Intrinsic value of Fairmount Santrol Holdings - FMSA

Previous Close

$4.22

  Intrinsic Value

$24.24

stock screener

  Rating & Target

str. buy

+474%

  Value-price divergence*

0%

Previous close

$4.22

 
Intrinsic value

$24.24

 
Up/down potential

+474%

 
Rating

str. buy

 
Value-price divergence*

0%

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

We calculate the intrinsic value of FMSA 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 0.9

 

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, %
  -35.46
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  535
  856
  1,323
  1,978
  2,870
  4,049
  5,566
  7,471
  9,810
  12,624
  15,945
  19,800
  24,207
  29,177
  34,715
  40,819
  47,482
  54,696
  62,448
  70,725
  79,516
  88,809
  98,594
  108,864
  119,613
  130,842
  142,550
  154,743
  167,429
  180,620
  194,330
Variable operating expenses, $m
 
  436
  672
  1,005
  1,457
  2,055
  2,825
  3,791
  4,977
  6,404
  8,089
  10,042
  12,278
  14,799
  17,608
  20,703
  24,083
  27,742
  31,673
  35,872
  40,330
  45,044
  50,006
  55,215
  60,668
  66,362
  72,301
  78,485
  84,920
  91,610
  98,564
Fixed operating expenses, $m
 
  458
  470
  481
  493
  506
  518
  531
  545
  558
  572
  587
  601
  616
  632
  647
  664
  680
  697
  715
  732
  751
  770
  789
  809
  829
  849
  871
  892
  915
  938
Total operating expenses, $m
  709
  894
  1,142
  1,486
  1,950
  2,561
  3,343
  4,322
  5,522
  6,962
  8,661
  10,629
  12,879
  15,415
  18,240
  21,350
  24,747
  28,422
  32,370
  36,587
  41,062
  45,795
  50,776
  56,004
  61,477
  67,191
  73,150
  79,356
  85,812
  92,525
  99,502
Operating income, $m
  -174
  -38
  181
  492
  919
  1,488
  2,223
  3,149
  4,288
  5,661
  7,284
  9,171
  11,328
  13,763
  16,476
  19,468
  22,736
  26,274
  30,077
  34,139
  38,453
  43,015
  47,818
  52,860
  58,137
  63,651
  69,400
  75,387
  81,617
  88,096
  94,829
EBITDA, $m
  -94
  89
  376
  783
  1,342
  2,083
  3,041
  4,246
  5,729
  7,514
  9,624
  12,075
  14,878
  18,042
  21,568
  25,455
  29,700
  34,296
  39,236
  44,512
  50,116
  56,040
  62,278
  68,826
  75,681
  82,841
  90,307
  98,083
  106,174
  114,587
  123,331
Interest expense (income), $m
  61
  49
  79
  126
  192
  281
  399
  551
  742
  976
  1,258
  1,591
  1,977
  2,419
  2,917
  3,472
  4,083
  4,751
  5,473
  6,250
  7,079
  7,960
  8,891
  9,872
  10,900
  11,977
  13,102
  14,275
  15,497
  16,768
  18,090
Earnings before tax, $m
  -240
  -87
  101
  366
  728
  1,207
  1,824
  2,598
  3,546
  4,685
  6,026
  7,580
  9,351
  11,344
  13,559
  15,997
  18,653
  21,523
  24,604
  27,889
  31,374
  35,054
  38,927
  42,988
  47,237
  51,673
  56,297
  61,112
  66,120
  71,327
  76,739
Tax expense, $m
  -100
  0
  27
  99
  196
  326
  492
  701
  958
  1,265
  1,627
  2,047
  2,525
  3,063
  3,661
  4,319
  5,036
  5,811
  6,643
  7,530
  8,471
  9,465
  10,510
  11,607
  12,754
  13,952
  15,200
  16,500
  17,852
  19,258
  20,720
Net income, $m
  -140
  -87
  74
  267
  531
  881
  1,331
  1,896
  2,589
  3,420
  4,399
  5,533
  6,826
  8,281
  9,898
  11,678
  13,617
  15,712
  17,961
  20,359
  22,903
  25,590
  28,416
  31,381
  34,483
  37,721
  41,097
  44,612
  48,268
  52,069
  56,020

