Intrinsic value of FuelCell Energy - FCEL

Previous Close

$1.41

  Intrinsic Value

$0.44

stock screener

  Rating & Target

str. sell

-69%

Previous close

$1.41

 
Intrinsic value

$0.44

 
Up/down potential

-69%

 
Rating

str. sell

We calculate the intrinsic value of FCEL 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -33.74
  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
  108
  98
  100
  103
  106
  109
  112
  116
  120
  125
  130
  135
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  249
  261
  273
  286
  300
  315
Variable operating expenses, $m
 
  108
  111
  114
  117
  120
  124
  128
  133
  138
  143
  147
  153
  160
  166
  174
  181
  189
  198
  207
  216
  226
  237
  248
  260
  272
  285
  299
  313
  328
  344
Fixed operating expenses, $m
 
  37
  38
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
Total operating expenses, $m
  155
  145
  149
  152
  156
  160
  165
  170
  176
  182
  188
  193
  200
  208
  215
  224
  232
  241
  251
  261
  272
  283
  295
  307
  321
  334
  348
  364
  379
  396
  413
Operating income, $m
  -46
  -47
  -48
  -49
  -51
  -52
  -53
  -54
  -55
  -57
  -58
  -58
  -60
  -61
  -63
  -65
  -66
  -68
  -70
  -72
  -74
  -76
  -78
  -81
  -83
  -85
  -88
  -90
  -93
  -96
  -99
EBITDA, $m
  -41
  -40
  -41
  -42
  -43
  -44
  -45
  -46
  -47
  -48
  -50
  -51
  -52
  -53
  -54
  -56
  -57
  -59
  -60
  -61
  -63
  -65
  -66
  -68
  -70
  -71
  -73
  -75
  -77
  -79
  -81
Interest expense (income), $m
  2
  9
  10
  11
  12
  13
  13
  15
  16
  17
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  38
  41
  43
  46
  49
  53
  56
  60
  64
  68
  72
Earnings before tax, $m
  -51
  -57
  -59
  -60
  -62
  -64
  -66
  -69
  -71
  -74
  -77
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -132
  -138
  -144
  -150
  -157
  -163
  -170
Tax expense, $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
Net income, $m
  -51
  -57
  -59
  -60
  -62
  -64
  -66
  -69
  -71
  -74
  -77
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -132
  -138
  -144
  -150
  -157
  -163
  -170

