623
  32,534
  34,523
  36,595
Adjusted assets (=assets-cash), $m
  1,339
  1,692
  2,101
  2,569
  3,096
  3,684
  4,331
  5,038
  5,803
  6,625
  7,503
  8,436
  9,421
  10,459
  11,548
  12,689
  13,880
  15,121
  16,415
  17,760
  19,159
  20,613
  22,124
  23,694
  25,327
  27,023
  28,788
  30,623
  32,534
  34,523
  36,595
Revenue / Adjusted assets
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
Average production assets, $m
  844
  1,066
  1,323
  1,618
  1,950
  2,320
  2,728
  3,173
  3,655
  4,172
  4,725
  5,312
  5,933
  6,587
  7,273
  7,991
  8,741
  9,523
  10,337
  11,185
  12,066
  12,981
  13,933
  14,922
  15,950
  17,018
  18,129
  19,285
  20,488
  21,741
  23,046
Working capital, $m
  178
  179
  223
  272
  328
  390
  459
  534
  615
  702
  795
  894
  999
  1,109
  1,224
  1,345
  1,471
  1,603
  1,740
  1,882
  2,031
  2,185
  2,345
  2,511
  2,684
  2,864
  3,051
  3,246
  3,448
  3,659
  3,879
Total debt, $m
  349
  565
  815
  1,101
  1,423
  1,782
  2,177
  2,609
  3,077
  3,579
  4,116
  4,685
  5,287
  5,922
  6,587
  7,284
  8,011
  8,770
  9,560
  10,382
  11,237
  12,126
  13,049
  14,008
  15,005
  16,042
  17,120
  18,242
  19,409
  20,624
  21,891
Total liabilities, $m
  818
  1,034
  1,284
  1,570
  1,892
  2,251
  2,646
  3,078
  3,546
  4,048
  4,585
  5,154
  5,756
  6,391
  7,056
  7,753
  8,480
  9,239
  10,029
  10,851
  11,706
  12,595
  13,518
  14,477
  15,474
  16,511
  17,589
  18,711
  19,878
  21,093
  22,360
Total equity, $m
  557
  658
  817
  999
  1,204
  1,433
  1,685
  1,960
  2,257
  2,577
  2,919
  3,282
  3,665
  4,069
  4,492
  4,936
  5,399
  5,882
  6,385
  6,909
  7,453
  8,019
  8,606
  9,217
  9,852
  10,512
  11,198
  11,912
  12,656
  13,429
  14,236
Total liabilities and equity, $m
  1,375
  1,692
  2,101
  2,569
  3,096
  3,684
  4,331
  5,038
  5,803
  6,625
  7,504
  8,436
  9,421
  10,460
  11,548
  12,689
  13,879
  15,121
  16,414
  17,760
  19,159
  20,614
  22,124
  23,694
  25,326
  27,023
  28,787
  30,623
  32,534
  34,522
  36,596
Debt-to-equity ratio
  0.627
  0.860
  1.000
  1.100
  1.180
  1.240
  1.290
  1.330
  1.360
  1.390
  1.410
  1.430
  1.440
  1.460
  1.470
  1.480
  1.480
  1.490
  1.500
  1.500
  1.510
  1.510
  1.520
  1.520
  1.520
  1.530
  1.530
  1.530
  1.530
  1.540
  1.540
Adjusted equity ratio
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -228
  -58
  -37
  -13
  10
  33
  57
  85
  114
  146
  180
  216
  254
  294
  336
  380
  426
  474
  524
  576
  631
  687
  746
  807
  871
  937
  1,006
  1,078
  1,153
  1,232
  1,313
Depreciation, amort., depletion, $m
  138
  175
  217
  265
  320
  380
  447
  520
  599
  684
  775
  871
  973
  1,080
  1,192
  1,310
  1,433
  1,561
  1,695
  1,834
  1,978
  2,128
  2,284
  2,446
  2,615
  2,790
  2,972
  3,162
  3,359
  3,564
  3,778
Funds from operations, $m