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  194
  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
  1,203
  1,615
  2,495
  3,732
  5,415
  7,639
  10,502
  14,097
  18,510
  23,818
  30,084
  37,358
  45,673
  55,052
  65,501
  77,017
  89,590
  103,200
  117,826
  133,444
  150,030
  167,564
  186,026
  205,403
  225,686
  246,871
  268,962
  291,968
  315,905
  340,793
  366,661
Adjusted assets (=assets-cash), $m
  1,009
  1,615
  2,495
  3,732
  5,415
  7,639
  10,502
  14,097
  18,510
  23,818
  30,084
  37,358
  45,673
  55,052
  65,501
  77,017
  89,590
  103,200
  117,826
  133,444
  150,030
  167,564
  186,026
  205,403
  225,686
  246,871
  268,962
  291,968
  315,905
  340,793
  366,661
Revenue / Adjusted assets
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
Average production assets, $m
  895
  1,431
  2,211
  3,307
  4,798
  6,770
  9,307
  12,492
  16,403
  21,107
  26,659
  33,105
  40,474
  48,785
  58,044
  68,250
  79,391
  91,451
  104,412
  118,252
  132,951
  148,488
  164,849
  182,020
  199,994
  218,767
  238,344
  258,731
  279,942
  301,997
  324,920
Working capital, $m
  280
  155
  239
  358
  519
  733
  1,007
  1,352
  1,776
  2,285
  2,886
  3,584
  4,381
  5,281
  6,283
  7,388
  8,594
  9,900
  11,303
  12,801
  14,392
  16,074
  17,845
  19,704
  21,650
  23,682
  25,802
  28,009
  30,305
  32,692
  35,174
Total debt, $m
  843
  1,345
  2,137
  3,250
  4,764
  6,766
  9,343
  12,578
  16,550
  21,327
  26,967
  33,513
  40,997
  49,438
  58,842
  69,207
  80,522
  92,771
  105,934
  119,990
  134,918
  150,698
  167,315
  184,754
  203,008
  222,075
  241,957
  262,663
  284,205
  306,605
  329,886
Total liabilities, $m
  952
  1,454
  2,246
  3,359
  4,873
  6,875
  9,452
  12,687
  16,659
  21,436
  27,076
  33,622
  41,106
  49,547
  58,951
  69,316
  80,631
  92,880
  106,043
  120,099
  135,027
  150,807
  167,424
  184,863
  203,117
  222,184
  242,066
  262,772
  284,314
  306,714
  329,995
Total equity, $m
  251
  162
  250
  373
  541
  764
  1,050
  1,410
  1,851
  2,382
  3,008
  3,736
  4,567
  5,505
  6,550
  7,702
  8,959
  10,320
  11,783
  13,344
  15,003
  16,756
  18,603
  20,540
  22,569
  24,687
  26,896
  29,197
  31,590
  34,079
  36,666
Total liabilities and equity, $m
  1,203
  1,616
  2,496
  3,732
  5,414
  7,639
  10,502
  14,097
  18,510
  23,818
  30,084
  37,358
  45,673
  55,052
  65,501
  77,018
  89,590
  103,200
  117,826
  133,443
  150,030
  167,563
  186,027
  205,403
  225,686
  246,871
  268,962
  291,969
  315,904
  340,793
  366,661
Debt-to-equity ratio
  3.359
  8.330
  8.560
  8.710
  8.800
  8.860
  8.900
  8.920
  8.940
  8.950
  8.960
  8.970
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
Adjusted equity ratio
  0.056
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -140
  -87
  74
  267
  531
  881
  1,331
  1,896
  2,589
  3,420
  4,399
  5,533
  6,826
  8,281
  9,898
  11,678
  13,617
  15,712
  17,961
  20,359
  22,903
  25,590
  28,416
  31,381
  34,483
  37,721
  41,097
  44,612
  48,268
  52,069
  56,020
Depreciation, amort., depletion, $m
  80
  127
  195
  292
  422
  595
  818
  1,097
  1,440
  1,853
  2,340
  2,904
  3,550
  4,279
  5,092
  5,987
  6,964
  8,022
  9,159
  10,373
  11,662
  13,025
  14,460
  15,967
  17,543
  19,190
