Intrinsic value of U.S. Geothermal - HTM

Previous Close

$3.87

  Intrinsic Value

$1.36

stock screener

  Rating & Target

str. sell

-65%

  Value-price divergence*

0%

Previous close

$3.87

 
Intrinsic value

$1.36

 
Up/down potential

-65%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of HTM 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 0.1

 

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, %
  0.00
  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
  31
  32
  32
  33
  34
  35
  36
  38
  39
  40
  42
  43
  45
  47
  49
  51
  54
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  102
Variable operating expenses, $m
 
  21
  22
  22
  23
  24
  25
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
Fixed operating expenses, $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
Total operating expenses, $m
  23
  21
  22
  22
  23
  24
  25
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
Operating income, $m
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
EBITDA, $m
  16
  17
  18
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
Interest expense (income), $m
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
Earnings before tax, $m
  4
  6
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  15
  16
  17
  18
Tax expense, $m
  0
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
Net income, $m
  0
  4
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  15
  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
  243
  233
  238
  244
  251
  258
  267
  276
  286
  296
  308
  320
  333
  347
  361
  377
  393
  411
  429
  449
  470
  491
  514
  538
  564
  591
  619
  649
  680
  713
  748
Adjusted assets (=assets-cash), $m
  228
  233
  238
  244
  251
  258
  267
  276
  286
  296
  308
  320
  333
  347
  361
  377
  393
  411
  429
  449
  470
  491
  514
  538
  564
  591
  619
  649
  680
  713
  748
Revenue / Adjusted assets
  0.136
  0.137
  0.134
  0.135
  0.135
  0.136
  0.135
  0.138
  0.136
  0.135
  0.136
  0.134
  0.135
  0.135
  0.136
  0.135
  0.137
  0.136
  0.135
  0.136
  0.136
  0.136
  0.136
  0.136
  0.137
  0.135
  0.136
  0.136
  0.135
  0.136
  0.136
Average production assets, $m
  185
  188
  193
  197
  203
  209
  216
  223
  231
  240
  249
  259
  269
  281
  292
  305
  318
  333
  348
  363
  380
  398
  416
  436
  457
  478
  501
  525
  551
  577
  605
Working capital, $m
  23
  12
  13
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  39
Total debt, $m
  108
  107
  110
  113
  117
  122
  127
  132
  138
  144
  151
  158
  166
  174
  182
  192
  201
  212
  222
  234
  246
  259
  272
  287
  302
  317
  334
  352
  370
  389
  410
Total liabilities, $m
  138
  137
  140
  143
  147
  152
  157
  162
  168
  174
  181
  188
  196
  204
  212
  222
  231
  242
  252
  264
  276
  289
  302
  317
  332
  347
  364
  382
  400
  419
  440
Total equity, $m
  105
  96
  98
  101
  103
  106
  110
  114
  118
  122
  127
  132
  137
  143
  149
  155
  162
  169
  177
  185
  193
  202
  212
  222
  232
  243
  255
  267
  280
  294
  308
Total liabilities and equity, $m
  243
  233
  238
  244
  250
  258
  267
  276
  286
  296
  308
  320
  333
  347
  361
  377
  393
  411
  429
  449
  469
  491
  514
  539
  564
  590
  619
  649
  680
  713
  748
Debt-to-equity ratio
  1.029
  1.110
  1.120
  1.130
  1.140
  1.150
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
  1.230
  1.240
  1.250
  1.260
  1.260
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.310
  1.310
  1.320
  1.330
  1.330
Adjusted equity ratio
  0.395
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  4
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
Depreciation, amort., depletion, $m
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
Funds from operations, $m
  12
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
Cash from operations, $m
  12
  11
  12
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
Maintenance CAPEX, $m
  0
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
New CAPEX, $m
  -9
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
Cash from investing activities, $m
  -16
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -18
  -18
  -19
  -21
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -48
  -50
Free cash flow, $m
  -4
  1
  0
  0
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
Issuance/(repayment) of debt, $m
  12
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
Issuance/(repurchase) of shares, $m
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
Cash from financing (excl. dividends), $m  
  11
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  16
  17
  18
  18
  19
  20
  21
Total cash flow (excl. dividends), $m
  7
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Retained Cash Flow (-), $m
  -4
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
Prev. year cash balance distribution, $m
 
  11
  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
 
  13
  1
  1
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  12
  1
  1
  0
  0
  0
  0
  0
  0
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  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
  99.9
  99.8
  99.5
  99.2
  98.9
  98.4
  98.0
  97.5
  96.9
  96.3
  95.7

U.S. Geothermal Inc. is engaged in the renewable green energy business. The Company, through its subsidiary U.S. Geothermal Inc. (Geo-Idaho), is engaged in the acquisition, development and utilization of geothermal resources in the Western United States and the Republic of Guatemala. It operates through two segments: Operating Plants, and Corporate and Development. It constructs, owns, manages and operates power plants that utilize geothermal resources to produce renewable energy. Its operations are primarily focused in the United States and Central America. It owns and operates geothermal power plant projects that include Raft River, Idaho; San Emidio, Nevada, and Neal Hot Springs, Oregon. The Company also has geothermal property interests in the Republic of Guatemala; the Geysers in California; Vale, Oregon; Crescent Valley, Nevada; Ruby Hot Springs, Nevada; Lee Hot Springs, Nevada, and Gerlach, Nevada, some of which are under development or exploration.

FINANCIAL RATIOS  of  U.S. Geothermal (HTM)

Valuation Ratios
P/E Ratio 0
Price to Sales 2.4
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 6.1
Price to Free Cash Flow 24.5
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 28.6%
Cap. Spend. - 3 Yr. Gr. Rate -8.5%
Financial Strength
Quick Ratio 4
Current Ratio 1.4
LT Debt to Equity 99%
Total Debt to Equity 102.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.7%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 2.6%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 5.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 48.4%
Gross Margin - 3 Yr. Avg. 48.4%
EBITDA Margin 48.4%
EBITDA Margin - 3 Yr. Avg. 49.5%
Operating Margin 25.8%
Oper. Margin - 3 Yr. Avg. 29%
Pre-Tax Margin 12.9%
Pre-Tax Margin - 3 Yr. Avg. 16.1%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 15.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -61.1%
Payout Ratio 0%

HTM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HTM stock intrinsic value calculation we used $31 million for the last fiscal year's total revenue generated by U.S. Geothermal. The default revenue input number comes from 2016 income statement of U.S. Geothermal. 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 HTM 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 8.1%, whose default value for HTM is calculated based on our internal credit rating of U.S. Geothermal, 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 U.S. Geothermal.
    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 HTM stock the variable cost ratio is equal to 67.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for HTM 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 3.9% for U.S. Geothermal.

Corporate tax rate of 27% is the nominal tax rate for U.S. Geothermal. 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 HTM 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 HTM are equal to 595.2%.

Life of production assets of 26.4 years is the average useful life of capital assets used in U.S. Geothermal 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 HTM is equal to 38.7%. 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 - $105 million for U.S. Geothermal - 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 19.24 million for U.S. Geothermal 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 U.S. Geothermal at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ U.S. Geothermal reports 2Q loss   [Aug-10-17 10:57PM  Associated Press]
▶ U.S. Geothermal misses 1Q profit forecasts   [May-10-17 06:04PM  Associated Press]
▶ U.S. Geothermal misses 4Q profit forecasts   [05:00AM  Associated Press]
▶ U.S. Geothermal Inc. Updates Two Development Projects   [Jun-27-16 08:00AM  Marketwired]
Financial statements of HTM
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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