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  84
  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
  341
  393
  402
  413
  424
  437
  451
  467
  483
  501
  520
  541
  563
  586
  611
  637
  665
  695
  726
  759
  794
  831
  870
  911
  954
  999
  1,047
  1,097
  1,150
  1,206
  1,265
Adjusted assets (=assets-cash), $m
  257
  393
  402
  413
  424
  437
  451
  467
  483
  501
  520
  541
  563
  586
  611
  637
  665
  695
  726
  759
  794
  831
  870
  911
  954
  999
  1,047
  1,097
  1,150
  1,206
  1,265
Revenue / Adjusted assets
  0.420
  0.249
  0.249
  0.249
  0.250
  0.249
  0.248
  0.248
  0.248
  0.250
  0.250
  0.250
  0.249
  0.249
  0.249
  0.250
  0.250
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
Average production assets, $m
  25
  55
  56
  58
  59
  61
  63
  65
  68
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
  127
  133
  140
  147
  154
  161
  169
  177
Working capital, $m
  150
  33
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
Total debt, $m
  99
  99
  105
  113
  121
  131
  141
  153
  165
  178
  192
  207
  224
  241
  259
  278
  299
  321
  344
  368
  394
  421
  449
  480
  511
  545
  580
  617
  656
  697
  740
Total liabilities, $m
  166
  289
  296
  304
  312
  322
  332
  343
  356
  369
  383
  398
  414
  432
  450
  469
  490
  512
  535
  559
  585
  612
  640
  670
  702
  735
  771
  808
  847
  888
  931
Total equity, $m
  174
  104
  106
  109
  112
  115
  119
  123
  128
  132
  137
  143
  149
  155
  161
  168
  176
  183
  192
  200
  210
  219
  230
  240
  252
  264
  276
  290
  304
  318
  334
Total liabilities and equity, $m
  340
  393
  402
  413
  424
  437
  451
  466
  484
  501
  520
  541
  563
  587
  611
  637
  666
  695
  727
  759
  795
  831
  870
  910
  954
  999
  1,047
  1,098
  1,151
  1,206
  1,265
Debt-to-equity ratio
  0.569
  0.950
  0.990
  1.040
  1.080
  1.130
  1.190
  1.240
  1.290
  1.350
  1.400
  1.450
  1.500
  1.560
  1.610
  1.650
  1.700
  1.750
  1.790
  1.840
  1.880
  1.920
  1.960
  1.990
  2.030
  2.060
  2.100
  2.130
  2.160
  2.190
  2.220
Adjusted equity ratio
  0.350
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -51
  -57
  -59
  -60
  -62
  -64
  -66
  -69
  -71
  -74
  -77
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -132
  -138
  -144
  -150
  -157
  -163
  -170
Depreciation, amort., depletion, $m
  5
  7
  7
  7
  7
  8
  8
  8
  8
  8
  9
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
Funds from operations, $m
  -54
  -50
  -51
  -53
  -55
  -57
  -59
  -61
  -63
  -65
  -68
  -71
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -105
  -110
  -114
  -119
  -124
  -129
  -135
  -140
  -146
  -153
Change in working capital, $m
  -7
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
Cash from operations, $m
  -47
  -51
  -52
  -54
  -56
  -58
  -60
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
  -100
  -104
  -108
  -113
  -118
  -123
  -128
  -133
  -139
  -145
  -151
  -158
Maintenance CAPEX, $m
  0
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
New CAPEX, $m
  -41
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
Cash from investing activities, $m
  -41
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -21
  -22
  -22
  -24
  -25
Free cash flow, $m
  -88
  -57
  -59
  -61
  -63
  -66
  -68
  -71
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -105
  -110
  -114
  -119
  -124
  -130
  -135
  -141
  -147
  -154
  -161
  -168
  -175
  -183
Issuance/(repayment) of debt, $m
  55
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
Issuance/(repurchase) of shares, $m
  71
  60
  61
  63
  65
  68
  70
  73
  76
  79
  82
  84
  87
  91
  94
  98
  103
  107
  111
  116
  121
  126
  132
  138
  144
  150
  156
  163
  170
  178
  186
Cash from financing (excl. dividends), $m  
  125
  67
  68
  71
  74
  77
  80
  84
  88
  92
  96
  99
  103
  108
  112
  117
  124
  129
  134
  140
  147
  153
  161
  168
  176
  183
  191
  200
  209
  219
  229
Total cash flow (excl. dividends), $m
  37
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
Retained Cash Flow (-), $m
  -19
  -60
  -61
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -84
  -87
  -91
  -94
  -98
  -103
  -107
  -111
  -116
  -121
  -126
  -132
  -138
  -144
  -150
  -156
  -163
  -170
  -178
  -186
Prev. year cash balance distribution, $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 flow adjustment, $m
 
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
Cash available for distribution, $m
 
  -51
  -52
  -53
  -55
  -56
  -58
  -59
  -61
  -63
  -65
  -67
  -70
  -72
  -75
  -78
  -80
  -83
  -87
  -90
  -94
  -97
  -101
  -105
  -110
  -114
  -119
  -124
  -129
  -134
  -139
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  -47
  -46
  -43
  -40
  -37
  -35
  -32
  -29
  -26
  -24
  -21
  -18
  -16
  -13
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  54.2
  29.5
  16.0
  8.6
  4.6
  2.5
  1.3
  0.7
  0.4
  0.2
  0.1
  0.1
  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
  0.0
  0.0
  0.0