  20,907
  22,696
  24,556
  26,491
  28,502
Funds from operations, $m
  18
  40
  269
  559
  954
  1,476
  2,149
  2,994
  4,029
  5,273
  6,739
  8,437
  10,376
  12,560
  14,990
  17,664
  20,581
  23,734
  27,120
  30,732
  34,565
  38,615
  42,877
  47,348
  52,026
  56,912
  62,004
  67,307
  72,824
  78,560
  84,522
Change in working capital, $m
  23
  58
  84
  119
  161
  213
  275
  345
  423
  509
  601
  698
  798
  900
  1,002
  1,105
  1,206
  1,306
  1,403
  1,498
  1,591
  1,682
  1,771
  1,859
  1,946
  2,032
  2,119
  2,207
  2,296
  2,388
  2,482
Cash from operations, $m
  -5
  -18
  185
  440
  792
  1,263
  1,875
  2,649
  3,606
  4,764
  6,138
  7,739
  9,579
  11,661
  13,988
  16,560
  19,375
  22,429
  25,717
  29,234
  32,974
  36,933
  41,106
  45,489
  50,081
  54,879
  59,885
  65,100
  70,528
  76,173
  82,040
Maintenance CAPEX, $m
  0
  -78
  -126
  -194
  -290
  -421
  -594
  -816
  -1,096
  -1,439
  -1,851
  -2,339
  -2,904
  -3,550
  -4,279
  -5,092
  -5,987
  -6,964
  -8,022
  -9,159
  -10,373
  -11,662
  -13,025
  -14,460
  -15,967
  -17,543
  -19,190
  -20,907
  -22,696
  -24,556
  -26,491
New CAPEX, $m
  -31
  -537
  -780
  -1,096
  -1,491
  -1,971
  -2,537
  -3,186
  -3,911
  -4,704
  -5,553
  -6,446
  -7,369
  -8,311
  -9,259
  -10,205
  -11,141
  -12,061
  -12,961
  -13,840
  -14,698
  -15,538
  -16,361
  -17,171
  -17,974
  -18,774
  -19,576
  -20,387
  -21,211
  -22,055
  -22,923
Cash from investing activities, $m
  -26
  -615
  -906
  -1,290
  -1,781
  -2,392
  -3,131
  -4,002
  -5,007
  -6,143
  -7,404
  -8,785
  -10,273
  -11,861
  -13,538
  -15,297
  -17,128
  -19,025
  -20,983
  -22,999
  -25,071
  -27,200
  -29,386
  -31,631
  -33,941
  -36,317
  -38,766
  -41,294
  -43,907
  -46,611
  -49,414
Free cash flow, $m
  -31
  -633
  -721
  -850
  -989
  -1,129
  -1,256
  -1,353
  -1,401
  -1,379
  -1,267
  -1,045
  -694
  -200
  449
  1,263
  2,247
  3,404
  4,734
  6,235
  7,903
  9,733
  11,720
  13,858
  16,140
  18,562
  21,119
  23,806
  26,621
  29,561
  32,626
Issuance/(repayment) of debt, $m
  -389
  513
  792
  1,113
  1,515
  2,002
  2,577
  3,235
  3,972
  4,777
  5,639
  6,546
  7,484
  8,441
  9,404
  10,365
  11,315
  12,249
  13,163
  14,056
  14,928
  15,780
  16,616
  17,439
  18,254
  19,067
  19,882
  20,705
  21,543
  22,399
  23,281
Issuance/(repurchase) of shares, $m
  446
  180
  14
  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  
  55
  693
  806
  1,113
  1,515
  2,002
  2,577
  3,235
  3,972
  4,777
  5,639
  6,546
  7,484
  8,441
  9,404
  10,365
  11,315
  12,249
  13,163
  14,056
  14,928
  15,780
  16,616
  17,439
  18,254
  19,067
  19,882
  20,705
  21,543
  22,399
  23,281
Total cash flow (excl. dividends), $m
  23
  60
  86
  263
  525
  873
  1,320
  1,882
  2,571
  3,398
  4,373
  5,502
  6,790
  8,240
  9,853
  11,627
  13,562
  15,653
  17,897
  20,291
  22,831
  25,513
  28,336
  31,297
  34,395
  37,629
  41,001
  44,511
  48,164
  51,961
  55,907
Retained Cash Flow (-), $m
  -312
  -180
  -88
  -124
  -168
  -222
  -286
  -359
  -441
  -531
  -627
  -727
  -832
  -938
  -1,045
  -1,152
  -1,257
  -1,361
  -1,463
  -1,562
  -1,659
  -1,753
  -1,846
  -1,938
  -2,028
  -2,119
  -2,209
  -2,301
  -2,394
  -2,489
  -2,587
Prev. year cash balance distribution, $m
 