  502
  117
  180
  252
  330
  413
  505
  605
  713
  830
  954
  1,086
  1,226
  1,374
  1,528
  1,690
  1,859
  2,035
  2,219
  2,410
  2,609
  2,815
  3,030
  3,253
  3,486
  3,727
  3,978
  4,240
  4,512
  4,796
  5,091
Change in working capital, $m
  239
  37
  43
  50
  56
  62
  69
  75
  81
  87
  93
  99
  104
  110
  115
  121
  126
  132
  137
  143
  148
  154
  160
  166
  173
  180
  187
  195
  202
  211
  220
Cash from operations, $m
  263
  80
  136
  202
  274
  351
  436
  530
  632
  743
  861
  988
  1,122
  1,264
  1,413
  1,569
  1,733
  1,904
  2,082
  2,267
  2,460
  2,661
  2,870
  3,087
  3,313
  3,547
  3,791
  4,045
  4,310
  4,585
  4,872
Maintenance CAPEX, $m
  0
  -138
  -175
  -217
  -265
  -320
  -380
  -447
  -520
  -599
  -684
  -775
  -871
  -973
  -1,080
  -1,192
  -1,310
  -1,433
  -1,561
  -1,695
  -1,834
  -1,978
  -2,128
  -2,284
  -2,446
  -2,615
  -2,790
  -2,972
  -3,162
  -3,359
  -3,564
New CAPEX, $m
  -74
  -222
  -258
  -294
  -332
  -370
  -408
  -445
  -482
  -518
  -553
  -587
  -621
  -654
  -686
  -718
  -750
  -782
  -814
  -847
  -881
  -916
  -952
  -989
  -1,028
  -1,068
  -1,111
  -1,156
  -1,203
  -1,253
  -1,305
Cash from investing activities, $m
  -24
  -360
  -433
  -511
  -597
  -690
  -788
  -892
  -1,002
  -1,117
  -1,237
  -1,362
  -1,492
  -1,627
  -1,766
  -1,910
  -2,060
  -2,215
  -2,375
  -2,542
  -2,715
  -2,894
  -3,080
  -3,273
  -3,474
  -3,683
  -3,901
  -4,128
  -4,365
  -4,612
  -4,869
Free cash flow, $m
  239
  -281
  -296
  -309
  -323
  -339
  -352
  -362
  -370
  -374
  -376
  -374
  -370
  -363
  -353
  -341
  -327
  -311
  -294
  -275
  -254
  -233
  -210
  -186
  -161
  -136
  -110
  -83
  -55
  -27
  2
Issuance/(repayment) of debt, $m
  -180
  216
  250
  286
  322
  359
  396
  432
  468
  502
  536
  570
  602
  634
  666
  697
  728
  759
  790
  822
  855
  888
  923
  959
  997
  1,037
  1,078
  1,122
  1,167
  1,215
  1,266
Issuance/(repurchase) of shares, $m
  -1
  195
  196
  195
  195
  196
  194
  190
  184
  174
  162
  147
  130
  110
  88
  64
  37
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -231
  411
  446
  481
  517
  555
  590
  622
  652
  676
  698
  717
  732
  744
  754
  761
  765
  768
  790
  822
  855
  888
  923
  959
  997
  1,037
  1,078
  1,122
  1,167
  1,215
  1,266
Total cash flow (excl. dividends), $m
  7
  130
  150
  172
  194
  216
  238
  260
  281
  302
  323
  343
  362
  381
  400
  419
  438
  456
  496
  547
  601
  656
  713
  773
  836
  901
  968
  1,039
  1,112
  1,189
  1,269
Retained Cash Flow (-), $m
  249
  -195
  -196
  -195
  -205
  -229
  -252
  -275
  -298
  -320
  -342
  -363
  -383
  -404
  -424
  -444
  -463
  -483
  -503
  -523
  -544
  -566
  -588
  -611
  -635
  -660
  -686
  -714
  -743
  -774
  -806
Prev. year cash balance distribution, $m
 