Fuelcell Energy, Inc. delivers fuel cell power solutions. The Company is engaged in designing, manufacturing, installing, operating and maintaining fuel cell power solutions. The Company also provides turnkey power generation solutions to the customers, including power plant installation, operations and maintenance. The Company's segment is fuel cell power plant production and research. The Company offers its services to various sectors, including utility companies, municipalities, universities, government entities and a range of industrial and commercial enterprises. The Company, by utilizing its Direct FuelCell (DFC) plants, is commercializing a tri-generation distributed hydrogen configuration that generates electricity, heat and hydrogen for industrial and/or transportation uses, as well as a fuel cell carbon capture solution for coal or gas-fired power plants. The Company is also developing and commercializing solid oxide fuel cell (SOFC) plants for sub-megawatt applications.

FINANCIAL RATIOS  of  FuelCell Energy (FCEL)

Valuation Ratios
P/E Ratio -1
Price to Sales 0.5
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -1.1
Price to Free Cash Flow -0.6
Growth Rates
Sales Growth Rate -33.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 485.7%
Cap. Spend. - 3 Yr. Gr. Rate 42.4%
Financial Strength
Quick Ratio 14
Current Ratio 0.2
LT Debt to Equity 53.4%
Total Debt to Equity 56.9%
Interest Coverage -25
Management Effectiveness
Return On Assets -15.9%
Ret/ On Assets - 3 Yr. Avg. -13.2%
Return On Total Capital -22.1%
Ret/ On T. Cap. - 3 Yr. Avg. -20.7%
Return On Equity -31%
Return On Equity - 3 Yr. Avg. -28.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 5.3%
EBITDA Margin -40.7%
EBITDA Margin - 3 Yr. Avg. -24.4%
Operating Margin -43.5%
Oper. Margin - 3 Yr. Avg. -25.6%
Pre-Tax Margin -47.2%
Pre-Tax Margin - 3 Yr. Avg. -28.7%
Net Profit Margin -47.2%
Net Profit Margin - 3 Yr. Avg. -28.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -2%
Payout Ratio -7.8%

FCEL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCEL stock intrinsic value calculation we used $96 million for the last fiscal year's total revenue generated by FuelCell Energy. The default revenue input number comes from 2016 income statement of FuelCell Energy. 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 FCEL 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 6.9%, whose default value for FCEL is calculated based on our internal credit rating of FuelCell Energy, 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 FuelCell Energy.
    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 FCEL stock the variable cost ratio is equal to 110.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $36 million in the base year in the intrinsic value calculation for FCEL 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 10.3% for FuelCell Energy.

Corporate tax rate of 27% is the nominal tax rate for FuelCell Energy. 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 FCEL stock is equal to 4.8%.

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 FCEL are equal to 56.2%.

Life of production assets of 10 years is the average useful life of capital assets used in FuelCell Energy 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 FCEL is equal to 33.3%. 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 - $101 million for FuelCell Energy - 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 50 million for FuelCell Energy 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 FuelCell Energy at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ FuelCell Energy: Fiscal 2Q Earnings Snapshot   [08:13AM  Associated Press]
▶ Should You Buy FuelCell Energy Inc (NASDAQ:FCEL)?   [Jun-06-18 07:06AM  Simply Wall St.]
▶ Alternative Energy Stock Outlook - April 2018   [Apr-12-18 03:13PM  Zacks]
▶ FuelCell Energy reports 1Q loss   [10:19AM  Associated Press]
▶ CORRECTING and REPLACING FuelCell Energy, Inc.   [Mar-07-18 10:24AM  GlobeNewswire]
▶ FuelCell Energy reports 4Q loss   [07:19AM  Associated Press]
▶ Read This Before You Buy Fuel Cell Stocks   [Dec-30-17 08:09AM  Motley Fool]
▶ Short Interest in Solar Drops, Alt Energy Stocks Mixed   [Dec-12-17 07:50AM  24/7 Wall St.]
▶ What Is FuelCell Energy Incs (FCEL) Share Price Doing?   [Nov-20-17 04:45PM  Simply Wall St.]
Financial statements of FCEL
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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