  183
  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
 
  62
  -2
  139
  357
  650
  1,034
  1,523
  2,130
  2,867
  3,746
  4,774
  5,958
  7,302
  8,808
  10,476
  12,305
  14,292
  16,434
  18,729
  21,172
  23,760
  26,490
  29,359
  32,366
  35,511
  38,792
  42,211
  45,770
  49,472
  53,320
Discount rate, %
 
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
 
  56
  -2
  100
  223
  351
  477
  591
  687
  757
  796
  803
  779
  729
  657
  573
  481
  391
  307
  232
  170
  120
  81
  53
  33
  20
  12
  7
  3
  2
  1
Current shareholders' claim on cash, %
  100
  58.8
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4
  57.4

Fairmount Santrol Holdings Inc. is a provider of sand-based proppant solutions. The Company operates through two segments: Proppant Solutions, and Industrial & Recreational (I&R) Products. Its Proppant Solutions segment provides sand-based proppants for use in hydraulic fracturing operations throughout the United States and Canada, Argentina, Mexico, China, northern Europe and the United Arab Emirates. Its I&R segment provides raw, coated, and custom blended sands to the foundry, building products, glass, turf and landscape, and filtration industries in North America. Its asset base includes approximately 800 million tons of proven and probable mineral reserves. As of March 2017, the Company had 10 sand processing facilities with 16.8 million tons of annual sand processing capacity. Its coating facilities include operations in Mexico, Denmark and China, through which it serves international oil and gas markets.

FINANCIAL RATIOS  of  Fairmount Santrol Holdings (FMSA)

Valuation Ratios
P/E Ratio -6.7
Price to Sales 1.8
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow -188.7
Price to Free Cash Flow -26.2
Growth Rates
Sales Growth Rate -35.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -72.8%
Cap. Spend. - 3 Yr. Gr. Rate -22.7%
Financial Strength
Quick Ratio 18
Current Ratio 0
LT Debt to Equity 331.5%
Total Debt to Equity 335.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -8.2%
Ret/ On Assets - 3 Yr. Avg. 1.6%
Return On Total Capital -12.4%
Ret/ On T. Cap. - 3 Yr. Avg. -1.9%
Return On Equity -147.4%
Return On Equity - 3 Yr. Avg. 72.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 14%
Gross Margin - 3 Yr. Avg. 25.9%
EBITDA Margin -18.5%
EBITDA Margin - 3 Yr. Avg. 4.7%
Operating Margin -32.5%
Oper. Margin - 3 Yr. Avg. -4.4%
Pre-Tax Margin -44.9%
Pre-Tax Margin - 3 Yr. Avg. -12.6%
Net Profit Margin -26.2%
Net Profit Margin - 3 Yr. Avg. -8.2%
Effective Tax Rate 41.7%
Eff/ Tax Rate - 3 Yr. Avg. 24.9%
Payout Ratio 0%

FMSA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FMSA stock intrinsic value calculation we used $535 million for the last fiscal year's total revenue generated by Fairmount Santrol Holdings. The default revenue input number comes from 2016 income statement of Fairmount Santrol 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 FMSA stock valuation model: a) initial revenue growth rate of 60% 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 10.8%, whose default value for FMSA is calculated based on our internal credit rating of Fairmount Santrol 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 Fairmount Santrol 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 FMSA stock the variable cost ratio is equal to 51%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $447 million in the base year in the intrinsic value calculation for FMSA 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 5.9% for Fairmount Santrol Holdings.

Corporate tax rate of 27% is the nominal tax rate for Fairmount Santrol 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 FMSA 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 FMSA are equal to 167.2%.

Life of production assets of 11.4 years is the average useful life of capital assets used in Fairmount Santrol 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 FMSA is equal to 18.1%. 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 - $251 million for Fairmount Santrol 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 224.953 million for Fairmount Santrol 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 Fairmount Santrol Holdings at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ Miner Sibelco Weighs Acquisition of Fairmount Santrol   [Oct-03-17 12:10PM  Bloomberg]
▶ Texas Frac Sand In Demand   [Sep-14-17 01:41PM  Forbes]
▶ FMSA Holdings beats Street 2Q forecasts   [Aug-04-17 02:29AM  Associated Press]
▶ Hi-Crush Partners: 100% of the Analysts Rated It as a Buy   [Jun-09-17 07:36AM  Market Realist]
▶ What Was Halliburtons Correlation with Crude Oil on June 2?   [Jun-05-17 02:35PM  Market Realist]
▶ What Were Schlumbergers Drivers in 1Q17?   [Jun-01-17 04:05PM  Market Realist]
▶ How Schlumberger Correlates with Crude Oil   [May-08-17 01:35PM  Market Realist]
▶ FMSA Holdings reports 1Q loss   [07:03AM  Associated Press]
▶ Whats NOVs Correlation with Crude Oil on April 21?   [Apr-24-17 01:35PM  Market Realist]
▶ Oil and Gas Stock Roundup: Say Goodbye to $50 Oil   [Mar-11-17 10:00AM  Motley Fool]
Financial statements of FMSA
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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