  36
  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
 
  -29
  -46
  -23
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -7
  24
  56
  90
  126
  163
  201
  241
  282
  325
  369
  415
  463
Discount rate, %
 
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
 
  -27
  -39
  -18
  -8
  -8
  -8
  -8
  -7
  -7
  -6
  -5
  -5
  -4
  -4
  -3
  -2
  -2
  0
  1
  2
  2
  2
  2
  1
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  83.7
  72.5
  64.5
  58.5
  54.0
  50.4
  47.6
  45.4
  43.6
  42.3
  41.2
  40.4
  39.7
  39.3
  39.0
  38.9
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8
  38.8

Exterran Corporation provides compression, production and processing products and services that support the production and transportation of oil and natural gas around the world. The Company operates through three segments: contract operations, aftermarket services, and oil and gas product sales. The contract operations segment provides natural gas compression services, production and processing equipment services, and maintenance services to meet specific customer requirements on assets owned by it. The aftermarket services segment provides a range of services to support the surface production, compression and processing needs of customers, from parts sales and normal maintenance services to full operation of a customer's owned assets. The oil and gas product sales segment provides design, engineering, manufacturing, installation and sale of natural gas compression units, and accessories and equipment used in the production, treating and processing of crude oil and natural gas.

FINANCIAL RATIOS  of  Exterran (EXTN)

Valuation Ratios
P/E Ratio -4.6
Price to Sales 1
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 4
Price to Free Cash Flow 5.6
Growth Rates
Sales Growth Rate -42.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -52.9%
Cap. Spend. - 3 Yr. Gr. Rate -5.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 62.7%
Total Debt to Equity 62.7%
Interest Coverage -1
Management Effectiveness
Return On Assets -9.3%
Ret/ On Assets - 3 Yr. Avg. -0.9%
Return On Total Capital -20.4%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -33.5%
Return On Equity - 3 Yr. Avg. -7.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 29.8%
Gross Margin - 3 Yr. Avg. 27.5%
EBITDA Margin 9.4%
EBITDA Margin - 3 Yr. Avg. 11%
Operating Margin -5.7%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin -6.8%
Pre-Tax Margin - 3 Yr. Avg. -0%
Net Profit Margin -22.2%
Net Profit Margin - 3 Yr. Avg. -5.1%
Effective Tax Rate -177.1%
Eff/ Tax Rate - 3 Yr. Avg. 79.9%
Payout Ratio 0%

EXTN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXTN stock intrinsic value calculation we used $1029 million for the last fiscal year's total revenue generated by Exterran. The default revenue input number comes from 2016 income statement of Exterran. 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 EXTN stock valuation model: a) initial revenue growth rate of 26.3% 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 7.7%, whose default value for EXTN is calculated based on our internal credit rating of Exterran, 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 Exterran.
    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 EXTN stock the variable cost ratio is equal to 87.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $195 million in the base year in the intrinsic value calculation for EXTN 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 6.6% for Exterran.

Corporate tax rate of 27% is the nominal tax rate for Exterran. 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 EXTN 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 EXTN are equal to 82%.

Life of production assets of 6.1 years is the average useful life of capital assets used in Exterran 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 EXTN is equal to 13.8%. 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 - $557 million for Exterran - 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 35.808 million for Exterran 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 Exterran at the current share price and the inputted number of shares is $1.1 billion.

RELATED COMPANIES Price Int.Val. Rating
AROC Archrock 9.85 2.53  str.sell
NGS Natural Gas Se 25.75 4.31  str.sell
CCLP CSI Compressco 5.28 1.01  str.sell
MIND Mitcham Indust 3.75 1.59  str.sell
Financial statements of EXTN
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.